By Yereth Rosen
ANCHORAGE, Alaska, July 10 Opponents of a recent
tax cut for Alaskan oil producers fanned out this week to
collect enough signatures to ensure voters can weigh in on a
battle over the future of the state's finances and its most
Their proposed ballot initiative would seek to repeal the
"More Alaska Production Act," which in May scrapped a
coffer-filling system championed six years ago by Sarah Palin
when she was still Alaska's populist governor, and little-known
Referendum sponsors must gather just over 30,000 signatures
by July 13 for it to make the 2014 ballot. They currently have
about 29,000, and in anticipation of their success, both sides
are gearing up for a battle next year that taps into Alaska's
sense of identity and what it means to be an oil state.
"The (tax cut) opponents say, as an oil state, we need to
control the oil industry and we've got to stand up for the free
Alaska man and woman," said Michael Carey, a seasoned Alaskan
journalist, adding that proponents are mainly focused on keeping
the oil flowing.
Not only does the debate center on an industry that funds 90
percent of the state budget, it also revives historic tensions
over the perceived exploitation by outsiders of state resources.
It took a three-year battle before current Governor Sean
Parnell signed the tax reform into law in May. He argued, along
with the industry, that by promoting investment it would help
reverse a decline in Alaska oil output, which is now about a
quarter of its peak above 2 million barrels per day in 1988.
"When you sign the petition, you aren't hurting the oil
companies because they'll find other places to invest their
money. You're hurting Alaska," says one group fighting the
referendum called "We Are Alaska" - set up by a state
oilfield-support trade group that says it represents 50,000
workers with jobs from driving trucks to employee placement and
DETERMINING "MAXIMUM PUBLIC BENEFIT"
Referendum supporters are backed by former state Senator Vic
Fischer, one of two surviving authors of the state constitution,
and Bella Hammond, widow of 1970s-era Governor Jay Hammond, who
was one of the creators of the state's Permanent Fund.
The beloved fund, which now holds $45 billion and provides
annual dividends to residents, has not escaped the tax debate.
The fund was created as a savings account meant to sustain
the state after most of the oil ran out. There will no direct
impact on the fund from the tax cut but there are fears the
state might have to draw on it one day because the near-term
fiscal impact of the cut means Alaska will run its first deficit
The tax rewrite will cause $4.5 billion in lost revenue over
five years, referendum backers say. Parnell's own worst-case
estimates correspond with that, depending on oil prices, but he
argues the state can afford to wait for the new production.
The Alaska oil extraction debate is even more complicated
than elsewhere in the United States, since the state's natural
resources are publicly owned and its constitution explicitly
says they should be managed for maximum public benefit.
Hammond likens the referendum campaign to historic battles
with fur traders and miners. "Control of our own resources is
what makes us different from a colony," she wrote in an
Anchorage Daily News column.
Palin signed the old tax law before shooting to fame as the
Republican vice presidential nominee. From a 25 percent base,
rates rose for every $1 in price above $30-a-barrel oil, capped
at 75 percent. Palin, who argued it demonstrated her tough
stance against the business establishment, has been silent in
the current debate.
The new system sets a maximum rate at 35 percent, though the
effective rate, after various credits, will likely end up lower.
To underline the argument that it will help investment, BP
announced last month a commitment of $1 billion more over five
years to secure new rigs and enhance production in Alaska.
ConocoPhillips made a similar announcement in April,
the same month that Spanish company Repsol cited the
tax bill as a "critical factor" in a recent oil discovery.
Yet critics argue no tax system will reverse the realities
of older reservoirs, and they note that Repsol's Alaska
exploration program, for one, started in 2011.
"It's been sort of this constant stream of the governor and
the oil companies pretending that investments that were decided
under (the earlier tax) are somehow new under the tax giveaway,"
said state representative Les Gara, an Anchorage Democrat.
The public seems evenly divided, said Ivan Moore, an
Anchorage-based pollster and political consultant, who saw few
obstacles for the referendum getting on the ballot to set up the
battle in 2014. "It should be fun to watch, one way or another."