My friend Mike Heimbuch offered his opinion recently that it may have been a mistake for the legislature to overturn the oil tax law known as ACES in favor of Senate Bill 21. Mike and I have some common ground in that we are both offspring of Alaska homesteaders and were enjoying Alaska long before oil was discovered. Mike and I don’t agree on every political issue, but our friendship endures.
One of the takeaways for me after reading Mike’s article is that striving for a fair oil taxation structure for all Alaskans is a totally nonpartisan concept. Many longtime Alaskans who have been attentive to the decades of gyrations of the oil dynasty that now controls our state agree that oil companies will stop at nothing to achieve as much leverage as possible when it comes to enhancing their profits with little regard for the “fair deal for Alaskans” concept.
The economic concepts at stake in this debate are complex. Voters should take the time to investigate and seek the truth. Taking a close look at the two war camps can give a person some clues: On the “Vote No” side, you have a handful of major contributors (big oil) with nearly unlimited financial resources. Nearly $8 million has already been spent on slick advertisements designed to defeat the August initiative. On the “Vote Yes” side you have a vast army of old time Alaskans, homesteaders, fishermen, business owners, Hickelites, Hammondites, Vic Fisherites, and grassroots citizens who gathered an astounding excess of signatures on the petition required to gain access to the ballot so that Alaskans can vote on the issue. While poorly funded, the “Vote Yes” crowd has history and truth on its side.
Under the previous oil tax system (ACES) we balanced Alaskas budget, invested in roads and education, and saved $17 billion. Oil revenue is forecast to decline sharply with SB 21. Why should Alaskans submit to budget austerity while the oil producers fatten up? Why is there no guarantee that, in exchange for a more favorable tax structure, the oil companies will increase production?
This statement from the Bill Walker for Governor campaign website says: “The same thing is happening today as Alaska unfortunately transitions from an ‘owner state’ to an ‘owned state.’ With the passage of Senate Bill 21, the North Slope leaseholders have convinced Gov. Parnell and some legislators to dramatically reduce taxes to maintain their investment in Alaska, even though their leases — legally binding contracts — require them to produce Alaskans’ oil when they have a reasonable expectation of profit.”
A recent report from Scott Goldsmith concedes that SB 21 would have reduced Alaska revenue by over $1 billion per year if it were in place in 2012 and 2013 when oil prices were up. Returning to the ACES model would let Alaskans share fairly when oil prices are high. SB 21 provides Alaskans with a haircut on revenue share of up to 40 percent.
Does this sound like a good business deal to you?
Gov. Parnell reported that there will be a 26 percent decline in oil and gas revenue over the next 10 years. Why should schools, roads, and public safety suffer unnecessarily as a result of this giveaway?
The concept that Alaskans own the resources in our state, and the “owner state” concept was championed years ago by Govs. Jay Hammond and Walter Hickel and others. Let us not dishonor them by allowing SB 21 to stand. Please vote “yes” on Aug. 19.
Frank Mullen was raised on an Alaska homestead and is a financial planner and commercial fisherman who lives in Homer.
