Jon Iversen: How Will Alaska Pay its Rebatable Production Tax Credits?

Stoel Rives tax partner Jonathan Iversen authored an article for State Tax Notes titled “The Battle Over Payment for Alaska’s Tax Credits.” The article, Iversen’s third as a columnist for State Tax Notes, delves into the rebatable production tax credit program, which was created by Alaska legislators to be an incentive for explorers and small producers to invest in oil and gas exploration and production in the state but was hurt by its own success when oil prices dropped. The legislature repealed the program but a queue of valid outstanding credits still awaits payment.

In the article, Iversen:

• Provides an overview of the rebatable production tax credits, which were crafted specifically to encourage exploration and development by explorers, small producers and new entrants to the state.
• Outlines the status of funding to pay down the tax credit queue and notes that the explorers and small producers the tax credit was meant to lure have been the ones hardest hit by the lack of a significant appropriation to the oil and gas tax credit fund over the last two years for purchase of the outstanding balance of credit certificates.
• Discusses H.B. 331, introduced in February 2018 by Alaska Gov. Bill Walker, which would establish the Alaska Tax Credit Bond Corp. in the Department of Revenue and authorize it to issue up to $1 billion in bonds to finance purchases of the oil and gas tax credits.

In his next column, Iversen will look at H.B. 331 in greater detail and provide an update as to the challenges the bill is facing as to its constitutionality.