If weather can predict election outcomes, Saturday’s sunshine bodes well for Ballot Measure 1, which seeks to repeal the state’s oil and gas tax structure as established in Senate Bill 21 and approved by the Legislature in 2013.
“The turnout today is phenomenal. The weather is phenomenal. Whoever is controlling the weather is smiling on our cause,” said Homer resident Frank Mullen, one of the organizers of the rally and march sponsored by the Kachemak Resource Institute. The event attracted a crowd of 150-200 area residents and visitors.
“We are here today because the Alaska Legislature passed a big fat tax cut for the oil producers. … The question is, ‘do we want to reverse this big fat tax cut?’ Yes,” said Mullen.
Unable to attend the rally, Sen. Gary Stevens, R-Kodiak, emailed comments he asked to be read.
“People seem to forget that the oil, Prudhoe Bay and most of the other resources in Alaska belong to Alaskans and we are foolish to give them away,” said Stevens. “It is a great disservice to future Alaskans, to our children and grandchildren, to give our oil away for so little.”
Vic Fischer, a member of the Vote Yes! Repeal Giveaway nonpartisan group, traveled from Anchorage to Homer for the event, just as he has been traveling to similar rallies around the state.
Fischer was a delegate at the Alaska Constitutional Convention in 1955-1956 and served as both a territorial and state legislator. He recalled the cause that united Alaskans in the 1950s, a bipartisan battle against outside interests that resulted in statehood.
Emphasizing Alaska as an “owner state,” Fischer noted the 104 million acres allotted to the people of Alaska upon becoming a state. He recited a section of the state’s constitution he helped frame that provides “for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.”
“SB 21 was not for the maximum benefit of the people,” said Fischer. Of the campaign being waged by Exxon, BP and ConocoPhillips to defeat Ballot Measure 1, Fischer said, “You can tell how unfair it is by the millions of dollars the oil companies are putting into the battle.”
With fishermen, teachers, construction workers and Alaskans in general, waving signs supporting Ballot Measure 1, Saturday’s crowd worked its way down Pioneer Avenue, led by musicians playing “The Hokey Pokey.” Passing motorists honked and waved. Pedestrians either stepped aside or joined in the march.
Among those at Saturday’s rally was Beverly Vosburgh.
“I’m here to ensure Alaska’s future for my grandchildren,” said Vosburgh.
John Toppenberg drove from Sterling to attend the event.
“It’s so outrageous that Alaska is giving away these dollars to the most profitable companies on the planet,” said Toppenberg.
Turning around claims of increased employment opportunities under SB 21, Brad Faulkner dubbed SB 21 the “anti-jobs bill.”
For Scott McEwen, the ballot measure and arguments it raised were “a good reminder to read the state’s constitution.”
SB 21 passed the Senate in March 2013, on an 11-9 vote, “with two oil company officials casting their votes, which many of us think was an unethical act, a conflict of interest,” said Fischer. He was referencing votes by Sen. Peter Micciche, R-Soldotna, the former mayor of Soldotna, a commercial fisherman and an employee of ConocoPhillips, as well Sen. Kevin Meyer, R-Anchorage, also a ConocoPhillips employee.
“If we had more ethical rules, nothing like that could happen,” said Fischer.
Also known as the “More Alaska Production Act” and the “Oil and Gas Production Tax,” SB 21 came before the Legislature at the request of Gov. Sean Parnell. After passing both the Senate and House, it was signed into law by him May 21, 2013. Parnell saw it as a way to increase oil production and attract new investments in Alaska’s oil industry. He said it rebalanced the tax credit system under ACES, Alaska’s Clear and Equitable Share, a tax structure adopted under former Gov. Sarah Palin, in a way that protected the state from low oil prices.
In Parnell’s 2014 State of the State speech before the Legislature in January, he said, “Last year, we passed the More Alaska Production Act, and now, new oil investment dollars, new jobs, and better opportunities are flowing into the state.”
Opponents of SB 21 argue the new tax system benefits large producers more than it does Alaskans, however.
“The reality is that this is a huge gift to the oil companies who would have drilled the same oil anyway under the ACES tax structure, thereby giving Alaskans a fair share of revenue,” said Mullen. “It’s really an example of power politics more than anything else.”
With regard to the increased employment opportunities noted in Exxon, BP and ConocoPhillips’ anti-Ballot Measure 1 campaign, Mullen said, “The TV ads that talk about how all the jobs have suddenly increased and exploration has increased are really disingenuous to the extent that all the activities going on on the North Slope this year, next year, last year, were on the drawing board and planned years ago when the ACES tax structure was in place. So, claiming credit for today’s activities is kind of like the rooster claiming the dawn.”
Prior to passage of SB 21 by the House of Representatives, Rep. Paul Seaton, R-Homer, made numerous attempts to change the legislation.
“I think I had nine amendments that I proposed in the Resources Committee and three on the floor to try to make it better balanced, but those didn’t pass,” said Seaton, who voted against the bill. Upon reconsideration, however, seeing that it was destined to pass the House, Seaton changed his vote, “hoping to make changes the next year. That didn’t happen.”
Seaton said he views the ballot measure as an attempt by the people of Alaska to find a balance.
“The way I look at it, this is a big pendulum and you’re looking for a balance in taxes between big companies, small companies, tax rates and the people of Alaska,” he said. Repealing SB 21 would “tell the Legislature this deal wasn’t good enough for the people of Alaska and we want you to reconstruct it.”
Seaton said tax credits under ACES brought new companies to the North Slope.
“The problem is that SB 21 took away those credits from new exploration and only gives them to what’s called ‘production,’ the producing wells of ConocoPhillips, BP and Exxon,” said Seaton.
In May, Scott Goldsmith, senior economist with the University of Alaska Anchorage’s Institute of Social and Economic Research, released a study comparing SB 21 and ACES. According to Goldsmith, using current oil prices and costs for production, the two tax structures resulted in similar revenue for the state.
Fischer argued against Goldsmith’s report by referencing a study by Douglas B. Reynolds of the University of Alaska Fairbanks’ Department of Economics, School of Management.
“If SB 21 had been in place during the time ACES was in place from 2008 to 2013, the state would have lost $8.5 billion in revenue according to a Department of Revenue report for the Legislature in 2013,” Reynolds said. “It would seem that you would need a lot of new oil fields to make up such a revenue loss.”
Fischer also pointed to comments by Mark Meyers, former director of the state’s Division of Oil and Gas, who criticized the Goldsmith report for being weak and failing to provide “an authoritative analysis of the differences between previous and current tax systems. I urge the public to disregard the report until or unless it undergoes serious technical or peer review.”
Repeal of SB 21 would revert the state to the ACES tax system, one Fischer says provides for a fair share of profits to both industry and Alaskans. Failure to repeal SB 21 will result in the “loss of billions, reducing funding for schools, roads, public safety and other critical needs. Our kids will suffer as will our economy,” Fischer said.