Still have questions about the oil tax referendum? You're not alone

Cliff Groh

Alaskans will get their chance to vote on petroleum taxes at the primary election Tuesday, Aug. 19. This commentary sets out the issue’s basic history, poses some questions to consider before the polls open, and ends by letting you know where you can get some answers.

How we got here

Ballot Measure No. 1 — also known as Proposition 1— is a referendum on the oil and gas tax legislation adopted by the Alaska Legislature in 2013 as Senate Bill 21 (SB 21) or the “More Alaska Production Act."  That legislation replaced the law adopted in 2007 as “Alaska’s Clear and Equitable Share” (“ACES”).  Both ACES and SB 21/MAPA relate to the oil and gas production (severance) tax, the state of Alaska’s largest single revenue component. SB 21/MAPA reduced the progressivity of the tax structure compared to the ACES regime and changed the tax credit system in an attempt to create incentives for the petroleum industry to increase oil and gas production in Alaska.

A “Yes” vote on Ballot Measure No. 1 is a vote to repeal SB/21 MAPA and have the state go back to ACES. A “No” vote is a vote to retain SB21/MAPA, which is the status quo today.

Some questions to consider

• Did the tax regime under ACES produce an unfavorable climate for investment in Alaska’s North Slope, and does the tax regime under SB 21/MAPA generate a better investment climate?

• What effects will the tax regime created by SB 21/MAPA have on development of legacy fields (like Prudhoe Bay and Kuparuk) vs. newer fields?

• How attractive is MAPA/SB 21 vs. ACES for independent oil and gas producers, and how important will those independent producers be to Alaska going forward?

• How do the tax rates under SB 21/MAPA and under ACES compare with the tax rates in other petroleum provinces around the world?

• How should Alaskans view the political factors that contributed to the passage of ACES in 2007 and the adoption of Senate Bill 21 in 2013?

• If a voter favors a tax system that is different from either SB 21/MAPA or ACES, will a “Yes” vote or a “No” vote on the referendum be more likely to produce that alternative tax system?

The last question in particular deserves elaboration. Some supporters and some opponents of Ballot Measure No. 1 have stated that the best approach is neither ACES nor SB 21/MAPA, but something in between that would include some — but not all — of the progressivity features of ACES. If a voter feels the same way, would a victory or a defeat for Ballot Measure No. 1 be more likely to push the Legislature towards such a middle ground?   

Forum to examine the oil tax referendum

On Wednesday evening, July 23, Alaska Common Ground is sponsoring a forum on this ballot proposition at the Wilda Marston Theatre at Anchorage’s Loussac Library from 7 p.m. to 9 p.m. The event is free and open to the public.

This forum will pit state Sen. Bill Wielechowski, D-Anchorage, and longtime Alaska economist Gregg Erickson on the "Yes" side against oil and gas policy consultant Brad Keithley and veteran petroleum economist Roger Marks on the "No" side. This event will be moderated by Prof. Gunnar Knapp, director of the University of Alaska Anchorage’s Institute of Social and Economic Research. This forum will differ from a number of others on this issue in that it will focus on getting each side to answer the other side's questions. Audience members will have the opportunity to submit questions of their own.

This forum is co-sponsored by the League of Women Voters of Anchorage, the League of Women Voters of Alaska, the Anchorage Public Library, ISER, and Alaska Integrated Media.

The old saying is that if you don’t vote, you can’t complain. But if you don’t try to learn the issues you are voting on, you can’t complain that they are confusing. Hope to see you July 23.

Cliff Groh is the chair of Alaska Common Ground, a membership-supported, nonprofit, nonpartisan, tax-deductible organization that focuses on fostering understanding and dialogue about Alaska’s public policy issues.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.