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Oil tax vote deconstructed shows Fairbanks, Southeast, most rural hubs wanted repeal

  • Author: Alex DeMarban
  • Updated: September 28, 2016
  • Published August 22, 2014

Regions of Alaska where the oil industry has its deepest roots voted in favor of the contentious oil production tax cut known as Senate Bill 21, but there were exceptions, including Fairbanks, where five of six districts supported the law's repeal.

Meanwhile, Southcentral Alaska and the North Slope Borough -- home to communities with strong ties to the oil industry -- voted in Tuesday's primary election to keep Senate Bill 21 in place.

"Generally it's the communities who can see with their own eyes the benefits that industry provides that we won," said Matt Larkin, an Anchorage political consultant with Dittman Research who worked against the repeal. "And it's the areas where the industry is less prevalent that we lost, like Kodiak, Juneau and Southeast."

Ballot Measure 1, which seeks to repeal the tax cut for oil producers, appears doomed. It's failing by 6,880 votes or 4.5 percent. Remaining to be counted are at least 17,000 early and absentee votes. But both sides have said it won't be enough to turn the tide.

As a result, Senate Bill 21 is expected to remain in place.

How the regions voted was no surprise to the well-funded Vote No on One campaign, officials said. The group raised more than $14 million, primarily from BP, ExxonMobil and ConocoPhillips. They blasted airwaves with ads, and hired Dittman as well as an Outside political consultant to measure voter moods as the campaign progressed.

"Regionally, we did as we anticipated, almost to a shocking level," said Willis Lyford, spokesman for Vote No on One.

The campaign group said:

  • They won Southcentral, which includes Anchorage, Eagle River, Mat-Su and the Kenai Peninsula, by 60-40.
  • They won Anchorage 55-45.
  • They won the rural vote 53-47.
  • They lost Southeast 36-64.
  • They lost the Interior, including Fairbanks, 44-56.
  • Meanwhile, meagerly funded Vote Yes! Repeal the Giveaway -- despite small donations from a large number of Alaskans -- could afford to advertise on radio and TV for only the last three weeks of the campaign. That was possible thanks to an infusion of money from former grocer Barney Gottstein, who pushed the group's overall fundraising totals to about $625,000, said campaign manager T.J. Presley.

    Vote Yes bought no TV ads and relied largely on social media to get out its message, a sharp contrast to the Vote No campaign that relied on a variety of media tools.

    "We lost, yet we still feel like we won," said Presley. "They spent $14 million more than us to only turn out 6,000 or 7,000 more people."

    Fairbanks and Southeast wanted repeal

    Vote Yes also relied on a large base of volunteers, and they were especially strong in Fairbanks and Southeast Alaska, Presley said.

    Southeast, with its large base of Democrats, was expected to support the repeal. "But Fairbanks was a pleasant surprise," he said.

    Both Presley and Lyford said the closure of the Flint Hills oil refinery earlier this year, which ended dozens of jobs and soured views toward the oil and gas industry, helped the repeal campaign.

    Lyford called it "a very high-profile local issue that depressed our message" that Senate Bill 21 would produce new jobs and opportunities.

    Fairbanks Democratic Rep. Scott Kawasaki, a repeal supporter, disagreed. If that were the case, the district that includes North Pole, where the refinery was based and where many of its jobs were located, should have voted yes. Instead, it was the only Fairbanks district to vote no.

    "I think that's overreaching," he said of the refinery argument.

    Also critical in Fairbanks and Southeast, Lyford said, were the large number of state and other government workers who bought into the message that Senate Bill 21 would bankrupt the state and throw away billions of dollars in state revenue, threatening funding for their retirement and other services -- "all that baloney," Lyford said.

    "Our message was that this is about the future, the economy, jobs, and the big picture. They tended to see the issue in a narrower perspective: their pocketbook," Lyford said of government employees who voted yes.

    Not so, said Kawasaki. If any message had a chance to dominate and frighten voters, it was the Vote No side with its wall-to-wall advertising and claims that repealing Senate Bill 21 would threaten oil field activity, jobs and state revenue, he said.

    Meanwhile, lots of volunteers in Fairbanks relied on homemade signs, potlucks and talking with neighbors, he said.

    "People can see that industry is doing well in Fairbanks and Anchorage," he said. "Meanwhile, we have had huge public school cuts. The university was cut quite a bit and road construction in Fairbanks is tightening down. It was cause for alarm for a lot of activists in Fairbanks."

    North Pole splits from Fairbanks

    Republican Rep. Tammie Wilson said the holdout North Pole district supported Vote No in part because she knocked on more than 2,000 doors in her bid for the Republican nomination for state House, a race she's handily winning.

    Wilson, who voted for Senate Bill 21, said she explained to those voters why repeal was a bad idea.

    "They were able to understand what exactly we were trying to do as a Legislature" when Senate Bill 21 passed in 2013, she said. The conversations allowed Wilson to answer questions and provide data, such as showing Alaska trailing other oil and gas provinces in activity in recent years.

    That was more effective than the Vote No sound bites people heard on TV and radio commercials, she said.

    "Both sides had good arguments but at the end of the day, I believe if other legislators did what I did and actually did grass-roots work on it, it would have been a different outcome in Fairbanks," Wilson said.

    Vote No strong in Southcentral

    As for Southcentral Alaska, Larkin said the Vote No message resonated there because so many jobs are closely related to oil field activity.

    Even the Anchorage districts belonging to Sens. Bill Wielechowski and Hollis French, two of the main opponents of the tax cut, voted against their senators and in favor of Senate Bill 21, said Larkin.

    Meanwhile, the districts belonging to Sens. Peter Micchiche, R-Soldotna, and Kevin Meyer, R-Anchorage, supported Senate Bill 21. The two lawmakers were frequent targets of repeal supporters because they had worked at ConocoPhillips yet still voted for the tax cut.

    Still, their districts sided with them, suggesting that their vote was in line with what with their districts wanted, said Larkin.

    "Who's representing who?" Larkin asked.

    French said there was a simple reason for that. Primaries typically draw out more Republican voters, and this one was no exception. With its nationally watched Republican contest for the U.S. Senate, more Republicans turned out for the primary, and Republicans generally voted for the tax cut.

    French agreed that Southcentral's connections to the oil industry increased support for Senate Bill 21. "The closer you are to the economic center of the state, the more financially tied you feel to the oil industry."

    The divided Bush

    In Western Alaska, roughly two villages supported the tax cut for every one that didn't.

    But the large rural hubs almost all voted for the repeal, including Bethel, Dillingham, Kotzebue, Nome and Unalaska. The exception was Barrow, the closet rural hub to the oil patch, where the North Slope Borough relies heavily on tax revenues from the industry.

    With its limited funding, Vote Yes was dramatically overpowered in rural areas, residents said.

    Presley said Vote Yes was able to send out one mailer to rural Alaska describing the virtues of repealing Senate Bill 21, but only in the closing weeks of the campaign after money became available. Meanwhile, Vote No flooded village homes with TV commercials.

    Tom Begich, a longtime rural consultant, did not help either side. He said the repeal campaign's social media was less effective in small villages, with their limited bandwidth and Internet connectivity, than it was in larger communities.

    Villages "were completely exposed to a multimillion dollar media campaign and the other side had limited ability to reach those guys," said Begich. "I believe if the Yes vote had been able to communicate in the villages, they would have lined up differently. They simply had no money and couldn't do it."

    Rep. Bryce Edgmon, D-Dillingham and a repeal supporter, said input from regional Native leaders also played a big role in the Dillingham region. The Bristol Bay Native Corp. had joined other regional corporations, including in the Kotzebue, Nome and Barrow regions, in campaigning to keep Senate Bill 21 in place. BBNC owns Peak Oilfield Services, an oilfield support company, and village residents listened to the corporation's leadership.

    "I never thought it was a statewide debate," Edgmon said. "It was held largely in Juneau and Anchorage, so when it came time for people to vote, I think a lot of people voted how they felt about it emotionally or how their leaders urged them how to vote."

    "People in villages are pretty isolated from mainstream politics," he said. Meanwhile, Dillingham residents followed the issue much more closely. "Not to be disparaging, but that's the way it is."

    Rep. Bob Herron, D-Bethel, a repeal supporter, said the Vote No side saturated rural media with ads. Meanwhile, there was little messaging from the repeal side. Vote Yes yard signs, for example, arrived in Bethel only shortly before the vote.

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