Doyon Drilling

Doyon Drilling drill rig on North Slope exploration well

Alaska labor unions are split over the oil tax initiative pending on the November state election ballot.

Eleven unions, including large public employee unions, have announced support for Ballot Measure One, which would increase state taxes on oil production. Five unions representing workers in construction and other trades, are opposing the ballot proposition.

Groups favoring and opposing the measure are engaged in heated campaigns for and against as the November election approaches. The “Alaska Fair Share” coalition is in favor while an opposing group, “One Alaska” is in opposition.

Oil and gas taxes are complex and Alaska’s current petroleum tax system is regarded as one of the most complicated in the world.

“Fair Share” argues the state is being short-changed by the current system and proposes to more than double the current tax.

The tax would be increased from 4 percent of gross revenues to 10 percent, and to 15 percent if oil prices rise beyond a certain threshold. Proponents of the ballot measure say his would make up for revenues lost since 2014, when a series of changes enacted by the Legislature went into effect.

“One Alaska” says the decline in state revenues were an effect of the oil price collapse that happened in late 2015 and that the 2014 tax changes encouraged companies to drill new wells, resulting in new oil discoveries made in recent years.

Oil prices collapsed again last March and have not shown significant recovery.

Opponents to Ballot Measure One say now is the worst time to raise taxes on the industry, when it is hit hard by low prices and several thousand petroleum workers have been laid off.

Proponents counter that, arguing some large oil fields might still be making money and that the state needs to offset losses of oil income to help pay for public services including a Permanent Fund Dividend.

Alaska oil producers pay other state taxes in addition to the production tax affected by the ballot measure. They pay a state petroleum property tax, the only state property tax, along with a special corporate income tax that is different than corporate income taxes paid by non-oil Alaska businesses.

Union leaders opposing Ballot Measure One are on the record with strong statements: Bob Hubbard, business manager of Plumbers and Pipefitters Local 375 in Fairbanks, said: “Oil is a source of thousands of direct and indirect jobs in Alaska, and we need to keep it that way. Now is the time to stabilizeour economy, not change the rules and sacrifice even more good-paying jobs.”

Gary Dixon, Secretary/Treasurer of Teamsters Local 959 in Anchorage, said:

“This ballot measure is bad for Alaska jobs, pure and simple. We oppose any policy that puts family-supporting jobs at risk, and this measure does just that. I’m worried about the next generation of workers, and what their future holds.”

Not surprisingly, the group in favor has a different view. No union leaders were quoted in the Fair Share Oct. 15 press release announcing the union support, but David Dunsmore, the group’s spokesman, said:

“Alaska’s working families have been hit hard by Alaska’s oil production revenue crisis and Ballot Measure One will provide the revenue we need to save jobs and fund infrastructure projects,” he said.

Dunmore said the proposition would increase taxes only from the state’s three largest and most profitable fields, but opponents counter that the higher taxes would halt further drilling and development in those fields and would also apply to large new fields that have been discovered but have not yet been constructed.

It would also chill new North Slope exploration in the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska because any finds in ANWR or NPRA would have to be large enough to be economically viable to the point that the higher tax would apply.

Unions in favor of the tax increase include not only those representing public employees but also bargaining units representing state ferry workers and several construction trade unions like the International Brotherhood of Carpenters Local 1243.

Ironworkers Local 751; Plumbers and Steamfitters Local 367 and Ironworkers Local 751 are also signed on as favoring the proposition.

Among unions opposing it, besides the Teamsters and Plumbers and Pipefitters, are the Alaska Laborers Local 341; the Alaska Petroleum Joint Crafts Council, which represents oi workers, and Brotherhood of the Sea, or SIU, representing vessel crews on oil tankers and other vessels serving coastal communities.

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