Oil companies are spending millions to stop repeal of Alaska tax cuts

ldemer@adn.comFebruary 9, 2014 

While Michael Stallings, left, signs a petition to get a referendum to repeal of SB21 on the ballot, a passer-by makes a comment supporting the oil tax law outside Barnes & Noble on Thursday, June 20, 2013. Petition circulator Bill Buchwald is at center.

BILL ROTH — Anchorage Daily News Buy Photo

Oil companies are pouring millions of dollars into their attempt to defeat a voter referendum to repeal the oil tax cuts approved last year by the Alaska Legislature.

New campaign filings to the state show BP and ExxonMobil each have invested more than $1.3 million in the "Vote No on One" campaign, which already is playing out with a barrage of radio and television ads six months ahead of the August primary election. The referendum on oil taxes is Ballot Measure One.

In all, the oil industry-backed group raised $3.5 million as of Feb. 5, reports to the Alaska Public Offices Commission show.

Current reports aren't available for the other side, "Vote Yes -- Repeal the Giveaway."

It had raised just over $104,000 through Dec. 31, the period covered in its last report to APOC.

Its biggest donors on the Vote Yes side are Barney Gottstein, the Gottstein family patriarch who was a partner in the old Carrs Quality Centers, and Robin Brena, an Anchorage attorney whose practice includes oil and gas issues. Gottstein had given $29,000 and Brena, $10,000, as of the end of the year. Most of that money was spent last summer to gather signatures needed to put the referendum on the Aug. 19 primary ballot.

Vote No is following new APOC rules covering "independent expenditures" requiring ballot groups to file reports within 10 days of spending money, said its campaign director, Willis Lyford. The Vote Yes group hasn't yet filed any independent expenditure reports, but did file quarterly campaign disclosures last year.

Chancy Croft, a former state Senate president and part of the group trying to repeal the tax cuts, said he told a reporter earlier this year he expected the Vote Yes group to be outspent 10-to-1.

"So I was wrong," he said Friday. "They are going to outspend us 50-to-1."

Even with millions in oil industry spending against the referendum, Croft said "it's peanuts compared to the amount of tax that's at stake here."

'AN AWESOME FIGHT'

Depending on oil prices, the state could lose $1 billion or more a year under the new tax, without accounting for the promise of more oil. Advocates of tax cuts said they would curb a decades-long slide in North Slope production.

Oil taxes are state government's main revenue source, providing 90 percent of discretionary funds and paying for teachers and troopers, roads and snowplows, health care and social workers.

Lawmakers fiercely debated the Parnell administration's Senate Bill 21 last year. After it narrowly passed, opponents organized a voter veto opportunity. They gathered more than 52,000 signatures, of which 45,664 were confirmed by the state Division of Elections, far more than the 30,169 needed.

The new law, the key elements of which took effect Jan. 1, dramatically cuts oil taxes when prices are high but brings in more money at lower prices. The Parnell administration says lower-than-expected oil prices mean the state will bring in more money, not less, during the budget year starting July 1 with the new tax scheme than under the prior, Palin-era tax.

Still, Parnell aides, citing those lower oil prices and declining production, have projected a $2 billion drop in revenue this budget year compared to the 12 months ending June 30 -- and an even bigger hit in the coming budget year.

Backers of the referendum have latched onto Senate Bill 21 as the culprit.

"It's going to be an awesome fight," Croft said. "We're going to have to do the ground game. It's pretty obvious. We don't have the money and aren't going to be able to raise the money to compete with them on the regular media."

AIRWAVE BLITZ

The oil industry money is fueling a massive campaign against the referendum that already features several different television ads, including a new one using hockey as a metaphor for oil tax reform.

"We need to stay in the game," a coach tells players in the locker room. The ad then cuts to images of oil fields and a narrator tells viewers "oil tax reform is creating new investment to grow our economy and create jobs. Ballot Measure One jeopardizes that progress."

So far BP, at $1.31 million, is the top contributor to the effort to defeat the tax referendum, putting in about $6,000 more than Exxon.

"The Alaska oil tax reform was an important step forward," BP spokeswoman Dawn Patience said in an email Friday. "BP is adding 200 jobs and two new drilling rigs, one rig by 2015 and a second in 2016, for a total incremental $1 billion investment over five years."

The Vote No group isn't revealing how much it expects to spend by Election Day, but the campaign will be "aggressive and robust," said Lyford, the campaign director.

So far the Vote No group has spent around $2 million, he said, significantly less than the estimates in its reports.

"The expenses are high, absolutely," Lyford said Saturday. "We're running a statewide campaign. We're running statewide media. We're speaking to groups and organizations statewide. This is a comprehensive effort because we think there's a lot of information we need to get out."

FOLLOW THE MONEY

Alaska's other major North Slope oil producer, ConocoPhillips, contributed just over $350,000, the APOC reports show. Lyford said not all oil company contributions are coming in at the same time.

Other significant contributors to Vote No so far are: Repsol, the Spanish oil giant, which gave almost $265,000; Chevron with $150,000; and Pioneer Natural Resources USA with more than $97,000.

The Alaska Oil and Gas Association has given almost $24,000. The Greater Chamber Fairbanks of Commerce gave $10,000. Hilcorp Alaska LLC, Apache Corp., Statoil USA and Alyeska Pipeline Service Co. pitched in $7,700 each. Tesoro Alaska Co. and Petro Star Inc. each gave $2,500.

Just one individual contributed so far: Anchorage builder Chuck Spinelli, the group's treasurer. He gave $50.

Another business group, "Keep Alaska Competitive - Vote No on 1," received $180,000 in contributions as of its Jan. 8 report to APOC.

That money came from seven different companies, including Trident Seafoods Corp., Alaska Frontier Constructors and Udelhoven Oilfield System Services Inc. Keep Alaska Competitive's biggest contribution, $40,000, came from Lynden Inc., a shipping company whose chairman, Jim Jansen, is chairman of the ballot group. Ed Rasmuson, the former banker, gave $10,000.

In contrast, the Vote Yes side has collected donations from dozens of individuals ranging from a few bucks to thousands of dollars. Anselm Staack, an associate professor of accounting at the University of Alaska Southeast, gave $3,500. Chancy Croft gave $2,000, as did Robert Gottstein, one of Barney's sons. Another son, David, gave $1,250. Democratic legislators -- Sens. Hollis French, Bill Wielechowski and Berta Gardner and Reps. Les Gara and Max Gruenberg -- have given from $100 to $500. Rep. Scott Kawasaki donated smoked salmon. The Alaska State Employee Association gave $3,000, as of Dec. 31.

A report covering all campaign spending and donations through Feb. 1 is due to APOC Feb. 17.

Email reporter ldemer@adn.com

 

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