You should vote in the August primary election. A lot of important questions are on the ballot besides picking candidates for the November general election. Forty thousand signatures were gathered asking you, the public, to repeal a law that began as "Senate Bill 21," now Chapter 10 of the Session Laws, 2013. Repeal of a new law is authorized by a constitutional process called a "referendum." If you agree that this law should be repealed, you should vote "Yes" on Proposition One. Here is why you should vote "yes," even if you are unsure of the consequences of the bill.
Chapter 10 (SB 21) is what ConocoPhillips, Exxon and BP, the big three oil companies that dominate Alaska oil production, wanted out of the last Legislature. The law set out a new tax structure more favorable to them than the one called "ACES" adopted when Gov. Sarah Palin was in office. The state and the Big Three have highly divergent interests in both oil in the ground and oil produced. The state wants to maximize state income over the long term. The Big Three want to maximize profits and, like most taxpayers, reduce their share of state taxes.
The problem with Chapter 10 is that the tough negotiation that should have taken place never happened. The administration and its allies in the Legislature joined the Big Three to fashion a sweeter tax deal as if there was no conflict of objectives. Not only was there an unrecognized conflict of objectives but there were profound, and in some cases scandalous, conflicts of interest arising from the campaign support given to elected officials who showed their gratitude by supporting Big Three objectives. Even with this support, the Big Three had to rely on the votes of two of their employees who also serve in the Legislature to get their bill passed. One of these employees has since reported a handsome raise.
If you vote "yes" on Proposition 1, you will be sending the newly elected Legislature and governor "back to the drawing board" on oil taxation issues in 2015. Chastised by your vote on Prop One and with some new personnel, the negotiation will be done over, with more attention to state interests. You should vote "yes" because Chapter 10 was not negotiated or bargained for; it was, as many have called it, a "give away." Under these shameful circumstances, whether the Big Three deserved the tax regime they asked for is beside the point.
In the next five months you will be subject to millions of dollars of advertising, particularly on TV, explaining why the enactment of Chapter 10 was good for you. In tiny lettering at the bottom, you may see the names of oil companies or surrogates with fancy names sounding very public spirited. Make sure you aren't bought too.
You will also see and hear many familiar names and faces, some of my friends, maybe some of yours, telling you to vote "No" on proposition one. Many years ago, "Engine Charlie" Wilson (distinguishing him from GE's "Electric Charlie" Wilson) famously said, "What's good for General Motors is good for America." A national uproar resulted, rejecting Mr. Wilson's lack of a nuanced appreciation of public good. We have our share of Engine Charlie thinkers who don't mind accumulating oil's good will incidentally.
Of course we wish the oil industry well. It doesn't employ as many people as its ads say, in fact, ranking behind the much maligned federal government in number of Alaska jobs. Federal employee dollars spill over more readily into the rest of our economy. Spokespersons tend to exaggerate oil's contribution to the state budget by including, as if a current contribution, earnings from taxes collected and saved by wiser legislatures of decades past. However, the health of Alaska's oil industry is very important even if its friends tend to exaggerate.
But we are not pals. Next time, our people should sit on the other side of the table when listening to tax proposals and think of the long term interests of Alaskans.
As Gov. Bill Egan's attorney general, John Havelock negotiated with legislative leaders and oil company officers to produce the first tax framework for North Slope oil.
commentBy JOHN HAVELOCK