Morning Headlamp — Sturgeon wins & deficit increases

Sturgeon triumphs over federal government. In a landmark case for Alaska, that many political observers thought was doomed after the passing of Justice Antonin Scalia, the U.S. Supreme Court handed down a unanimous decision in favor of Alaskan moose hunter John Sturgeon. The court, in an 8-0 decision written by Chief Justice John Roberts, handed a narrow victory to John Sturgeon in his legal challenge to the U.S. government’s power to prevent him from riding his hovercraft on a river through a federal preserve to reach remote moose-hunting grounds. The Supreme Court threw out a lower court ruling favoring government, but did not decide the bigger question of whether the government can regulate hovercraft use on a waterway within park service property in Alaska. The answer to that question could have had implications for other park service regulations, including on oil and gas extraction. The state of Alaska supported Sturgeon, noting that Congress in 1980 specifically limited park service jurisdiction over land within a conservation area that is not federally owned. In his opinion reversing that decision, Roberts said federal law governing park service authority contains several Alaska-specific provisions, reflecting “the simple truth that Alaska is often the exception, not the rule.”  The Alliance is proud to have participated, with other Alaskan trade associations, in an amicus brief in support of Sturgeon. 

Headlamp, like thousands of Alaskans this morning, is celebrating this monumental victory for our state. John Sturgeon took on the U.S. Park Service and won. Today marks a victory for Alaskan sovereignty, and for those who hunt, fish, and enjoy our great outdoors.

What’s the real story in the spring revenue forecast? According to a new preliminary forecast by the revenue department released Monday morning, the current budget deficit has jumped another $300 million. Governor Bill Walker’s administration blames low oil prices. The revised forecast means the expected deficit for the state’s $5.4 billion budget is now $4.1 billion, up from a previously projected $3.8 billion. That means current revenue can cover only about 25 percent of the existing state budget. Walker, in a news conference at the Capitol on Monday, said the diminished flow of oil revenue underscores the need for lawmakers to pass his financial plan. It’s no surprise to Headlamp  that the Governor chose to ignore the most important detail of the the new forecast – INCREASED PRODUCTION. The fall forecast was revised from 500,200 barrels per day to 517,500 barrels per day, acknowledging that the change reflects eight months of ACTUAL daily production levels. The tax incentives in SB 21 are working to increase production. Headlamp wonders how raising taxes on the industry, as the Walker administration has proposed, will continue this trend of increased production?

Successful edits. The House has submitted a substitute bill to Gov. Walker’s proposal to increase the oil production tax and reduce tax credits paid to the oil and gas industry. The governor had hoped to increase the minimum production tax from 4 percent to 5 percent, claiming that such an increase would  raise $100 million.  The committee bill would create a legislative working group to propose changes to the Cook Inlet tax regime that will be considered by the Legislature next spring. Headlamp thanks lawmakers who helped remove this blatant money grab from the Governor’s proposal. Raising taxes will only chase away the industry; leading to less production and fewer jobs. Attacking Alaska’s primary industry while its cash flow negative is not the answer to the state’s spending problem. 

According to the Associated Press, Alaska Gov. Bill Walker said he is willing to call the Legislature into a special session if lawmakers don’t pass any revenue proposals to help close a multibillion-dollar budget deficit. “It’s important that we have legislation passed this session or a special session to make sure that we have taken away the uncertainty,” Walker said during a news conference on the forecast. For 2016, the forecast shows the state’s budget deficit is now at $4.1 billion.  Headlamp would suggest that the Governor take a few moments to review the operating budget and try to convince Alaskans that state government has done their fair share in addressing the budget gap before he attempts to take money from them to support big government.


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First Reads

U.S. top court backs moose hunter in Alaska hovercraft case
Reuters U.S., Lawrence Hurley, March 22, 2016

Alaska budget deficit just jumped $300M because of low oil prices, Walker administration says
Alaska Dispatch News, Nathaniel Herz, March 21, 2016

Alaska’s budget gap officially just got a little bigger
Fairbanks Daily News Miner, Matt Buxton, March 21, 2016

House committee guts governor’s attempt to tax oil industry, end secrecy
Alaska Dispatch News, Alex DeMarban, March 21, 2016

Governor may call special legislative session over budget
The Washington Times, Rashah McChesney, March 21, 2016