So far, four large oil companies that profit handsomely in Alaska have spent $9 million to spread fear. The massive oil tax breaks they want to keep make Alaska oil production more profitable, according to ConocoPhillips’ own annual reports, than all the Lower 48 states and Canada combined. Ballot Measure 1, the Alaska Fair Share Act, is the only potential revenue that’s on the table. It’s fair to both Alaskans and the oil industry. It’s needed for Alaska to repair our economy and schools, and to help businesses and workers harmed by the current pandemic.
The Fair Share Act ends excessive breaks only on Alaska’s three largest, most profitable fields.
The awful impacts of COVID-19 should help us understand what happens when you take huge amounts of money out of the economy. Businesses can’t thrive when people don’t have money to spend at them. People can’t thrive when they lose their jobs.
The double hit will come in December, when the governor introduces his budget and says he “has” to make even more cuts to schools, senior support and other basic services. That will add to the more than 1,000 teachers and education staff whose jobs have already been lost. It will continue the loss of construction funding that has harmed construction businesses and jobs, the loss of jobs at the University of Alaska and elsewhere, and the loss of wages and grants we need, more than ever, to circulate through the economy to support our Alaska businesses and workers.
Without the passage of the Fair Share Act, Alaska will be almost out of savings. The governor will claim our self-inflicted budget problems require continued, damaging school and other budget slashes, on top of the $1 billion in continual state cuts that have been made since 2015. That will add to our economic pain.
A University of Alaska Institute of Social and Economic Research study shows how this will harm the economy. It shows that every $100 million in budget kills roughly 1,000 private and public sector jobs. Those are jobs people are laid off from, jobs lost in the private sector because there’s less money spent by workers at Alaska businesses, and then less money spent by those businesses at other businesses.
We should aim for prosperity, not poverty.
The University of Alaska has had to cut more than 100 degree and certificate programs. Those aren’t just college degree programs. The university is the largest vocational education provider in the state. The majority of its graduates, unlike those who leave Alaska for school, stay here so we can have a trained Alaska workforce for our businesses. We shouldn’t keep cutting opportunity and ladders to success.
Our capital budget is roughly one-fifth the 2006-2015 average. Those funds went to construction, engineering and other businesses and jobs. They helped maintain and repair what has grown to a $2 billion backlog in needed state and University building and infrastructure repairs and maintenance.
That’s not the Alaska I want for this and our next generation. And that’s no way to bring jobs back or to get money circulating through our economy to struggling Alaska businesses.
Ballot Measure 1 is straightforward. It implements a modest 10% oil production tax on our three largest fields (legally called “units”). At high prices, a windfall profits provision allows the rate to rise modestly to a maximum of 15%, so Alaskans can share fairly as profits rise. And it stops oil companies from hiding their Alaska profits (currently, only ConocoPhillips is required to reveal them under federal securities laws).
Alaska’s combined oil company production tax under Ballot Measure 1, plus oil royalty payments, would still be lower than the combined production tax and royalty costs companies pay in Texas, North Dakota, Louisiana and most major oil-producing states.
Companies would still profit more in Alaska than elsewhere. ConocoPhillips’ annual reports show they raked in $5.2 billion in profit in Alaska during the past four years. In that same time, they lost $2.45 billion in the Lower 48, and earned 60% less profit in all of Canada than they made in Alaska.
We should be full partners with our oil industry neighbors, not junior partners. It’s your oil. We shouldn’t give it away at a price that robs students, workers, businesses and all Alaskans of a better future.
Les Gara served in the Alaska State House from 2003-2019, and is now happily working on children’s issues and writing on Alaska’s fishing and outdoors.