Ballot Measure 1 is the single most important ballot issue I can recall in the 43 years that I’ve lived in Alaska. The long-term prosperity of Alaska and Alaskans rests on the outcome of this vote. I don’t work in the oil industry, but I care passionately about Alaska and our future. That’s where my heart and my mind are on this issue. My sole motivation is what’s best for Alaska.
So, what is best for Alaska? The first thing everyone should know is that all the roads, schools, and public buildings built, all the private and state contributions to nonprofits, all the contributions to the Permanent Fund, and all the and funding of state government from the start of oil flowing in the pipeline to 2007 were accomplished under a tax structure lower than our current tax structure, SB 21. Far from a “giveaway,” SB 21 is the second-highest tax structure we’ve ever imposed on the oil industry.
I’ve been studying and graphing Alaska’s economy and its primary engine, the oil industry, for over 40 years. I have a very well-based opinion about what happens if Ballot Measure 1 passes -- that is if a “yes” vote prevails and we go back to ACES.
Oil production will continue to decline. Production declined an average of 6 percent every year ACES was in place. If we go back to ACES, why should we expect that to change? It won’t, and that’s bad for Alaska.
The annual contributions to Alaska’s Permanent Fund will decline. Royalty payments -- not taxes -- determine Alaska’s annual contribution to the Permanent Fund. The only way to increase royalty payments is to increase production.
Many of the projects started since our current SB 21 tax bill passed will be jeopardized. Over $10 billion in new oil company investments in the next 10 years have been projected under SB 21; $4 billion in new projects have already been announced and planning has started. If the tax structure changes again these projects will be re-evaluated and future investment decisions will be impacted.
Oil company investment will move away from Alaska. That money will go to our 13 competitor states or to foreign competitors. That means fewer jobs in our oil-dependent economy. That is especially sobering when you consider that every oil company job generates 20 jobs in the public and private sectors combined.
The $45-$65 billion natural gas line, which will create thousands of jobs during construction and continuing operations, will become a giant question mark. It certainly does not help the economics of this mega-project to increase taxes by going back to ACES, the tax that even supporters of the repeal say is too high. Now what happens if a “no” vote prevails and we give SB 21 a chance to continue its successful start.
The billions of dollars in new investments announced since the new tax was passed will continue with even more investment expected. That means a long-term, healthy economy, more jobs in the private and public sectors and more funding for nonprofits.
Our oil production decline has already has already slowed to almost level. Unless the price of oil drops significantly, we can expect the oil decline Alaska experienced under ACES to be reversed. More oil through the pipeline means bigger royalty payments to our Permanent Fund and more tax revenue for the state in the long term.
Everyone in the public, private, and nonprofit sectors will have more job security and opportunities. We can all have more confidence in our existing employment and employment opportunities for our children and grandchildren.
Planning for -- and investment in -- the Alaska Gas Line will continue. That project means thousands more direct jobs and tens of thousands more indirect jobs. Here’s our choice -- a long-term, healthy economy with lots of job growth and job opportunities for our children and grandchildren or a declining economy with continuing decline in oil production and continuing deficits. Keeping our existing tax, SB 21, best meets our constitutional requirement of developing our resources for the maximum benefit of our citizens. That’s why on Aug. 19 I'm voting no on 1.
Rick Mystrom served two terms as mayor of Anchorage.
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