2020 is turning out to be one for the record books.
COVID-19 has turned our lives upside down; the economy, once recovering, has been rocked by the virus and subsequent shutdowns, our summer tourism season was essentially canceled, and oil prices have hit new lows. Ballot Measure 1 will make the economy even worse.
One thing is certain: Alaskans will need to work together to begin the long road to economic recovery. Our various industries will put their best foot forward to restart the economy, but each one of them, from tourism to commercial fishing, will need help from citizens and governments to survive. Alaska voters have a huge role to play.
Our family owns and operates an oyster farm here in Ketchikan, and while we are proud of our product and our homegrown workforce we are understandably concerned about how our company will weather this storm. Our family has lived in Ketchikan for generations and we are hopeful that our kids will have the opportunity to raise their families and build businesses of their own here. Ballot Measure 1 threatens the viability of our business and would have a disastrous impact on our community.
Discussion about the oil and gas industry has always felt like something far removed from our world in Southeast, Alaska. Unfortunately that misperception sets us up to make a grave mistake, a mistake that will impact communities in our region in ways many of us may not have considered before.
The connection that I had been missing was just how much of our daily lives, the critical services offered in our community, is paid for through taxes from the oil and gas revenue. I also didn’t realize that one quarter of all jobs in Alaska are from this one industry. If we lose those jobs, Alaska as we know it ceases to exist.
In Ketchikan the revenue from these taxes provides state funding for essential services such as education, corrections, health care and so many more. State funding for local projects like our hospital expansion, shipyard renovation, and renewable energy projects have predominantly come from oil tax revenue.
That one industry is the state’s largest taxpayer by a huge margin − no other industry comes close. Here’s proof: For 2015-2019, total North Slope revenue to the state was approximately $13 billion, accounting for approximately 90% of Alaska’s total revenue. Those who claim oil companies have not paid taxes in years are just flat out wrong.
Of course, total revenues to the state have dropped in recent years, but that’s because oil prices cratered, not because of the tax law. If you still think there is a more equitable way for the industry to contribute to our state then I think the conversation should continue but if you are a small business owner like we are then you know now is the worst possible time to substantially raise taxes on any industry, especially if that industry has the ability to move their investment elsewhere.
Even before the COVID-19 crisis hit, the oil industry was facing perhaps its toughest financial predicament in state history. Raising their taxes by 150%-300% overnight was a bad idea a year ago, but it’s a downright horrible idea now. With oil prices bottoming out, it will be extremely difficult for these companies to maintain even status quo activity.
Let’s use an example that hits close to home — the cruise industry. The entire cruise industry is reeling from the effects of COVID-19, and with them, our friends and family who own tourism related businesses. Now imagine the State of Alaska implementing a 300% head tax increase in 2021 and expecting the cruise lines to choose to stay and to continue to operate normally. It’s an absurd proposition. Yet here we are, ready to inflict the same damage to an industry that funds our services from the most northern reaches of Alaska to our southern Southeast doorstep.
Here in Ketchikan, we know all too well what it looks like when an entire industry enters into steep decline. When the timber industry was killed by over regulation, it was our family, friends, and neighbors who lost their jobs. Businesses small and large closed their doors and people we loved dearly were forced to leave Alaska and start over.
I am proud of how the small communities in our region persevered and even thrived because of our resilience. It’s this pioneering spirit that gives me faith that we can survive the challenges before us now. However, I do not see how economic survival and recovery is possible if we add this kind of a tax burden to an industry that supports so much of Alaska’s economy.
I urge all Alaskans to learn more about this very serious issue and vote no on Ballot Measure 1 in November. The economic recovery of our community and our State depends on it.
Julie Sande is a retired health care administrator. She currently serves on the on board of the Alaska Industrial Development and Export Authority and Alaska Energy Authority. She also is co-chair of OneAlaska.