Legislators refuse to consider oil tax changes so initiative backers say they’ll take it to voters

ANCHORAGE—The backers of an initiative that would raise oil production taxes on the three big North Slope oil fields say they have little hope that the matters would ever be taken up in the Alaska Legislature, saying that they’d rather ask voters to revise the state’s oil tax regime.

More than a dozen figures from Alaska’s political world gathered at the campaign’s office in downtown Anchorage on Monday for the official launch of the Fair Share Act, which is currently undergoing legal review with the Division of Elections before it can begin the signature-gathering process.

The initiative is a response, of sorts, to a long-running belief that the Alaska Legislature is incapable of passing a fair oil tax regime. Much of the presentation was done by oil and gas attorney Robin Brena, who’s successfully sued to increase the value of the trans-Alaska pipeline system, who argued that the 2013 Senate Bill 21 unfairly benefited the large oil producers over smaller explorers and producers.

The proposed initiative would only affect the Prudhoe, Kuparuk and Alpine fields by raising the minimum tax on oil produced from them, eliminating the per-barrel credits for the fields and “ring-fencing” each field so operating losses from one field cannot be applied to a more profitable field operated by the same company.

Many of the ideas have been circulating for years since the passage of Senate Bill 21 and appeared in some legislation under former Gov. Bill Walker’s administration and in bills filed by Sen. Bill Wielechowski, who was present at the meeting.

Former Senate President Chancy Croft said it’d be better for these sort of changes to go through the Legislature, but said the Legislature has demonstrated it has no interest in addressing what his group sees are flaws with the current regime.

“The short answer is it would be a foolish thing to do. In the first place, there’s no interest in the Legislature to do it, secondly there’s hostility in the Legislature and there’s the statement that they won’t even consider it. Third, even if we went through all the trouble to get it passed through the Legislature, the governor’s going to veto it,” he said. “It would be a lot better than the process that we have, which is to get almost 40,000 signatures in the next four months, but there’s one thing that’s possible and there’s another that’s impossible. We opted to go after what is possible.”

If approved, the Legislature would have the opportunity to knock the initiative off the ballot by passing something that’s materially similar to the initiative. The Legislature has previously done precisely this with minimum wage legislation in the early 2000s and more recently with a legislative ethics bill. Both were either gutted or rolled back entirely the following legislative year.

Former Rep. Paul Seaton, a former Republican who was an advocate for updating the oil tax system, said he would be happy to see the Legislature pass some kind of change, noting that it’s still a challenge to return and rollback changes.

“We’ve been trying to do that for a number of years, and there’s been people blocking those efforts. The initiative process is the citizen’s way to kick the legislature in the seat of the pants and say, ‘Address the issue otherwise we’re going to be doing it on the ballot,” he said. “Reforming that and going back and making the change is also difficult.”

The group will face several hurdles before it can take the issue to voters. First, the initiative language will need to survive the legal review by the state—headed by Attorney General Kevin Clarkson, who has already rejected an initiative that deals with the state’s primary system. A rejection could force the group to rewrite the measure or bring the issue to the courts.

A decision is due by Oct. 15.

Once approved, the group will then get underway with the signature-gathering process. Unlike the recall effort currently targeting Gov. Michael J. Dunleavy, the group will need to gather signatures from around the state. The state initiative process requires groups gather signatures from 30 of the state’s 40 house districts equal to 7 percent of the votes from the previous election.

The total signature threshold is 10 percent of the previous general election, or 28,501 signatures. The group will face a quick turnaround for the signature process. To get the legislation on the 2020 ballot, they’ll need to turn in the signatures before the Legislature convenes for the 2020 session in mid-January.