Business, Politics

Discussion on Oil Tax referendum civil but changes no minds

Individuals gather at the library museum  for a "Let's Talk" civil discussion on Ballot Measure No. 1, the referendum to repeal Senate Bill 21. Heidi Zemach photo.
Individuals gather at the library museum for a “Let’s Talk” civil discussion on Ballot Measure No. 1, the referendum to repeal Senate Bill 21. Heidi Zemach photo.

By Heidi Zemach for SCN –

In today’s polarized political atmosphere, one might imagine that a public discussion on the pros and cons of Ballot Measure No. 1, the referendum to repeal SB 21 on the Alaska primary election ballot August 19, might get a little heated.

But, although there were food and drinks handy at the “Let’s Talk Seward” event May 9th, 2014 at the Seward Community Library Museum, nothing was thrown, no faces turned red, nor were voices raised in anger. The conversation bubbled along in a friendly, open, and informative manner, although some had a hard time holding back their emotions as they expressed their distrust of Big Oil, or the threat to democracy that they feel has arisen since corporations were allowed unlimited political spending under the U.S. Supreme Court Decision “Citizen’s United.”

The discussion was sponsored by Let’s Talk Anchorage, an evolving network of library-based programs in Alaska and Alaska Common Ground promoting respectful public conversation “as an act of democratic dialogue and deliberation.”  It was moderated by their facilitator Bill Hall.

A discussion guide accompanied the conversation and guided it. It offered three different perspectives on the issue: that of Republican legislators who voted for SB 21 last spring, Rep. Mike Hawker and Sen. John Coghill; legislators who voted against SB 21, Sen. Bill Wielechowski, D, and Sen. Gary Stevens, R.; and the view of referendum sponsors, Vic Fischer, Bella Hammond and Jim Whittaker.

Participants agreed to ground rules such as listening with open minds, respect and compassion, seeking first to understand, then to be understood, making space for others to talk, and trying not dominate the conversation. At times Hall offered questions and went around the circle offering the chance for everyone who wished to respond. At other times anyone could jump in.

The 13 who attended the Seward discussion included librarians, a fisherman, businessmen, a scientist, a traveler, and two news reporters. Some of them had formerly worked in the oil industry, some also had experienced the 1989 Exxon Valdez Oil Spill, which helped shape their views. A few were more knowledgeable or familiar than others with environmental issues, the oil business, or economic trends and philosophy.

The leading premise of the discussion was that state revenues from oil and gas development in Alaska is diminishing due to declining oil production, and that it is a problem for Alaska’s economy. There is no state property tax in Alaska, so oil taxes, fees and royalties are responsible for the lion’s share of state income, which in turn funds public services such as schools, roads, police departments.  Another fact given was that Senate Bill 1 was written to reduce taxes on the oil industry for the purpose of increasing oil industry profits that could be invested to increase future oil production and income to the state.

The majority of the group appeared to strongly favor repealing the oil tax legislation, however, although all admitted that they weren’t experts on this complicated economic issue, nor could they predict the effects that either tax might have on the oil industry. Rather, they said their vote in August would be based on their own gut reactions and personal experiences, or they would vote for the positions taken by leaders and experts that they trusted, such as Sen. Stevens, Vic Fischer, or senior Alaska economist Scott Goldsmith.

Almost all those who spoke said they deeply mistrusted the motives of Big Oil even though oil and gas production pays for the public services and facilities on which all Alaskans depend. One said if the oil companies wanted folks to vote one way, she would be inclined to vote the opposite way.

Many felt manipulated by claims made in the pervasive, multi- million dollar ad campaign against Ballot Measure 1, sponsored by the oil-industry. A few said that the state’s voting districts, including our own, had been gerrymandered in favor of the conservative republicans under the new Redistricting.


All but one person doubted their legislators’ assumption that giving oil companies tax breaks without requiring any new investment or production in return, would cause the oil industry to actually produce more oil, or invest in Alaska and create jobs.  The new oil production and some of the latest development plans currently underway, that are touted as proof that SB 21 is working, were planned several years ago, under the Alaska’s Clear and Equitable Share oil tax bill, or ACES, they said. The Seward businessman disagreed, and said oil companies would be under pressure to invest and increase production as a result of the new tax structure created for them.

A few mentioned that the natural gas fracking boom in the Lower 48 has changed the American energy production landscape, providing a clear competitive advantage over developing Alaska’s ageing, or lesser known oil fields.

Several were concerned that the state would continue to give away$1-2 billion from of the state coffers each year, and that funding for education and other services that Alaska provides would suffer under the new tax structure.

All were nevertheless open to learning more about the findings in a newly-published study by the Alaska’s well-respected economist Goldsmith comparing the economic effects of SB 21 to ACES. The study was sponsored by the Institute of Social and Economic Research, or ISER. “Alaska’s Oil and Gas Production Tax: Comparing the Old and the New,” and is available on ISER’s website as Note no. 17. It  finds that

* at current oil prices and production costs, the two taxes bring in about the same amount of revenue.

*The much-discussed “give-away” of $2 billion in oil revenues this year under the new tax law doesn’t exist, and that the large budget deficits that Alaska will experience this year and next are mainly due to declines in oil prices and production, and higher production costs rather than the recent tax-structure change.

*Even without increased oil production, future oil revenues could be higher under the new tax, if current oil price and production cost trends continue.

* A modest increase in oil investment would create more state revenue under the new tax based on reasonable assumptions about future market conditions.

*New money invested in the oil patch would create long-lasting jobs and increase the purchasing power of consumers.

Most Seward discussion participants had not read or studied the in-depth economic study, although a few had printed it out. But they seemed intrigued by it, coming from an economist generally believed to be impartial. They had hoped to have their own views challenged by those supporting the other side of the issue. But in the end, no one’s opinions on Ballot Measure 1 had changed, although most enjoyed the exercise, and supported the idea of promoting citizen democracy through these civic conversations.



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