State of Alaska
Fiscal Note
Bill Version: SB 111
2019 Legislative Session
Fiscal Note Number: 2
(S) Publish Date: 4/15/2019
Identifier: 2019200143-DOR-TAX-4-11-2019 Department: Department of Revenue
Title: OIL/GAS LEASE:DNR MODIFY NET PROFIT Appropriation: Taxation and Treasury
SHARE Allocation: Tax Division
Sponsor: RLS BY REQUEST OF THE GOVERNOR OMB Component Number: 2476
Requester: Governor
Expenditures/Revenues
Note: Amounts do not include inflation unless otherwise noted below. (Thousands of Dollars)
Included in
FY2020 Governor's
Appropriation FY2020 Out-Year Cost Estimates
Requested Request
OPERATING EXPENDITURES FY 2020 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
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 *** *** *** *** *** *** ***
Estimated SUPPLEMENTAL (FY2019) cost: 0.0 (separate supplemental appropriation required)
Estimated CAPITAL (FY2020) 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? No
If yes, by what date are the regulations to be adopted, amended or repealed? n/a
Why this fiscal note differs from previous version/comments:
Not applicable, initial version based on the 2-13-19 Governor's FY2020 request.
Prepared By: Colleen M. Glover, Director Phone: (907)269-1033
Division: Tax Division Date: 04/11/2019 12:00 PM
Approved By: Brad Ewing, Administrative Services Director Date: 04/11/19
Agency: Office of Management and Budget
Printed 4/15/2019 Page 1 of 2 Control Code: KKYIU
 SB 111 - Fiscal Note 2
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO. LL00143
2019 LEGISLATIVE SESSION
Analysis
Background
The proposed bill allows the Commissioner of the Department of Natural Resources (DNR) to adjust the Net Profit Share
rate through royalty modification. This bill will incentivize additional resource development which may otherwise be
expected uneconomic, potentially generating revenues to the State in the form of royalties, taxes, or net profit share
payments that would not otherwise occur. This bill aligns with the priorities of Governor Dunleavy as it incentivizes
resource development on net profit share leases, with additional resource bringing positive economic impact and jobs.
This bill is limited to existing leases that are Net Profit Share Leases (NPSLs). Any changes from this bill are assumed to
only impact NPSL payments on a going forward basis only, not retroactive.
The proposed bill does not change any programs within the Department of Revenue.
Revenue Impact
***The revenue impacts of this bill are indeterminate. It is unknown at this time, which fields, if any would apply for net
profit share rate reduction, so it's difficult to forecast the revenue impact of this bill. This is aligned with DNR's fiscal note.
The revenue impacts to the Tax Division would as follows for an existing Net Profit Share Lease:
- Net profits taxpayer: A positive impact, in that if any fields are able to get a reduced net profit share rate, there would
be an increase to the amount of production tax paid.
- Minimum taxpayer: No impact if they are a minimum (i.e. gross) taxpayer unless they have any carry forward lease
expenditures. If they do have carry-forward lease expenditures, then there is a positive impact the same as a net profits
taxpayer.
Also, if the passage of this bill incentivizes more production, then there will be incremental revenue to State from oil and
gas production taxes.
Implementation Cost
This legislation would not require the Department of Revenue to update its Tax Revenue Management System (TRMS).
Besides having no implementation costs, this legislation would not cause any administrative burden on the Tax Division.
(Revised 9/05/18 OMB/LFD) Page 2 of 2
2019200143-DOR-TAX-4-11-2019 Page 2 of 2 Control Code: KKYIU


Statutes affected:
SB0111A, AM SB 111, introduced 04/15/2019: 36.30.850, 38.05.180