Down at polls, Alaska oil-tax opponents will closely watch system's effect on production

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ANCHORAGE, Alaska — Early results indicate Alaska's new petroleum-tax system will be spared an early death by referendum. If the vote holds up, opponents vowed Wednesday to track promises its supporters made and pounce if they prove to be false.

Ballot Measure No. 1 proposed a repeal of Gov. Sean Parnell's "More Alaska Production Act," approved last year as Senate Bill 21 and in effect since Jan. 1. As of Wednesday, the repeal was failing by almost 6,800 votes out of 153,164 cast but too close to call.

The Vote No on 1 campaign said the law would mean more jobs for Alaskans, more oil production, more money in the Alaska Permanent Fund and "more economic growth for everyone."

State Sen. Bill Wielechowski, D-Anchorage, an opponent of the law, said one victory taken from the vote was the extraction of promises from the oil industry that were not made during the Senate Bill 21 debate in 2013.

"If they live up to those promises, that's a victory, that's a great thing for all of us," he said Wednesday. Meanwhile, an army of mobilized Alaskans who voted to repeal will be keeping close watch to see if the system not only stems the decline in Alaska oil but also increases production, Wielechowski said.

"We're in the process of gathering up all the statements that were made by the oil industry and by their supporters, and I hope they live up to them," he said.

Supporters hailed Parnell's measure under the banner of oil-tax reform. It replaced the former system championed by former Gov. Sarah Palin's "Alaska's Clear and Equitable Share," or ACES, which gave tax credits for investment but contained a progressive surcharge that took a larger tax bite from company profits when oil prices increased.

Oil companies said ACES made investment planning uncertain and investment elsewhere more likely.

State Sen. Lesil McGuire, R-Anchorage, said ACES had seven years to work and failed to stop a production decline in a state where 90 percent of government revenue comes from the oil industry.

McGuire said she's willing to give Senate Bill 21 six years and her proof of measureable success will be oil production.

"Without that, you don't grow the royalty base, you don't then put money into the permanent fund, and fundamentally, you don't grow the economy. All you're doing is dividing up what's existing right now," she said.

The law could be adjusted sooner, she said. A provision of Parnell's system is a new Oil and Gas Competitiveness Review Board within the Department of Revenue, an independent board aimed at assessing a fair tax for companies and government.

Kara Moriarty, president of the Alaska Oil and Gas Association, a trade group, said companies already are spending more money under the new law. The indicator of the system's success will be whether investment adds production, she said.

Rep. Les Gara, D-Anchorage, pushed for a yes vote on Ballot Measure 1 and remains skeptical.

"When people see the money disappearing and the production disappearing, and when Republicans again start trying to grab your permanent-fund dividend, people will realize they were misled," Gara said.

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