Alaska voters are being asked to decide a ballot measure this general election that seeks to rewrite elements of the state’s oil and gas tax policy. Ballot Measure 1, if passed, would increase taxes on three of the largest oil fields on the North Slope — Prudhoe Bay, owned by three top oil producers, and the Kuparuk and Colville units owned by ConocoPhillips.
Supporters of the measure say it would provide between $1 billion and $2 billion to the state in additional revenue.
The ballot measure has gained the support of some business officials and some legislators who seek a change in structure but has faced harsh criticism from industry officials who fear it may push investment away from the state.
The proposal seeks to undo elements of Senate Bill 21, passed by the Alaska Legislature and signed into law by former Gov. Sean Parnell in 2013. That legislation created the current system and authorized new tax credits for oil and gas companies operating in the state.
The measure has received additional attention this year as Alaska’s oil prices have plummeted, at one point sinking into the negative numbers for the first time in history as the global oil market felt the consumer shocks of the COVID-19 pandemic.
At the time SB 21 went into effect, Alaska North Slope was priced at around $104 per barrel. Alaska North Slope crude was priced at $41 per barrel as of Wednesday, according to the Alaska Department of Revenue — about $22 per barrel lower than the same time last year and about $58 per barrel lower than it was this time in 2018.
Part of the measure includes a price-adjusted tax rate, meaning the state would take less from these oil fields if oil prices remain low and increase if prices grow.
Supporters of the ballot measure are pushing the message that Alaska deserves its “fair share” of oil revenue.
One of the central goals of the measure is to increase the amount of oil wealth that remains with the state.
Measure cosponsor Jane Angvik of Anchorage said the ballot measure may help the state address its growing budget deficit.
“With a fair share of petroleum revenues, Alaska can restore basic services, sustain a permanent fund dividend and adopt a robust capital budget for the first time in six years,” Angvik said.
The measure recently gained the endorsement of Fairbanks-based Alaska Native health consortium Tanana Chiefs Conference. However, local Alaska Native corporation Doyon, Limited opposes the measure.
Another cosponsor, Merrick Peirce of Fairbanks, noted that Gov. Mike Dunleavy’s plan to keep using the state’s Constitutional Budget Reserve account to fund the state budget this year is yet another reason the ballot measure is important.
“It is imperative that we end the SB21 corporate welfare that has destroyed Alaska’s finances and is harming the Alaska economy,” Peirce said. “Alaskans are doing the job that our elected officials are supposed to be doing.”
All three local area mayors have come out against the measure, with city of Fairbanks Mayor Jim Matherly voicing concern over a possible “gut punch” the the local economy, Fairbanks North Star Borough Mayor Bryce Ward urging for more industry investment instead of less and North Pole Mayor Mike Welch raising concerns over possible lost jobs.
The measure has also garnered fierce opposition from industry officials.
The OneAlaska—Vote No on 1 group is largely funded by oil companies ConocoPhillips, ExxonMobil and BP Alaska. The committee is chaired by Chantal Walsh, former director of the state Division of Oil and Gas.
“With several significant, new development projects in the works, adding a punitive new tax on companies that are trying to invest in Alaska is the wrong idea at the wrong time,” Walsh said.
Kara Moriarty, head of the Alaska Oil and Gas Association, said the proposal is bad economic policy.
“It’s just a huge step backward and, in our view, a very misguided and risky approach that clouds our state’s future,” Moriarty said.
A yes vote for the measure will change the tax structure, and a no vote will keep the tax credit system the same.
Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter: @FDNMpolitics.