Bill Summary – FastDemocracy

State of Alaska
                                                               Fiscal Note
                                                                                                  Bill Version:                  HB 81
 2021 Legislative Session
                                                                                                  Fiscal Note Number:            2
                                                                                                  (H) Publish Date:              2/18/2021
 Identifier:        0706-DOR-TAX-01-15-2021                                         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
                                    FY2022       Governor's
                                Appropriation      FY2022                                                Out-Year Cost Estimates
                                  Requested       Request
 OPERATING EXPENDITURES               FY 2022        FY 2022       FY 2023                          FY 2024            FY 2025         FY 2026        FY 2027
 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 (FY2021) cost:                                        0.0              (separate supplemental appropriation required)
 Estimated CAPITAL (FY2022) 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?
 Why this fiscal note differs from previous version/comments:
 Not applicable, initial version.
 Prepared By:               Colleen M. Glover, Director                                                                 Phone:       (907)269-1033
 Division:                  Tax                                                                                         Date:        01/15/2021 04:30 PM
 Approved By:               Brian Fechter, Administrative Services Director                                             Date:        01/15/2021
 Agency:                    Department of Revenue
Printed 2/18/2021                                                          Page 1 of 2                                                        Control Code: OWayF
                                                                                                                      HB 81 - Fiscal Note 2
                                                  FISCAL NOTE ANALYSIS
STATE OF ALASKA                                                                    BILL NO.
2021 LEGISLATIVE SESSION
Analysis
   The proposed legislation allows the Commissioner of the Department of Natural Resources (DNR) to adjust the Net Profit
   Share rate through royalty modification. This will incentivize additional resource development which may otherwise be
   expected to be uneconomic, potentially generating revenues to the State in the form of royalties, taxes, or net profit share
   payments that would not otherwise occur.
   This legislation is limited to existing leases that are Net Profit Share Leases (NPSLs). Any changes from this legislation are
   assumed to only impact NPSL payments on a going forward basis only, not retroactive.
   The proposed legislation does not change any programs within the Department of Revenue.
   Revenue Impact
   The revenue impacts of this legislation cannot be determined. It is unknown at this time which fields, if any, would apply
   for net profit share rate reduction, making it difficult to forecast the revenue impact of this legislation.
   The revenue impacts to the Tax Division is 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 carryforward lease
   expenditures. If they do have carryforward lease expenditures, then there is a positive impact the same as a net profits
   taxpayer.
   Also, if the proposed legislation incentivizes more production, then there will be incremental revenue to State from oil
   and gas production taxes.
   Implementation Cost
   The proposed legislation does 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 1/13/2021 OMB/LFD)                                                                                           Page 2 of 2
0706-DOR-TAX-01-15-2021                                          Page 2 of 2                                               Control Code: OWayF
Statutes affected: 
HB0081A, AM HB 81, introduced 02/18/2021: 36.30.850, 38.05.180
HB0081B, AM CSHB 81(RES), introduced 03/24/2021: 36.30.850, 38.05.180, 38.05.035, 38.05.134
HB0081C, AM CSHB 81(RES) am, introduced 05/14/2021, passed House 05/14/2021: 36.30.850, 38.05.180, 38.05.035, 38.05.134, 38.05.140, 38.06.040
HB0081A, AM HB 81, introduced 02/01/2021: 36.30.850, 38.05.180