State of Alaska
Fiscal Note
Bill Version: CSHB 387(RES)
2024 Legislative Session
Fiscal Note Number: 1
(H) Publish Date: 3/25/2024
Identifier: HB387-DOR-TAX-03-01-24 Department: Department of Revenue
Title: OIL & GAS TAX CREDIT: JACK-UP RIG Appropriation: Taxation and Treasury
Sponsor: RESOURCES Allocation: Tax Division
Requester: (H) RESOURCES OMB Component Number: 2476
Expenditures/Revenues
Note: Amounts do not include inflation unless otherwise noted below. (Thousands of Dollars)
Included in
FY2025 Governor's
Appropriation FY2025 Out-Year Cost Estimates
Requested Request
OPERATING EXPENDITURES FY 2025 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Personal Services
Travel
Services
Commodities
Capital Outlay
Grants & Benefits
Miscellaneous
Total Operating 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fund Source (Operating Only)
None
Total 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Positions
Full-time
Part-time
Temporary
Change in Revenues
None *** *** *** *** *** ***
Total *** 0.0 *** *** *** *** ***
Estimated SUPPLEMENTAL (FY2024) cost: 0.0 (separate supplemental appropriation required)
Estimated CAPITAL (FY2025) cost: 0.0 (separate capital appropriation required)
Does the bill create or modify a new fund or account? No
(Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
ASSOCIATED REGULATIONS
Does the bill direct, or will the bill result in, regulation changes adopted by your agency? Yes
If yes, by what date are the regulations to be adopted, amended or repealed? 01/01/25
Why this fiscal note differs from previous version/comments:
Not applicable, initial version.
Prepared By: Brandon Spanos, Acting Director Phone: (907)269-6736
Division: Tax Division Date: 03/01/2024
Approved By: Adam Bryan, Division Operations Manager Date: 03/01/24
Agency: Department of Revenue
Printed 3/25/2024 Page 1 of 2 Control Code: HZnGi
 CSHB 387(RES) - Fiscal Note 1
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO. HB 387
2024 LEGISLATIVE SESSION
Analysis
Bill Analysis
This bill would create a tax credit certificate for an entity that installs a jack‐up rig in Cook Inlet between the effective date
of the bill and July 1, 2026. The credit has no cap and would be equal to the total cost of purchasing and transporting a
jack‐up rig to Cook Inlet. Potentially, more than one jack‐up rig installation could generate multiple credits under this bill.
A credit could be used against any of the 20‐plus tax types in Title 43. However, the tax types that could apply to an entity
installing a jack‐up rig in Cook Inlet would likely be limited to the Oil and Gas Property Tax, Oil and Gas Production Tax
(including the Hazardous Release Surcharge), and the Corporate Income Tax—if the entity is a C‐corporation. It is possible
that the only tax that would apply to such an entity would be the Oil and Gas Property Tax, in the case that the entity is
not a producer and not a C‐corporation.
A credit earned under this bill could be used to reduce an entity’s tax obligations to as low as zero. Any portion not used in
a tax period could be used in a later tax period. The credit does not expire, it could be used to reduce future taxes into
perpetuity. The credit is non‐transferable and must be used by the entity that earned the credit certificate.
Revenue Impact
The revenue impacts of this bill cannot be determined at this time. If a jack‐up rig is not installed during the prescribed
time, the revenue impact would be zero. If one or more jack‐up rigs are installed during the prescribed time, the revenue
impact would likely be an indeterminate reduction to revenue. Revenue impacts could apply to both unrestricted revenue
as well as potentially restricted revenues such as the Hazardous Release Surcharge, deposits to the CBRF, etc.
It is difficult to estimate what the total cost of purchasing and transporting a jack‐up rig to Cook Inlet would be, and that is
complicated because costs can vary significantly based on the age and condition of a jack‐up‐rig. It is also impossible to
know which types of taxes a credit recipient would be subject to, and, therefore, which taxes would be reduced by the
credit, and by how much. For example, because the state share of property taxes levied under AS 43.56 is taxed at
approximately 1 percent in the Cook Inlet, no matter what amount the taxpayer spent to purchase and transport a jack‐up
rig, if that taxpayer was subject only to the AS 43.56 Oil and Gas Property Tax, it could take 100 years to fully utilize the
credit. However, if the entity were also subject to the Oil and Gas Production and Corporate Income taxes, the credit could
potentially be fully utilized in one or several years.
Implementation Cost
This legislation would require the Department to make changes to its Tax Revenue Management System (TRMS) and draft
regulations. Resources required to implement this bill would include staff time to update tax forms, TRMS, and Revenue
Online, staff time to draft regulations, and other miscellaneous costs when applicable. These costs will be absorbed by the
Tax Division using existing resources.
(Revised 10/31/2023 OMB/LFD) Page 2 of 2
HB387-DOR-TAX-03-01-24 Page 2 of 2 Control Code: HZnGi


Statutes affected:
HB0387A, AM HB 387, introduced 02/26/2024:
HB0387B, AM CSHB 387(RES), introduced 03/25/2024: