Highlights of the Week
- All about the budget. The House Finance Committee led by Reps. Paul Seaton and Neal Foster passed the operating budget (HB 57) out of committee. Not a single amendment was accepted to reduce government spending.
- The public remains opposed to increasing oil taxes in the face of a recession, low oil prices, and huge new discoveries on the North Slope under SB 21. Three nights of testimony provided a 2 to 1 margin for those who oppose HB 111.
- Senate Majority’s stances for the week: oppose income tax, reduce budget considerably, implement a legitimate spending cap, and use Permanent Fund earnings wisely.
- House Majority’s stances for the week: no more budget reductions, must changes oil taxes and implement an income tax, and gain broad access to Permanent Fund Earnings Reserve Account.
March 6, 2017
- House Resources heard Rep. Les Gara present his oil tax bill (HB 133), which would raise taxes on the industry upwards of $200 million per year by bringing back progressivity to Alaska’s oil tax regime.
- Senate Finance continued to analyze the three Permanent Fund POMV bills, SB 70, SB 21 and SB 26. Revenue Commissioner Hoffbeck presented on SB 26, the Governor’s legislation, and Senator Stedman presented his bill (SB 21). These bills set up a POMV draw based on the total value of the Permanent Fund over the last 5 years. The bills would set up a draw from the Earnings Reserve Account ranging from 4.5-5.25%, and would split that revenue between state services and dividends in different ways.
- Public testimony was heard both in the Senate Finance and House Resources Committees, regarding the Permanent Fund bills and HB 111 The public remains opposed to HB 111.
March 7, 2017
- Senate Finance advanced SB 14, the bill that would allow Uber/Lyft to operate in Alaska, out of committee and onto the floor. On the House side, the House Transportation Committee moved HB 132 (the companion bill to SB 14) out of committee.
- House Finance began the slog of amendments on the Operating Budget/HB 57. Tammie Wilson introduced over 240 amendments, to reduce the size of state government. Not a single cost saving amendment passed. AK Headlamp wrote about the budget games here.
March 8, 2017
- The Joint Legislative Committee held a meeting regarding legislative per diem. No action was taken to reduce the per diem rate legislators receive. During budget discussion this week, House Majority members on the Finance Committee shot down an amendment by Rep. Wilson to cut legislators per diem by 75%, and 100% for Juneau legislators.
- Senate Finance received an in-depth analysis and comparison by Legislative Finance on the three POMV bills. A good chart, found here, was produced on this issue.
- Alyeska Pipeline Service Company President Tom Barrett presented to House Resources, and gave his company’s position on HB 111. In the evening the Committee also took a small amount of public testimony on the bill.
March 9, 2017
- Senate Finance introduced a new version of SB 26.
- House Finance continued debate on amendments to the operating budget/HB 57.
March 10, 2017
- The House Finance Committee passed the operating budget (HB 57) out of committee without a single reduction, and actually increased the budget $70 million over what Gov. Walker proposed.
- Senate Finance moved SB 26 with considerable changes out of committee. The new bill incorporates many aspects of SB 70, including a statutory spending cap, POMV draw of 5%, and dividends of $1000 through 2020.
- House Resources dropped a new version of HB 111, and will hold a hearing on it on March 13. The Committee also held confirmation hearings for members of the Alaska Oil and Gas Conservation Commission: Daniel Seamount (who is being reappointed) and former state senator Hollis French.
Big find! Spanish oil company Repsol, working with Armstrong Oil and Gas announced Thursday what it’s calling the largest onshore U.S. oil discovery in three decades. According to the companies, wildcat wells drilled this winter at a prospect known as Horseshoe discovered bands of light oil, a find that extends the already huge Nanushuk play by an additional 20 miles to the south. Repsol said that the contingent resources of recoverable light oil found near the village of Nuiqsut on the North Slope, would allow production of 120,000 barrels per day starting from 2021.
Now, with Repsol saying the play is known to extend to the south, additional production beyond the original estimate can be expected to increase from the 2015 estimates. The Horseshoe wells were about 12 miles south of Nuiqsut. Repsol holds a 25 percent working interest in the Horseshoe discovery and a 49 percent working interest in the Pikka Unit. Armstrong is the operator and holds the rest of the leases, the statement said. The companies estimate first production in 2021.
The announcement was hailed by Gov. Bill Walker and state Sen. Cathy Giessel, who chairs the Senate Resources Committee. But it laid bare a divide in the Alaska House over proposals to overhaul the state’s oil tax and credit structure. Lawmakers are debating whether to further reduce incentives aimed at encouraging oil activity amid a multibillion-dollar state budget deficit.
This is truly amazing news for Alaska and the oil and gas industry. Policy matters. Stability matters. Production matters.
Smith Bay. Caelus Energy announced last fall that it had discovered a field with over 2 billion barrels of recoverable oil in Smith Bay, and possibly more in nearby areas. The next challenge will be getting it out. Smith Bay is 100 miles west of the start of the Trans-Alaska Pipeline in Prudhoe Bay. According to KCAW, Caelus’s Casey Sullivan told the Sitka Chamber, “This is a world-class find. And for someone like Jim Musselman, this is his third opportunity exploring in a different region, and he’s struck gold again.”
Companies claim largest US onshore oil discovery in 30 years
CNBC, March 9, 2017
Lawmakers stake positions on oil credits amid news of North Slope find
KTVA, March 9, 2017
Officials react happily to news that a North Slope oil discovery, already described as huge, just got a lot bigger
Alaska Dispatch News, Alex DeMarban, March 9, 2017
A small company prepares for challenges of Smith Bay oil field
KCAW, Robert Woolsey, March 9, 2017
State concerned about tanker escort design for Prince William Sound
Alaska Public Radio News, Rachel Waldholz, March 9, 2017
Short-lived proposition to cut funds for Alaska’s gasline corporation dies in committee
Alaska Public Radio News, Rashah McChesney, March 9, 2017
Panel begins review of Alaska legislative allowance
Juneau Empire, Becky Bohrer, March 9, 2017
Riddle: What’s easy to get into and hard to get out of?
Answer: The House Majority budget.
There have been 330 amendments to HB 57 in the House Finance Committee. You read that right: 330!
Here’s the breakdown of those that have passed:
- 0 to REDUCE the budget
- 5 to INCREASE the budget
- 4 are NEUTRAL measures
- $50 million for debt service on school bonds was restored
- $17 million for REAA was added back in
- $70 million was moved from one account (UGF) to another (DGF) to look like a reduction. AKA: fake savings
Representatives Wilson, Thompson, Pruitt and Tilton have made valiant attempts to reduce the size and scope of government.
We are thoroughly disappointed in the House Majority’s unwillingness to join them. Instead, they have voted almost exclusively along caucus lines, and thwarted attempts to reduce the budget. Remember, these are the same people who want to implement an income tax. Apparently, they believe balancing a bloated budget on the backs of Alaskans is an acceptable option. Headlamp disagrees.
The Majority continues to lament the supposed reductions in department budgets in recent years, failing to recognize that a large portion of Alaskans believe the size of government was so out of control that we still have not shrunk our budget to acceptable and sustainable levels, and for good reason.
According to CommonWealth North’s 2017 report on The State’s Operating Budget, two years ago, the state’s general fund spending was $7 billion (includes UGF and DGF funds). In FY 17, the state’s budget was $5.4 billion. $1.6 billion (22%) has been cut. HOWEVER, of those cuts $636 million came from the capital budget, and $595 million was from the state’s failure to pay oil and gas tax credits. Spending on formula programs like Medicaid and K-12 education (the two largest expenses in the state) has been cut $211 million, while agency operations is down only 8% (a cut of $217 million).
Fundamental reforms to the daily operations of state government have simply not occurred. HB 57 does nothing to help in such reforms, and in fact it pushes the budget back on the path toward growth.
This earns HB 57 its second week in a row as our Bad Bill of The Week.
*These numbers related to amendments were accurate as of Thursday afternoon.
Paul Basinski, the geologist who helped discover the Eagle Ford basin in Texas, is part of a fledgling effort on Alaska’s North Slope to emulate the shale boom that reinvigorated production in the rest of the U.S. His venture, Project Icewine, has gained rights to 700,000 acres inside the Arctic Circle and says they could hold 3.6 billion barrels of oil, rivaling the legendary Eagle Ford. The dwindling volume of crude produced in the state has combined with a rout in oil prices over the last two years to undercut Alaska’s once-booming economy. When oil topped $100 a barrel in 2014, Alaska took in $5.7 billion in petroleum taxes and royalties for the fiscal year that ended that June, covering most of its budget. For fiscal 2017, the take is projected at $1.6 billion, a 72 percent drop.
“The oil is there,” said Basinski, founder and chief executive officer at Houston-based Burgundy Xploration LLC, in an interview. “Now it’s a question of how quickly we can get it to flow and whether we can get the economics to work.” One exploratory well has been drilled, he said, and a second is planned by mid year.
Headlamp hopes legislators understand that more oil in the pipeline is a big part of the solution to the state’s fiscal issues. That means crafting or maintaining tax policy that encourages investment so that more Project Icewine’s occur.
Armed with info. Alaska’s senior senator, Lisa Murkowski, brought her maps with her to a meeting in the Oval Office on Wednesday. Sen. Dan Sullivan brought the numbers. Murkowski brought a map that showed Alaska overlaying the Lower 48, demonstrating the state’s formidable size. Another showed Alaska’s limited road system. Another detailed oil and gas production on the North Slope. And she brought a map that showed the area and diversity of federal land management operators across the state. “I think he’s just a very visual person,” Murkowski said of Trump. “And it really allowed…for a wide-ranging conversation.”
Murkowski didn’t really elaborate on this part of the discussion, but Sullivan did mention discussion of building a road through the Izembek National Wildlife Refuge for residents of King Cove to access the airport in Cold Bay for emergencies. Sullivan said he pitched his legislation to divide up the U.S. Court of Appeals for the 9th Circuit. Finally, the senators raised the possibilities for growing Arctic infrastructure, including building out telecommunications, adding a deep-water port and advancing icebreaker capacity, Murkowski said.
Headlamp applauds Sens. Murkowski and Sullivan for advocating for an “Alaska first” agenda.
What does it take to prove a big oil discovery?
Alaska Public Radio News, Elizabeth Harball, March 8, 2017
A Father of Fracking Seeks to Emulate U.S. Shale Boom in Alaska
Bloomberg, Alex Nussbaum, March 9, 2017
Alaska’s senators and the Interior secretary meet with President Trump
Alaska Dispatch News, Erica Martinson, March 8, 2017
Bill offering PFD back payments to Fairbanks Four gains traction in Alaska Legislature
Fairbanks Daily News Miner, Matt Buxton, March 9, 2017
Short-lived proposition to cut funds for Alaska’s gasline corporation dies in committee
KTOO, Rashah McChesney, March 8, 2017
Headlamp believes our readers can handle the truth; unfortunately, Representative Paul Seaton doesn’t want you to hear it.
Yesterday’s marathon House Finance committee meeting produced these gems:
- Every attempt to reduce the size of government was rejected by the majority, even simple things like:
- A $22,000 reduction in overtime pay for the Alcohol and Marijuana Control Office.
- A $75,000 lump sum allocation for overtime in the Division of Elections in a non-election year.
- A rejection of 93 amendments to reduce FY 18 spending levels to the FY 16 actual levels based on a memo from Legislative Finance cautioning that the “actuals” aren’t really actual…
- And…a $127 million increase, by the House Majority, to the operating budget above what the Governor originally introduced.
And the winner is….
- The rejection of every attempt to remove funding for positions that had been eliminated. Maybe. The only thing that was clear about this issue was that NO ONE on the House Finance committee, understands it.
- Representative Grenn asked the Committee Co-Chair, Representative Seaton, if they could have the Department come forward and provide clarity on the issue.
- Representative Seaton said no.
- This issue won’t go away. Legislators and the public have constantly asked for clarifying information about vacant positions and their funding. A tongue in cheek kudos to the Departments and Administration for providing information that protects these positions and their funding. Likewise, a similar shout-out to the Co-Chair for denying his own caucus member clarification.
Perhaps we can’t handle the truth; if the truth is:
- Not one penny can be cut from the current budget;
- The “actuals” from the state’s financials don’t represent reality; and
- House Majority leaders would prefer for members to be confused when making critical budget decisions.
Morning Headlamp — What we have here is a failure to communicate…does anyone know the real details about Alaska’s budget?
The party heats up in Juneau. According to reports, the Alaska House’s budget process Tuesday threatened to dissolve into delay and dysfunction rivaling that of U.S. Congress, complete with its own filibuster from a frustrated fiscal hawk, North Pole Republican Rep. Tammie Wilson. Wilson started Tuesday’s House Finance Committee meeting with a massive number of amendments — 243 — to the $5 billion unrestricted general fund spending plan from the chamber’s largely Democratic majority coalition. By lunch, one of the committee’s co-chairs, Homer Republican Rep. Paul Seaton, had found a way to dispense with half of Wilson’s amendments, lumping similar proposals into two separate packages — allowing the committee to vote them down en masse.
“It’s painful,” said Fairbanks Republican Rep. Steve Thompson, who went for a walk during part of Wilson’s speech. “But it’s part of the process.” “I literally can’t think of a better place to be. No regrets,” said Anchorage Independent Rep. Jason Grenn, a freshman who caucuses with the Majority. “It is a heck of a way to learn about the state and the crisis we’re going through.” “I literally went line by line by line throughout the entire budget,” Wilson said in an interview in her office, where she’s affixed a “243” poster on her door surrounded by balloons.
Pen pals. Alaska Gov. Bill Walker in early February wrote to President Trump with his wish list for the state’s pipeline and liquefied natural gas (LNG) project, asking for environmental regulatory exemptions for the project as well as federal loan guarantees. The governor said the federal government can help the Alaska LNG project with “relatively minor amendments to an existing federal loan guarantee previously passed for an Alaskan gas pipeline project, concessionary financing and/or guarantees (such as a first-loss investment) of up to 25% of the total investment for each project, and some changes to regulations that would provide Alaska with greater oversight of the existing and well-established pipeline corridor.”
Headlamp would not call an increase from $18B to $40B loan guarantee a minor amendment; nor would we support the request that any gas pipeline project require the State as a participant.
Potential budget cuts aimed at the U.S. Environmental Protection Agency could pull millions of dollars for drinking water and wastewater initiatives from Alaska, slowing the progress of potable water in villages, and limiting efforts to adjust to climate changes. The EPA’s fiscal year 2017 budget is $8.6 billion, supporting roughly 15,000 employees. But only a small portion of that funding goes to staff — much of it goes directly to states, tribes and territories through the clean water and drinking water state revolving loan funds, and a variety of grants. In Alaska, that amounted to just more than $78 million in fiscal year 2016.
Opposition from an Inupiaq village near the U.S. petroleum reserve in Alaska has stopped ConocoPhillips from drilling a nearby exploration well, a move that raises doubts about future exploration efforts at the potential oil play on the North Slope. ConocoPhillips’ decision to delay plans to drill the Putu 1 exploration well was a factor in a decision by the state on Feb. 17 to increase pressure on the company to make sure exploration occurs as soon as possible. The area is on leased state land.
Home is where the recession isn’t. Home foreclosures are often the hallmark of a down economy, but that doesn’t appear to be the case in Alaska, where last year, in the midst of recession, the number of statewide home foreclosures actually fell. Foreclosures statewide and in specific markets are also at or close to 10-year lows, according to data released Tuesday by the Alaska Housing Finance Corporation.
A filibuster and a blizzard of amendments start to weigh down Alaska Legislature’s budget work
Alaska Dispatch News, Nathaniel Herz, March 7, 2017
Here’s what Alaska stands to lose with major cuts to the EPA budget
Alaska Dispatch News, Erica Martinson, March 7, 2017
Oil exec: Trump should keep US in Paris climate pact
The Hill, Timothy Cama, March 7, 2017
Alaskans, protect dividend and pay taxes
Alaska Dispatch News, John Havelock, March 7, 2017
Alaska Governor Sends Trump A Pipeline/LNG Wish List
Natural Gas Intelligence, Joe Fisher, March 7, 2017
State dials up pressure on ConocoPhillips after it delays controversial exploration project
Alaska Dispatch News, Alex DeMarban, March 7, 2017
Alaska home foreclosure count shows little sign of recession’s effects
Alaska Dispatch News, Jeannette Lee Falsey, March 7, 2017
Hilcorp given May 1 deadline to repair leaking pipeline
Peninsula Clarion, Ben Boettger, March 7, 2017
Still just talk. Alaska legislative leaders say they are committed to taking major steps to address the state’s multibillion-dollar budget deficit this year, even if that means working beyond 90 days. “Honestly, if it takes going over a little bit in order to do the right thing for the future of Alaska, personally, I’m prepared to do it,” House Speaker Bryce Edgmon told reporters two days before the scheduled 90-day session reached its midway point.
The challenge will be avoiding a repeat of last year, when gridlock prevailed. The Senate has said it hopes to lop $300 million off the budget for next year, and Senate Majority Leader Peter Micciche has said he’d like to see a focus on passing a Permanent Fund bill before delving into politically divisive topics, like taxes. “The important part, and the thing that heartens me, is, we have a very good dialogue going,” Edgmon said.
India seeking more oil. India’s energy minister announced a new round of bidding for upstream and downstream investments on Monday. “We want to increase our production. We want to invite investment,” said Shri Dharmendra Pradhan, the country’s minister of petroleum and natural gas, speaking at the annual CERAWeek conference in Houston. “I must tell you there was never a better time to be in India. I encourage both existing and new players to come forward and avail the opportunity,” he said in prepared remarks. As Headlamp repeatedly emphasizes, if Alaska doesn’t capitalize on East Asian energy markets…someone will.
Midway through session, Alaska lawmakers looking for fiscal fix
Juneau Empire, Becky Bohrer, March 6, 2017
India’s oil boom: Growing into role as No. 1 in global demand
CNBC, Patti Domm, March 6, 2017
TODAY CONOCOPHILLIPS (COP) STAKE RAISED BY FIRST NATIONAL BANK SIOUX FALLS
Daily Quint, Susan Crespo, March 6, 2017
Fast Growth Coming for Northeast Shale Gas Pipelines
Hellenic Shipping News, March 7, 2017
Differences of Opinion Threaten Movement of Deficit Reduction Proposals in Senate
Alaska Commons, Craig Tuten, March 6, 2017
Is the Antiquities Act antiquated? Murkowski wants Alaskans approval for future national monuments
KTOO, Elizabeth Jenkins, March 3, 2017
Permanent Fund Time. CEO of the Alaska Permanent Fund Corp. and a former commissioner of the Alaska Department of Revenue Angela Rodell penned an opinion piece in the Alaska Dispatch News. According to Rodell, “The Prudhoe Bay lease sale raised $900 million, while the state budget for fiscal year 1968 was a mere $112 million. This prodigious outcome demonstrated Alaska could, in fact, generate revenues to maintain and build state infrastructure – roads, water systems, schools – in support of our communities. Given the list of needs throughout Alaska, it was no surprise the $900 million was quickly spent on a variety of priorities, including infrastructure and social programs. The velocity of that spending and its impact on the state’s economy, however, caused our leaders to take a step back.” Rodell closed by thanking her fellow Alaskans for continuing to believe in her leadership.
The Republican-led Alaska Senate majority on Friday proposed a new deficit-reduction bill involving Permanent Fund dividend reductions and provisions to limit government spending. The House Majority plan for the Permanent Fund is a reduced dividend and an income tax with no spending limitations.
Full weight. In a Feb. 7 letter addressed to President Trump, Gov. Bill Walker asked for a “federal wish list” to help expedite the Alaska LNG project that seeks to sell huge reserves of North Slope gas to Asian utilities. Walker termed the project an “ideal” megaproject, as the president moves ahead with his $1 trillion plan to rebuild the nation’s infrastructure. Alaska Sens. Lisa Murkowski and Dan Sullivan are working to remove one hurdle with legislation that would allow the pipeline to run through the non-wilderness portion of Denali National Park and Preserve, said Nicole Daigle, communications director for the Senate Energy and Natural Resources Committee chaired by Murkowski. Murkowski has said that would help reduce project costs.
According to reports, U.S. crude oil exports could reach 800,000 barrels per day (bpd) in 2017, exceeding the amount shipped by Organization of the Petroleum Exporting Countries (OPEC) Ecuador, Gabon, Libya and Qatar, according to analysts polled by Bloomberg. “Trump’s soundbites and actions have put the industry on steroids,” Forbes contributor Gaurav Sharma said.
According to the Alaska Dispatch News, halfway through the Legislature’s 90-day session, the Republican-led Senate and the largely Democratic House majority are still drifting apart, with Senators pushing for a spending cap and steep budget cuts as the House advances an income tax proposal and increased oil and gas taxes. They also have deficit-reduction plans on parallel tracks in each chamber, but the House and Senate versions don’t match up. The differences between them will ultimately be resolved in negotiations between leaders — just like the past two years. “You come together, pass it to the governor, and the governor has to sign it,” Homer Republican Rep. Paul Seaton, co-chair of the House Finance Committee, said in an interview. “The process is the process.”
Send the Oil: What America Gains from Trump’s Big Energy Push
The National Interest, Anthony Fenson, March 5, 2017
Alaska governor asks Trump to throw his weight behind Alaska LNG project
Alaska Dispatch News, Alex DeMarban, March 5, 2017
Alaska Permanent Fund: The difference between debate and disaster
Alaska Dispatch News, Angela Rodell, March 5, 2017
Alaska lawmakers are following a budget path that’s ended in gridlock before. Will it be different this time?
Alaska Dispatch News, Nathaniel Herz, March 5, 2017
Alaska Senate Majority unveils new Permanent Fund bill
The Arctic Sounder, March 4, 2017
Midway Through Session, Lawmakers Looking for Fiscal Fix
US News and World Report, Becky Bohrer, March 5, 2017
Key Messages of the Week
- All the warm fuzzy feelings are gone. Clashes between the House Majority and House Minority during the Finance Committee meetings were on full display this week.
- The efforts by the Co-Chairs of House Resources to garner support for HB 111 off the ground are lagging.
- The public testimony process for the operating budget is flawed, and always have been. Comments on such a large piece of legislation and spending should be held when most Alaskans can legitimately comment on the legislation.
- The House Majority of “openness and transparency” is anything but, as they refuse to consider budget reductions, block their colleagues in the Minority from participating in the process and perfect the art of telling one side of the story.
February 27, 2017
- Senate Finance dove into SB 70, the new bill by the Sen. Finance committee that would restructure use of the Permanent Fund Earnings Reserve Account, implement a spending cap and change how PFD’s are calculated.
- House Resources heard testimony solely from anti-Pebble proponents and offered no time for pro-Pebble backers and process supporters to come before the Committee. Likewise, the Committee continued its hearings on HB 111. The Legislature’s consultant, Rich Ruggiero, was back in the hot seat answering questions and presenting “options” (AKA changes) the legislature could make to Alaska’s oil and gas tax regime. The Committee also met at night to go over models Mr. Ruggiero had put together, unfortunately those models were not available to the public watching the hearing.
- House Finance reviewed the sub-committee budget documents and amendments for the operating budget, HB 57.
February 28, 2017
- House Finance continued its work on HB 57. Rep. Seaton proposed an amendment that would cut tax credit payments to oil & gas companies in half from the level Gov. Walker proposed. Under Seaton’s proposal, only $37 million would be paid out to companies due far larger sums, while Gov. Walker had $74 million allocated.
- House Transportation examined HB 132, the House companion bill that would allow transportation network companies like Uber and Lyft to operate in Alaska.
March 1, 2017
- Senate Finance heard an analysis from the Department of Revenue on SB 70. Some modeling of the bill was presented.
- House Resources heard another presentation by Rich Ruggiero who extrapolated his thoughts on HB 111. Mr. Ruggiero has not given resounding praise and endorsement of HB 111 to date.
- House Resources also heard public testimony on HB 111, in which the public voiced overwhelming opposition to the bill.
- House Finance introduced a committee substitute for HB 57, incorporating changes/amendments that emerged during the sub-committee process. House Minority committee members were not supportive of the CS. In fact, the entire House Minority sat in the gallery to show their opposition to the plan (which Headlamp wrote about here) being pushed by the House Majority.
March 2, 2017
- House Finance began public testimony on the operating budget. Public comment was limited to 2 minutes. Comments were taken from Homer, Kenai, Ketchikan, Kodiak, Mat-Su and Seward residents from 1-3:30pm. From 3:45-6:00pm the Committee heard testimony from Barrow, Dillingham and Fairbanks citizens. It must be noted that most public testimony was considered during WORK HOURS when most Alaskans don’t have the ability to provide comment. Testimony for the above communities will be heard again on March 4 and 6th
March 3, 2017
- House Finance continued public testimony on HB 57. Anchorage residents testified from 1-3:00pm; Sitka, Petersburg, Delta Junction, Unalaska, Glennallen & Tok from 3:15-4:45pm; “off-net” callers went from 5-6pm.
This week’s Bad Bill of the Week may seem like a slightly unorthodox choice, because it’s something the Legislature HAS to pass. But with it, comes the bulk of state spending.
Headlamp spent the better part of last weekend attending the Anchorage Caucus and various constituent meetings held by legislators. The mantra we heard again and again was “there’s no more to cut.” Headlamp simply does not agree. For this to be accurate, one would have to assume that state government spending was at reasonable levels when this process began. But in reality, our per capita spending in Alaska, accounting for all types of spending, was $14,121.39 in FY 2017; which was far above the national average of $5,777 in FY 2015.
For this reason, our Bad Bill of the Week is HB 57 – the House Appropriations Bill for the Operating Budget. We think it goes without saying that Headlamp doesn’t believe this spending bill will solve our financial situation or strengthen the private sector.
The Operating Budget is just what it sounds like: the legislation which funds the operating expenses of state government. When one considers that Headlamp continues to preach the need to find efficiencies, privatize services and cut more expenses on a state level, it should come as no surprise this is our Bad Bill of the Week.
The Governor sent the House and Senate an operating budget with a price tag (accounting for all funds and expenditures) of $9,587,701,500. HB 57 currently sits in the House Finance Committee. Throughout the budget sub-committee process the House Majority passed dozens of amendments and increased the size of the operating budget by over $127 million! The state’s operating budget, which includes agency funding, debt service, payment of oil and gas tax credits, PFD payments etc. now sits at $9,714,838,500. Headlamp has no doubt that certain legislators will defend such increases as necessary and good. Headlamp’s opinion is certainly different. Which is why, when it comes to the budget, we believe legislators should be asking what expenses and programs are “mission critical”?
Mission Critical, a group comprised of concerned citizens, has taken it upon themselves to do the work the Legislature has failed to do. They have broken down the budget by Department and analyzed what spending is critical to each Department’s mission, what services could be privatized, what is a function of another Department and what could be eliminated.
Growing the operating budget, as the House Majority is doing with HB 57, doesn’t solve our financial situation, and it certainly doesn’t strengthen the private sector. Loyal Headlamp readers know we’re steadfast in our support of the private sector and in making Alaska an attractive place to do business. Until we get our fiscal house in order, elected officials will continue trying to balance the budget on the backs of businesses through increased taxes (as in the case of HB 111). Headlamp does not believe that’s right or acceptable.
Because it grows the size of government and increases spending, HB 57 is our Bad Bill of the Week.
Over the next three days the House Finance Committee is taking public testimony on HB 57. We encourage our readers to participate, and let legislators know they must reduce government to a sustainable size before turning to taxes.
In the meantime, we’ll continue looking for leaders to make the tough decisions to reduce spending and reform our state government.