I spent most of yesterday trying to write a foolproof essay
explaining why I planned to vote Yes on Ballot Measure 1 and why everyone
who cares about Alaska should, too. I thought it was pretty clear that Parnell
had traded tax revenues for jobs, and that claims of increasing production
enough to make up for the lower tax rate were unrealistic. I thought the direct
interest of the oil companies and support industries – the truckers and
pipefitters and pilots – had created a lopsided debate between a vocal minority
who depend directly on a lively North Slope and a quieter majority of Alaskans who
depend on the state’s financial health, but less directly. I thought if you
found the necessary facts and considered the relevant arguments, there would be
a right answer.
Then, as I wrote and read, I realized how much I still didn’t
know. I was in Juneau covering politics when Parnell offered his first two tax
proposals, but I wasn’t there for SB 21. I didn’t know the revenue projections,
or the increase in production needed for the state to break even. I didn’t know
the relative importance of oilfield jobs compared to all the teachers, firemen,
and biologists the state employs. I read ads claiming oil production is no
longer dropping, and that revenues are as high as they would have been under
ACES. I learned that sharp people whose commitment to Alaska I never questioned
were voting no.
I had thought the right question to ask was Which tax policy will bring the greatest
revenue to the state in the long run? with some consideration given to the
economic value of a busy oilfield and to legitimate political differences favoring
private industry or government spending. But now I wasn’t sure I knew the
answer, or even if the question could be answered. And if it couldn’t be, then
on what basis should one cast a vote? It’s
our oil?
I think a thorough approach to figuring out which tax is
best for Alaska would include a solid understanding of ACES, SB 21, and the
interplay of taxes and credits in each; Department of Revenue modeling combined with unbiased expert analysis; an
understanding of tax systems, government take, and geologic and political risk in
other oil-producing regions; expert projections for oil prices and
production costs; and an understanding of Alaska’s oilfields (composition,
decline rates) and where they fit in the portfolios of the big three oil
companies and of the smaller companies new to Alaska. I doubt if many Alaskans
will cast truly informed votes tomorrow, and I’m not sure many lawmakers did
when they voted on SB 21. For Alaska’s
future?
I know Palin and Parnell's tax plans both include various tax credits, and that Palin's credits did more to force companies to reinvest in Alaska. I know Parnell's tax generates relatively more revenue at low oil prices and Palin's at high prices. I know production costs are an important wildcard, and that high costs reduce the difference between the two taxes. But there's much more I don't know.
Today I thought maybe people would vote based on whom they
trust – a business group or union, a political party – and that maybe that’s
not a bad thing. That maybe this vote is largely symbolic, not about tax rates
and credits but about the state’s relationship to the oil industry. Palin stood
up to the oil companies, on the gasline and on taxes. She argued – correctly,
in my opinion – that the interests of the oil companies were not the same as
those of the state, and she instituted policies that aimed to be enticing to
companies but which put Alaska’s interests first. It’s remarkable to me that
Parnell and many others seem to think what’s good for Exxon, BP and Conoco is
good for Alaska, and, beyond that, trust the companies to tell us what they
need. Palin had smart, honest people in her Revenue Department, and she brought
in experts who were professional and inspired confidence. Parnell, at least in
his first two tries, offered sound bites. I remember being shocked at how
little homework he seemed to have done in setting tax policy worth billions. It
was as if the companies had told him taxes were too high and he had taken their word
for it.
Whether the numbers work out this way or not, tomorrow’s
vote seems to be between those who believe private industry does and should
drive the state and those who want to get the most from a limited resource.
Between those who won’t lose sleep if oilfield jobs come at the expense of
state budgets and those already suffering from budget cuts.
In a sense, a No vote would say Alaskans trust the industry
enough to negotiate a tax plan together – in my opinion, to let the industry
tell us what’s right for them and for Alaska. A Yes vote will send the message
that Alaskans take the industry seriously, and value it, but won’t be bullied
by it.
And I think that matters. This might sound conspiratorial,
but I imagine oil companies don't base their investment decisions strictly on net present value – or rather, that they're fully aware of a tax policy’s potential to change.
I wouldn’t be surprised if companies here delayed projects when Parnell took office,
or when he declared the taxes too high – if lease requirements are as lax as
they seem, why wouldn’t they wait? I wouldn’t be surprised if they fast-tracked
projects when lawmakers passed a tax policy they liked. And I won’t be
surprised if they punish Alaska for passing Ballot Measure 1. Alaska might lose
money. Who really knows? But in the long run, I think it’s important to show
that Alaska can and will look out for itself.
Before the Legislature passed SB 21, even supporters of ACES
thought it needed some changes, and from what I’ve read, it probably does. I’m
voting Yes for Palin’s tax, but also for the way she put Alaska first and took
tax policy as seriously as it deserves.
