Senate majority: Let’s end cash credits Saturday

illustration of person holding bags of cash.
A stylized depiction of Rep. Geran Tarr handing $1 million a day in cash credits to oil companies. The Senate is ready to end the credits, but will Tarr and the House hold fast in the hopes of getting higher taxes, too?

The Senate Republican-led majority has a proposal to end the cash credits paid by the State of Alaska to the smaller oil explorers on the North Slope.

And the governor, who is normally aligned with Democrats, is on board, too.

But will the Democrat-led House majority go along? Or will the House dig in its heels and continue paying out $1 million in cash to oil companies every single day? A million dollars a day the State can no longer afford.

Today senators put their offer on the table, not in conference committee, but in a very public way — in a press conference. They did so, in large part, because House members who have been assigned to hash out an agreement with the Senate on cash credits have not been willing to come to the table.

To end the stalemate over oil taxes and cash credits paid to explorers, Senate President Pete Kelly said the Senate will return to Juneau on July 10, when he hopes the House majority will agree with Senate leaders to not only end the cash credit eligibility, but make HB 111 retroactive to July 1 — and not put anything else on the bill, such as higher taxes.

Making it retroactive would give the state another $15 million, and that’s money it could use for troopers, educators, and other essential services.

The cash credits were established to encourage smaller companies to explore on the North Slope and in Cook Inlet. The plan worked, with entrants such as Caelus, Armstrong, and Hilcorp working on major oil finds, but the State now doesn’t have enough money to continue the program. It’s even struggling to pay companies what is already owed.

“We believe it is urgent to pass legislation ending these cash payments,” said Kelly. “The state will bleed at least one million dollars per day between now and the end of the year – each day, that could pay for seven troopers for an entire year – unless we act now.”

He urged the House to reengage with the Senate over HB 111. House Democrats and near-Democrats have said they also want to see higher oil taxes as well as ending the cash credits, but Sen. Cathy Giessel said the state, at current prices, already receives 77 percent of the price of every barrel.

“We must stop this cash bleed. It will save us at least $200 million between now and Dec. 31 – possibly more,” Giessel said. “Under this proposal, the state will stop offering cash payments for credits beginning July 1, 2017.”

The Senate passed a bill to end cash payments to oil and gas companies on May 15, but the House failed to agree.

As a compromise, the Senate has agreed to several provisions including what is called “ring fencing.” That means 100 percent of losses incurred on a lease cannot be transferred to another property, but will stay with the lease until it goes into production. This encourages production, Giessel said. It’s a provision the governor has asked for and the Senate, in the spirit of compromise, has agreed to.

“The Senate is prepared with a proposal to move forward on, reach compromise, and end cash payments, today,” said Giessel. “We are calling on the House to join us and take action. We can and must do our job, now.”

It remains to be seen if, on July 10, the House negotiators finally come to the table.


  1. Some of these companies use these credits as the whole business plan. They can’t exist with out them. Even if you made it a loan instead of a give away would be better.

    • They can’t exist without oil welfare handout? Then let’s stop this stupidity and bid them adieu. There are others who will willingly replace them without welfare.

  2. Could we please talk about this year’s work ethic of the Majority House?
    Suzanne Downing, please numbers compared to past rabble. I think that would amaze folks…

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