There is no bigger issue for small businesses in Alaska right now than oil tax reform. When oil is flowing through the pipeline, more jobs, dollars and services are being exchanged throughout the state. All of that activity gives local Alaska small business a recipe for success.
The National Federation of Independent Business Alaska recently polled its members and a large majority has said they will be voting no on Ballot Measure 1. I think we all understand how critical the energy sector is to the lifeblood of Alaska. Small business owners are usually the first to feel the pain of a failing economy. For Alaska, a failing economy is directly tied to the health of the oil and gas industry. It also means a thriving economy is dependent on vibrant oil and gas production in the state.
The McDowell Group of Juneau, a group of experts on Alaska economic issues, recently released new research that shows for every one direct oil company job, 20 more jobs are created. That same report also says for every one dollar an oil company employee earns, eight more dollars are generated in Alaska. These are jobs and dollars that are directly impacting local shops, restaurants and service industries. That's good for small local business and good for Alaska.
Supporters of Ballot Measure 1 have claimed oil tax reform was a giveaway of tax dollars to oil companies, but they now know there is no giveaway. One of the most respected economists in Alaska, Scott Goldsmith from the University of Alaska Anchorage, put that myth to bed last month when he released his recent research on the issue. And even better, according to the Department of Labor, employment across Alaska has increased every month this year. And oil and gas direct jobs have also increased every month to near record highs today.
The takeaway from this discussion is the facts speak for themselves. Alaska counts on the oil and gas industry. More than 90 percent of our state revenue is from the oil and gas industry. We are the only state in the nation with no income or state sales tax. As Goldsmith said, we need to recognize the problem is not one of revenues disappearing; it's a problem that production is declining. We also know that 25 percent of Alaska's oil royalties go immediately into the Permanent Fund. When we increase production, the Permanent Fund grows.
Stemming the decline is critically important, and oil tax reform is the smart choice. Why would we want to go back to a failing system? ACES was the culprit that put Alaska fourth behind California in U.S. oil production. It left many small business owners questioning their future and whether their businesses could endorse the continuing decline in oil production.
Since the passage of oil tax reform more than a year ago, we have seen billions of dollars being allocated for new work on the North Slope. New production projects mean local companies have been reporting upswings in business. Oil tax reform is working, and we must give it time to do what it was so carefully designed to do -- put more oil in the pipeline. This is a vote for our future; it's a chance to give our children and grandchildren an Alaska they can call home for decades to come.
On Aug. 19, think of everyone affected by your vote, including the thousands of small business owners in this state, who are counting on you to vote No on One!
Hal Ingalls is a member of the National Federation of Independent Business/Alaska Leadership Council and CEO of Denali Drilling, based in Anchorage.
BY HAL INGALLS