When I served in Alaska’s Legislature, I relied on data and analysis to inform decisions. As most Alaskans know, the numbers have been tough in our state for a few years, and the resulting budget decisions painful as a result. The thing to remember about numbers is even when we don’t want to make hard choices, they persist in guiding us.
If we strip away the emotion and anxiety of the moment and focus instead on what the numbers show, Alaskans should vote to reject Ballot Measure 1. Not only do the numbers demonstrate why voting no is in Alaskans’ best financial interest, but they prove how the ballot measure’s supporters are distorting the facts.
Let’s examine a few examples, and clarify something. I no longer serve in the Legislature, but work full time in the nonprofit sector. I do not have a dog in this fight other than loving this state and wanting it to succeed. I am speaking up for that reason and that reason alone. No one is paying me to advocate one way or the other.
For starters, it is downright false to say that Alaska has received no oil production tax revenue during the last few years. These numbers are plain to see and published by the state’s Department of Revenue. North Slope oil companies have paid state taxes every year since oil was first produced in this state decades ago. For the time period in question, Alaska received over $8.7 billion in taxes, and $13.8 billion in total revenue from oil companies since 2014. Those payments account for approximately 90% of Alaska’s tax revenue from business during the time period.
Ballot Measure 1’s proponents also claim that during the past five years, tax credits have exceeded revenues. This is an especially gross mischaracterization. To reach this inaccurate number, they are simply subtracting the roughly $2 billion in cash credits paid or owed to companies that wouldn’t even be impacted by this tax. It’s bizarre that Ballot Measure 1’s supporters would mix up these numbers, but perhaps they are doing it intentionally. Either way, it’s inaccurate.
Ballot Measure 1’s supporters falsely claim the current oil tax structure, Senate Bill 21, has failed. Again, this is proved untrue using real, publicly available numbers. Our current oil tax structure has resulted in more oil production and more revenue for the state than was projected under the old tax structure, even with the massive drop in oil price that began in 2015. In 2013, the state’s Department of Revenue projected that 2019 North Slope oil production would clock in at 425,000 barrels per day, even with oil prices over $100 per barrel. Instead, we saw production levels reach nearly 500,000 barrels per day in 2019. Doing some quick calculations, the state is over $1.5 billion dollars to the good in total revenue versus riding the 6% oil production decline rate down with the old tax structure.
Perhaps the most concerning and misleading argument being made by Ballot Measure 1 supporters is the notion that voting yes is some kind of silver bullet that will solve the state’s fiscal crisis. In short, it won’t come anywhere close to filling the gap, and will make the state’s finances even worse. The COVID-19 pandemic and painfully low oil prices caused North Slope producers to shut down almost all drilling on the North Slope, and significantly cut back on planned investments. That alone should put a chill down the spines of Alaskans, but the question now becomes: when does drilling and investment come back? Does it? Oil price and the ballot initiative will both drive those decisions. Even if oil prices recover, passage of Ballot Measure 1 will slow down Alaska’s North Slope recovery, and with it, the recovery of the state economy.
I know we remain in a tough spot here in Alaska. We dealt with many of these same issues when I served, and the challenges just keep coming. Alaskans remain anxious about the future, for good reason. In times like this though, we must, as always, rely on the numbers to guide us, even when our hearts may nudge us in a different direction. A brave, unflinching examination of the facts proves Ballot Measure 1 is a bad idea that should be rejected by voters. Our collective recovery depends on it.
Jason Grenn is a former state representative.
• By Jason Grenn