Posted Wednesday, November 15, 2017 - 10:06 am
There’s new math, old math and just plain crazy math, which best describes the latest formula from Sens. Berta Gardner and Tom Begich to close our fiscal gap in part by raising taxes on oil and gas a seventh time in 12 years.
While most governments around the world have offered incentives to help energy companies weather low oil prices, Alaska raised its oil taxes in 2006, 2007, 2014, 2016 and 2017 – and now talks about upping them again. To be fair, the Legislature did pass a tax credit incentive package in 2010, which turned a gas shortage in Cook Inlet into a surplus and doubled the area’s oil production while also attracting new independents to the North Slope.
Changing tax policy every year or two just doesn’t add up because it’s a destabilizing factor that makes it harder for Alaska to compete for the capital we need to fully develop our assets.
Sens. Gardner and Begich base their argument on their claim that Alaska is not receiving its “fair share” of the value of our oil and gas. The fact is Alaska has some of the highest oil taxes in the world. The fact is Alaska’s share is higher than the producers at every price point. The fact is the state gets paid even when producers are operating at a loss because it still collects royalty, property tax and income tax.
Based on the facts, one could argue that’s more than fair.
Our current oil tax policies are working, balancing Alaska’s “fair share” with the needs of the industry to create a viable operating environment for the companies to do business.
Oil production has risen the past two years for the first time in a decade, even though 2016 was a rough year to be in the oil business. The industry cut its spending by 44 percent, laying off 3,600 workers and letting drilling rigs sit idle. The state expects another increase in production this fiscal year, even if oil prices don’t rise significantly.
In a Preliminary 2017 Fall Production Forecast report recently presented to the House Finance Committee, Paul Decker and Ed King from the Department of Natural Resources point to the efforts of Alaska’s producers for the increased output, saying they “outperformed expectations, doing more with less.”
That’s a lesson the state should learn.
And in its Fall 2017 Preliminary Revenue Forecast Presentation, the state Department of Revenue reported that petroleum revenue is projected to represent 70 percent to 72 percent of the state’s unrestricted revenue in fiscal years 2018 and 2019, up from 65 percent in fiscal year 2017, an increase tied to projected increases in production and oil prices.
It should be noted that these production increases come not from the giant new oil finds on the North Slope but mainly from existing fields, primarily Prudhoe Bay and Alpine. The billions of barrels of oil still in the ground need billions more in new capital before they can leave the ground.
The solution to increasing Alaska’s revenues is not tipping the scales by piling more taxes on an already lean and still struggling industry. As we’ve seen under past oil tax regimes, increased taxes on the industry does not equal increased production. Instead, we saw years of decreased production when oil prices were sky high. In fact, Alaska was the only state to lose production when oil topped $100 per barrel.
We must maintain stable policies, encourage investment and put more oil into our pipeline. That’s how we increase much-needed revenues for Alaska.
We hope our elected officials will recognize the long-term effects of their actions, take steps to ensure a healthy and stable operating environment and recognize that the best way to increase revenues for Alaska is to get more oil in the pipeline. Threatening our resource industry with increasing taxes is not productive.
More oil is the answer — but to get more oil, we need more investment.
Gail Phillips is a former Speaker of the Alaska House of Representatives and current board member of KEEP Alaska Competitive, a group that aims to encourage oil industry investment and discourage higher oil taxes.
Posted Wednesday, November 08, 2017 - 10:23 am
A year ago to the day from this writing, Donald Trump defeated Hillary Clinton in a political upset for the ages that both Democrats and Republicans are still trying to come to grips with.
The infighting between Republican ranks of the establishment put off by Trump’s brash nature versus the voters who put them all in power is rivaled only by the Democrats’ self-immolation over the still ongoing Wednesday-morning quarterbacking about how Clinton blew what was supposed to be an easy win and recent revelations about primary-rigging and the Russian “collusion” that are leading not to the White House but to the Democratic campaign apparatus instead.
While there was immediate hope within Alaska at the realization that the federal government would get its boot off the state’s neck after eight years of strangulation by the Obama administration, nobody could have predicted just how greatly Trump would focus on unlocking the state’s resources.
This December, the entire available area of the National Petroleum Reserve-Alaska of nearly 12 million acres will be up for bid in a lease sale.
Around that same time, Congress should be passing a tax reform bill through budget reconciliation that will finally open the coastal plain of the Arctic National Wildlife Refuge to development as was intended nearly 40 years ago when that area was set aside for its vast potential.
After the much-publicized $7 billion failure of Shell to explore its Arctic offshore leases, Eni and Hilcorp are quietly advancing plans to produce oil from federal waters of the Outer Continental Shelf from manmade islands.
Regular order has been restored to the permitting process for the Pebble mine, whose owners have finally released a plan for a scaled-down version of the project with an assurance it will finally get a fair hearing.
Right now, Gov. Bill Walker is the only state executive traveling with Trump on his trip to Asia, and the president has dotted his administration with Alaskans in some of the most important positions.
Trump has recognized Alaska’s strategic national security importance, and just sought another $4 billion for a new missile defense site at Fort Greely.
He put Alaskans in charge of the nation’s fisheries, its on and offshore minerals, the Environmental Protection Agency Region 10 covering the state and made Tara Sweeney the first Alaska Native woman appointed to a confirmation-level post as the Assistant Secretary of the Interior for Indian Affairs.
The road from King Cove to Cold Bay looks surer to become a reality than it ever has, and while the environmental non-government organizations have howled at its recent progress, the fact an issue as relatively small as this one has caught the attention of Interior Secretary Ryan Zinke as a priority speaks volumes about Alaska’s status in the current administration.
Oh, there have been troubles along the way, as Trump has aimed his Twitter ire at our senior Sen. Lisa Murkowski over her reticence to go along with a rushed process on repealing Obamacare that even included an alleged threat from Zinke in a beef that was quickly squashed.
Even on that front, earlier this year the state received an “innovation waiver” under Obamacare that allowed the federal government to fund the state’s reinsurance program in lieu of larger premium support payments. The move makes Alaska likely the only state in the nation in line to see insurance premiums fall next year.
Thanksgiving is still a couple weeks away, but it’s never too early to be glad for where the state stands now compared the wasteland it would have been under a President Hillary Clinton.
Andrew Jensen can be reached at [email protected]
Posted Wednesday, November 08, 2017 - 10:23 am
Alaskans could be forgiven for feeling like Phil Connors, the TV weatherman played by Bill Murray in the movie Groundhog Day, when it comes to the state’s response to the ongoing budget crisis.
The Legislature is once again back in session to consider Gov. Bill Walker’s proposal to impose a 1.5 percent tax on the wages of Alaskans earning $75,000 or more a year.
This is the second year in a row that Walker, an independent, has proposed the adoption of an income tax to cover at least part of the annual budget shortfall. Despite his protests that the proposal is really a “head tax,” a tax on income is an income tax, plain and simple.
Legislators by now must be feeling like weatherman Connors themselves — doomed to wake in a city that is not their home and repeat the same debate about how to cover the cost of state services, and run headlong into the same deadlock with their colleagues over which Alaskans should pay more for those services — over and over again.
Two years of constant in-fighting, failure to reach compromise and the inability to pass meaningful legislation. What is the answer?
The only way to escape this time warp is for our state’s leaders to learn from past mistakes and change the behavior patterns that burdened Alaska with a $2.5 billion deficit in the first place. That means addressing the policies that result in Alaska consistently being ranked among the least attractive places in the nation to do business.
Alaska is already one of the nation’s most expensive places to live, so legislators should think twice before adding to the burden of working families. With the state limping through another year of recession with the nation’s highest jobless rate, taking a bite out of Alaskans’ take-home pay is the wrong way to revitalize the economy.
Almost two years ago, my family and I chose to leave our Alaska home to seek a more prosperous path. Burdened by the high cost of living and a recent job loss, we moved south but our hearts stayed in Alaska. It is frustrating to see the place I called home for so long, head down a path of self-destruction.
New taxes are not the answer. Taxes don’t create wealth — they simply redistribute money that someone else has earned by employing labor, creativity, and enterprise to generate value from the kinds of resources we have in abundance. As long as the size of Alaska’s economic pie continues to shrink, there will be less and less to go around, no matter how you slice it.
Instead of new taxes, what Alaska needs is a fiscal plan that restores sanity to the budget process by reducing spending and encourages investment in the state’s sizable resources.
The state’s current budget crisis is the result of low oil prices and declining North Slope production, but the fiscal situation has been made worse by years of Legislatures that failed to live within their means.
Legislators can’t set the price of oil, but they can make Alaska more competitive by enacting stable regulatory and fiscal policies designed to attract the private-sector investment necessary to harvest the billions of barrels of new oil reserves whose discovery the state has worked so hard to make possible.
The first step toward achieving this goal is to put the state’s fiscal house in order with a series of targeted cuts that bring spending down to a sustainable level. When you’re in a hole, stop digging.
Second, legislators should cap unrestricted general fund spending to ensure future legislatures don’t revert to bad habits once the price of oil rebounds.
Finally, structural changes to the $61 billion Permanent Fund would allow lawmakers to use a small portion of the investment earnings to pay for essential services. No one is suggesting we give them the keys to the piggy bank, but providing the Legislature with a reliable source of revenue to pay for truly essential state services would remove the need to tax working Alaskans while ensuring that a reasonable dividend program survives for future generations.
New revenue alone won’t close the budget gap as long as spending remains unchecked and oil production continues to decline. The Percentage of Market Value plan put forth by the Senate, though, would provide the revenue to see the state through potential shortfalls while giving new oil discoveries time to come online.
We cannot tax our way to prosperity. We can, however, make Alaska a more attractive place to invest and stay. If we continue to repeat the mistakes of the past, though, more young families will leave in droves as legislators once again engage in the same political battles about who should pay for state services.
Anne Seneca is a 25-year resident of Alaska who is currently pursuing economic opportunities in Texas. She hopes to return to Alaska with her family soon.
Posted Monday, November 06, 2017 - 2:01 pm
I read with some satisfaction — and disappointment — Senate President Pete Kelly’s recent opinion piece “The sky is not falling.” While I share his optimism regarding North Slope oil production, I am sorely disappointed that he continues to issue statements that rationalize ignoring our fiscal crisis.
I also object to President Kelly’s false claim that my administration manipulated oil revenue forecasts to justify new revenues. Nothing could be further from the truth, and I will not allow his fabrications to go unchallenged. The hard-working members of the Department of Revenue serve with integrity as they strive in good faith to solve Alaska’s fiscal crisis.
Yes, recent technological advances by North Slope producers have slowed the decline in our older fields. Exciting new developments that have been talked about for years are now close enough to reality that a modest increase in throughput in the Trans-Alaska Pipeline System is possible. I applaud the splendid work of the producers on these fronts.
The additional revenue from this production, compared to previous forecasts, could reach $500 million per year by 2026. As encouraging as this sounds, that additional revenue would only help our income keep pace with inflation. If the state continues to provide the same services it does now, when adjusted for modest inflation, we’ll continue to see annual budget deficits similar to what we have today.
Sen. Kelly noted, “The Senate will support new revenues only when it is proven to be in the best interest of Alaskans as a whole, not just their government.”
Here’s where President Kelly and I agree: We have now reached that point where it is in Alaska’s interest to diversify our revenue stream. The benefits Alaskans would gain from stable and sustainable state services outweigh the cost of a small additional tax.
As President Kelly knows, nearly 50 percent of the state operating budget goes directly to local communities. In his community’s case, this includes a portion of education funding in the Fairbanks-North Star Borough, law enforcement and school debt reimbursement for the Fairbanks area, University of Alaska Fairbanks funding, health care for those in the Interior, safe roads in the area, and more. These are all critical services that support Alaskans, not their government. But they cannot be maintained with our current revenue.
The legislature has already made significant reductions to state spending. These budget cuts — from $7.8 billion in 2013 to $4.3 billion this year — impact every department and every Alaskan. Smart cuts will continue and efficiencies will be found, but the truth is that the fat my administration inherited is largely gone: muscle and bone are now at risk.
While denying our fiscal reality, those in the Legislature who oppose any new revenue have spent down $14 billion in savings, with nothing to show for it. We could have funded the state’s deferred maintenance many times over with that money, yet some still refuse to act.
Nearly all legislators agree that a Permanent Fund restructuring that protects the fund and preserves a dividend is an essential part of the fiscal solution. But that alone won’t get us to a balanced budget.
President Kelly acknowledges this deficit, yet feels additional revenues are unnecessary. His claims are based on overly optimistic assumptions of revenue growth and unrealistically static expenditures for years to come.
Our savings are all but gone. Credit rating agencies continue to downgrade our borrowing ability. Billions of dollars in deferred maintenance are going unfunded. We simply can’t count on improbable outcomes; there’s too much at stake.
My administration’s small revenue proposal is reasonable fiscal policy, and will still leave Alaskans as the lowest-taxed Americans. It also ties Alaska’s budget to the state’s economy, so that when growth occurs, we can collect the additional revenue needed to provide the roads, schools, troopers, and other services new jobs and people require.
Moreover, for the first time, nonresidents — who make up about 20 percent of our workforce — will finally start contributing to the cost of essential services they use.
No, the sky isn’t falling, not even close. Alaska is strong, and we have world-class resources and enviable assets set aside for just this moment. The combination of wise use of our Permanent Fund with a small and limited new revenue source can put us back on the path to prosperity. To those who propose to do nothing, I say that Alaskans deserve results, not rhetoric; solutions, not slogans. The time to act is now.
Gov. Bill Walker, an independent, is the 11th governor of Alaska.
Posted Friday, November 03, 2017 - 9:33 am
About a week ago, Alaskans received some outstanding news. North Slope oil production is forecast to rise for a third consecutive year. Since 1988 was the last time this happened, it’s worth stepping back to take in the larger picture.
Because Alaska gets the bulk of its revenue from oil, increased production means the state has a lot more money in its future than the Gov. Bill Walker has been telling us. It also means Alaskans chose wisely when they voted to keep in place the oil tax reform known as SB 21 — but that’s a topic for another day.
Remember, it was just last March when Gov. Walker and the House Democrat Majority were desperate to justify an income tax. The Walker administration told us to expect a 12 percent decline in oil production this year that would result in a catastrophic loss of revenue.
As it turns out, we have a two percent increase. So, what unforeseen economic event accounts for this 14 percent turnaround? The answer is, nothing. It appears the sky-is-falling projection was never justified. Doomsday scenarios were useful, however, to the Walker administration as they worked to rationalize a tax and spend agenda.
Last year, when we in the Republican-led Senate Majority were confronted with Walker’s projections, they just didn’t make sense and our Finance Committee pushed back. After all, we had just experienced two years of increases after decades of declines.
In addition, there was a barrage of good news about huge discoveries on the North Slope. Even though we didn’t have exact numbers, the anecdotal evidence was mounting, and it suggested the administration’s production estimates were nonsense.
Ultimately, Walker’s officials admitted their numbers were “stale,” and the Senate told them to sharpen their pencils and provide us with more realistic information. About a week later, they came back and their new projections showed only a four percent decline. It was still off by about $600 million gross, but at least in the realm of reality.
This all happened in an environment where Gov. Walker and the House Democrat Majority envisioned an Alaska IRS system under which working Alaskans would write a second check on April 15. The Senate said, “No.” As a result, we were dragged into multiple special sessions as the governor and political left sought to wear down the Senate’s resistance.
During this time, we were told repeatedly to “do our job”, but apparently what that really meant was “capitulate!” And do it quickly before anyone calculates the math.
When the governor began talking about another special session on taxes in October, the Senate told him he needed to provide accurate oil production numbers before we would engage in any discussions about revenue.
To the governor’s credit, the new numbers didn’t help his position, but he delivered them anyway. It is these new oil production estimates that show a two percent increase instead of a 12 percent decline. That 14 percent change represents nearly an additional $1.5 billion circulating in our economy.
The Senate does not believe our fiscal problems are over. However, these new oil production estimates suggest we may be dealing with a difficult but manageable problem, not a dire crisis.
The Senate has repeatedly found that our reserves, if prudently managed, will earn enough investment income to fund government and ultimately close the fiscal gap without taxing Alaska’s wage earners. Our plan does not rely on draconian cuts, nor does it wipe out our budget reserves. It does, however, envision a state spending limit and continued downward budget pressure to reduce the size, scope and intrusiveness of government.
Gov. Walker and the House Democrat Majority labor under the false impression that the Senate will act counter to the best interests of Alaskans after we have been sufficiently leveraged, worn down or cajoled. The governor can drag us back to Juneau, ad nauseam, and the leftists can pin every government ill on us, but it simply won’t work.
Here’s the deal: in the last two years, senators have spent more than a year living in Juneau hotels and sleeping in rented beds, but we will not be more easily leveraged just because we are tired. We won’t be leveraged because we’re unpopular with the bureaucracy, either.
The Senate will support new revenues only when it is proven to be in the best interest of Alaskans as whole, not just their government.
Sen. Pete Kelly, a Republican from Fairbanks, is President of the Alaska State Senate.
Posted Wednesday, November 01, 2017 - 12:06 pm
Alaska needs to repeal Senate Bill 91. I say this as a former supporter of the bill. I even co-sponsored it. I fully believed in the bill. I don’t believe in it anymore.
Senate Bill 91 has failed — and ever since its passage I have watched my neighbors and fellow Alaskans suffer as crime has increased, seemingly without end. We need to start over.
We got it wrong and we need to say so. If we don’t acknowledge it’s broken, we won’t be able to fix it. The good intentions of Senate Bill 91, and the results seen in other states, are meaningless if Alaskans are not safe. We need to recognize the law failed us and has hurt Alaskans, families, and businesses. The public has lost its trust in our criminal justice system, and repealing this law is the first step to gain it back.
When I was growing up in Turnagain, my parents left the front door unlocked for friends and neighbors. Today those same friends and neighbors tell me they no longer feel safe in their homes. With unprecedented levels of car theft and other crimes, we’ve lost the sense that our community is a safe place to live.
The first step toward feeling safe in our communities is a full repeal of Senate Bill 91. Here’s why.
Those on the front lines of public safety — our police — tell us they no longer have the tools in law to keep us safe. Decreasing sentences under Senate Bill 91 was supposed to provide for rehabilitation and other alternatives for offenders that would prevent crime. That isn’t happening. Alaskans are frustrated and angry to see thieves walk away from crime scenes with merely a citation.
The wholesale rewrite of our criminal statutes happened during an economic recession and drug epidemic in Alaska. Our criminal justice system is overwhelmed and not able to keep up with rapid changes required by Senate Bill 91. Lowering sentences, a new bail schedule, and changes to probation and parole have created confusion around our efforts to improve public safety.
Since the passage of Senate Bill 91, Alaska’s crime rates have spiked. According to crime data collected by the FBI, Alaska jumped from being 25th in the country in burglary to 14th. For larceny, we went from 13th to second. In property crime, we’ve gone from 17th in the nation to third. Alaska is in the top 15 in every category of crime for the first time in our history — just since Senate Bill 91 passed.
Some fervent supporters of Senate Bill 91 say that crime has been increasing for years and that Senate Bill 91 isn’t to blame. But this isn’t quite true. According to the Department of Public Safety’s Crime in Alaska 2016 report, over the last 15 years, the trends for larceny, burglary, and vehicle thefts were down — until last year, when Senate Bill 91 was signed into law.
All categories showed sharp spikes upward in 2016. In fact, except for murder, crime rates in all offenses increased in 2016.
Naturally, Alaskans don’t want a knee-jerk reaction to public policy, and neither do I. Repealing the law, and reviewing the provisions that we agree can work one by one, is the best way to restart this process. We need continue thoughtful, focused dialogue with the Legislature and the public. However, that conversation needs to begin by listening to those of you who have been affected by Senate Bill 91.
Right now, criminals are emboldened, and law-abiding Alaskans have lost our sense of safety. We need to send a clear message. We owe it to our communities to repeal Senate Bill 91 and start over.
Senator Costello serves as the Chair of the Senate Labor and Commerce Committee and a member of the Senate Judiciary Committee. She is a graduate of West High, Harvard University and has a Master of Art in Teaching from the University of Alaska Southeast. She has served West Anchorage in the Legislature since 2011.
Posted Wednesday, November 01, 2017 - 10:12 am
In 1923 President Warren Harding set aside 23 million acres in the middle of the U.S. Arctic as a petroleum reserve. The National Petroleum Reserve-Alaska, or NPR-A, is magnificent and its oil resource potential is world class.
In 2002 the U.S. Geological Survey estimated 10 billion barrels of undiscovered oil in the reserve. While that number was downgraded to 900 million barrels in 2010, exciting new discoveries at the Nanushuk and Willow prospects indicate the 2002 estimate was likely more accurate, and might even be too conservative.
Alaskans know better than most that we are vying with other nations for control of the Arctic. To win the race for control our top priority should be developing infrastructure in the region. Doing so will protect and strengthen Arctic communities, increase commerce for Alaskans and our country, and provide a platform for our nation to face challenges and even threats from other countries attempting to infringe on our waters.
Our nation is also moving toward its longstanding goal of energy independence. Domestic oil production has grown from a low of 5 million barrels a day in 2008 to a high of over 9.4 million barrels a day in 2015, providing the United States greater flexibility in its dealings with other nations and less reliance on imports from unstable areas of the world.
But domestic exploration and development of oil must continue if we are to obtain and maintain energy independence. Developing our untapped resources in the NPR-A is necessary to support this objective and highlights Alaska’s role in the safe and responsible production of domestic oil.
In May we were excited to hear Secretary of the Interior Ryan Zinke’s commitment to seek updated geologic information across the North Slope. Secretary Zinke’s comments highlighted the federal government’s commitment to developing updated data to support exploration of Alaska’s untapped oil. Alaska will be a key partner in collecting new data and updating resource estimates.
Our Geologic Materials Center in Anchorage, known as the GMC, is a world-class repository for core samples, well information and seismic data. It is a significant state asset that we can rally around as we assess and make decisions about the values below the tundra in the NPR-A. Count Alaska in when it comes to gathering new information that informs development.
In addition, the Walker Administration takes to heart our commitment to improve the lives of all Alaskans including our obligation to the communities in the Arctic region. In 2016 Gov. Bill Walker initiated a series of meetings with North Slope leaders.
It was agreed the most important feature missing on the North Slope landscape was infrastructure linking and supporting communities. Walker has addressed this issue by creating a program to systematically plan to build infrastructure that meets local needs and provides North Slope residents the benefits that most other Alaskans enjoy.
The project is called ASTAR, short for Arctic Strategic Transportation and Resources. ASTAR will allow the State to redouble its efforts to work with communities that need critical infrastructure; take a lead role in long-term plans that focus on cumulative benefits of development; and ensure subsistence is protected. The North Slope Borough has formally joined the State of Alaska in the ASTAR project and we are forging ahead on this project in the coming year.
To increase positive momentum for NPR-A oil exploration, we need to do three things. First, we need Alaskans in the pilot seat when it comes to developing plans for the NPR-A. The State can help the federal government develop management plans that truly balance development and protection. Second, we need to empower local groups to have more control of the process. The NPR-A Working Group is a good example of local involvement.
This group, composed of the leaders of North Slope government, tribal organizations, and Alaska Native corporations was created by BLM in early 2013 to place local leaders in the co-pilot seat along with the federal government on NPR-A decisions. As new plans were considered, we look forward to the working group reconvening to provide strong, locally-sourced input. Third, we need to think long term. The saying goes “the best time to plant a tree was 20 years ago.” Let’s seize the opportunity and plant Alaska’s tree now.
The NPR-A is a beautiful and stark landscape. The opportunity to move forward with balanced and well-informed management plans that benefit Alaskans and Alaskan communities is here now. The state is committed to working with Alaskan stakeholders to ensure we are all successful.
Andy Mack is the commissioner of the Alaska Department of Natural Resources.
Posted Friday, October 27, 2017 - 11:08 am
If Sen. Bill Wielechowski is true to his word, we’ve heard the last from him about changing Alaska’s oil taxes.
Back on June 10, 2014, Wielechowski and now-former Sen. Hollis French (who Gov. Bill Walker appointed to the Alaska Oil and Gas Conservation Commission last year) issued a “very simple challenge.”
“If SB 21 produces new oil, even ONE additional barrel, and this production results in increased revenue to the state, even ONE more dollar we will drop our support for revising oil taxes,” Wielechowski said.
The legislation proposed by Wielechowski and French called for the previous system known as ACES to be retroactively implemented in 2019 “if there is not one new barrel of oil produced compared to the 2013 TransAlaska Pipeline moving average of 531,000 (approx.) and total oil revenues from 2014 to 2018 are not any greater under SB 21 than they would have been under ACES.”
On Oct. 25 in Juneau, state Revenue Department officials released a revised production forecast for the current fiscal year of 533,000 barrels per day.
That’s 1,999 barrels more than needed under Wielechowski’s and French’s challenge and by the time the fiscal year ends next June 30 it could be plenty more.
We’ve yet to reach the peak production months on the North Slope, yet in September the daily rate was 512,000 barrels per day compared to 474,000 per day in September 2016.
So far in October, the daily production is 537,000 barrels per day compared to 525,000 per day in the same month last year.
This puts the North Slope on track for its third straight year of production increases in the four full fiscal years that Senate Bill 21 has been in place despite the fact prices have cratered from about $112 per barrel when it passed to as low as $26 per barrel in January 2016.
Meeting the revenue half of the Wielechowski-French challenge is even more of a layup.
Nobody, not even the Democrats, disputes that SB 21 has collected more production tax revenue than ACES would have at the prices from 2014-18. ACES would have collected zero production taxes at prices less than $63 per barrel, which we haven’t seen since the first quarter of 2015. The revised price forecast doesn’t expect prices to cross the $63 threshold until 2020.
That represents hundreds of millions more in revenue under SB 21 versus ACES.
Early indications are Wielechowski has either forgotten about the gauntlet he and his former Democrat colleague laid down or doesn’t intend to abide by it.
He was tweeting the day after about how we haven’t reached former Gov. Sean Parnell’s goal of 1 million barrels per day and then turned his attention to the difference in production tax revenue versus the entirely separate subject of oil tax credits.
Sarah Erkmann Ward of the Alaska Oil and Gas Association offered a kill shot to Wielechowski’s million-barrel reference when he claimed Parnell’s goal was entirely based on passage of SB 21 and not the potential production from the Arctic National Wildlife Refuge or the Outer Continental Shelf.
Ward promptly replied with the 2012 briefing note from the Department of Natural Resources, which clearly included ANWR and OCS as part of the 10-year goal to reach 1 million barrels.
We are now five years out from that briefing paper, and years 2-5 are of particular note:
“Increased infield production from legacy fields.”
“Development of smaller pools of conventional oil (Oooguruk, Nikaitchuq, and others); the North Slope is estimated to have “dozens” of such untapped fields ranging from 25 million to 350 million barrels”
“Production from the eastern North Slope, including Point Thomson, which will create economies of scale to explore and develop the eastern North Slope.”
Wielechowski has been hoisted by his own challenge, but his defensive and rather sad tweeting shows he remains without shame about how wrong he’s been on SB 21.
Moving from the pathetic to the laughable was Walker’s reaction to the production forecast:
“The Walker-Mallott Administration has been working closely with our industry partners to incentivize production, which is crucial to building a Stronger Alaska.”
Closely as in proposing several times to raise oil production taxes.
Closely as in vetoing $630 million in oil tax credits over two years that has slowed down or stopped multiple efforts at exploration and new production.
Closely as in threatening the operators of Prudhoe Bay for not bowing to his demands for natural gas marketing information.
Mallott, for his part, declared that oil would no longer be the sustaining driver of the economy, “not even close to what it has been in these first 50 years,” in a speech to the Southeast Conference in September 2016.
Meanwhile, the Nanushuk project by Armstrong Energy that could reach 120,000 barrels per day is going through permitting, as is Hilcorp’s Liberty OCS project pegged to reach 60,000 barrels per day.
Meanwhile, ConocoPhillips is developing its Greater Mooses Tooth 1 and 2 prospects that have combined potential of 60,000 barrels per day and the company also announced its Willow discovery in the NPR-A with potential for 100,000 barrels per day.
That’s up 340,000 barrels per day of production that could come online within or near Parnell’s 10-year window.
Wielechowski and Walker, who both campaigned to repeal SB 21 in 2014, should simply admit they were wrong and stop embarrassing themselves with claims to the contrary.
Andrew Jensen can be reached at [email protected]
Posted Wednesday, October 25, 2017 - 10:26 am
Now is the time to enshrine Permanent Fund Dividends in the Alaska Constitution to protect your share of Alaska’s mineral wealth from politicians, and to tell your legislators that they must do the hard work to eliminate the deficit.
For the last three years, a debate has raged about Alaska’s fiscal future — how are we going to pay for the essential state services we all need to maintain the quality of life we all expect.
Due to our near total dependence on oil revenue and the continued low price of oil, Alaska has been pushed into a fiscal crisis. This crisis will only worsen in the coming years because we are saddled with an ill-advised oil tax system that only returns fair value to the state at price levels we are not expected to see anytime soon, if ever. As a result, there is not enough money coming in to cover the cost of vital state services like public education, public safety, and resource management.
Over the last few years, many of us have been bloodied, but not beaten, in the fight to ensure Troopers stay on duty, the roads are plowed and maintained, and there is funding for our seniors and students.
In contrast Senate President Pete Kelly and his allies tried to slash spending on vital state services, failed to consider new revenue, and sought to reduce Permanent Fund Dividends in an effort to prevent any oil tax reform efforts from gaining traction in Alaska.
Because of this, it is time to permanently protect Alaskans Permanent Fund Dividends by passing a comprehensive fiscal plan and enshrining PFDs in the Alaska Constitution. We are afraid that once politicians are allowed to get their hands on the Permanent Fund they won’t stop until there are no more dividends.
The lingering recession that sprang out of the ongoing fiscal crisis continues to put a damper on our economy and is jeopardizing thousands of private and public-sector jobs. Every single indicator shows the economic well-being of our state is at risk.
That’s why a group of Republicans, independents and Democrats in the Alaska House of Representatives decided it was time put aside partisan politics in favor of solutions. The Alaska House Majority Coalition formed with just one goal, to address the fiscal crisis by passing a comprehensive fiscal plan to save the economy and protect jobs and Alaskan families.
The plan we developed is fair because it does not unfairly burden one group over another. Our plan is responsible because over time it gets rid of the structural deficits that are jeopardizing our dwindling savings. Our plan invests in Alaska because it allows for economic development and a meaningful capital budget in the future.
Despite widespread skepticism, our Coalition successfully passed our plan through the House during the regular 90-day session only to watch the Senate Majority ignore it in favor of dangerous cuts to public education and other vital services.
Most troubling is the Senate Majority’s insistence that a massive cut to future PFDs is the only solution to Alaska’s fiscal challenges they will accept. We are sorry to report that we see a concerted effort by the Senate Majority to use up the earnings of the Permanent Fund in a very unsustainable and unfair way.
The battle this year between the new bipartisan Alaska House Majority Coalition and the Senate Majority proved to us that the Senate Majority is not the least bit interested in a comprehensive fiscal solution for Alaska. They are interested in the billions of dollars in the Alaska Permanent Fund’s Earnings Reserve Account, the account that funds Alaskans yearly Permanent Fund Dividends.
The Senate Majority continues to advocate for a PFD-only solution to reduce the deficit. That isn’t right, and we can’t stand by and let that happen. The Alaska Constitution is where we enumerate the rights that we will never give up and we say the time has come to make a dividend a right for all Alaskans.
Why should the Senate Majority use your share of Alaska’s oil wealth to reduce the deficit while out of state workers and oil companies sacrifice nothing? Their plan is inherently unfair because the wealthy will pay the exact same amount as the thousands of hardworking Alaskans that are struggling to make ends meet.
Finally, economists have said that reducing the PFD does the most damage to the overall economy compared to other deficit reduction measures. This means more lost jobs, more closed businesses, and less prosperity for everyone.
These reasons are why it is time to enshrine the dividend in the Constitution, to protect your share of Alaska’s mineral wealth from politicians, and to tell your legislators that they must do the hard work to eliminate the deficit.
It tells them that they cannot balance the budget solely on the backs of every Alaskan man, woman, and child. We believe this is the action required to ensure dividends into the future, and one that will force legislators to implement a fiscal plan to protect Alaska’s future.
Rep. Chris Tuck is a Democrat from Anchorage and the House Majority Leader. Rep. Gabrielle LeDoux is a Republican from Anchorage. This commentary only represents the opinions of the authors. The opinions expressed are not endorsed by the members of the Alaska House Majority Coalition.
Posted Wednesday, October 25, 2017 - 10:03 am
Faribanks Daily News-Miner
The 9th U.S. Circuit Court of Appeals should be broken up, split into two or three smaller and perhaps more regionally aware circuits. It’s been the unrelenting plea of Alaska officials for decades, it seems.
It should be broken up for many reasons.
The 9th Circuit is the largest of the nation’s 13 federal appellate courts. It is based in San Francisco and hears appeals from Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington and the territories of Guam and the Northern Mariana Islands.
Together, that’s about 20 percent of the U.S. population and is a disproportionately larger share than of the other circuit courts.
The court, as of March, has 29 active judges and 15 judges on senior status, a classification that in many instances has such a judge working as much as one on active status.
It’s a large court. Calls to break the 9th Circuit have come from beyond Alaska’s border as well and for a long time.
One of the significant factors supporting the division of the court — and one that relates directly to those who find themselves using the 9th Circuit — is that the court takes, by many accounts, an inordinately long time to close out cases.
The extended time in closing a case results in extended trauma for people who have truly been victimized, whether in a criminal or civil case.
The 9th Circuit’s own website indicates a lengthy process:
An oral argument on a civil appeal will occur 12 to 20 months after the filing of a notice of appeal. It’s four to five months for a criminal case.
After that, it’s three months to a year until the court issues a decision, though the judges have no time limit.
That’s a long time.
9th Circuit Judge Andrew Kleinfeld of Fairbanks strongly favors, and has for many years time, the breakup of the court on which he has served since 1991. He laid out the severe problems of the over-sized court in remarks submitted for a hearing of a subcommittee of the House Judiciary Committee in March of this year.
Judge Kleinfeld’s observations about the 9th Circuit should concern residents of all states covered by the court. He provides a grim insight into what he sees as the court’s failings — failings caused by the sheer size of the court, which is so big it cannot ever meet as one, known as “en banc,” to rehear cases. That is left for smaller panels.
Here are but a few of Judge Kleinfeld’s many points, in brief:
“Our size causes errors, and gives us too much power,” he stated in his 14 pages of written testimony. “When we make a mistake, the impact is colossal, and we do make mistakes. We have so many judges that we cannot read each other’s opinions, and we cannot correct our errors by effectively rehearing cases en banc.
“Judges on the same court should read each other’s decisions. We are so big that we cannot and do not. That has the practical effect that we do not know what judges on other panels are deciding.
“The Ninth Circuit, because of its size, is not and cannot be a reckonable court. No district judge and no lawyer can, by reading even a few hundred of our decisions, predict what our court will do in the next case. Even if the decisions could be read, there are over 3,000 combinations of judges who may wind up on panels, so the exercise would not be worth the time.
“Judges betray their trust if they do not act with shared authority. We were not put in office to be 29 individuals each imposing our idiosyncratic individual will on 60 million people. The en banc process is what an appellate court uses to speak as a single unified organ of authority. Because of our size, that is impossible.
“We judges on the Ninth Circuit have too much power over too many people. When we err, the consequences of error can be very great, and the Supreme Court cannot catch all the errors. Much governmental power in our country is confined by distributing it among 50 states. Our court’s excess power can benefit from division into two or three intermediate appellate courts.”
Deciding the number of circuit courts is within the purview of Congress; it created the 11th Circuit in 1980, for example. But, as with many issues, opposition exists.
Nevertheless, a firm case exists for breaking up the 9th U.S. Circuit of Appeals. The effort to achieve that should continue.
Read Judge Andrew Kleinfeld’s testimony to a House Judiciary Committee subcommittee here: http://bit.ly/2yEKhO1
Posted Wednesday, October 25, 2017 - 10:03 am
Recently, this paper ran a curious op-ed by Dan McCue, a senior vice president at Alaska USA Federal Credit Union. He argued that credit unions would be hurt if Congress does not block a new rule from the Consumer Financial Protection Bureau, or CFPB, that restores Alaskans’ day in court.
The rule prevents credit reporting agencies like Equifax, big banks like Wells Fargo, and other financial corporations from using fine print clauses to take away people’s choice of banding together in court if a company violates the law. The rule allows people to choose arbitration if they want. But companies can’t rig the system by removing the choice of court and forcing people alone, one-by-one, into secretive proceedings before a private arbitrator approved and often paid by the company.
Mr. McCue’s position is surprising because Alaska USA Federal Credit Union — like virtually all credit unions in Alaska and nationwide — does not use forced arbitration.
Indeed, a survey by the National Consumer Law Center could not find a single arbitration clause in any credit card or deposit account agreement offered by any Alaska credit union. Similarly, a comprehensive study by the CFPB found that 97 percent of credit unions did not use arbitration clauses in their credit card contracts and only 8 percent of banks and credit unions — primarily large banks — did so for checking account agreements.
Credit unions treat their customers fairly and don’t need to take away their day in court. Credit unions also have an interest in their customers’ financial health, and will benefit if people have stronger tools to fight financial predators that drain assets, like the debt buyers who ignore Alaska’s laws and tack on illegal fees that make it harder to climb out of debt.
Also puzzling: Mr. McCue’s argument about the harm to credit unions begins by discussing a Ticketmaster class action – a case that not only didn’t involve credit unions, it didn’t even involve a financial product that would be covered by the CFPB arbitration rule!
Mr. McCue also repeated a false claim from Wall Street lobbyists who argue that forced arbitration is good for consumers because people recover $5,389 on average in arbitration. That number is based on only 16 people per year in the entire country who win in arbitration; most people lose. The average person in arbitration actually has to pay the bank or company $7,725. Moreover, compared to the 16 people per year who win cash in arbitration, 32,000,000 people are eligible for relief in class actions.
This striking echo of Wall Street arguments shows who is really behind the push to take away our day in court: Wall Street banks and large corporations like Equifax. After Equifax revealed the massive data breach impacting 145.5 million Americans – including 262,120 in Alaska, a third of the population — Equifax initially buried a forced arbitration clause and class action in the website it set up to help people, blocking court access for any dispute “relating in any way to Your relationship with Equifax.” Wells Fargo has repeatedly used forced arbitration to block class actions over the 3.5 million fake accounts it created (5,970 in Alaska) and to block claims by Alaskans and others over overdraft fees that a judge found were “unfair and fraudulent.”
The final irony? Credit unions have filed their own class action against Equifax for the damage caused to them by the data breach. Credit unions, like individual consumers, are small players that need to join forces to fight wealthy companies.
Outside of lobbyist circles, there is wide bipartisan support for the Consumer Financial Protection Bureau’s rule to restore our day in court when corporations break the law. More than two-thirds of Alaskans polled support the rule, including a majority of Republicans and respondents who identified as “very conservative.” The Military Coalition, and military voices in Alaska, also support the CFPB rule.
Sen. Dan Sullivan has endorsed Wall Street’s call to block the rule. But Sen. Lisa Murkowski has a long history of defending military vets against forced arbitration, and we hope she will reject calls to strip other Alaskans of their right to access the courts when needed.
James J. Davis, Jr. lives in Anchorage and is a founding partner of Northern Justice Project, where he represents low-income Alaskans and Alaska’s tribes.
Posted Friday, October 20, 2017 - 1:53 pm
We’re optimistic that our Alaska Legislature will be able to not only strengthen the course of criminal justice reform by passing SB 54, but also address our state’s fiscal crisis in the upcoming special session in Juneau. Here’s why:
Legislators and all Alaskans should be careful not to get so wrapped up in the ongoing debates over taxes, state spending and crime sprees, that we all miss the very real connection between our economy and the overall health of our state.
It’s really that simple. And it’s really that serious. Which is why we have hope and confidence that the Legislature and governor will work together toward fiscal compromise when they convene in special session Oct. 23.
Think about it. You would not buy a house until you know the interest rate on the loan, until you know the property tax bill. You would not invest in a business until you knew what the balance sheet looked like, both profit and loss. You would not construct a new building or expand your business until you knew the economic health of the community.
That’s the problem in Alaska today: Investors, whether oil and gas companies or real estate or mining or tourism or retail, are not confident that the state has a fiscal plan. They worry that they will start writing checks, only to see the state change the economics underlying their business plan.
Fiscal uncertainty can kill private investment, or at least wound it. We need stability. We need to show investors we are willing to help pay our own way.
We’re not losing jobs in Alaska because of one line or another in the state budget. We’re not losing private investment dollars because we talk about using Permanent Fund earnings to help provide public services. And we’re not ruining our future by considering broad-based revenues, as some irresponsibly claim.
The truth is, all those bad things — job losses, investor reluctance and a shaky economic future — are because we’re not doing enough.
The governor’s proposal for a flat wage tax is not perfect. No legislation ever is, and certainly no tax is ever popular. But it is an opportunity for debate, amendment, compromise and ultimately passage of a fiscal plan that doesn’t rely solely on one commodity.
The Alaska Legislature has recently shown it can work together on tough issues; they hammered out a budget comprise earlier this year which avoided a government shutdown; they came together in the spirit of compromise to eliminate unaffordable cash payments to oil companies and passed HB 111; and, they approved a capital budget in one day without taking per diem to get the job done.
Like many Alaskans across the political spectrum, we were supportive of the 2016 criminal justice reform bill. But we knew it would not solve all our problems and we support constructive changes in current legislation on the table this month. We know the opioid epidemic has contributed to the public safety crisis that has hurt so many families and communities.
We also know that we need sustainable funding for law enforcement, prosecutors and mental health services. And we absolutely must address the chronic shortage of rehabilitation beds. Finally, we acknowledge that addressing these public health and safety crises will require an investment of financial resources.
Now more than ever we need our lawmakers to come together and focus on our state’s economy and a safer Alaska. If we do nothing, if we fail to put the state on a path toward sustainable finances, if we miss another opportunity to build a stronger Alaska… we just give businesses, investors and the public another reason, another year, to put their money, and their future, elsewhere.
Our focus should be on a stronger, economically healthy state for decades into the future.
It’s not a matter of who wins or loses or who pledges to defend a political line in the sand or who stands strongest against any given issue. It’s a matter of compromise, working together and finding an acceptable solution that can give certainty to 735,000 Alaskans.
Mike Navarre is the outgoing mayor of the Kenai Peninsula Borough and Jim Matherly is the mayor of Fairbanks.
Posted Wednesday, October 18, 2017 - 12:38 pm
After President Barack Obama used Congressional intransigence as an excuse to upend the separation of powers spelled out in the Constitution, President Donald Trump is using the same reason to restore it.
Not once, not twice, but more than two dozen times, Obama told audiences and interviewers that the Constitution did not allow him to use an executive order to change the immigration status of millions of people brought to the country illegally as children.
Congress refused to pass the DREAM Act, and Obama proceeded to violate his previous claims by issuing an executive order to create the Deferred Action for Childhood Arrivals, or DACA, program, which granted legal status to those who claimed their parents brought them to the United States illegally as children.
A group of state attorneys general promptly sued and a federal district court judge issued an injunction against continued implementation of DACA.
In another case, once the Republican Party took full control of Congress following the 2014 midterm elections it refused to appropriate funds for the Cost Sharing Reduction payments under the Affordable Care Act also known as Obamacare.
Obama’s administration ignored the lack of authorization and continued sending the payments to insurance companies, which led to an unprecedented lawsuit in which the House of Representatives was granted standing to sue the president.
Again, a federal district court judge decided that Obama’s actions were outside the bounds of the Constitution and ruled the payments illegal without an appropriation from Congress. The judge stayed her own ruling as the appeal was processed, and Trump continued to make the payments on a month-to-month basis after inheriting the lawsuit from Obama’s Justice Department as he waited on the GOP to deliver on seven years of promises to repeal and replace Obamacare.
Now, by giving the DACA program an expiration date less than six months away and turning off the illegal CSR payments as of Oct. 13, Trump is forcing Congress to work rather than continue to rely on unconstitutional actions by the executive branch.
Few sights are more amusing lately than watching the unhinged left that has spent every day since Jan. 20 declaring Trump either a tyrant or one in the making now demand that he continue Obama’s acts that have been declared unconstitutional by federal courts.
Just days after Trump announced an end to the CSR payments, Senate Health, Education, Labor and Pensions Committee Chair Lamar Alexander, R-Tenn., and ranking Democrat Sen. Patty Murray announced the outline of a deal that would restore the payments with an actual appropriation from Congress and create more flexibility for states through block granting the funds and expediting the Section 1332 waiver process.
The 1332 “innovation waivers” under the Affordable Care Act allow states to create programs suited to their needs and allow federal funding for them so long as they are deficit neutral.
Alaska received one of the first such waivers earlier this year after creating a reinsurance program in 2016 as Premera Blue Cross Blue Shield, its lone remaining insurer serving the individual market, was considering rate hikes of as much as 42 percent for 2017 after increases of nearly 40 percent in the previous two years that shot the state’s premiums to the highest in the country at nearly $1,000 per month for a silver plan.
Using an existing fee structure on every insurance policy sold in the state, the state directed $55 million to offset the costs of the few dozen high-cost customers in the small individual pool, which led to a much smaller rate increase of 7 percent this year.
The cost of premium support tax credits that go to about 90 percent of the individual pool dropped dramatically. The 1332 waiver will now allow money that would have gone to premium support to flow to the reinsurance program — with savings for both the state and federal government — and the end result being Alaska is likely the only state in the country to not see a rate hike in 2018. In fact, Premera’s rates will drop by more than 21 percent.
Alaska’s premiums will still rank highest in the nation, but at least there was some progress and it is a good thing that the HELP Committee, of which Sen. Lisa Murkowski is a member, heard from Alaska Division of Insurance Director Lori Wing-Heier about how the state’s return to isolating its high-risk pool from generally healthier customers helped lower costs.
The fate of the Alexander-Murray proposal is far from certain, but having a Democrat of Murray’s stature on board is precisely the outcome that Murkowski has been clamoring for and one that wouldn’t have happened had Trump not returned to constitutional order and forced Congress to do its job by ending the illegal CSR payments.
Andrew Jensen can be reached at [email protected]
Posted Wednesday, October 18, 2017 - 12:38 pm
In a recent class action lawsuit against Ticketmaster, the court ordered the company to pay out $42 million over four years, and no less than $10.5 million per year to consumers.
However, the reality of what consumers actually received is detailed in a New York Times article entitled, “Why You Probably Won’t Get to Use Your Ticketmaster Vouchers.”
Outlined in the article is the fine print of the settlement including the difficulty consumers have in actually receiving any remuneration.
The author of the article notes, “How and when those vouchers can be used has befuddled people, and confusion has only grown since Ticketmaster released $5 million worth of free tickets this week. Those tickets were quickly claimed, leaving most people unable to redeem their vouchers and feeling pretty irritated.” Such a measly payout to those who actually deserve to be made whole is not an uncommon result for class action litigation.
For credit union members, the results of class-action litigation are even worse because it essentially means that the resources of all of that credit union’s members are moved to a small pool of members (or even non-members), with plaintiffs’ attorneys taking their cut in-between.
At a credit union, each member with an account is also an owner: an owner that has pooled his or her resources with fellow owners. This means all the financial resources of the credit union is money that belongs to all its members. Therefore, members are directly affected by any negative monetary impact, especially regarding any costly legal matters.
Yet, the Consumer Financial Protection Bureau, or CFPB, is taking away the ability to limit class action litigation. In what’s known widely in Washington as the arbitration rule, the claim from supporters is that arbitration harms consumers and that class-action litigation is the consumer-friendly ideal. Unfortunately, even the agency’s own research does not support this rhetoric championed by the trial bar.
Instead, it shows that 87 percent of putative class actions resulted in zero class-wide recovery and that of the 13 percent of class actions that did settle on a class-wide settlement, a weighted average of only 4 percent of consumers in those cases received any monetary recovery at all.
According to the CFPB’s own study, the average payout for the few consumers who actually recover something is about $32 while the average plaintiffs’ lawyer pockets $1 million. In arbitration, however, consumers recover $5,389 on average. The CFPB’s study also shows that the average time frame for arbitration is two to seven months while the average class action suit takes one to two years to complete. It is quite unclear how padding the pockets of trial lawyers improves the financial situation of most Alaskans.
Credit unions are the go-to financial institution for a majority of Alaskans. There are several reasons for this, including the fact that credit unions are known for excellent customer service and their personal relationships with their members, which means disputes between credit unions and their member-owners are rare.
However, should a dispute between a credit union and a member arise, the credit union’s structure as a not-for-profit, member-owned financial cooperative provides numerous ways to quickly and amicably resolve the dispute. While credit unions are less likely to enforce an arbitration clause, it can be an important resource to protect the equity built by and owned by the credit union’s members.
A rule banning the ability to use arbitration doesn’t make sense for any credit union member across this state. Thankfully, there’s a chance we can avoid any negative impact.
The House of Representatives disapproved of this anti-arbitration rule and the Senate has the chance to do the same. Unfortunately, more Washington-based groups, many representing the interest of trial lawyers, are putting pressure on our senators to back the anti-arbitration rule, and we couldn’t disagree with them more on this matter.
As the original protectors of consumer’s finances, credit unions believe this rule has the potential to hurt more Alaskans than it protects.
Dan McCue is the senior vice president, corporate administration, for Alaska USA Federal Credit Union.
Posted Thursday, October 05, 2017 - 3:28 pm
Creating wealth unfortunately doesn't just happen; rather, it’s a function of having a "can do" spirit, working hard, being smart and sometimes even a little luck comes into play.
We don't have to look very far, only to Seattle, to see the negative consequences of what happens when government places a local income tax on individuals. The reaction was swift and severe. Amazon’s founder and chairman, Jeff Bezos, announced that his company — which from 2010 through 2016 provided $38 billion to Seattle’s economy — plans to open Amazon HQ2, a second company headquarters in North America. Amazon is now asking other cities and states across the nation to submit their proposals to home HQ2.
One city’s mistake could be Alaska’s gain.
Amazon’s proposal for the initial investment for their new headquarters is $5 billion. This would create more than 50,000 jobs averaging wages of more than $100,000 a year in the first five to 10 years.
Amazon has stated that the criteria for selecting a location would be a metropolitan area with more than one million people, a stable and business-friendly environment (we need to work on this), urban or suburban locations with the potential to attract and retain strong technical talent.
Why Alaska? While no one city or metropolitan area has all the attributes that Amazon is seeking, Alaska offers a diverse workforce, a geographically strategic position in the world, quality schools, an international airport that is a cargo crossroad of the world and best of all, a place of majestic beauty, quality lifestyles and an abundance of outdoor activities that their "millennial workforce" demographic appreciates and values.
Landing Amazon HQ2 would be a prize for anyone. But for Alaska, it would be a home run that would play a huge role in diversifying our economy. The economic activity would shore up home prices, spur construction, generate new businesses to service Amazon and their employees, and substantially grow the property tax base of local governments.
Unfortunately, while many other states and municipalities across the country are scrambling to get in front of Amazon, Alaska's political hierarchy seems content to let this opportunity pass them by.
I'm sure the left will criticize my advocacy for wealth creation, screaming the need for more taxes. To them I say, "we can't tax ourselves into prosperity." Yes, taxes are a necessity to fund government; however, energizing the private sector and insuring its well-being, especially during a time of economic decline and uncertainty, is prudent. I realize that the politics of such are tricky. But that’s not a reason to not try. Just like there’s no reason not to try to lure Amazon to Alaska.
I think its time that we change the narrative from more taxes to focusing more on economic opportunities, resource development, growing our tourism market and the many other opportunities that are out there. This requires vision and hard work. Its time our elected officials start working with the private sector to grow the economy and create wealth. This will ensure that future generations have even better opportunities and benefits from this great state that we have experienced.
Can we get Amazon's HQ2 to Alaska? We'll never know if we don't try. If nothing else, it would be a good exercise in taking inventory and evaluating Alaska’s business climate. It could also serve to pull us together as a state, to remind us of what we have and what we are capable of. Alaskans deserve vision from our elected officials. We need leaders who look to other areas to see what’s worked and what hasn’t worked. Amazon’s announcement is proof that businesses want tax stability. We should heed that lesson for current and future businesses in Alaska, and we should strive for more.
Curtis W. Thayer is lifelong Alaskan and serves as president and CEO of the Alaska Chamber.
Posted Wednesday, October 04, 2017 - 12:15 pm
The Arctic National Wildlife Refuge is the largest wildlife refuge in America.
Spanning more than 19 million acres, it’s an area larger than 10 U.S. states. This vast expanse is home to caribou, fox, bears, and dozens of other species.
Much of that land is also home to the Native Iñupiat, and our people have utilized the resources it has blessed us with for more than 10,000 years. One type of those natural resources lies beneath this great land — oil and gas — and lots of it.
The debate over opening ANWR to drilling gained headway nationally in 1980, when President Jimmy Carter set aside less than 8 percent of the refuge for potential oil and gas development. This section of ANWR became known as the 1002 area, after a section of the Alaska National Interest Lands Conservation Act.
Since then, Alaskans and the oil and gas industry have fought unsuccessfully to open the 1002 area to drilling, which literally requires an act of Congress. At the same time, Lower 48 lawmakers, special interest groups across the country, folks and organizations around the world have waged war on the idea citing the disruption of wildlife and the pristine Arctic environment.
As ANWR debates occur, the views of the Iñupiat who call the area home are often times left out. The wishes of the people who live in and around the refuge’s coastal plain are frequently drowned out by people who live hundreds and even thousands of miles away. Many of whom have never bothered to set foot anywhere near the Arctic. Well, today is a new day.
Voice of the Arctic Iñupiat, an organization with 21 members from across the Arctic Slope region — including members from Kaktovik located inside ANWR — have voted unanimously to pass a resolution supporting oil and gas development in the 1002 area.
This is an unprecedented show of unity from the community leaders of the North Slope, those who live in and around the coastal plain of the Refuge, and should send a very clear message to America: we support the development of a portion of the coastal plain of ANWR.
My fellow Iñupiat and I firmly believe in a social license to operate, and perhaps no other potential project in the history of America has called for such a blessing from local indigenous peoples more than this one.
When oil was first discovered on our land in 1969, the Iñupiat were worried of industry activities and fought hard for self-determination in order to protect our subsistence resources. So, we fully understand the trepidation from outsiders; the fear that the presence of industry on the coastal plains of ANWR could disrupt wildlife and affect America’s manufactured perspective of our land and culture.
However, we also have the benefit of decades of experience working with the oil and gas industry to implement stringent regulations to protect our lands, and the industry has consistently lived up to our standards. Prudhoe Bay, the largest oil field on the continent located 60 miles to the west of the coastal plain of ANWR, has demonstrated for four decades that resource development and ecological preservation can and do coexist in the Arctic.
The 1002 area of ANWR resides in our backyard and is entirely within our homeland, which gives the Iñupiat a unique perspective in the debate to allow drilling there.
The oil and gas industry supports our communities by providing jobs, business opportunities and infrastructure investments; and has built our schools, hospitals and provided other basic services most Americans may take for granted.
Our region recognizes its importance to our local and state economy, and we believe that development can be done responsibly in a portion of the 1002 area. We are not alone.
Over the past 35 years, the Alaska State Legislature has consistently passed resolution after resolution supporting the opening of ANWR to drilling. During that same time period, each Alaska congressional delegate and every single Alaska governor has supported responsible development of the 1002 area.
More recently, in January, Senator Lisa Murkowski introduced Senate Bill 49 — the Alaska Oil and Gas Production Act — which would allow development of 2,000 surface acres in the refuge’s coastal plain. This proposed legislation served as the catalyst for the Iñupiat people coming together to make an informed, united decision on whether or not to support drilling in ANWR.
As Iñupiat, we stand to be unarguably the most affected by oil and gas activity in the Arctic. Therefore, we have the greatest stake in seeing that any and all development is done in a manner that keeps our land and subsistence resources safe. We know it can be done, because it’s already being done.
Now is the time to open ANWR to drilling.
Matthew Rexford is the president of Kaktovik Iñupiat Corp.
Posted Tuesday, October 03, 2017 - 3:51 pm
Crime is on the rise. We’ve been hearing a lot from Alaskans about their cabins, cars, shops, and homes being broken into. People feel scared and that fear is warranted. The crime statistics confirm what we have been hearing in all of our Alaska communities.
As Alaska’s Attorney General and commissioner of Public Safety, public safety is our highest concern. We agree action is needed to protect Alaskans. Passing Senate Bill 54 during the special session is an important first step in this direction.
A number of factors contribute to our public safety problem. The foremost issues are the opioid epidemic and the fiscal crisis. Demands on our public safety resources have gone up while budgets to fight these problems have gone down.
We need to solve our fiscal crisis to ensure that the state has the resources available to address public safety. Ignoring our fiscal crisis will leave us with an inability to keep Alaskans safe.
We also need to ensure that our criminal laws establish appropriate sanctions to prevent and punish criminal acts. Enacted just over a year ago, Senate Bill 91 comprehensively reformed our criminal justice system by changing the classification and sentences for a number of crimes, adding pretrial and probation services, and focusing on rehabilitation of criminals and treatment for those with substance abuse problems.
SB 91 also increased the mandatory minimum sentences for murder in the first degree from 20 years to 30 years and murder in the second degree from 10 years to 15 years.
Based on evidence and positive experience of other states, SB 91 brought proven solutions to bear on the upward trend of crime and recidivism in Alaska. To be clear, the majority of changes brought by SB 91 are reforms that we support.
Prior to it, we saw the number of inmates growing faster than the facilities we had to house them, and two out of three inmates returned to jail within three years of release.
Our justice system clearly was in need of an overhaul. But criminal justice reform will need time – and resources – to bear fruit. For example, starting in January, the state will begin using a new risk assessment tool to assess individuals before they are released on bail.
The Department of Corrections will deploy 60 new officers to monitor defendants on bail. Additional substance abuse and mental health resources will soon come on line.
SB 91 is good policy. Yet, while SB 91 holds promise, as with any comprehensive overhaul, we knew adjustments would be needed. While the rise in violent crime preceded SB 91, the recent increase in larceny and vehicle thefts appears to correspond to certain changes made by the bill.
Feedback from courts, law enforcement, and prosecutors confirms that we need to adjust the tools available to judges to deter those crimes. Last session, SB 54 was introduced to correct some of these outstanding issues with SB 91, and these changes are intended to support the overall effectiveness of this criminal justice reform effort.
The governor added SB 54 to the special session this fall. We believe passing SB 54 is an essential step in addressing public safety. It gives courts more discretion to tailor appropriate sentences for repeat theft offenders and for first time Class C felonies. Under Alaska law, Class C felonies encompass a wide array of criminal conduct, including pointing a gun at someone, vehicle theft, causing a riot, and low level drug trafficking, to name a few.
It also returns violating a condition of release to a crime punishable by jail time. These are three issues that we’ve heard a lot about. We believe that these changes will help to deter offenders and provide tools to encourage offenders addicted to opioids and other illegal drugs to seek treatment.
This bill responds to the very concerns voiced by Alaskans, and representatives from both law enforcement and prosecutors testified in support of the bill before it passed the Senate. It now needs to pass the House, and be signed into law.
Passing SB 54 is one step, but it’s not the only step. Governor Walker also tasked us with putting together a comprehensive public safety action plan with steps the state can take to improve public safety around the state. This plan will soon be unveiled. We will continue to communicate and engage across state, federal, municipal, and tribal lines to make sure that we’re actively working to improve public safety at all levels.
Everyone deserves the right to feel safe in their neighborhoods and communities. To all Alaskans: please know that we are listening to your concerns. Public safety is our number one priority.
Jahna Lindemuth is the Attorney General of the State of Alaska. Walt Monegan is the Commissioner of the Alaska Department of Public Safety.
Posted Wednesday, September 27, 2017 - 12:11 pm
This summer, observers across the nation watched as lawmakers in the state of Alaska pulled together a buzzer-beating compromise that prevented a potentially catastrophic budget shutdown and kept the government funded through the coming fiscal year.
For countless Alaskans who simply wanted their government to continue to operate, the compromise is a win. The alternative — an unprecedented shutdown — would have been untenable, resulting in significant upheaval for Alaskans seeking to utilize programs ranging from fishery permitting to cruise ship oversight to early education and Head Start services.
For political and policy junkies, it was a budget showdown that checked nearly every box, complete with flaring tempers, bruised egos, high stakes, and the discussion of policy shifts that could send ripples through the economic landscape for years to come.
This is particularly true in the case of the oil and gas industry, a sector that is looking at increased taxes in the eye in Alaska while simultaneously facing extremely challenging market conditions across the nation and around the world.
On the heels of a massive surge in domestic production driven by advances in extraction technology and finds from the Bakken to the Marcellus, fortunes have changed somewhat for the American oil and gas sector.
Prices have fallen steadily in recent years, hovering around $47 per barrel, and analysts expect the price to remain in the $40 to $60 range for the next five years. The cost of producing a barrel of oil is also increasing alongside advances in extraction technology, with companies pursuing projects that are riskier, more difficult to access, and ultimately more expensive.
The oil and gas industry is strong, and no one will mistake it for a struggling mom-and-pop operation. But these are no longer the boom times of the early 2010s – margins are thinner, profits are lower, and the challenges on the horizon are greater than they have been in some time.
As the fight continues in Alaska, it’s essential that lawmakers keep these facts about the energy market landscape in mind as they debate their course of action, and that they focus squarely on reducing government spending in ways that won’t cut the legs out from under the state’s economy over the long term.
The compromise measure includes language convening a special task force of legislators and advisors charged with consideration of additional changes to the overall tax system. The panel, once appointed, will make recommendations for additional tax changes in the coming legislative session. For oil and gas companies still struggling to adjust to a tax structure that has shifted significantly on a nearly annual basis in recent years, the prospect of even more change — and more uncertainty — is troubling and would represent an added hurdle for companies seeking to limit the risk inherent to the capital-intensive business of oil and gas development.
This should be a source of serious concern for Alaskans, because the oil and gas industry’s outlook is extremely important to the state. No other industry is more heavily integrated into the state’s economy, with 35 percent of all wages and well over 100,000 jobs tied up in the oil business in 2016, according to a McDowell Group report. The sector also poured $2.1 billion into the state government via taxes and royalties in 2016.
Higher taxes, like those under debate in Alaska, would only add to the challenges the industry faces.
Such changes may sound insignificant, but the fact of the matter is that tax policy — and policy uncertainty in general — matters a great deal to companies choosing where to explore or where to invest their billions. Caelus delayed a major Alaska project this summer, for instance, citing tax uncertainty among the motivating pressures that led them away from their development schedule.
In a state where the latest jobs report showed 7,500 lost jobs in the last year, with the deepest losses concentrated in the oil business, this should raise red flags.
If Alaska continues to focus its policy efforts not on spending cuts and instead on harmful oil tax hikes, more companies like Caelus will rethink their investments. And if other states or jurisdictions consider similarly harmful policy in this market environment, the industry will likely be forced to contract there, too.
Even amid low crude oil prices and a difficult market, the oil industry employs 10 million Americans and serves as a pivotal engine for economic growth. We simply can’t afford to let bad policy — in Alaska or anywhere else — add to the challenges faced by one of our nation’s most important job creators.
Dr. Margo Thorning is the senior economic policy advisor with the American Council for Capital Formation in Washington, D.C.
Posted Wednesday, September 27, 2017 - 10:58 am
Gov. Bill Walker appears to have not learned his lesson when calling a special session.
After the Legislature went all 121 days it was allowed this year without producing a budget or a way to pay for it, Walker called a special session with a loaded agenda that proved a recipe for disaster as the divided House and Senate exerted their respective leverage over the various pieces and it ended after 30 days at the same stalemate.
Now with a government shutdown looming, Walker called another special session with one agenda item: the operating budget. With no leverage over each other and an understanding of the consequences of not passing a budget by June 30, the House and Senate were finally able to agree on something and accomplished their one constitutionally-mandated task.
After the operating budget was agreed upon June 22, Walker added a second item to the session: ending the cashable credit program for North Slope explorers and small producers.
Again, with one item to consider and with both sides understanding the need to end a program with a $1 billion liability to the state budget, the House and Senate eventually agreed to kill the program retroactively to the start of the current fiscal year on July 1.
By this point the per diem counters were running and the public anger was growing over legislators collecting thousands of dollars per day while only a handful were actually involved in the heavy lifting of negotiation.
Acknowledging that anger, Walker declared he would not call a third special session until a capital budget bill was ready to pass. Like the limited call of the second session, with one thing to work on the House and Senate leaders finalized a deal and were able to come to order for a single day and pass it.
With the fourth special session of the year now set to begin Oct. 23, Walker has set himself up for another failure.
The agenda is limited to just two items, neither of which is the use of Permanent Fund earnings to cover the budget deficit that have passed in some form by both the House and Senate in the last two years.
Instead of putting a version of one of those bills on the call, Walker chose instead to introduce an income tax that will effectively end the Permanent Fund Dividend and create two classes of Alaskans: those who get one and those who don’t.
This proposal — unlike his veto to set the PFD at $1,000 in 2016 or the Legislature’s decision to set it at $1,100 this year — is the real fundamental change because Alaskans are no longer treated equally as the program intended.
What Walker is pitching is that the PFD be reduced by half from what it would be under the current statutory formula and the remaining half would be taxed away from those making more than $75,000 per year.
Quite simply, some Alaskan income earners would get a PFD and some would not, which transforms it from an equal distribution into a welfare program.
The governor can cite spending cuts until he turns blue in defense of his tax plan, yet he cannot point to any structural changes in how state government works to make his pitch because none have happened.
When the state’s largest public employee union contract was negotiated over the past year, Walker’s administration didn’t even achieve bare minimums of a wage freeze or a health plan contribution that resembles the private sector.
The Senate Majority, which has stood fast against any income tax, did not outright reject Walker’s proposal but President Pete Kelly did make a reasonable request for a realistic oil production and revenue forecast.
Currently, the production forecast for this fiscal year is just 459,000 barrels per day that no one believes yet hasn’t been officially revised and isn’t required to be until December.
North Slope production is now tracking even with last year when 529,000 barrels per day flowed through the pipeline in the second straight year of growth after annual declines in every year but 2002 since the peak of 1988.
Through the first 25 days of September, production for the month is averaging 508,000 barrels per day compared to 474,000 barrels per day in the same month a year ago. Prices are also rebounding, which combined with production and the success of the financial managers at the Permanent Fund changes the state fiscal picture greatly.
If the goal is to get something done, Walker’s special session call makes no sense. If the goal is to set up an election that will feature class warfare between those who want an income tax and those who don’t it will be a smashing success.
Andrew Jensen can be reached at [email protected]
Posted Monday, September 18, 2017 - 10:37 am
The rumors swirling around about yet another special legislative session devoted to a broad-based tax are both troubling and wrong. This whole narrative, concept and belief coming out of Juneau that “we can tax ourselves into prosperity” is a shortsighted plan that in the long term is simply not sustainable.
Alaska is a wonderful state with abundant resources, vast amounts of wide-open spaces, pristine water and a global position of strategic and geographic importance. Instead of talking about taxes, new taxes and more taxes that will likely cause our economy to further constrict, we should be talking about plans, opportunities and incentives to create new wealth. New wealth, not more taxes, is the only real answer to our state’s fiscal woes.
We’ve just experienced back-to-back special sessions that mark 2017 as the year with the most legislative days since statehood and not one of them was spent discussing a vision of hope and prosperity.
The concept of wealth creation was never even discussed let alone put on the table. Government seems to suck the creativity and entrepreneurial spirit out of the best of our elected officials. That’s too bad. Because, now more than ever, we need big thinkers with the courage and vision to cut a sustainable path for our state’s economy and treasury by creating new wealth.
New wealth can come in a variety of ways and from different sectors. Let’s talk about how to expedite getting the newfound North Slope oil into the pipeline and to market. Let’s talk about what will it take to increase the activity in our oil fields — such as honoring our commitments on tax credits, create some tax stability, and truly being a committed and reliable partner.
Let’s talk about new and creative ways to expand and make more of our tourism — we have so much more to offer than being just a “bucket list” destination. We also need to talk about our other natural resources — mining, fishing, and forestry and growing these sectors for the benefit of all Alaskans.
It’s time to wake up, roll up our sleeves and help develop the many opportunities right under our noses.
To continue the narrative about taxes, new taxes and more taxes without talking about capitalizing on new economic opportunities is a disservice to the working men and women of Alaska and to our future generations.
Some say we have a fiscal crisis, I say we have a fiscal challenge. I believe that the challenge is manageable and presents opportunity. With the right vision and desire, Alaska’s best days are still ahead of us. Our government needs to start thinking more like the private sector. It needs to learn how to live within its means and how to create new opportunity and wealth. It also means that sensible planning is a necessary element of success.
Senseless, conflicting goals need to better be vetted and thought through.
Our elected officials are good men and women. They just need to realize that we are facing a new dawn, with new challenges that require new, maybe outside the box thinking and innovative solutions.
They need to realize that we can’t tax ourselves into prosperity and instead we need to focus on creating a better, more prosperous Alaska by finding the means to creating new wealth.
Alaskans are a resilient people and are willing to meet challenges head on, overcome them and build a better economy for tomorrow and future generations. Together, we can create new wealth that will fill our state treasury, provide profits for our businesses while providing good meaningful jobs for our working men and women.
It’s time to change the narrative from one focused on taxes to one that is sustainable and create new wealth for Alaska.
Curtis Thayer is the president and CEO of the Alaska Chamber.