Get the Facts on Ballot Measure 1
What are the impacts of the Alaska North Slope oil production tax increase?
- Hurts Alaska’s economy
Alaska’s economy depends on healthy oil industry to fund essential public services, the Permanent Fund, and critical infrastructure. The ballot measure sponsors acknowledge this measure will increase taxes by at least $1 billion dollars; an independent economic analysis says it represents a 300+ percent increase at $60 per barrel oil prices.
A tax increase of this magnitude will make Alaska less competitive. This will impact investment and could eliminate or postpone oil development projects, resulting in fewer jobs, less oil down the pipeline, and less long-term revenue for the state.
COVID-19 has already devastated economies across the region and the state, and this ballot initiative places additional obstacles in front of Alaska families.
Under the current tax structure, Alaska’s oil production is finally stabilizing after years of sharp declines, and new development projects will help bring Alaska out of recession. This initiative will reverse Alaska’s progress and be a short-term tax gain at the cost of long-term oil production and state revenue.
- Hurts Alaska families
Alaska families rely on a healthy oil and gas industry. For every Alaska oil industry job, 15 more Alaska jobs are created. The workforce employed by the industry impacts all of Alaska, from Ketchikan to Utqiagvik, including all of the Doyon region.
What does this mean for Doyon shareholders? Sections 7(i)/7(j) of the Alaska Native Claims Settlement Act (ANCSA) ensure that all Alaska Natives benefited from resource development on ANCSA lands. If this initiative passes, it could potentially mean a decrease in distribution amounts.
- Hurts jobs
Before COVID-19 devastated jobs across the Doyon region, statewide, and the country, Alaska had the highest unemployment rate in the nation and was still climbing out of recession. Following the oil price crash a few years ago, the oil industry lost several thousand jobs and had just begun to turn the corner toward recovery. With one-quarter of all Alaska jobs tied to the oil and gas industry, now is not the time to raise taxes.
The ballot measure sponsors claim that a tax hike of this magnitude on over 80 percent of the production from our state’s largest economic driver will not hurt economic growth or the good-paying jobs Alaskans need. No industry in Alaska can sustain that level of tax increase without it impacting jobs.
The impact of this initiative will be felt directly first-and-foremost by Alaska workers, including Doyon employees and families.
Myths vs. Facts
MYTH: Our current oil tax structure is not working for Alaskans.
FACT: Our current tax structure is working for Alaskans because it is producing MORE OIL and MORE REVENUE for the state than was projected under the tax structure it replaced.
- Oil production is 75,000 barrels per day greater than projected.
- Oil tax revenues are $1.5 billion above what was projected.
Source: Alaska Department of Revenue
MYTH: The ballot measure only applies to legacy fields operated by three big oil producers and will not impact the development of new fields. It will encourage new producers to invest in Alaska.
FACT: According to the Alaska Department of Law, the ballot measure is UNCLEAR and badly written – it will create UNCERTAINTY over what oil fields are taxed and how. It will drastically raise taxes on large-producing legacy fields and potentially on other fields, including several new North Slope developments. It jeopardizes future oil industry spending in Alaska.
Source: Alaska Department of Law, October 14, 2019
MYTH: Alaska has been giving away billions of dollars in tax breaks to big oil companies for years.
FACT: Large oil companies were NEVER eligible for the cashable oil tax credits, which only applied to small producers and explorers. Additionally, in 2017, the State terminated all cashable oil tax credits. The State still operates a per-barrel credit under which producers pay higher taxes as oil prices rise.
Source: Alaska Department of Revenue
MYTH: Oil companies have paid zero taxes in three of the last five years under the current tax law.
FACT: North Slope oil companies have paid state taxes EVERY year since oil was produced. Since 2014, Alaska received over $8.7 billion in taxes and $13.8 billion in total state revenue from oil companies, which accounts for approximately 90 percent of Alaska’s tax revenue from business.
Source: Alaska Department of Revenue
MYTH: If passed, the ballot measure will create new jobs.
FACT: The ballot measure means FEWER JOBS, not more, because it raises oil production taxes by over 300 percent at current prices. Low oil prices in recent years forced job losses in Alaska and across the country, but oil industry employment today is growing again. Now is not the time to damage Alaska’s growing economy with a ballot measure that significantly raises oil taxes too far, too fast.
Source: Alaska Department of Labor and Workforce Development
For more information and frequently asked questions, visit www.onealaska.com.