Referendum on the Oil Tax Bill

Petitions are circulating in Juneau and throughout Alaska to hold a referendum on the oil tax bill recently passed by the legislature. I urge you to sign. A referendum will allow the voters to reject Senate Bill 21. This bill (SB 21) revised the state oil tax commonly known as ACES (Alaska’s Clear and Equitable Share), which was adopted in 2007 with a bipartisan majority, and with Governor Sarah Palin as the moving force. SB 21 lowers the tax rate in ACES and drastically reduces state revenue from our oil fields. The loss to the state treasury is estimated at between $700 million and $1 billion annually for five years. The rationale for SB 21 is that lower oil taxes will make Alaska more competitive with other states for investment by the oil industry and stimulate more production. But the producers have not promised they will increase production to make up for our lost revenue. Indeed, they have made no promises at all. The bill is a bad bargain for Alaska. Actually it is not a bargain at all; it is a one-sided deal that we negotiated with ourselves.

There is no question that Alaska needs more oil production. If a lower severance tax is the best way to stimulate new investment and new production, we should lower the tax. But we should lower the tax only on new investment and new production, not on existing fields that have been producing for years and which are very profitable to the oil companies. The Juneau Empire reported on April 26 that Conoco Phillips made a profit of $540 million in Alaska in the previous quarter. That is a profit of over $2 billion per year, and Conoco Phillips in only one of three major producers on the North Slope. The severance tax is the major source of revenue to the state. Loss of billions of dollars means cuts to school funding, fewer road and harbor improvements, reduced support for non-profits and perhaps the loss of state revenue sharing with the cities.

The founders of the Alaska Constitution put great faith in the judgment of our elected legislature. But they reserved to the people the power to rescind a law, knowing that the legislature might, for whatever reason, adopt a law that was not in the best interest of the state. SB 21 is not in the best interest of the state, and we must veto it through a citizen’s referendum.

• Gordon Harrison is a 30-year Juneau resident. Now retired, he worked for many years in the governor’s office and for the legislature. He is the author of Alaska’s Constitution; A Citizen’s Guide.


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