Tax increase debate back on as signatures filed
A group seeking to raise taxes on major oil producers in Alaska rolled a flatbed dolly stacked with boxes of signature books to the Alaska Division of Elections office in Anchorage on Jan. 17, setting the stage for what’s expected to be another costly political battle.
Members of the “Vote Yes for Alaska’s Fair Share” group said they turned in 44,624 signatures, well beyond the amount needed to put the measure before voters.
If it passes, the measure would bring the state close to $1 billion extra in oil-production taxes each year, supporters say. The money could be used to shrink the Alaska’s giant deficits while keeping state services in place, they say.
“We have given away billions of dollars (to the industry),” said Robin Brena, an oil and gas attorney and chair of the group, speaking to a crowd of supporters at the elections office.
The two-page text of the ballot measure explains it would affect the taxes applied to the state’s three largest oil fields, Prudhoe Bay, Kuparuk and Alpine.
BP Alaska, ConocoPhillips and ExxonMobil Corp. are the major leaseholders at Prudhoe Bay. ConocoPhillips is the major owner at Kuparuk and the Alpine.
A group called OneAlaska formed to fight the measure in November. It is led by small-business owners, a union leader, a Native corporation chair and others. Much of its funding so far is coming from oil companies, primarily ConocoPhillips and Hilcorp Alaska, the company that plans to buy BP’s assets in Alaska.
The ballot measure would boost production taxes on the oil industry by more than 300 percent, OneAlaska said in a statement on Jan. 17. Such a spike would force any industry to cut back on its investment in the state, the group said.
Gary Dixon, secretary and treasurer with Teamsters Local 959 and part of the anti-initiative group, said in a statement that his organization opposes the ballot measure. The union represents construction workers, truck drivers and others.
“My job is to protect jobs for Alaskan workers, full stop,” said Dixon. “This ballot measure will make it harder for Alaskans to get and keep jobs, from Kotzebue to Ketchikan.”
The state estimates the industry is expected to pay $381 million in production taxes this year. Total petroleum revenue from production tax, corporate tax, property tax and royalties is forecast to be $1.56 billion.
Roger Marks, a former petroleum economist for the state who has no affiliation with the anti-initiative group, said if the measure was already in effect, the industry would pay about $1.4 billion this year.
Ed Davis, a retired engineer for Alyeska Pipeline Service Co., was one of the supporters at the Division of Elections on Jan. 17 when “Vote Yes for Alaska’s Fair Share” turned in its petition books. Davis said the oil industry can afford to pay more.
Davis collected more than 800 signatures in Fairbanks, during a cold streak when the worst temperatures plunged to about 40 degrees below zero. He stood outside near the solid waste facility where people bring their trash, he said.
The oil industry does not deserve all the breaks and benefits it gets in Alaska, he said.
Bill Popp, a co-chair of the anti-initiative group and president of the Anchorage Economic Development Corp., said the measure would hamper the state’s economic recovery.
It would hurt profit margins in the state’s oil industry and force companies to look outside Alaska for better investments, he said. Oil companies are now investing in new fields in Alaska. But the “massive” tax increase will push investment away, he said, adding that will have devastating impacts on the state economy.
“This (initiative) is another simplistic approach to a complex problem,” Popp said. “To once again say, ‘Tax the oil industry, it will solve all our problems,’ is such an ill-advised idea. It isn’t going to work.”
Alaska is one of the most profitable places for the oil industry to operate, and will remain so if the initiative passes, members of the initiative group say.
Jane Angvik, a primary sponsor of the measure and former Anchorage Assembly member, said ConocoPhillips has boosted dividends for its shareholders. Meanwhile, the state — now facing a $1.5 billion deficit — has reduced Permanent Fund Dividends paid to Alaskans.
The extra money generated by the tax could support higher PFD payments, initiative supporters say.
The last ballot fight over oil-production taxes in 2014 produced more than $14 million in political spending, with the oil industry vastly outspending opponents. The oil industry won that battle with 53 percent of the vote.
Oil companies and partners spent about $145 for each supportive vote, according to a review of state records. The losing side spent about $7 per vote.
In the current oil tax battle, the two sides have so far raised about $300,000, according to reports.
Members of the “Fair Share” group said they expect the measure to go before voters in the November election.
The Division of Elections still must certify that the group has 28,501 signatures from registered Alaska voters in at least 30 of the state’s 40 House districts, they said. The group said it met requirements in 36 House districts.
The measure’s changes to taxes at the three major fields include:
• The gross minimum production tax, which has gone into effect in recent years under low oil prices, would increase from 4 percent to between 10 percent and 15 percent, depending on the price of oil.
• The net production tax, which has kicked in when oil prices are higher, would eliminate the per-barrel credit provided to oil producers.
• Tax returns and other documents provided by oil and gas producers would be public information, instead of confidential documents.
• Companies won’t be allowed to deduct costs at other fields from tax payments at the three major fields, Brena said.