Alaska Journal of Commerce

New and bigger taxes, reduced PFD in gov’s plan

(Editor's note: This story has been updated to include remarks from legislators as they become available.)

 

Ready or not Alaskans, here comes reality: higher taxes, more of them and a smaller dividend.

Gov. Bill Walker unveiled his long-range fiscal plan for the state Dec. 9, which includes a personal income tax as well raising nearly every state industry tax in the face of yearly budget deficits approaching $3.5 billion.

AGDC, producers approve 2016 spending

Alaska Gov. Bill Walker said he gave the OK Dec. 3 for the state to vote “yes” on continuing work on the Alaska LNG Project after receiving commitments from two North Slope producing companies that they would not withdraw from the project without negotiating to sell their gas.

That same day the partners in the project, BP, ConocoPhillips, ExxonMobil and the state, voted to approve a $230 million 2016 budget and work plan to complete preliminary engineering work. The state’s share of that is 25 percent, or about $57 million.

Cook Inlet fish meeting to stay in Anchorage

The 2017 Upper Cook Inlet meeting of the Alaska Board of Fisheries will be held in Anchorage, as planned and as usual.

The board made the call by a 5-2 vote at the tail end of its Bristol Bay finfish meeting, also in Anchorage. Only two board members, commercial fishermen Sue Jeffrey and Fritz Johnson, voted in favor of a proposal moving the meeting from Anchorage to Kenai Peninsula, where the board hasn’t held an Upper Cook Inlet meeting since the last millennium.

 “Maybe next time,” said member John Jensen of Petersburg, drawing an outraged cry from the audience.

Donlin environmental impact statement released

Twenty years in the making, the first draft of an environmental impact statement for the Donlin Gold mine proposed for Western Alaska was released Nov. 30.

“It’s still a long path ahead of us, a lot of challenges ahead of us, but (the EIS) is a significant milestone,” Donlin Gold General Manager Stan Foo told the Resource Development Council of Alaska Dec. 3.

Early resource definition work at the site began in 1995.

$305B transportation bill grows annual outlays for Alaska

President Barack Obama signed into law the nation’s first long-term transportation funding bill in more than a decade on Dec. 4.

The $305 billion Fixing America’s Surface Transportation, or FAST, Act provides five years of funding aimed at improving rail, road and marine infrastructure. It passed both the House and Senate by wide margins the day prior to being signed by the president.

All three members of Alaska’s congressional delegation supported the legislation.

State working on flatfish tax fix to capture foregone revenue

A state tax rate glitch let groundfish trawlers off the hook for more than $10 million of fishery taxes in the last half decade, and there’s no concrete fix just yet.

The fishery resource landing tax taxes groundfish based on ex-vessel price. Processors turn flatfish caught as bycatch into low-value fishmeal, so the only known ex-vessel price for certain flatfish species is artificially low. Nine species have this price uncertainty, but most flatfish volume comes from yellowfin sole and Atka mackerel.

Board of Fisheries rejects permit stacking for Bristol Bay

One permit, one person will still be the norm for Bristol Bay.

The Alaska Board of Fisheries voted against a fistful of proposals that would have allowed a single person to hold multiple Bristol Bay permits. Taking care of the coastal communities, the board said, trumps the business sense of reinvestment and increased efficiency.

Interior gas project finalists narrowed to two

Interior residents will have to wait a little longer to hear who their new supplier of natural gas will be, but the Alaska Industrial Development and Export Authority has narrowed its project partner options to two: Spectrum LNG and Salix Inc.

Withdrawal agreement would allow state to buy Slope gas

Gov. Bill Walker released the agreement signed Dec. 4 by the state, BP and ConocoPhillips regarding the companies’ willingness to sell North Slope natural gas if either firm withdraws from the Alaska LNG Project.

The nine-page agreement states that the sales offer will be made to the State of Alaska if “mutually agreed commercially reasonable terms can be reached between the relevant party (the withdrawing company) and DNR (the state Department of Natural Resources).”

Annual revenue forecast a bleak picture for production take

The state released its annual forecast for state revenue and oil production Dec. 8, and the news wasn’t good.

Unrestricted general fund revenues, a measure of funds available for appropriation by the Legislature to support public services, is now forecast at $1.6 billion for fiscal year 2016, the current budget year, compared with $2.26 billion for the last fiscal year that ended June 30.

This will likely balloon a projected deficit for the year from $2.7 billion estimated last spring to more than $3 billion.

Marijuana board reverses itself on residency

In an emergency meeting, the Marijuana Control Board voted unanimously on Dec. 1 to reinstate a stricter residency requirement for marijuana business licensees, following Permanent Fund Dividend rules instead of voter registration rules.

The board also tried to loosen rules to allow more access to Outside money, but public process rules will hold that discussion until the board’s next meeting in February 2016.

The regulatory package will now move to Lt. Gov. Byron Mallot for approval pending a review by the Department of Law to make sure the regulations follow statute.

Interior aurora tourism continues to grow in new markets

(Editor's note: This story was updated to reflect an accurate number of Japan Airlines charter flights for this aurora season — from two to three —  after a scheduling change by the airline.)

 

Don’t say “winter” to Deb Hickok.

The Explore Fairbanks CEO is not in denial of the chilling temperatures and dark mornings yet to come. Rather, in the style of any good marketer, she will tell you the Golden Heart City has two seasons: summer and aurora.

“The aurora is really the big thing in Fairbanks,” Hickok said.

It’s hard to argue with her stance.

IPHC staff presents 2016 halibut harvest recommendations

The International Pacific Halibut Commission’s scientific staff released its recommendations for the 2016 harvest Dec. 1, including the first natural bump the Central Bering Sea, or Area 4CDE, has seen in 10 years, as well as an overall increase from recent recommendations.

The international commission sets the direct commercial halibut removals in U.S. and Canadian waters of the Pacific Ocean, incorporating the allocations for sport removals and halibut bycatch that are set by the North Pacific Fishery Management Council.

Citing new projects, explorers urge preservation of tax credits

State oil and gas tax credit incentives are a valuable investment in new oil production and in-state energy security and shouldn’t be trashed, independent explorers are telling state officials and legislators.

In the long run they more than repay the state treasury through new royalty and state taxes, too, several companies say.

Alaska, British Columbia sign transboundary MOU

Gov. Bill Walker and British Columbia Premier Christy Clark signed a Memorandum of Understanding Nov. 25 committing to cooperation on transboundary issues, particularly related to concerns in Southeast over mines on the Canadian side of the border.

North Pacific council to talk halibut rules, groundfish quotas

The North Pacific Fishery Management Council will meet in Anchorage Dec. 9-15 at the Hilton to hash out sport halibut measures for 2016 in addition to setting groundfish harvest limits.

Groundfish — which includes pollock, Pacific cod and flatfish — makes the bulk of the volume pulled from the federal waters off Alaska’s coast. Harvest quotas totaling two million metric tons of those species are set each year in the Bering Sea and Aleutian Islands fisheries.

Tongass EIS proposes transition to young-growth harvest

The future of timber management in the Tongass National Forest in Southeast Alaska is beginning to take shape.

On Nov. 20, the U.S. Forest Service released the first draft of an environmental impact statement, or EIS, needed to amend the Tongass Land and Resource Management Plan with five alternatives for managing the federal forest that dominates the region.

At nearly 17 million acres, the Tongass is the nation’s largest national forest and encompasses about 90 percent of Southeast Alaska.

Hilcorp looks for cost savings, new reserves

Hillcorp Energy’s Cook Inlet oil production is holding steady at about 14,000 barrels per day and the company is now negotiating with Southcentral regional utilities for extension of natural gas supply contracts, Hilcorp president Greg Lalicker told the Resource Development Council conference Nov. 19.

In a briefing on Hilcorp’s activity in Alaska, Lalicker said some new gas supply contracts have been signed out to 2023 and 2024 and others are still being finalized. Hilcorp’s previous supply contracts were through the early part of 2018.

Native regional corporations net income rebounded in 2014

Alaska Native corporations continue to grow in financial strength and are increasingly integrated into the state’s economy. In 2014 total revenues by the 12 Alaska Native regional corporations grew over 2013 in line with a five-year average, according to the latest financial reports on regional corporations released Dec. 1 by the ANCSA Regional Association.

ANCSA stands for the Alaska Native Claims Settlement Act that passed in 1971 and created the regional and village corporations.

Fauske resigns as AGDC president

The melodrama that has become the Alaska Gasline Development Corp. continued Nov. 21 with the sudden resignation of president Dan Fauske.

Fauske stepped down one day after Gov. Bill Walker removed John Burns and Commerce Commissioner Chris Hladick from the Alaska Gasline Development Corp., or AGDC, board.

Burns, who served as board chair, is a former Alaska attorney general.

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