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Parnell claims oil-tax referendum could have 'chilling effect' on Alaska investment

  • Author: Pat Forgey
  • Updated: September 27, 2016
  • Published June 6, 2013

JUNEAU -- Alaska Gov. Sean Parnell is saying that a citizen referendum that could lead to a vote on Alaska's oil tax cut could have a "chilling" effect on jobs and investment on the North Slope -- even if it doesn't get to a vote.

Senate Bill 21, which Parnell is now calling the "More Alaska Production Act," passed the last legislature and was signed into law last month. It has already been proven successful by new work in Alaska announced by major oil companies, he said. Democrats who opposed the oil tax cut and are backing the referendum disagreed.

Parnell made his comments Thursday on Juneau's KINY radio's Action Line program.

The referendum is now in the signature-gathering phase, as supporters try to qualify for the ballot. Parnell said that the effort could be damaging to the state, even if it doesn't reach a vote.

"The more people who sign that referendum petition, it's more likely to have a chilling effect on jobs and opportunities than anything," he said. "I wouldn't want to see that happen."

Sen. Hollis French, D-Anchorage, who opposed the oil tax cut and supports the referendum, said the real threat to jobs comes from the lost revenue to the state.

"We know it is going to have a disastrous effect on the state's ability to pay for essential services," he said.

Taxes cut up to $1 billion a year

Senate Bill 21 would cut taxes by as much as a billion dollars a year at expected price and production levels, amounting to several billion over the next five years. Supporters say reducing taxes will result in more oil exploration and production.

Parnell said the tax cut he championed has already been proven successful by new announcements from companies such as ConocoPhillips and BP. Those announcements, most of which came after the bill passed and signed, identified new projects and investment in Alaska.

After the legislative session ended in April, Parnell said he visited oil companies and told them now that taxes had been lowered they'd be expected to step up and make investments.

"Boy indeed, have they stepped up in a big way, with BP's announcement of a billion in more spending" he said. The company also says it will evaluate up to $4 billion in additional projects.

"That's exactly what we wanted to see is more work, more opportunities for Alaskans," he said.

Parnell: Look to job creation

French laughed when he heard that, saying it was Parnell who brought out the "brass bands" to tout new investments, something he's been quiet about in recent years as new companies came to explore the North Slope under the existing ACES tax structure.

"It's the governor doing exactly what we said he'd be doing, that is taking credit for every dollar of investment on the North Slope," French said.

He said BP, based in its public statements, was probably going to undertake many of the new projects with or without a tax break from Alaska.

But Parnell said oil company announcements similar to those by Conoco and BP will undermine support for the referendum.

"Once Alaskans continue to see more and more proof that these tax changes have resulted in new investment -- and that means new jobs and opportunities for them -- I don't think that referendum will get any legs," he said.

Contact Pat Forgey at pat(at)alaskadispatch.com

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