In previous columns for State Tax Notes, I have discussed H.B. 331, which was passed by the Alaska State Legislature to remedy the state’s failure to pay off outstanding rebatable oil and gas production tax credits. However, the Bill faced numerous lawsuits, culminating in a Sept. 2020 Alaska Supreme Court ruling that the financing structure created by the Bill violates the Alaska Constitution.
H.B. 331 established the Alaska Tax Credit Bond Corp. as a public corporation to finance the purchase of tax credits designated in certain sections of the Alaska Statutes, including all rebatable oil and gas production tax credit certificates for specific credits. Provisions included in the bill were meant to address possible attacks on its constitutionality regarding violations of the statutory requirement to not dedicate future revenue for a specific purpose or the limitations on contracting for state debt.
A lawsuit challenged the bill on those two bases, and a judge of the Juneau Superior Court dismissed the complaint based on a failure to state a claim on which relief can be granted. On appeal to the Alaska Supreme Court, the court made its ruling that the Bill is unconstitutional — in part because it contracts state debt in violation of Alaska Constitution Article IX, section 8.22, and because it did not meet one of the limited exceptions in section 11 to the prohibition against the state contracting for debt.
My next column will include updates on potential options for holders of tax credits, the Fair Share Act initiative, and the upcoming legislative session that starts in mid-January.
Read the article here.
Originally published as “Alaska Supreme Court Overturns Tax Credit Bond Program” on November 9, 2020, by State Tax Notes.