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On Ballot Measure 1, how much does money really matter?

Posted: August 13, 2014 - 12:07am

Editor’s note: This is the second in a series of articles that will run through Sunday, Aug. 17, on Senate Bill 21, which voters will decide whether or not to repeal during the Aug. 19 election.

Ballot Measure 1 is at the center of one of the most expensive political campaigns in Alaska history.

Oil companies are dumping tens of millions of dollars into the coffers of groups that want people to vote ‘No’ on the proposed oil tax law repeal. The ‘Yes’ groups, on the other hand, have a total income of about $435,000, according to Alaska Public Offices Commission filings.

But how much does money matter?

A June poll by Anchorage pollster Marc Hellenthal showed the Vote Yes’ers, who want to repeal the tax cuts and were being outspent by 100 to 1 at one point in the race, were leading by three percentage points.

“I was totally flabbergasted with the SB 21 results,” Hellenthal said in an interview Tuesday. “With all the money that was being spent — they didn’t have any opposition since there was no money being spent on ‘Yes’ at the time — I didn’t expect it to be close. I expected the oil companies to be winning by a large margin.”

At that point, the ‘Vote No’ groups who want to keep the current tax law in place had spent more than $8 million. The ‘Yes’ groups had spent virtually nothing. Now that the ‘Yes’ group has received a little bit more spending money, it’s anyone’s race, he said.

“I would expect with Barney Gottstein’s (a retired Anchorage businessman who donated $200,000 to Vote Yes! Repeal the Giveaway group recently) involvement and the ‘Yes’ side now having money, for this to be very much up in the air,” he said.

No one paid for the poll, which reached about 400 people across the state by random digit dial. Hellenthal looked into all four ballot measures since he was already doing a statewide poll for Republican U.S. House candidate Don Young.

“I don’t really have a dog in any of the fights here,” he said.

How can polls show a grassroots movement winning the race against a Big Oil-backed goliath? That’s an easy question, said Willis Lyford, campaign director of Vote No on One group (one of four groups opposing the repeal) and the senior vice president of the public relations firm running the campaign.

“It’s wrong,” he said of the poll Tuesday in a phone interview. “My reaction to that was he was wrong at the beginning, and he’s wrong now. We don’t actually talk about our polling ... but I can say that we don’t agree with the polling data that he has offered.”

“We don’t talk about polling because that would help inform the opposition, and we want them to pay for their own polling,” he added.

Lyford’s side has raised a little over $13 million and has spent about $12 million on SB 21. The campaign’s top contributors are ConocoPhillips, BP Exploration Alaska and Exxonmobil. With only six days before voters take to the polls, Lyford said his campaign still has about $200,000 to $300,000 on hand that it plans to use on a get out the vote effort.

The primary reason the campaign has been so expensive is due to one reason, Lyford said — the rising cost of TV ads. The ‘Yes’ group has not paid for any television ads and has advertised on Facebook and other venues instead.

“That is a huge cost driver for the campaign,” Lyford said. “The campaign like this, an issue campaign, is charged what are called issue rates by the broadcast television and cable, so it’s multiple times the normal rate of commercial time is sold for, so that has really driven the cost of the campaign way up.”

A 30-second TV ad spot during the nightly news would cost a business like a furniture store about $525. In contrast, political campaigns would have to pay about $3,500 for that spot.

“I’ve been doing this in Alaska for almost 20 years,” Lyford said. “Never before have the television stations adopted a cost schedule like they did in this campaign cycle.”

While the ‘No’ groups have used the oil companyies checkbooks to reach TV viewers for the past eight months, some in the ‘Yes’ camp believe TV messaging is actually a weakness. Rules passed by the Alaska Legislature in 2010 require that the top three contributors to political ads be revealed in the message.

“They’re seeing all this advertising that says paid for ConocoPhillips, Exxon and BP, and that in itself plants a good deal of suspicion,” said Ray Metcalfe, an activist who chairs the other ‘Yes’ group, called “Stop the Giveaway! Vote Yes on Prop 1.”

Metcalfe also believes the opposition is resorting to scare tactics in their messaging by threatening to take people’s jobs away if they don’t vote no.

“The message that’s been hammered on, though it be a small hammer, for about 15 years is that we’re not getting our fair share (of Alaska’s oil revenue), and that’s soaked into a lot of minds,” Metcalfe said. “So they’re up against a hard wall to bring that down (and they’re using) a lot of scare tactics.”

“Some of their advertising says, ‘Well, you’re going to get more under Senate Bill 21,’” he added. “Well, would they spend 10, 20 million dollars trying to preserve the right to pay me and you more for our resources? That’s nonsensical.”

Lyford doesn’t think the listing of the top contributors is as detrimental as Metcalfe believes.

“People do deserve to know who’s paying for these things, so we completely believe that that’s the appropriate thing to do,” he said. “But we also think that they get that these are companies that have a lot at stake in Alaska. They’ve invested a lot of money and do business here and they employ tens of thousands of people.”

He said his group’s ads do not use scare tactics.

“We’ve said that going back to the old tax system could jeopardize our future,” he said. “I don’t think that’s scare language. That’s just a fact.”

While the majority of the ‘No’ funds come from oil companies and businesses, Chancy Croft, a former state Senate president and member of the ‘Yes’ camp, is proud of the fact that most of the donations to his side come from individuals.

“This is the ultimate race between individuals and corporations,” he said. “All of their people are not people — they’re corporations. And all of our people are individuals.”

Croft added that by spending so much money, the oil companies have conceded that they would benefit “substantially” from the passage of a ‘No’ vote.

Lyford said it’s not surprising the oil companies have opened their wallets; they have a lot at stake in the vote.

“I think people get that, and they get that oil is a major part, in fact the largest single part, of Alaska’s economy, and so if this is an important issue that affects that industry, of course they should have something to say about it,” he said.

A ConocoPhillips spokeswoman said it’s nothing new for the company to invest in Alaska, when asked what the motivation was to donate to the ‘No’ campaign.

“ConocoPhillips has a 50-year-plus history in Alaska,” spokeswoman Natalie M. Lowman, the director of communications for ConocoPhillips Alaska, said in an email. “We have made huge investments over time, and the state remains strategically important to the company. Significant development potential remains and we’ve increased our capital spending in Alaska to pursue new production. We have many other attractive opportunities in which to invest, and that investment will be focused on those opportunities with the greatest potential to deliver higher returns. SB 21 has created a more positive investment climate in Alaska and has made us more optimistic when it comes to new production-adding developments to help stem the TAPS decline.”

A BP spokeswoman referred questions to Lyford.

At the beginning of the campaign, Croft guessed that the ‘Yes’ campaign would be outspent 10-to-1. When he learned the ratio was 50-to-1, he told the press, “So I was wrong. They are going to outspend us 50-to-1.”

When discussing the factthat the ‘Vote Yes’ campaign was being outspent 100-to-1, Croft joked with the Empire on Tuesday, “I just dropped the zero is all.”

Lyford noted that with the ‘Vote Yes’ campaign’s recent fundraising bump, they’re on track to spend $500,000, which would be a ratio of 26-to-1.

“We’re spending to get the message across,” Lyford added, “and we looked at this campaign from the outset that there was a lack of understanding of the depth and the importance of the oil industry in Alaska, and the relationship of oil taxes to the industry’s future. So we had a job in front of us, which was to help them better understand how important this was and why it mattered. That’s kind of where we started, so it was a lengthy process, but I think by the end, we’re feeling that people have a deeper understanding of the importance of oil in Alaska from a revenue standpoint for the state and from a job standpoint.”

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Elva Bontrager
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Elva Bontrager 08/13/14 - 08:36 am
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How Much Profit do They Need?

From Conoco-Phillips: "SB 21 has created a more positive investment climate in Alaska and has made us more optimistic when it comes to new production-adding developments ...”

In other words, under SB21 they make more money. How much profit is enough profit?

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