AD Main Menu

Oil tax repeal opponents outspending supporters 100 to 1

Richard Mauer
Vote No on 1 supporters march in the Eagle River Bear Paw Festival parade on Saturday, July 12, 2014. Opponents of the ballot measure are outspending supporters by a factor of 100 to one. Bob Hallinen / Alaska Dispatch News

With a month to go until the referendum on the 2013 oil-tax cuts, the industry and its allies are outgunning the advocates of repeal by more than 100 to one.

Four organizations favor keeping the 2013 tax law, sought by Gov. Sean Parnell and backed by Republican majorities in both houses of the Legislature, and they've raised more than $13.5 million combined and spent $12.2 million. Two groups back repeal and they've raised  $115,500 and spent almost $109,000, according to an Alaska Dispatch News analysis of several dozen public campaign reports, which are supposed to be filed within 10 days of spending activity.

“Even though we’re this itty-bitty organization, it seems like our bite is big,” says T.J. Presley, campaign manager for the leading organization behind the referendum to remove the 2013 oil tax cuts from the books, Vote Yes! Repeal the Giveaway. “What keeps us motivated is that we aren’t focusing on spending a lot of money on TV or big signs or traditional media. We do phone calls every night, we do (literature) drops every night, we do all the ground-game stuff.”

The state’s three leading oil producers -- ConocoPhillips, Exxon Mobil Corp. and BP, the beneficiaries of the tax cut -- account for most of the opposition money, $10.8 million. Nearly all the rest comes from hopeful producers like Repsol ($729,000), the Alaska Oil and Gas Association ($145,000) and other industry and related organizations. Six Alaska Native regional corporations, many with subsidiaries that work on the North Slope, have pooled about $673,000 into their own anti-repeal organization.

“Our campaign is a wide grassroots effort,” said Willis Lyford, campaign director of the industry’s organization, Vote No on One, and senior vice president of the public relations firm running the campaign, Porcaro Communications.

“The grassroots is on the top floor of the executive building,” suggested Marc Hellenthal, the Anchorage pollster and campaign adviser who usually works for Republicans. Hellenthal, who isn’t working for either side in the referendum, said one of his polls last September showed repeal winning by 3 points. His most recent poll, at the end of June, showed it up about the same 3 points.

After all the millions raised and spent in opposition to repeal, Hellenthal said, “the needle hasn’t moved and there’s nothing on the other side. It’s not like ‘Oh, the other side had more brilliant ads’ or something — they haven’t had any ads. It’s a monopoly.”

Lyford won’t say what his polling shows, but he disagrees with Hellenthal’s numbers.

“That’s for me to know; that’s why we pay for polling,” Lyford said. “We use it to inform our decision-making, and of course we don’t discuss our polling publicly. I won’t want the competition to know what I know.”

The referendum will take place in the state’s primary election, Aug. 19. It was forced by a statewide petition drive of opponents of the tax cut, initiated as Senate Bill 21 in 2013. It passed the Alaska Senate 11-9, with two senators employed by ConocoPhillips joining the majority and two Republicans siding with all seven Democrats in opposition. The House vote was a more certain 24-15.

It will take a “Yes” vote at the polls to approve repeal and return the state’s tax system to ACES -- Alaska’s Clear and Equitable Share, passed in 2007. Supporters of repeal say ACES promoted investment by industry and provided a greater return to Alaska’s treasury, which depends on oil tax revenue for most government activity. Opponents say ACES’ high tax rate at high oil prices encouraged industry to drill in places with lower taxes, leading to a more rapid decline in production than would occur with greater investment.

Two groups are supporting repeal. Presley’s Vote Yes! Repeal the Giveaway, has raised $107,400 and spent $106,200. Its biggest contributor is Barney Gottstein, the retired former grocery wholesaler and retailer, who gave $20,000, and the union PAC of the Alaska State Employees Association, which gave $10,000. In all, 420 contributors, almost all from Alaska, gave an average of $256 each.

Vote Yes! Repeal the Giveaway had at least two people on the regular payroll, Presley and Andrew Lessig, but Presley said Lessig is gone and has left the state after broadcasting an unauthorized email attacking former Democratic Gov. Tony Knowles, a repeal opponent.

Among its other expenditures are rent for its Northern Lights Boulevard headquarters and charges for small printed items like signs and envelopes, a set of robocalls, ads on Facebook and city buses, and website fees.

The other group is Stop the Giveaway! Vote Yes on Prop 1, chaired by activist Ray Metcalfe. It has raised only $7,869, with Metcalfe himself the largest contributor at $1,120. The low-budget group reported spending $4.74 on a lone bumper sticker, then another $493 on 500 more.

Four groups are registered against repeal. Vote No on One, the group flooded with oil money, raised $12.3 million and spent $11.1 million, just about all with Porcaro. Most of the Porcaro money has been used to produce and place television and radio commercials. But Porcaro also reported spending nearly as much money just on a website and social media like Facebook -- $80,000 -- than the repeal group spent on everything.

Porcaro also reported subcontracting out some $465,000 in surveys and polling, a large sum that would enable it to tailor its commercial messages to the leanings it discovered among potential voters.

“I don’t care whether it’s political or it’s consumer research, if you’re selling a product, you want to know what your customer knows, what they understand, what is important to them,” Lyford said. “We have to understand what their understanding of the issue is. We don’t want to jump into the discussion way ahead of their level of understanding -- otherwise we’ll lose them."

Typically, Hellenthal said, that means going through different variations of the messages and finding what resonates, then feeding it back to the public in commercials.

While the content of the Vote No on One commercials seems like it might be effective, Hellenthal said, they suffer from a perception problem: the state-mandated disclaimer at the end that lists the three biggest contributors to the group.

“The one thing that sticks out on all the ads is ‘Paid for by Exxon, BP and ConocoPhillips,’” Hellenthal said. “Every single ad, and it’s at the end. It takes away from all their messaging.”

While the big companies have opened their wallets, they've let Vote No on One and Porcaro do most of their public talking. Dawn Patience, a spokeswoman for BP Exploration (Alaska), said no one has invited BP to participate in a public debate, though she's not sure the company would accept if the offer was made.

“We chose to support the entire conversation” by contributing to the oil-company group, she said. Company employees are deeply involved there as volunteers, Patience added. “We’re supporting the effort to get out the word so people can make an informed decision,” she said.

Two of the other anti-repeal groups also dwarf the pro-group.

No One on One, supported by six Native regional corporations, has raised $673,000 and spent $480,000. The group is headquartered at the Anchorage office of Arctic Slope Regional Corp., and ASRC has given $268,000. With Bristol Bay Native Corp.’s subsidiary Peak Oilfield Service Co., which is running its own one-company campaign, BBNC is the top spender among the regionals, totaling just under $279,000.

No One on One has spent nearly all its money with the agency Bradley Reid and Associates, which in turn has invested heavily in advertising. In one day alone, June 9, it reported spending $300,000 placing television commercials.

Keep Alaska Competitive -- Vote No on 1 has raised $413,000 and spent $378,300. Most of its money has come from oil company contractors and related businesses, with the Lynden freight companies leading the pack at $66,900 and GCI a close second at $50,000. The group reported spending all its money with MSI Communications, which in turn has researched campaign issues and produced advertising, campaign buttons and other material.

We Are Alaska -- No on One has tapped the related Alaska Support Industry Alliance for $45,700 and has so far spent $23,900 of it on research, mailings and festival booths and parades.

Presley, the campaign official from the pro-repeal group, said he believes his opponents are so big, they’ve lost their effectiveness.

“When you’re polling the entire state three, four, five times a month, you’re never going to be able land on a consistent, solid message that speaks to a specific group of people that you’re trying to get to,” Presley said. “They’ve literally become no more substantive than ‘For our jobs, for our future, for Alaska,’ and that’s actually what they’re saying even in the debates now.”

But Lyford disagreed. “Our whole campaign has been built around facts,” he said. “Let’s cut out the baloney and get down to the facts,” he added, accusing the repeal forces of engaging in name-calling by saying oil companies “are big, ugly and greedy.”

While the industry may not have yet convinced Alaskans, Hellenthal said its message has worked in the chambers of commerce.

“They’ve managed to convince most of the business people in this state that somehow we have to have this,” said Hellenthal, who himself plans to vote for repeal.