Analysis: Legislators ponder how to extract oil tax initiative from election ballot

Every session has its bills to alter oil and gas taxes but there is now serious interest among legislators as to whether a bill can be passed that could result in removal of oil tax initiative proposition from the 2020 state election ballot, assuming the initiative is ultimately approved by the state lieutenant governor.

Signatures have been gathered on petitions in excess of the number needed to place the question on the ballot but those must still be verified for authenticity and Lt. Gov. Kevin Meyer has yet make a decision,

The discussion in the Legislature is whether a bill could be passed this session that would meet the substantially “similar to” test that would determine whether the lieutenant governor can order the tax proposition off the ballot, assuming it is approved.

This is new legal territory because the limits for taking a pending ballot proposition off the ballot are not well defined in court decisions.

If the tax is approved for the ballot and it wins in the election the Legislature can clearly repeal it after two years and can also amend, or change, the new law within that period. But there are questions over how extensively the law can be amended before it effectively becomes a repeal. Meanwhile, the uncertainties created in the tax system may have a dampening effect on new oil abs gas investment on the North Slope.

It’s now widely assumed in Juneau that the initiative sponsors will get approvals for the signatures needed. Under current laws, if the Legislature adjourns by the 90th day, about May 15, the question will appear on the August primary election ballot. If the session adjourns after the 90th day it will be on the November general election ballot.

The timing is important. Primary elections are typically low-turnout for voters, which mean that interest groups on either side of the issue will have out-sized impacts of their campaigns for and against. The general election will have a much larger turnout given that this is a presidential election year and having President Donald Trump on the ballot will undoubtably attract a big turnout of conservative voters.

In theory that should help opponents of the initiative, but both primary and general elections can be volatile, and the outcomes can never be predicted. It’s also possible that the recall question for Gov. Mike Dunleavy could be on the same ballot. The state Supreme Court has approved the second gathering of signatures for this.

On the mechanics of how the ballot proposition might be taken from the ballot, state attorneys have advised that legislators can pass a bill they feel is substantially similar or tat largely achieves the objectives of the proposition. If a bill is passed and signed by the governor, the Attorney General would write an opinion as to whether it passes the test of being substantially similar.

If the opinion is in the affirmative, the Attorney General would advise the Lieutenant Governor and the proposition will be taken off the ballot. There would likely be litigation from the proposition sponsors, and existing court decisions leave a lot of gray area as to what the outcome might be.

Meanwhile, the uncertainties this could create comes at an awkward time. Oil Search and Repsol, two companies hoping to develop Pikka, a large new discovery on the slope, are to make their final investment decision this fall, just as the ballot proposition might appear in the election.

Also, Oil Search is reported to be looking for an additional partner to invest in and share the risk of Pikka.

ConocoPhillips is also looking for a partner for its western North Slope discoveries and has already said it will hold off on its efforts until after the tax initiative question is resolved.