Alaska Oil Tax Cuts Veto Referendum, Ballot Measure 1 (August 2014)
|Ballot Measure 1|
|State code:||Senate Bill 21|
|Status:||On the ballot|
- 1 Text of measure
- 2 Background
- 3 Support
- 4 Opposition
- 5 Reports and analyses
- 6 Path to the ballot
- 7 See also
- 8 External links
- 9 Additional reading
- 10 References
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.
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. So far, the opposition campaign has outraised the support campaign by a margin of 34 to one.
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.
The official ballot title of this measure will read as follows:
Ballot Measure No. 1: Referendum
An Act Relating to the Oil and Gas Production Tax, Interest Rates on Overdue Taxes, and Tax Credits
SB 21 text
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. Alaska has the lowest tax burden of all 50 states. 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.
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.
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.
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. 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. 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. 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."
- Hal Gazaway (D)
- Barb Gazaway
- Ray Metcalfe (R)
- Jim Whitaker (R)
- Bella Hammond
- Victor Fischer
Vote Yes - Repeal the Oil Giveaway developed a slideshow that supplied seven reasons to oppose the oil tax cuts and support the veto referendum. The following is an excerpt from the slideshow:
1. It’s a massive giveaway of our wealth with no strings attached.
2. It violates Alaska’s Constitution.
3. It will drain Alaskans’ savings and push us off a fiscal cliff.
4. Our current tax system workers and is fair to all parties.
5. It will discourage investment in Alaska.
6. It was built on myths and distortions, at best.
7. Alaskans deserve a say in a decision of this magnitude.
—Vote Yes - Repeal the Oil Giveaway, 
| Total campaign cash |
as of July 21, 2014
|PAC||Amount raised||Amount spent|
|Vote Yes! Repeal the Giveaway||$107,400||$106,200|
|Stop the Giveaway! Vote Yes on Prop 1||$7,869||$498|
Top 4 contributors:
|Alaska State Employees Association||$10,000|
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."
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.
- See also: A full list of opponents
- Rick Mystrom (R), Former Anchorage Mayor
- Leslie Hajdukovich, Former President of the Fairbanks North Star Borough School Board
- Alaska Republican Party
- Alaska Libertarian Party
- Alaska Federation of Republican Women
- Anchorage Republican Women's Club
- Make Alaska Competitive Coalition
- Alaska Alliance for Cruise Travel
- Alaska Bankers Association
- Alaska Cruise Association
- Alaska Forest Association
- Alaska Miners Association
- Alaska Oil & Gas Association
- Alaska Trucking Association
- Alaska State Home Building Association
- Associated Builders & Contractors of Alaska
- Associated General Contractors of Alaska
- Consumer Energy Alliance Alaska
- Council of Alaska Producers
- The Alaska Support Industry Alliance
- Resource Development Council for Alaska, Inc.
- Anchorage Economic Development Corporation
- Fairbanks Economic Development Corporation
- Alaska Teamsters
- First Things First Alaska Foundation
- Mat-Su Business Alliance
- Mat-Su Home Builders Association
- Southeast Conference
- Anchorage Tea Party
Chambers of Commerce
A Vote No on 1 online ad titled, "Oil tax reform matters to Alaska's schools."
- Alaska Chamber of Commerce
- Anchorage Chamber of Commerce
- Chugiak Eagle River Chamber of Commerce
- Greater Fairbanks Chamber of Commerce
- Greater Ketchikan Chamber of Commerce
- Greater Palmer Chamber of Commerce
- Greater Wasilla Chamber of Commerce
- Juneau Chamber of Commerce
- Kenai Chamber of Commerce
- Seward Chamber of Commerce
- Soldotna Chamber of Commerce
- Alaska Cruises, Inc.
- BP Exploration Alaska
- Bristol Bay Native Corporation
- Denali Drilling
- Nabors Alaska Drilling, Inc.
- Pioneer Natural Resources, USA
- Puget Sound Pipe & Supply Co.
- Samson Electric
Keep Alaska Competitive - Vote No on 1 issued a frequently asked questions sheet that detailed responses to questions about the oil tax cuts. The following is an excerpt from such sheet:
Q: What is the goal of oil tax reform?
Q: Hasn’t Alaska benefited from high oil prices in recent years?
Q: How does a 35 percent tax on production compare with other oil and gas provinces?
Q: Isn’t the new legislation a $2 billion giveway?
Q: Has oil tax reform produced any results?
Q: Isn’t the new oil tax responsible for the projected FY 2014 and FY 2015 deficits?
Q: Doesn’t the state constitution require Alaska to get maximum benefit from our oil?
—Keep Alaska Competitive - Vote No on 1, 
A Vote No on 1 television ad.
|PAC||Amount raised||Amount spent|
|Vote No on One||$12,300,000||$11,100,000|
|No One on One||$673,000||$480,000|
|Keep Alaska Competitive - Vote No on 1||$413,000||$378,300|
|We Are Alaska - No on One||$45,700||$23,900|
Top 5 contributors:
|BP Exploration Alaska||$1,311,658|
Reports and analyses
Goldsmith ISER report
Scott Goldsmith, professor emeritus of economics at University of Alaska Anchorage Institute of Social and Economic Research (ISER), published a study in May 2014. The study was funded by a grant from Northrim Bank, which is sponsoring ISER’s Investing for Alaska’s Future research initiative. Goldsmith's study examined the effect of SB 21 and the impact it would have to uphold versus repeal it. The following were Goldsmith's four main points:
—Scott Goldsmith, 
Response by Liden Companies
Jim Jensen, chairman of Liden Companies, used Goldsmith's report to bolster the companies' claim that "$2 billion giveaway" is a myth in a June 2014 meeting at the Bethel Community Services Building.
Response by Rep. Les Gara
Rep. Les Gara (D-18) wrote an editorial widely published throughout the state in May 2014, in which he generally opposed SB 21, but also specifically addressed Goldsmith's report. Rep. Gara pointed out that the report, which has been seen by some as refuting the need to repeal SB 21, "concedes SB 21 would have reduced Alaska revenue by more than $1 billion/year if it were in place at 2012 and 2013’s higher oil prices." Other supporters of the passage of Ballot Measure 1 have been quick to point out this part of Goldsmith's report, as well.
Path to the ballot
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.
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.
On March 20, 2013, the Senate passed SB 21 with a vote of 11-9. On April 13, 2013, the House passed the bill 24-15. 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|
|Alaska Oil and Gas Production Tax, SB 21 House Vote|
- Referendum Proposed Ballot Summary and Title
- More Alaska Production Act (MAP Act)
- Senate Bill No. 21
- Stop the Giveaway - Vote Yes on Prop 1
- Stop the Giveaway - Vote Yes on Prop 1 Facebook
- Vote Yes - Repeal the Oil Giveaway
- Vote Yes - Repeal the Oil Giveaway Facebook
- Fairbanks Daily News-Miner, "ExxonMobil updates chamber on Point Thomson, makes case against oil tax repeal," June 4, 2014
- Juneau Empire, "Native corps join to oppose SB21 repeal," May 29, 2014
- Juneau Empire, "My Turn: SB 21: A definite maybe," May 28, 2014
- Fairbanks Daily News-Miner, "Alaska should vote no on Measure 1," May 4, 2014
- Fairbanks Daily News-Miner, "SB 21 sleight-of-hand is becoming more evident," May 3, 2014
- Anchorage Daily News, "Critics of oil tax cuts move ahead with referendum to repeal the legislation," April 18, 2013
- Alaska Dispatch, "Deadline looming, Alaska oil tax repeal petition gains momentum," June 11, 2013
- Alaska Public Media, "Repeal Group Exceeds 45,000 Signatures For Referendum," July 12, 2013
- Alaska Dispatch, "Oil-tax repeal backers claim 51,000 Alaska signatures, far more than needed," July 13, 2013
- Anchorage Daily News, "Oil companies are spending millions to stop repeal of Alaska tax cuts," February 9, 2014
- The Alaska State Legislature, "28th Legislature(2013-2014): Bill Text 28th Legislature, Senate Bill 21," accessed March 27, 2014
- State of Alaska Division of Elections, "Proposed Ballot Summary and Title from Attorney General Opinion," accessed March 28, 2014
- Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
- Reuters, “Alaska sees $1.25 billion budget gap on oil price drop,” February 19, 2009
- Tax Foundation "Monday Maps: State and Local Tax Burdens vs. State Tax Collections" May 2010
- YesOn1, "Stop the Giveaway - Vote Yes on Prop 1," Sept 13, 2012
- Alaska Dispatch, "Referendum to repeal governor's oil tax cut takes another step," April 18, 2013
- Alaska Public Media, "Oil Tax Referendum to Appear on Ballot," September 5, 2013
- Vote Yes - Repeal the Oil Giveaway, "Slideshow," accessed May 28, 2014
- State of Alaska, "Campaign Disclosure: Forms," accessed May 29, 2014
- Alaska Dispatch News, "Oil tax repeal opponents outspending supporters 100 to 1," July 21, 2014
- Vote No on 1
- Keep Alaska Competitive - Vote No on 1
- KTUU, "Alaska Native Corporations Move to Protect Oil Tax Reform," May 28, 2014
- We Are Alaska
- Vote No on 1, "Coalition for Alaska's Future," accessed May 28, 2014
- Keep Alaska Competitive - Vote No on 1, "FAQ," accessed May 28, 2014
- UAA ISER, "Alaska’s Oil Production Tax: Comparing the Old and the New," May 2014
- The Tundra Drums, "Oil tax debate comes to town," June 12, 2014
- Mat-Su Valley Frontiersman, "Don’t be fooled by rosy oil tax reform talk," May 23, 2014
- Anchorage Daily News, "Paul Jenkins: Tax cut repeal backers target Goldsmith over giveaway claim," May 31, 2014
- Homer Tribune, "Alaska: ‘Owner’ state or ‘owned’ state?" accessed June 13, 2014
- Homer News, "Parnell spares budget vetoes, signs SB21," May 29, 2013
- OpenStates.org, "SB 21, Alaska Senate Bill," accessed April 25, 2013
State of Alaska
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