Alaska Measure 2, Natural Gas Tax Initiative (2006)

Alaska Measure 2
Election date November 7, 2006
Topic Fossil fuel energy and Mineral resources
Status Defeated
Type Indirect initiated state statute	Origin Citizens

Alaska Measure 2 was on the ballot as an indirect initiated state statute in Alaska on November 7, 2006. It was defeated.

A "yes" vote supported levying a tax on certain natural gas resources under state lease.

A "no" vote opposed levying a tax on certain natural gas resources under state lease.

Election results

Alaska Measure 2
Result		Votes	Percentage
Yes		80,909	34.61%
No		152,889	65.39%

Results are officially certified.

Source

Text of measure

Ballot title

The ballot title for Measure 2 was as follows:

“

This initiative would levy a new state tax on certain oil and gas leases overlying large deposits of natural gas. The tax rate would be three cents a year per thousand cubic feet of taxable gas in the ground. Leaseholders who dispute the levy of the tax or the amount owed will have to deposit the disputed amount into an escrow account until the dispute is resolved. A leaseholder subject to the new tax could avoid paying the tax by giving up rights under oil and gas leases by December 31, 2006. When a major gas pipeline system is built and gas is transported, the resource tax will be repealed. After the repeal, the initiative provides for tax credits for some of these taxes previously paid, which could be used to reduce future production taxes owed by leaseholders on their gas. SHOULD THIS INITIATIVE BECOME LAW? YES NO

”

Support

Arguments

Gov. Wally Hickel (R), Mayor Jim Whitaker (R) of Fairbanks and Rep. Eric Croft (D) wrote an argument in support of the initiative found in the state's official voter guide:

“	We Alaskans own a resource worth hundreds of billions of dollars -- our natural gas. Yet, for three decades, we have received nothing for it: no jobs, no gas to heat our homes, and no money to fund our schools. Nothing. The major oil companies say they might develop our gas by 2017. Then again, it may take another 20 years. Under Governor Murkowski’s proposed contract with the oil companies, they have only promised to study it and let us know. If we wait another two decades for gas to flow, another generation of Alaskans will have been denied access to and the benefits of our own resources. We need the benefits now. We need stable funding for vital government services that does not depend on corporate decisions made in Houston or London. We need a strong incentive for the oil companies to get the gasline moving now. We need the Alaska Gasline Now Act. That is why 47,000 Alaskans signed the petition to give us all the right to vote on it. Here is what the Alaska Gasline Now Act does: It creates income from our gas resources now by levying a reserves tax on large deposits of natural gas that have been leased but undeveloped for decades. As a result, the state will receive an estimated $900 million dollars per year for our schools, roads, and other vital government services. It encourages construction of the natural gas pipeline by automatically repealing the reserves tax when the gas pipeline is completed. This creates an incentive for the oil companies to build it sooner rather than later. It promotes exploration and development for oil and gas by assuring new explorers there will be a gas pipeline in which they can ship their new discoveries to market. Any new gas found is exempt from the reserves tax. It treats the oil companies fairly by giving them a tax credit after the pipeline is built. They will get a full rebate if they act quickly to build the gasline. Delay costs money. We have done this before. In 1975, frustrated by delays in building the oil pipeline, Alaskans needed revenues to fund basic government services. We levied a reserves tax on oil that was repealed after the TAPS line was completed. We own the gas. We need to act like owners. No one else would lease a valuable asset and let it remain unproductive for 30 years. It is time for Alaska to take a stand for development of our gas and a stand for fiscal stability. It is time for the Alaska Gasline Now Act. Vote “Yes” for Alaska’s future.	”
—Governor Wally Hickel, Mayor Jim Whitaker and Representative Eric Croft

Campaign contributions

Donors to the campaign for the measure, included:

• Our Gas Our Decision: $500

The total amount raised was $500.

Opposition

Arguments

Former Gov. Bill Sheffield (D), John T. Shively and Edward B. Rasmuson wrote an argument against the initiative found in the state's official voter guide:

“	Ballot Measure 2 discourages oil and gas exploration and development. Alaska’s oil production continues to decline, and we need new investment in oil and gas exploration and development. But, when explorers find oil, they also find gas. That gas would then be subject to billions of dollars of new taxes, making it less likely that the producers would make the investments necessary to find and produce more oil and gas. Alaska needs new investment, and this ballot measure would have a chilling effect on that investment. The Gas Reserves Tax puts the Alaska Gas Pipeline in jeopardy and will delay its development. The Alaska Gas Pipeline would create thousands of jobs and generate new state revenue for roads, schools and other public services. The project is now at a critical crossroads. Alaska can choose to move forward with the project, or not. Ballot Measure 2 will jeopardize the gas pipeline, placing billions of dollars of new taxes on the project, while also discouraging oil exploration. Voting yes on this initiative puts Alaska’s future at risk. Ballot Measure 2 would mean fewer jobs, less state revenue, and less money in the Permanent Fund. Alaska needs the gas pipeline, with its thousands of jobs and billions in state revenue. Without the development of the Alaska Gas Pipeline, North Slope oil production will continue to decline, resulting in fewer jobs, less state revenue for roads and schools, and less money deposited into the Permanent Fund. This ballot measure could stop development of the gas pipeline and discourage new investment in Alaska. The Gas Reserves Tax sends the wrong message to Alaska investors and employers. No other jurisdiction in the world imposes such a tax, because it is simply bad public policy. The reserves tax punishes explorers and gas leaseholders and creates disincentives for future investment. Passage of the reserves tax would indicate to investors across industries that Alaska is not open for business and that our policy of stable taxation is eroding.	”
—Former Gov. Bill Sheffield, John T. Shively and Edward B. Rasmuson

Campaign contributions

Donors to the campaign against the measure, included:

• AKFirst.org Inc: $1,050,200
• Alaska Oil & Gas Assoc: $642,230
• Greater Fairbanks Chamber of Commerce: $6,500

The total amount raised was $1,698,930.

Path to the ballot

See also: Signature requirements for ballot measures in Alaska

An indirect initiated state statute is a citizen-initiated ballot measure that amends state statute. While a direct initiative is placed on the ballot once supporters file the required number of valid signatures, an indirect initiative is first presented to the state legislature. Legislators have a certain number of days, depending on the state, to adopt the initiative into law. Should legislators take no action or reject the initiative, a second round of signatures is required to put the initiative on the ballot for voters to decide.

See also

2006 Measures

• 2006 Measures
• Severance taxes on the ballot
• Fossil fuel energy on the ballot
• Mineral resources on the ballot
• 2006 legislative sessions

Alaska

• Alaska ballot measures
• Alaska ballot measure laws

News and analysis

• Ballot measure lawsuits
• Ballot measure readability
• Ballot measure polls

External links

• Alaska 2006 Election Results
• 2006 Alaska Voter Guide