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Vol. 24, No.42 Week of October 20, 2019
Providing coverage of Alaska and northern Canada's oil and gas industry

O&G tax hike draws closer to 2020 ballot

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Kay Cashman

Petroleum News

A ballot initiative that will ask Alaska voters to increase oil taxes in order to support state spending reached the next step in the process on Oct. 15 when Lt. Gov. Kevin Meyer certified its application.

The initiative’s supporters can now gather signatures to get what they call the “Fair Share Act” on the ballot in 2020.

If approved by voters, the initiative would rewrite Senate Bill 21, which was passed by the Alaska Legislature in 2013 to replace the former oil tax structure, ACES - Alaska’s Clear and Equitable Share.”

ACES is blamed by many analysts and industry observers for the slowdown in oil exploration and production several years ago, negatively impacting Alaska’s jobs and economy.

The lieutenant governor is responsible for determining the legality of ballot initiatives and whether enough qualified voters have signed on to the petition.

While the Alaska Department of Law's review of the application found it legal, it found the act itself vague and difficult to interpret.

The proposed law “raises a number of implementation and constitutional questions” that would need to be dealt with if it’s enacted, Alaska Attorney General Kevin Clarkson wrote.

Petition sponsors have one year to file the initiative petition from the date they’re notified by the Division of Elections the booklets are ready.

Proponents have said that if the act had been in effect for Fiscal Year 2018, it would have produced an additional $1.1 billion for the state.

They have also said that many of the recent controversial budget cuts would not have been necessary.

$1 billion-plus tax hike

Opponents have also weighed in.

“This proposed ballot measure is yet another flawed attempt to adopt complicated tax policy through the initiative process," Kara Moriarty, president & CEO of the Alaska Oil & Gas Association, said.

"While the sponsors say it will not have any impact, make no mistake, no industry in Alaska can sustain a $1 billion plus tax hike without negatively impacting investment decisions for their business, which creates less opportunity for jobs for Alaskans,” she said.

According to a KTUU report, the group behind the initiative must gather signatures amounting to greater than 10% of the total ballots cast in Alaska's last general election. Out of that total figure, 70% of the signatures would have to come from across 30 separate house districts.

If passed into law, the Legislature cannot change the act for two years.

“It’s take-it-or-leave-it lawmaking without the balanced review good legislation needs,” economist Roger Marks said Oct. 16. In private practice now, Marks formerly served as a petroleum economist with the Tax Division in the Alaska Department of Revenue.



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