Oil production tax repeal fails, tax reform upheld
A referendum to roll back an oil production tax change made in 2013 was defeated by voters in the state’s primary election held Aug. 19.
Ballot Measure 1, which would have reinstated the state’s previous tax known as ACES that was repealed in 2013, was voted down 52 percent to 48 percent, or a margin of about 6,800 votes, the Division of Elections reported in late results with 98.6 percent of the votes counted.
Earlier in the evening of Aug. 19 the “yes” votes had a thin majority of a few hundred for repeal with about 25 percent of the first counts, but later returns steadily reversed the trend as the night wore on.
Anchorage, Eagle River, the Kenai Peninsula and Matanuska-Susitna Borough voted heavily against the rollback, while Fairbanks and Southeast largely favored the repeal. Among Anchorage districts, 9 of 13 were won by the “no” votes. Every district in the Mat-Su and Eagle River was carried by the “no” vote.
The “no” votes also carried in rural Alaska, with the North Slope and Northwest upholding tax reform by more than 900 votes compared to only small margins for “yes” in the Bristol Bay/Aleutians and Kuskokwim Delta districts.
With 98 percent of the votes cast counted, 79,980 voted against the tax rollback and 73,184 voted for it. There are still absentee and challenged ballots left to be counted but to overcome the current margin, the “yes” votes for the rollback would have to capture about 10,000 of estimated 13,000 absentee ballots.
The election, closely watched by the oil and gas industry, had stirred intense debate through the summer.
In a statement, BP Alaska President Janet Weiss said, "Alaskans have made clear they are interested in moving forward and improving Alaska's long-term economic future. We agree with the voters that oil tax reform is working, and BP is committed to doing its part to make sure that continues."
ConocoPhillips voiced similar sentiments: “We are encouraged by the election night results that indicate Alaska voters support retaining More Alaska Production Act,” spokeswoman Natalie Lowman said in a statement.
“MAPA has improved the investment climate in Alaska and provides the basis for a more positive long term outlook for Alaska’s economic future. Since MAPA was passed, ConocoPhillips has added rigs to its operations and announced plans to invest in projects that will add production, create jobs and business opportunities for Alaskans, increase the taxable revenue to the state and increase contributions to the state’s Permanent Fund.”
After the Legislature adopted the tax change in April 2013, critics of the change immediately organized an initiative drive to get the repeal the law with a ballot referendum.
The revised tax passed as Senate Bill 21, also called the More Alaska Production Act, eliminated a progressivity formula in the previous tax that hiked tax rates sharply as oil prices rise. It also eliminated a 20 percent investment tax credit, replacing it with a tiered system of per-barrel production tax credits as an incentive for producers to develop new resources.
Opponents to SB 21 objected particularly to production tax credits to oil produced in existing fields. However, many opponents of the tax change supported tax reductions for new fields.
The previous tax put Alaska’s production taxes among the highest in the world, consultants told the Legislature in 2013. The revised tax puts Alaska’s take in the upper middle tier of comparable producing regions.
Since the tax was changed in 2013 North Slope producers have intensified field activity, brought on new drill rigs and essentially halted the decline in production from the Slope for the first time since 2002.
If the “no” vote prevails in the final election results, it will likely settle the oil tax question for some time, and most expect the upward trend for activity and production to continue.
State Rep. Les Gara, D-Anchorage, an ardent supporter of the repeal, said, "This election had $15 million dollars of corporate donations compared with less than $1 million of donations from real people. This shows the power of corporate money, but also that Alaskans are tough to fool. It was a close election."
Gara predicted that under the new tax oil production will fall, there will be less revenue to the state and in a few years people will demand another change.
"All the companies did is buy themselves some time," he said.
The ConocoPhillips board of directors will meet later this year to give final approval to projects that will add 40,000 barrels per day of new production by 2018, and BP is considering a new projects In the west end of the Prudhoe Bay field that will add 40,000 b/d beginning in 2018.
In the Democratic U.S. Senate primary incumbent U.S. Sen. Mark Begich received 84 percent of the votes cast against six challengers.
Begich won 47,631 votes in his primary compared with Sullivan’s 36,293, so in the November general election it would be important for Sullivan to appeal to those who voted for Miller and Treadwell.
The Alaska U.S. Senate rate is one of a handful of contested seats where Republicans hope to prevail, tipping the balance of control in the Senate from Democrats to Republicans.
Meanwhile, incumbent Rep. Don Young easily outdistanced three challengers to net 74 percent of the Republican vote for U.S. Representative, although one who contested Young, John Cox, received 13.5 percent.
In the Democratic contest for U.S. Representative Forrest Dunbar received 63 percent of the vote against two opponents. Dunbar netted 31,555 votes in the late count against Young’s 64,445, so the longest-serving Republican in Congress has his usual advantage going into the general election.
In the governor and lieutenant governor races, incumbent Gov. Sean Parnell easily outdistanced three Republican challengers with 75.5 percent of the vote in the Republican governor’s primary; Democrat Byron Mallot received 66 percent of the vote against two challengers in the Democratic governor’s primary.
State Sen. Hollis French netted 62 percent of the lieutenant governor’s Democratic primary against two challengers; Anchorage Mayor Dan Sullivan received 70.5 percent of the vote against one challenger in the Republican lieutenant governor’s primary.
In key state legislative races where the primaries were contested, state Rep. Bill Stoltze, R-Chugiak, beat back a challenge from DeLena Johnson to win the Senate District R GOP nomination; in House District 3 in North Pole, near Fairbanks, two incumbant Republicans, Reps. Tammie Wilson and Doug Isaacson, were pitted against each other through redistricting. Wilson is the apparent winner.
An apparent upset is in the House District 9 Republican race, Palmer-Glennallen-Valdez, where challenger Jim Colver of Palmer has apparently defeated incumbent Rep. Eric Feige, of Chickaloon.
In House District 22, in Anchorage, Liz Vazquez has apparently defeated her Republican challenger, Sherri Jackson. In House District 21, also in Anchorage, Anand Dubey has apparently defeated Republican challenger Matt Fagnani.
In House District 32, Kodiak, Louise Stutes has apparently defeated two Republican challengers.
In House District 40, northern and northwest Alaska, incumbent Rep. Bennie Nageak, of Barrow, is leading his challenger, Dean Westlake of Kotezebue, in late results.