In Tuesday’s primary election, Alaskans will be asked whether the state should repeal a recently-passed bill granting tax breaks to oil companies.
They’ll also decide who will square off for several top-level statewide offices in November.
Ballot Measure 1, also known as Proposition 1, would repeal Senate Bill 21. The Alaska Legislature passed the bill in 2013, but residents collected enough signatures statewide to get a veto referendum on the 2014 primary ballot.
Residents can cast their ballots between 7 a.m. and 8 p.m. at the American Bald Eagle Foundation in Haines or the Klehini Valley Volunteer Fire Department in Mosquito Lake.
Supporters of Proposition 1 claim SB 21 amounts to a “giveaway” to the oil companies, while opponents argue the tax breaks are necessary to incentivize production and make Alaska competitive with other areas.
Representatives from both sides spoke during a July 11 Haines Chamber of Commerce lunch. Democratic Sen. Hollis French, who is also running for lieutenant governor, spoke in favor of Proposition 1 (“Vote Yes”). Mark Morris, a Juneau-based consulting engineer, spoke against it (“Vote No”).
French, who helped craft Alaska’s Clear and Equitable Share (ACES) tax that SB 21 replaced, said according to an Alaska Department of Revenue study, the state would have lost $8 billion in revenue between fiscal years 2007 and 2013 if SB 21 had been in place instead of ACES.
French argued if SB 21 is kept in place, the state will lose valuable revenue it could otherwise be using to fund schools, infrastructure and other projects.
In response to the claim that production declined under ACES, French said oil production has been declining in Alaska since the late 1980s, well before ACES was implemented in 2007.
French referred to the decline in oil production as “a geophysical fact of life.” “That’s what oil fields do,” he said.
French said he would rather promote “strong investment in Alaska” instead of “strong profits for oil companies” by allowing oil companies to “buy down” tax rates by investing in the state.
He also pointed out that ConocoPhillips made more money per barrel under ACES than it did anywhere else, with the company making an average of $24 per barrel in Alaska from 2010-2012 and $5.87 per barrel during the same time frame in the Lower 48.
“The oil industry does very well here,” French said. “Alaska will continue to be a cash cow.”
Morris, whose company Morris Engineering Group LLC has worked on multiple North Slope projects, countered that SB 21 has “stopped the drop” in oil production.
Since 1989, Morris said, production decline has averaged 6 percent annually. In fiscal year 2014, when SB 21 went into effect, production only declined by .13 percent. That brought in $143 million more in revenue than if production had continued to drop by 6 percent, Morris said.
“We have a very big change in the drop of oil. It literally stopped the drop,” Morris said of SB 21.
“If we let production continue to decline, we’re not going to have state government as we know it now,” he added.
A 2013 Department of Revenue study predicts production will continue to decline.
State Rep. Jonathan Kreiss-Tomkins, D-Sitka, and state Sen. Bert Stedman, R-Sitka, who represent Haines in the Alaska Legislature, both have publicly opposed SB 21 and support its repeal.
Residents on Tuesday also will choose their party’s candidates for statewide offices, including candidates for governor, lieutenant governor, U.S. senator and congressman.