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Alaska Oil Tax Cuts Veto Referendum, Ballot Measure 1 (August 2014)

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Ballot Measure 1
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Type:Veto referendum
State code:Senate Bill 21
Referred by:Citizens
Topic:Taxes
Status:On the ballot
The Alaska Oil Tax Cuts Veto Referendum, Ballot Measure 1 is on the August 19, 2014 primary ballot in Alaska as a veto referendum. The referendum seeks to repeal Senate Bill 21, also known as the Oil and Gas Production Tax, which was passed by the Alaska State Legislature and grants tax breaks to oil companies.[1]

To land the referendum on the ballot, supporters had to collect at least 30,169 valid signatures by July 13, 2013. They ultimately collected more than 52,000 signatures by the deadline, 45,664 of which were confirmed valid by the state's Division of Elections.[1][2][3][4][5]

Those supporting the referendum and seeking to repeal SB 21 believe the tax breaks will only benefit oil companies and not the citizens of Alaska. Those who are against the referendum believe that the tax cuts outlined in SB 21 are necessary to incentivize these companies to continue drilling for oil in Alaska. A majority of Alaska's budget is balanced using revenue from oil taxation.[1] So far, the opposition campaign has outraised the support campaign by a margin of 34 to one.[5]

The full text of SB 21 can be found here.[6]

Text of measure

In Alaska, veto referendums are currently worded in such a way that a "yes" vote repeals the law in question, while a "no" vote upholds it.

Ballot title

The official ballot title of this measure will read as follows:[7] Ballot Measure No. 1: Referendum

An Act Relating to the Oil and Gas Production Tax, Interest Rates on Overdue Taxes, and Tax Credits

Ballot summary

The full ballot summary, as prepared by Attorney General Michael C. Geraghty (R), can be read here.[7]

SB 21 text

The full text of SB 21 can be found here.[6]

Background

State budget and oil revenue

Alaska does not have a state income tax or statewide sales tax. Eighty-two percent of Alaska’s estimated state revenues for 2010 were from oil taxes, royalties and fees.[8] Alaska has the lowest tax burden of all 50 states.[9] It therefore relies heavily on revenue from oil to balance its budget, as taxes on oil are the state's primary source of revenue. They provide for 90 percent of discretionary funds and are used to compensate teachers, some law enforcement officers, roads and snowplows, health care, and state social workers.[1][5]

Tax code changes

Under the previous tax code, oil companies paid a base rate of 25 percent on the first $30 of net profits from a barrel of oil, plus a 0.4 percentage point increase in tax rate for each subsequent $1 in profit per barrel. Under SB 21, oil companies pay a base rate of 35 percent, but the additional add-on tax matching the market price of oil is removed. Given the new provisions detailed in SB 21, it is estimated that the tax on oil will be approximately 14 percent.[2]

Use of veto referenda in Alaska

Since this issue successfully made the ballot, it marks the fourth time Alaskans have employed their right of veto referendum. They used it first in 1968, with the Voter Registration Referendum, again in 1976, with the Compensation and Retirement Referendum, and most recently in 2000, with the Alaska Land-And-Shoot Referendum.

Support

Supporters of the referendum have created two separate campaigns. One campaign is "Stop the Giveaway - Vote yes on Prop 1," which has supporters including Hal Gazaway (D), Barb Gazaway and former Alaska representative Ray Metcalfe.[10] The second campaign is called "Vote Yes! Repeal the Giveaway!" The referendum's proponents include former Fairbanks mayor, Jim Whitaker, former governor and state representative Jay Hammond's widow, Bella, and former senator, Vic Fischer.[11] Supporters claim the bill only benefits oil companies, not Alaskan citizens. They are confident oil companies will come to Alaska with or without the added incentive of a tax break.[1] After the measure was officially certified in early September 2013, Whitaker said, "I think all Alaskans should be pleased that we have a chance to make a decision individually about something that is going to affect the future of our state for a long time. And this is our shot. This is our chance to do what we think is right."[12]

Supporters

  • Hal Gazaway (D)
  • Barb Gazaway
  • Ray Metcalfe (R)
  • Jim Whitaker (R)
  • Bella Hammond
  • Victor Fischer

Campaign contributions

Total campaign cash Campaign Finance Ballotpedia.png
as of February 10, 2014
Category:Ballot measure endorsements Support: $104,000
Circle thumbs down.png Opposition: $3,500,000

As of February 10, 2014, the "Yes" campaign has raised $104,000. Most of the money was spent during the process of collecting signatures to land the measure on the ballot.[13] Former Alaska Senate president Chancy Croft, one of the referendum's supporters, predicted in early 2014 that the opposition campaign would outspend the "Vote Yes" campaign 10-to-1. Upon hearing that the opposition campaign had raised $3.5 million by early February, he remarked, "So I was wrong. They are going to outspend us 50-to-1."[5]

Opposition

Gov. Sean Parnell (R) sponsored and strongly supports Senate Bill 21, and therefore is against the effort to repeal it. The governor claims the tax break will entice oil companies to come to Alaska and boost production. Alaska relies heavily on revenue from oil to balance its budget, as oil taxes are the state's primary source of revenue. They provide for 90 percent of discretionary funds and are used to compensate teachers, some law enforcement officers, roads and snowplows, health care and state social workers.[1][5]

Opponents

Campaign contributions

As of February 10, 2014, the "No" campaign had raised $3.5 million. So far, BP and ExxonMobil have been the biggest contributors, each donating more than $1.3 million, so far.[13]

Path to the ballot

See also: Laws governing the initiative process in Alaska and Veto referendum

In order to get the referendum on the August 2014 ballot, supporters were required to gather at least 30,169 valid signatures. The campaign had to obtain these signatures from at least 10 percent of the number of voters who participated in the prior general election, and signatures had to be gathered in 30 of the 40 House districts, with at least 7 percent of eligible voters in each district signing. The deadline for these signatures was July 13, 2013.[1][14][2]

Supporters collected over 52,000 signatures - well above the number required - and surpassed their goal by more than 50 percent. Pat Lavin, one of the referendum effort's organizers, stated, "It's exceeded my expectations." Though support for the referendum has been strong, a 2005 measure that sought to ban aerial wolf hunting still maintains the record for the most number of signatures collected. That measure, which was ultimately successful at the polls, garnered more than 55,000 signatures. On September 3, 2013, Division of Elections Director Gail Fenumiai officially certified the referendum, noting that supporters had met all signature requirements.[12][5]

Legislative action

On March 20, 2013, the Senate passed SB 21 with a vote of 11-9.[15] On April 13, 2013, the House passed the bill 24-15.[15]The bill was signed into law by Gov. Parnell on May 21, 2013 and took effect on January 1, 2014.

Alaska Oil and Gas Production Tax, SB 21 Senate Vote
ResultVotesPercentage
Approveda Yes 11 55%
No945%


Alaska Oil and Gas Production Tax, SB 21 House Vote
ResultVotesPercentage
Approveda Yes 24 62%
No1538%

See also

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External links

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Anchorage Daily News, "Critics of oil tax cuts move ahead with referendum to repeal the legislation," April 18, 2013
  2. 2.0 2.1 2.2 Alaska Dispatch, "Deadline looming, Alaska oil tax repeal petition gains momentum," June 11, 2013
  3. Alaska Public Media, "Repeal Group Exceeds 45,000 Signatures For Referendum," July 12, 2013
  4. Alaska Dispatch, "Oil-tax repeal backers claim 51,000 Alaska signatures, far more than needed," July 13, 2013
  5. 5.0 5.1 5.2 5.3 5.4 5.5 Anchorage Daily News, "Oil companies are spending millions to stop repeal of Alaska tax cuts," February 9, 2014
  6. 6.0 6.1 The Alaska State Legislature, "28th Legislature(2013-2014): Bill Text 28th Legislature, Senate Bill 21," accessed March 27, 2014
  7. 7.0 7.1 State of Alaska Division of Elections, "Proposed Ballot Summary and Title from Attorney General Opinion," accessed March 28, 2014
  8. Reuters, “Alaska sees $1.25 billion budget gap on oil price drop,” February 19, 2009
  9. Tax Foundation "Monday Maps: State and Local Tax Burdens vs. State Tax Collections" May 2010
  10. YesOn1, "Stop the Giveaway - Vote Yes on Prop 1," Sept 13, 2012
  11. Alaska Dispatch, "Referendum to repeal governor's oil tax cut takes another step," April 18, 2013
  12. 12.0 12.1 Alaska Public Media, "Oil Tax Referendum to Appear on Ballot," September 5, 2013
  13. 13.0 13.1 The Republic, "Oil companies report spending millions to oppose Alaska oil tax referendum," February 10, 2014
  14. Homer News, "Parnell spares budget vetoes, signs SB21," May 29, 2013
  15. 15.0 15.1 OpenStates.org, "SB 21, Alaska Senate Bill," accessed April 25, 2013