Despite the production drop, high oil prices have resulted in a boom in state revenue, allowing the state of fewer than 800,000 people to approve a $8.6 billion operating budget for 2014 and reserves of $19 billion.
Under S.B. 21, the state is expected to lose about $600 million in the first year and as much as $4.5 billion over five years, which Democrats describe as a bonanza for oil companies at the expense of Alaskans.
“Never in Alaska history has the legislature stolen so much money from the public for so little in return,” the Alaska Democratic Party said in a March statement.
Pat Lavin, campaign coordinator for Repeal the Oil Giveaway, said the bill “threatens to impoverish our state while enriching outside corporations and their shareholders.”
Critics say those predictions assume no increase in production but that S.B. 21 already is spurring development. Along with BP, ConocoPhillips announced in June that it “will increase investment in Alaska as a result of the More Alaska Production Act,” the governor’s office said.
The Alaska Revenue Department estimated “that $5 billion in new North Slope investment could stimulate enough production to pay for the tax and possibly create new revenues by fiscal year 2018,” according to the Alaska Journal of Commerce.
Even though tax collections are expected to drop under S.B. 21 in the short run, the state’s long-term financial health depends on increasing investment and production, Ms. Moriarty said.
“We don’t see it as a giveaway,” she said. “We see it as a policy that sustains Alaska for the future.”
The repeal petitions must be certified within the next 60 days. If the petitions pass muster, the proposal will be put before voters during the statewide election in August 2014.