The deadline for collecting signatures to reset the state’s oil tax formula is less than a week away. Organizers say they already have the required 40,000 signatures to get on the ballot. As KBBI’s Jay Barrett reports, the Fair Share Act seeks to reverse declines in state revenue, even as oil prices have rebounded from their last slump.
Former Homer Rep. Paul Seaton is one of many signature-gatherers around the state supporting the initiative. He explains how the new tax regime would work if it is passed by voters.
“What this is doing is changing the formula. It's not wiping out everything and starting anew. It's changing the minimum tax as it's now collected, which is the lowest percentage in the history of the state, is what we're getting now,” Seaton said. “And this would change that from a 4 percent gross tax to a 10 percent gross tax.”
The initiative also has built-in increases for oil prices above $50 per barrel. Homer resident John Reid spoke with Seaton after signing the petition. Reid told KBBI that everyone needs to pay their fair share, including the oil companies.
“I think that's a good idea because the oil companies are getting a real cushy deal here. And the taxpayers are footing the bill,” Reid said. “I’m willing to pay my fair share of taxes but I don't see oil companies are doing their fair share.”
Under the current oil and gas tax formula, instituted in mid-2014 under Gov. Sean Parnell, 5,000 jobs have been lost on North Slope alone, according to Seaton, though he admits revenues have been up slightly, mostly on the strength of recovering oil prices.
The Fair Share Act is limited in its scope, organizers hope will get it past voters worried of scaring off new oil and gas exploration. Nevertheless, while just focusing on the three largest North Slope oil fields, Seaton says the act would increase state revenue by a billion dollars.
“So that billion dollars would go a long way towards solving our deficits, where we are right now. Now, one thing that people should understand is, although some of the things that are happening with that deficit are reduced dividends and cuts divided services, we, through the initiative process, can't say where we're going to spend that money.” Seaton said, "By the constitution, everything goes into the general fund, but the legislature has to make the appropriations. That means it’ll be up to the legislature to designate funds for the Permanent Fund Dividend, as usual. Nothing in the initiative changes that," said Seaton.
Halibut Cove elder statesman Clem Tillion was in the state senate when the Permanent Fund was established in 1976. He’s currently the chair of the group Permanent Fund Defenders.
“How anybody can take $1,000 away from some widow in Emmonak and not charge the guy that comes up to fish or work on the North Slope is beyond me. Any tax is better than raiding the Permanent Fund. It's the most regressive way," Tillion said.
"The legislature is filled with people who do not intend to retire in Alaska," said Tillion,"and so don’t vote for the state’s long-term interests. It’s a broken trust between the legislators and residents."
The Alaska Fair Share initiative, if approved by voters, would also change the way oil companies write off exploration and operating losses, prohibiting them from using losses elsewhere to reduce the tax owed to the state, as they do now.