Vote yes, then insist on real fix

In recent years, we have gotten away from formal endorsement of candidates and causes in this space. But the discussion about whether to do so, and why we should or shouldn’t, comes around with every election cycle.

Mostly, we like to think that our reporting on issues and local electoral races is thorough and engaging enough that readers go to the polls sufficiently informed to make the best decisions. But every now and then, we feel compelled to share our opinion anyway.

Such is the case with the upcoming referendum on Senate Bill 21 — Ballot Measure 1, as it is known — which passed into law in 2013 and changed the way the state profits from the extraction of its petroleum resources.

The issue is especially fascinating to us considering the number of respected, high-profile people lined up on either side of the cause. Prominent Republicans, Democrats and independents have spoken earnestly about both sides of the issue in advertisements and newspaper op-eds, equally passionate about the rightness of a “yes” or “no” vote on 1.

So where does this leave “regular” Alaskans, bleary-eyed — and eared — from endless repetitive advertisements, which too often appear to make little distinction between fact and alarmist hype?

Prior to SB 21, the Palin-era Alaska’s Clear and Equitable Share — ACES — was rushed to passage in a wave of politically charged bipartisanship. Under ACES, tax credits increased production and enabled smaller, independent producers to enter the game, in some cases while the big three — BP, ExxonMobil and ConocoPhillips — sat on the sidelines.

Additionally, some projects started under ACES are now dishonestly being attributed to SB 21 by the industry, which has funded a multimillion-dollar ad campaign to convince voters to vote “no.”

No surprise that industry sees it that way. The state’s own Department of Revenue is forecasting for fiscal year 2014, the first full year of SB 21, that industry will be $1.6 billion richer than it would have been under the old system.

To be clear, we are not opposed to profits. But it’s hard to see the state essentially give away $1.6 billion when we struggle to adequately fund schools, roads and other needed infrastructure each year.

The Department of Revenue forecast is similarly industry-friendly for the next 10 years, while also predicting continued declines in production over the same time span. None of this meshes with the rosy revenue and production claims currently being pitched by industry and the vote “no” crowd.

The rush to “fix” ACES, then, is hard to understand, especially when industry is offering no substantial guarantees in return for the massive hand-out it is being given.

In a recent op-ed, Rep. Paul Seaton, a Republican from the Kenai Peninsula, cautioned voters about this. SB 21, he says, poses “enormous risk” for the state at low oil prices and net operating loss.

SB 21, Seaton points out, guarantees that the state is a partner in offsetting development and set-up expenses without being an equal partner in any subsequent profits once production starts. In short, the state will likely never be able to recover its initial credit investment on most “new oil” fields.

Seaton closes his piece with an observation that should concern all Alaskans: “SB21 is not robust enough to effectively handle large variations in energy prices without exposing Alaska to tremendous risk. … No business owner I know would sign on to this sort of deal for their contractors. Tell the Legislature this tax reform needs to go back for a real fix.”

We agree. The state constitution is emphatic about the state’s natural resources being commonly owned by all Alaskans. It is equally emphatic about responsible stewardship of those resources.

We understand that some 90 percent of unrestricted general fund revenue comes from the oil industry. But that money is generated for bringing to market oil that we own under Alaska law. As the multi-millionaire owners of this resource, we should never approach industry with our hat in hand. To us, that’s how a “no” vote feels, a collective sigh and resignation that we cannot negotiate better terms for the production of this non-renewable resource.

We do not believe that Senate Bill 21 meets the constitutional charge to responsible stewardship of resources. There is a better way. And we believe it starts with a yes vote.