In my latest State Tax Notes column, I provide an update on H.B. 331, which was passed by the State Legislature in 2018 to create a mechanism to finance the purchase of some $700 million in outstanding rebatable tax credits. I also look at continuing budget tensions in the state, efforts to reduce and simplify various regulations, and the Alaska ‘Fair Share Act’ Initiative, which if enacted would impose a sizable tax increase on some North Slope oil producers.
A lawsuit was filed in 2018 challenging the constitutionality of H.B. 331, and the Department of Revenue is waiting to proceed with the bond program until after the litigation is completed. In January 2019, a judge of the Juneau Superior Court dismissed the complaint, the plaintiff filed an appeal to the Alaska Supreme Court, and oral arguments were held before the court in September. The court has not issued its decision, but once it does, it will likely be several months for the DOR to start the bond program and a few more before it begins purchasing tax credits.
Alaska’s budget tensions have also continued, with higher oil production costs, the threat of production declines and reduced prices continuing to affect state revenues, already highly dependent on the oil and gas industry. The DOR noted that unrestricted general fund revenue was $2.6 billion in fiscal year 2019 and is projected to be $2.1 billion in fiscal 2020 and $2 billion in fiscal 2021.
My next column will include an update on legislative and agency activity surrounding Alaska’s fiscal regime and any tax measures, and a status report on the Alaska Supreme Court appeal concerning H.B. 331. Depending on the status of the Fair Share Act initiative, I may also include a more in-depth discussion about the initiative process in Alaska and the proposal itself.
Read the article here.
Originally published as “Alaska: Preparing for a Tumultuous Year” on January 20, 2020, by State Tax Notes.