Both sides should be watching for effects of oil tax change

  • Saturday, August 23, 2014 3:28pm
  • Opinion

The dust is starting to settle on Tuesday’s primary election, with voters narrowly rejecting a referendum to repeal the oil tax law passed by the Legislature in 2013.

While interpreting voters’ intent in any given election is a bit like reading tea leaves, there should be at least one takeaway for state lawmakers in just how close the results on Ballot Measure 1 were. The “no” vote won by just 6,880 votes out of 154,136 ballots cast, or 52.23 percent to 47.77 percent. While Alaskans agree that changes to the state’s oil tax structure were necessary, it also seems that we don’t entirely trust the motivations of the oil industry or the state government.

Just as opponents of the new tax law barely waited for the ink to dry on the bill before promising a referendum, they wasted little time in vowing to track the promises made by proponents of the tax change — and to take action should the new tax law not live up to expectations.

Our response to that rhetoric is this: Those on both sides of the oil tax debate should be closely tracking the effects of the legislation. In fact, for those in the Legislature and the administration, that’s what we elected or hired you to do.

In this region, we’ve seen the boost that increased investment by the oil industry brings to our economy. To us, the jobs created as that money cycles through our community are as important, if not more so, as the revenue going into state coffers.

That’s a part of the issue that should be examined further. Roughly 90 percent of our state budget is dependent on oil. Our state’s economy is frequently described as a three-legged stool, with oil and gas being one of the legs. We’re heavily dependent on a robust oil and gas industry.

There is optimism that the oil and natural gas will flow for decades to come, but the state would be wise to take steps to diversify our economy. As hard as the state has worked to attract new investment in the oil and gas industry, it should be doing the same for other industries. For example, with burgeoning aerospace and high-tech opportunities across the state, now is the time to invest in the state university system to train the people who will work in that field.

Of course, much of the argument around the oil tax referendum has been about which structure is better for the state’s long-term economic health, and would therefore enable that type of investment. We agree that changes to the old tax structure were needed, and we too will be watching closely for results — not just for the state’s bottom line, but for the other opportunities a healthy, diverse economy can provide.

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