With news that backers of a wrong-headed referendum to undo oil tax reform have collected more than 31,000 signatures to put the question to a vote, many wonder: What happens if they win and Alaska is returned to the bad old days?
The bigger question is: Where did they find so many who care so little about Alaska's future?
Like it or not, Alaska is an oil state. It needs oil, new oil. It runs on oil. Ninety cents of every dollar it spends comes from oil. More than half its economy -- twice the size it would be without oil -- and more than half its jobs depend on oil. Oil in Alaska supports the nation's highest per capita spending, a $43 billion Permanent Fund and a state budget that would be the envy of small nations. We are income tax-free because of oil. More oil is not just good, it is critical.
Alaska's Clear and Equitable Share oil tax meant less oil.
Earlier this year, lawmakers -- faced with lagging North Slope oil production and declining revenues -- finally fixed the rates in the tax, which were hamstringing production and investment for new oil. ACES was the darling of a Democrat-driven Senate coalition of tax-and-spenders destroyed by voters in the last election.
ACES' levy contained ratcheting, progressive provisions that contributed to an investment-busting 90 percent marginal tax at higher oil prices. To make matters worse, it funneled hundreds of millions of dollars in tax credits to companies for infrastructure and such -- without requiring that they produce one new drop of oil.
The tax annually lifted somewhere between $1 billion and $2 billion too much from North Slope industry shareholders, making Alaska as attractive to new investment as a cold sore on a prom queen. Its effects were telling. While the nation's production soared -- and the U.S. positioned itself to surpass Saudi Arabia in oil production -- it slid here. Investment fled to other oil provinces where tax policies make sense. ACES did, however, add to fat capital spending budgets, revenue surpluses and unsustainable spending in Alaska. Big-government types, the Left and some union bosses adored the tax.
Today, those same self-interested folks are desperate to party on and they are willing to say anything, sacrifice anything, to keep the band playing. They blather that ACES reform is a giveaway to producers; that there are North Slope jobs aplenty; that investment is soaring; that everything is hunky-dory. They are being disingenuous. They do not tell you the jobs and investment have nothing to do with new oil but, instead, support very finite maintenance and repair projects; that the party is doomed.
No matter what else happens, referendum proponents and fellow travelers have delayed for at least a year any hope of projects to increase North Slope production as producers wait to see what is going to happen. What a terrible waste.
All of that brings us to the prickly question referendum proponents simply will not answer: What will they do if they succeed?
As a policy, "Don't worry, be happy" stinks, even for the Left, doctrinaire "Owner State" dinosaurs and the most dogmatic anti-oil knuckleheads. The facts are clear: ACES was inimical to anything but bigger government. It was Sarah Palin's vengeance on the oil industry. It hurt Alaska. Badly. Are we going to return to less of the same? Less oil? Less revenue? Less work? Fewer jobs? What industry will step in to pick up the slack? What will prop up the economy?
The handwriting is on the wall. Throughput in the trans-Alaska oil pipeline is plunging by 6 percent a year. In 1988, it peaked at 2.2 million barrels a day. Last week, it hovered at about 480,000 barrels.
The state's spring revenue forecast told the rest of the tale. Unrestricted General Fund revenue was estimated at $7.5 billion for fiscal year 2013 -- and $6.7 billion for next fiscal year. That is quite a drop, especially when you consider that in fiscal 2012, it was $9.5 billion If nothing changes, if no attempt is made to slow or reverse the production decline, it will get worse. Think income tax and lost jobs.
It truly is astounding that any Alaskan would want to return to anything resembling the miserably failed ACES tax.
It is even more astounding that repeal proponents dug up more than 31,000 of them.
Paul Jenkins is editor of the AnchorageDailyPlanet.com.