Morning Headlamp – Senate President asks House to focus while AGDC takes a giant step.

April 14, 2017 | Posted in : News

Focus, Focus, Focus. Acknowledging that legislators won’t finish work on time, Senate President Pete Kelly sent a letter to House Speaker Bryce Edgmon, asking him to narrow the legislature’s focus. “We believe we must act to define the scope of legislative work if we are to proceed beyond Day 90,” Kelly wrote. “Consideration of a range of other legislative issues is a distraction from a timely resolution to our fiscal problems.”

Something’s Fishy. The push by a group of fisheries activists made to get a section of Alaska law overhauled is making its way through the Legislature, but won’t pass this year. House Bill 199, sponsored by representatives Louise Stutes and Andy Josephson, would overhaul Alaska Statute Title 16, which sets out the procedures for the commissioner of the Alaska Department of Fish and Game to issue permits for operations in fish habitat. Headlamp wrote about HB 199 a few weeks ago and is glad to see that the bill will not move this year. 

One Giant Step.  On Thursday, Alaska Gasline Development Corporation officials formally launched their application for federal permission to build a pipeline and other facilities to export North Slope gas. 58,000 pages of documents will be delivered by truck to the Federal Energy Regulatory Commission’s (FERC) headquarters in Washington, D.C., on Monday. FERC officials have said this will be the largest application they have ever received, involving the largest and most expensive project they have ever studied. Current plans call for North Slope natural gas to be shipped in an 800-mile pipeline to Nikiski, where it can be chilled into liquefied natural gas and loaded into oceangoing tankers. FERC will take public comment associated with a draft environmental impact statement, and later issue a final impact statement. The documents, to be published by FERC, will spell out the project’s effects on the environment and would provide the basis for permitting decisions.

Nothing lasts forever. For the first time in state history, the Alaska Legislature has chosen to spend the Alaska Permanent Fund on something other than dividends. On Wednesday, the Alaska House of Representatives voted 22-18 to approve Senate Bill 26, which takes a portion of the Permanent Fund’s investment earnings and applies that money to Alaska’s $2.8 billion annual deficit. As a side effect, the Permanent Fund Dividend would drop to $1,250 starting this year.

On the road again. There’s more time to provide input on what should be considered in an environmental impact statement for the proposed Ambler Road project. The Bureau of Land Management has extended the EIS scoping period for the over 200-mile state proposed mining access route in the southern Brooks Range.

 

First Reads

State gas line agency applies for permission to build Alaska LNG project

Alaska Dispatch News, Alex DeMarban, April 14, 2017

Big bills finally on the move as Legislature hits crunch time

Alaska Journal of Commerce, Elwood Brehmer, April 15, 2017

In email, BP Alaska president details 2016 losses

Alaska Journal of Commerce, Elwood Brehmer, April 14, 2017

House approves Permanent Fund bill with tax contingencies

Alaska Journal of Commerce, James Brooks, April 13, 2017

Ambler Road access project scoping period extended

Alaska Public Media, Dan Bross, April 13, 2017

Senate asks House to narrow focus on Day 87 of session
KTVA, Liz Raines, April 13, 2017

HB 199 gets hearing, won’t pass this year

Peninsula Clarion, Elizabeth Earl, April 13, 2017

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Bad Bill of the Week – A poison pill Alaskans shouldn’t swallow

April 14, 2017 | Posted in : News

As we wind up the last week of the regular session with no adjournment in sight, we reflect on the creation of Bad Bill of the Week and hope it has both informed and horrified loyal Headlamp readers.

The majority of our Bad Bills have been easy to pick. They have offended us at Headlamp for a myriad of reasons, not the least of which were they don’t solve our financial situation or strengthen the private sector. But this bill has EVOLVED into Bad Bill of the Week. It is CSSB 26.

SB 26 was originally Governor Walker’s bill that included a percent of market value (POMV) approach to the Permanent Fund. When the Senate considered the bill, it added a spending cap and other levers to help address Alaska’s fiscal crisis. But SB 26’s story didn’t end there.

Last week, the House Majority got ahold of CSSB 26 and in Headlamp’s opinion, destroyed it and likely the chances of its passage. Anyone who follows politics in Juneau isn’t surprised by the gamesmanship that takes place at the end of session. Broadly titled bills have been known to end up with entire pieces of legislation added in the waning hours. But the actions of the House Majority this week take the cake.

Perhaps it should come as no surprise that the House Majority, acting like a petulant child, hijacked CSSB 26, adding “conditional language” amounting to extortion in Headlamp’s view. The leaders in the House are trying to jam bad legislation down the throats of the Minority and the Senate, and they’re being met with vocal resistance.

The latest version of CSSB 26 that passed the House says the POMV will only go into effect if the Legislature enacts a broad-based tax dedicated to education and the House version of HB 111 (oil taxes) is passed into law. HB 111 was already Bad Bill of the Week in late March, and let’s just say, if we thought the earlier version of HB 111 was bad, the final version passed by the House earlier this week would be the Terrible, Horrible, No Good, Very Bad Bad Bill of the Week.

Headlamp is concerned, to say the least, with the poison pill the House Majority has added to SB 26. It’s clear they did it because they can’t get their economy killing, anti-private sector garbage passed on merit, so they’re resorting to extortion. We’ll pass CSSB 26 if you give us what we want. It’s like we’re in an appalling real-life episode of the Sopranos. Well, House Majority, Headlamp believes Alaska deserves better. That said, it’s clear we won’t be getting it from the so called “leadership” in the Alaska State House.

Don’t let the evolution of this bill from good legislation to Bad Bill of the Week fool you – it most definitely deserves the designation. Headlamp will keep you posted as we head to extra innings.

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Morning Headlamp – Mergers, Audits and Pipelines

April 13, 2017 | Posted in : News

Deadline Looms. Bill Walker continues to attempt to entice world leaders’ support for the Alaska LNG project. On Tuesday he said he would personally put in a word with President Donald Trump and is now trying to meet with Japan’s prime minister, following recent talks with the Chinese president. Whether the high-level efforts boost the fortunes of the $45 billion liquefied-natural-gas project, known as Alaska LNG, is yet to be seen. Walker had proposed a Sept. 1 deadline to line up critical business partners before pulling the plug on the costly undertaking. On Tuesday, he said he was hopeful the prominent attention would lead to financial commitments to push the proposal into construction. He didn’t back off the deadline, though he seemed to keep his options open, “it’d be great if we had someone by then, we’ll have to evaluate by then where we are, what we’ve received, and how the world has changed.”

More money coming. Oil and gas companies in Alaska owe the state $194 million in unpaid taxes and interest from 2010, according to a summary of recently completed audits of that year’s oil and gas production tax returns. The back-taxes assessment comes atop the roughly $3.5 billion collected that year from the production tax that has usually provided Alaska with most of its general fund revenue. The income from the tax has fallen dramatically in recent years with the collapse in oil prices. The audits assessed an additional $131 million in production taxes for 2010, along with $63 million in interest. The audits are confidential under state law, as are the tax returns. The 12 companies whose returns were audited were not named in the summary.

Spend money to save money. A committee of Alaska legislative leaders Wednesday unanimously approved a $400,000 computer upgrade for lawmakers and staff — a step that could ultimately save $150,000 on annual moving costs. The “workstation mobility” project will pay for new monitors, color printers and docking stations in Juneau and legislators’ home districts that will plug into a laptop or small computer that can be easily carried between the two offices. Currently, the state pays for lawmakers to move desktop computers and other equipment between Juneau and Anchorage — a process that takes weeks and involves hundreds of boxes.

Two become one? In a letter to the Chugach Electric Association and Municipal Light & Power, Anchorage Economic Development Corp. President Bill Popp said the utilities and stakeholders should have “substantive discussions” about a merger. The suggestions are the product of a working group, convened by Anchorage Economic Development Corp, of 10 companies and organizations that have “significant property investments in both ML&P and CEA service areas,” AEDC said in a news release. Those include the Alaska Railroad Corp., GCI, JL Properties, Alaska Regional Hospital and others. ML&P and Chugach do not compete for the same customers because they both serve distinct, different areas of Anchorage.

 

First Reads

Governor says Alaska LNG on world leaders’ radars as he pursues partners

Alaska Dispatch News, Alex DeMarban, April 13, 2017

Oil companies owe $194M in 2010 tax and interest, state says

Alaska Dispatch News, Alex DeMarban, April 13, 2017

Alaska House votes to restructure Permanent Fund and slice dividends

Alaska Dispatch News, Nathaniel Herz, April 13, 2017

Alaska lawmakers approve $400,000 computer upgrade

Alaska Dispatch News, Nathaniel Herz, April 13, 2017

Major Anchorage businesses again encourage power utilities to merge

Alaska Dispatch News, Annie Zak, April 13, 2017

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Morning Headlamp – State: Pebble to Commit $2 Million for Land Restoration

April 12, 2017 | Posted in : News

Back to Work! Conditions for continuing work at the Pebble Mine were announced Tuesday by the Alaska Department of Natural Resources and immediately drew a favorable reaction from Bristol Bay tribes, environmental groups and fishing interests. Pebble said its work this summer will be as DNR has directed, and will protect the public interest. Pebble Limited Partnership applied in October for a land-use permit to continue monitoring and care of mining claims spread over 266,000 acres in the Bristol Bay region. The developers aren’t planning exploration work this summer, but say they intend to move forward and eventually seek major permits to develop the site. The summer work, with permission now in hand, will include inspections, upkeep of facilities, and reclamation including filling of holes drilled into the earth to remove core samples. The state estimates it would cost $1.9 million to remove all of Pebble’s equipment from state land and another $100,000 to do the inspection and restoration required under this year’s permit. Since 1988, some 1,355 exploratory holes have been drilled on the Pebble prospect. About 600 have been filled, DNR says. The new permit requires Pebble to fill another 138 holes, including plugging them below the surface and cutting off any exposed well or pipe, which Bristol Bay residents say have been exposed in the past, creating hazards. Another 612 boreholes can remain open for the next year, but Pebble must inspect 300 of them, under the permit. The state required Pebble to commit $2 million to ensure disturbed land is eventually restored.

The consequences of courage. The Alaska Senate has removed Wasilla Republican Sen. Mike Dunleavy from his key committee posts following his vote last week against the caucus’s budget proposal. Dunleavy’s seat on the key finance committee went to Palmer Sen. Shelley Hughes.  They also gave Dunleavy’s gavel as chair of the Senate State Affairs Committee to Anchorage Republican Sen. Kevin Meyer, the previous Senate president. Kodiak Sen. Gary Stevens, the Senate president from 2011 to 2012, will take over Hughes’ old job as chair of the Senate Education Committee. Dunleavy said in a brief interview Tuesday that he wasn’t surprised to lose his finance seat or his chairmanship. “I knew what the ramifications were of my decision,” he said. “There’s no animosity.” Headlamp applauds Dunleavy for standing his ground and his belief that the size and scope of government could be further reduced.

 

First Reads

Bombarded with public comments, Alaska gives Pebble OK for summer work — with new requirements

Alaska Dispatch News, Lisa Demer, April 12, 2017

Dunleavy stripped of committee posts after defying Alaska Senate majority on budget vote

Alaska Dispatch News, Nathaniel Herz, April 12, 2017

Oil tax credit bill on its way to the Senate, with ultimatum from House

Alaska Public Media, Rashah McChesney, April 11, 2017

That Uncomfortable Moment When The Pipeline Boogeyman Fails To Perform

Forbes, David Blackmon, April 11, 2017

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Morning Headlamp – House Majority hopes to extort support from Senate.

April 11, 2017 | Posted in : News

Love It or Leave It.  The House Finance Committee is taking a new approach and will combine its proposals to institute an income tax and raise oil and gas taxes with a proposal to draw money from Permanent Fund earnings to pay for the state government. The House committee amended Senate Bill 26, which sets how much the state can draw from Permanent Fund earnings. Under the amendment, changes to the Permanent Fund will only go into effect if the Legislature also passes both an income tax and changes to oil and gas taxes.

SMH. Headlamp is intrigued by the move. If you can’t convince people that your idea works, you force them to support your idea anyway? Call us crazy, but that’s not how statesmanship works. 

Massive rewrite of oil taxes passes house. The Alaska House narrowly passed its oil tax bill Monday, sending a wide-ranging measure to the Senate that both scales back companies’ cash incentives and changes the state’s base tax rate. The 21-19 vote on House Bill 111 came along caucus lines, with Anchorage independent Rep. Jason Grenn the one member of the largely Democratic House majority coalition opposing the legislation. Members of the GOP minority said they were willing to accept changes to the incentive program, which would be nearly eliminated under HB 111. But they characterized the rest of the bill as a rewrite of the state’s oil tax regime in a way that would discourage investments in new projects. “Make no mistake, this is not a modest proposal,” said Anchorage Republican Rep. Chris Birch. “This is a massive tax increase on the industry. This is bad for our economy. It’s bad for our community and it’s bad for our state.”

Headlamp applauds Rep. Grenn for keeping his campaign promise to avoid a complete overhaul of the tax system.  

How low can they go?   The Trans Alaska Pipeline System was built for extreme conditions, but as the Alaska’s oil production declines, the pipeline faces a new challenge: flows so slow that operators worry the line may become unusable, cutting off access for hundreds of North Slope oil wells. While new discoveries in Alaska have raised hopes recently, the state’s oil production has been falling for years. Most of the easy crude has already been removed from Prudhoe Bay, and the availability of cheap shale in the lower 48 states means there’s less incentive for explorers to open new fields up north, where drilling can be three times more expensive. Lower volumes mean crude travels more slowly through the pipeline, losing heat along the way. And at low temperatures, crude can form harmful ice crystals that damage pumping equipment.

Headlamp realizes the irony of this story coming on the heels of one about oil tax increases being pushed by the House Majority. People who trot out a 40th Anniversary cake for TAPS and then turn around and support legislation to tax Alaska’s oil industry out of existence aren’t really interested in another 40 years of the pipeline.

When you wish upon a star…Trump’s cabinet picks include a host of oil industry veterans and allies, including former ExxonMobil CEO Rex Tillerson as Secretary of State, former Texas governor Rick Perry as Secretary of Energy and climate change sceptic Scott Pruitt as head of the Environmental Protection Agency. With the oil lobby pushing for more access to offshore oil licenses and regulatory reform, could this be the cooperative cabinet the industry has been hoping for?

Hilcorp Discovers Leak Source. Repair divers inspecting a natural gas leak at a Hilcorp Alaska pipeline in Cook Inlet have found a gash that appears to have been caused by a boulder on the seafloor. With the recent warm weather and the melting of Cook Inlet ice, Hilcorp was able to send contract divers to two locations — the leaking gas line, by Platform A, and an oil pipeline that was suspected of leaking crude near the Anna platform. After inspecting the Anna pipeline, Hilcorp said it was not the source of a small crude oil leak on April 1. Divers worked over the weekend to locate the hole and are preparing to install a temporary clamp to prevent further methane leaks.

 

First Reads

Pipeline Built to Survive Extremes Can’t Bear Slow Oil Flow

Bloomberg, Alex Nussbaum, April 10, 2017

Alaska House sends oil tax overhaul to Senate

Alaska Dispatch News, Nathaniel Herz, April 10, 2017

Hilcorp finds 2-inch gash in leaking natural gas line in Cook Inlet

Alaska Dispatch News, Alex DeMarban, April 11, 2017

Antiquated Cook Inlet pipelines targeted amid busy season for oil and gas leaks

Alaska Dispatch News, Alex DeMarban, April 11, 2017

New version of Permanent Fund bill would require income tax, oil tax hike
KTOO Public Media, Andrew Kitchenman, April 10, 2017

Trump’s energy team: a big win for big oil?
offshoretechnology.com, Chris Lo, April 10, 2017

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Morning Headlamp: Anti-business House Majority struggling to maintain control

April 10, 2017 | Posted in : News

Proposed Total Overhaul of Oil Tax System. With the income tax proposal stalled, the Alaska House majority is now moving forward on its proposed oil tax bill instead, unveiling a new version of the legislation on Friday. The oil tax measure, House Bill 111, passed the House Finance Committee in a 6-5 vote Saturday and will head next to the floor over the objection of GOP minority members. The new substitute version of HB 111, from the House Finance Committee, replaces an earlier draft from the House Resources Committee. The revised bill preserves many of the original elements: eliminating cash credits for North Slope companies and stopping companies from using most types of tax credits to bring their tax rates below a minimum floor. But it also takes a new step of eliminating a key tax credit issued for each barrel of oil production. Kara Moriarty of the Alaska Oil and Gas Association, called the new version of the legislation a “very significant increase in taxes” that was worse than the previous version from the resources committee. “Alaskans may not care about the impact to the industry, but it will hurt the economy.” “This is the way to destroy industry right here,” said Anchorage Republican Rep. Lance Pruitt. “I thought we were only going to have a focus on the credit discussion. This is a total rewrite of our tax system.” Headlamp is not surprised the House Majority can’t move its punitive tax measures. Members of their own caucus can’t support their anti-business legislation. 

China’s Alaska Interest Grows. China’s growing interest in Arctic resources was on full display during an Anchorage stopover following President Xi Jinping’s summit with President Donald Trump. During the visit, the Chinese president met with Gov. Bill Walker. The governor said the two discussed seafood, air cargo, oil and gas, minerals, tourism and the liquefied natural gas export project. Walker said China would like to fill the policy space vacated by the Trump administration, which has moved to reverse many Obama-era policies designed to mitigate climate change. “It appears with the shift from the U.S. of leading a bit less, they (the Chinese) may be taking over the position of leading on that.” China is clearly interested in securing economic and political footholds in the Arctic as the region’s thinning sea ice unveils new shipping routes, fishing grounds, oil and gas, and minerals. Several of its government ministries fund research in the Arctic. It has launched several polar-orbiting satellites and established a research field station in Norway, and plans to add a second icebreaker to its fleet of one, the MV Xue Long, or Snow Dragon. Alaska exported seafood, minerals, oil and other products valued at just under $1.2 billion to China in 2016.

Proposed Heavy Fuel Oil Ban for Arctic Ocean. A proposed ban on heavy fuel oil use in the Arctic is being advocated by environmentalists and indigenous action groups who want it added to the new Polar Code, a set of binding environmental and safety rules put into effect at the start of the year by the International Maritime Organization. Though the Polar Code bans the use of heavy fuel oil in Antarctic waters, it includes no such ban for the Arctic.

Essential Air Service Not Essential? Air carriers and people in rural communities around Alaska say that President Donald Trump’s proposal to gut a subsidy program that allows more affordable flights to and from villages would sever a key lifeline to services and goods. Trump’s proposed budget blueprint calls for eliminating funding for the Essential Air Service program, which subsidizes flights around the country, allowing regular air service in communities where it otherwise wouldn’t be economically viable. Used in about 60 Alaska communities, the program affects more parts of Alaska than any other state. Without the Essential Air Service program, carriers speculate that ticket prices might go up and service frequency might go down, if regular flight service remains at all.

Alaska is OPEN for Business. Alaska’s senators this week introduced legislation that would undo the Obama administration’s indefinite ban on offshore drilling in a large portion of the Arctic Ocean, opening a politically difficult but legally effective way to restart oil and gas lease sales. The bill, introduced by Sen. Lisa Murkowski (R-Alaska) and co-sponsored by fellow Alaska Republican Sen. Dan Sullivan, entitled the OPENS Act, would require the Department of the Interior to hold at least three lease sales in the Beaufort and Chukchi seas and the Cook Inlet during each five-year planning period. The Obama administration did not include any lease sales for the Arctic in its 2017-2022 plan, and then issued a controversial indefinite ban. Headlamp applauds Senators Murkowski and Sullivan for wasting no time to reverse harmful policies and get Alaska back on track to develop their resources. 

 

First Reads

Arctic bans on heavy fuel oil and large-scale fishing win support, but action is slow

Alaska Dispatch News, Yereth Rosen, April 10, 2017

Gov. Walker breaks down his Alaska meeting with Chinese President Xi Jinping

Alaska Dispatch News, Jeannette Lee Falsey, April 10, 2017

New Alaska House oil tax bill emerges but faces an uphill climb in Senate

Alaska Dispatch News, Nathaniel Herz, April 10, 2017

Nearing 90-day deadline, Alaska lawmakers advance bills on health care, campaign fundraising and crime

Alaska Dispatch News, Nathaniel Herz, April 10, 2017

Rural Alaska communities rely on this program for air travel. Now it might be going away.

Alaska Dispatch News, Annie Zak, April 10, 2017

GOP Senators Push Bill to Undo Drilling Ban While Awaiting Action From Trump
Morning Consult, Jack Fitzpatrick, April 7, 2017

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Morning Headlamp – A big win from Trump for Alaska

April 7, 2017 | Posted in : News

A dream come true.  President Donald Trump is preparing an executive order to reverse President Obama’s actions to withdraw U.S. Arctic and Atlantic Ocean waters from lease sales for the purpose of oil and gas development. While the reversal of the anti-development policy could take years, Headlamp is encouraged to see President Trump take aggressive action in helping to develop Alaska’s vast resources. The U.S. Arctic is estimated to hold 27 billion barrels of oil and 132 trillion cubic feet of natural gas.

A failure to communicate. One of two key state financial reports, the spring revenue forecast, is behind schedule this year. The state released an early version of the spring revenue forecast last year on March 21, saying that its content — growth of the Alaska deficit by $300 million — would help guide legislative debate as Gov. Walker pressed the Legislature for budget reforms. The forecasts are typically released in the first week of April. But this year’s document isn’t expected until April 14, according to Ken Alper, the state tax director. House Republican, Anchorage Rep. Lance Pruitt, accused Walker’s administration of hiding information about higher oil revenues that could undermine its push for new state revenue through taxes. “Something tells me that the revenue outlook is not as dire-painted as it was last year,” said Pruitt, a member of the GOP minority. “Meaning some of the things that they’re pushing — the scare tactics that are being used to try to force Alaskans into bad policy, whether it’s on oil taxes or on an income tax — are not maybe as necessary as they need to be.”

Two become one. Consolidation is the next natural step for Anchorage’s electric utilities to take in their ongoing efforts to reduce costs, according to NERA Economic Consulting Director Kurt Strunk. City-owned Municipal Light and Power services Downtown and Midtown Anchorage, as well as Joint-Base Elmendorf Richardson. Chugach Electric Association, a cooperative utility, covers the remaining majority of the city and small portions of the northern Kenai Peninsula Borough. Strunk, who has testified before the Regulatory Commission of Alaska on utility matters in the past, said full consolidation of Chugach and ML&P is the single biggest thing the utilities could do to capture operational savings. Similar utility consolidation has already occurred across the Lower 48, he said; it’s common as markets mature. “If the two Anchorage utilities combine they would be the size of a very small utility in the Lower 48,” Strunk described. “The scale of diseconomies when you’re operating very small utilities is huge.” Current Anchorage electric rates are on par with Lower 48 averages, but a request to the RCA by ML&P to increase its rates to offset the cost of its new $300 million East Anchorage 2A power plant would push rates above national averages.

 

First Reads

Trump Preparing Order to Expand Offshore Oil Drilling
Bloomberg.com, Jennifer Dlouhy, April 6, 2017

Tax rules, not politics, delay state revenue forecast, Alaska official says

Alaska Dispatch News, Nathaniel Herz, April 7, 2017

Wasilla state Sen. Dunleavy risks exile from caucus as Alaska Senate approves budget

Alaska Dispatch News, Nathaniel Herz, April 7, 2017

Anchorage utility consolidation pondered

Alaska Journal of Commerce, Elwood Brehmer, April 6, 2017

Congressional Democrats remount effort to block drilling in ANWR
Alaska Dispatch News, Erica Martinson, April 6, 2017

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Bad Bill of the Week: It’s a jungle out there…

April 7, 2017 | Posted in : News

This week’s Bad Bill of the Week comes to us from the Rules Committee Chair of the House, Rep. Gabrielle LeDoux. By now you’re all familiar with our criteria for Bad Bill of the Week. If it doesn’t solve our financial situation or strengthen the private sector a piece of legislation is in the running for the title. Well, HB 200, Rep. LeDoux’s bill to revamp the primary election system in Alaska fits the criteria and takes the award this week.

The bill does a number of things, but the most interesting to Headlamp is adding a jungle primary. According to politicaldictionary.com a jungle primary is defined as:

A primary election in which all candidates for elected office run in the same primary regardless of political party.

Also known as the “Nonpartisan Blanket Primary” or “Top Two Primary”, the top two candidates who receive the most votes advance to the next round, similar to a runoff election. However, there is no separate nomination process for candidates before the first round, and parties cannot narrow the field. In fact, it is entirely possible that two candidates of the same party could advance to the second round. For this reason, it’s not surprising that the parties haven’t rushed to embrace jungle primaries because they ultimately reduce their power.

Were this bill to become law, there are places in Alaska where a Democrat or a Republican might never make the general election ballot. One can imagine a scenario where two Mat-Su Valley conservatives are duking it out in November and more left-leaning citizens of that area wouldn’t be able to cast a ballot for a like-minded candidate. Who thinks this is a good idea? Why does Rep. LeDoux want to offer a way to silence voters?

Obviously Headlamp also takes issue with this bill because we still don’t believe the Legislature should spend any time working on legislation that doesn’t address our fiscal situation. This bill does nothing to improve our economy, end our recession or put Alaskans to work. Unfortunately, Rep. LeDoux doesn’t have a sponsor statement for this bill yet, but we’re certain it doesn’t move Alaska forward in any way. While we’re waiting for the sponsor statement, we’ll look up the definition of self-serving.

HB 200 is scheduled for a hearing next week in the House Judiciary Committee. With any luck, it won’t make it far.

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Morning Headlamp – Senate-Planned Budget Cuts Under Scrutiny

April 6, 2017 | Posted in : News

Does the House have the votes?  The House Majority’s income tax bill may not have the votes to pass the House. With two majority members not yet willing to be yes votes, the bill’s passage is in question. Headlamp hopes the income tax (which is being called “broad based” but certainly isn’t with only 40% of Alaskans paying it) can’t get out of the House, but if it does, we hope the Senate stays strong.

Senate reduces budget. The Alaska Senate’s majority has pledged to cut $300 million from the state budget as part of its deficit-reduction plan. But while the Senate’s latest spending plan would use $262 million less next year from the state’s unrestricted general fund, the real reduction in the size of government will be far less. That’s because more than $100 million in Senate cuts from the unrestricted general fund would be replaced with spending from other accounts, or in future budgets. Budget hawks and conservative lawmakers have been scrutinizing the new Senate proposal since the majority unveiled it Monday. The Senate leader in charge of the state operating budget, Bethel Democrat Lyman Hoffman, said he didn’t want to debate the details, even as he argued that the “black and white of it” was that the budget was being cut by some $300 million. Majority members say they can avoid new taxes by reducing dividends and cutting $750 million in general funds over the next three years — starting with this year’s $300 million.

Railroad reports first loss since 1999. The Alaska Railroad Corporation reported a net loss of $4.4 million in its 2016 annual report released this week, its first annual loss since 1999. In a news release, the railroad said the loss was the result of “continued declines in historic freight lines” and an impasse with the Municipality of Anchorage on how to split about $15 million in federal transit funds. The railroad’s $4.4 million net loss last year compares to a net income of $10.9 million in 2015, according to the annual report. The last time the railroad had a net loss was in 1999, when it reported a loss of $3.8 million. In addition to the battle over federal funding, the railroad last year saw freight revenue drop 16 percent compared to 2015, and more than 44 percent since 2008. A number of factors, including a 23 percent drop in petroleum product shipments to the Interior compared to 2015 and a collapsed coal market, played a role, the railroad said.

 

First Reads

Alaska Senate’s cuts are close to $300 million on paper. But their effect on spending will be far less.

Alaska Dispatch News, Nathaniel Herz, April 6, 2017

Alaska Railroad lays some blame on Anchorage for $4.4M loss in 2016

Alaska Dispatch News, Annie Zak, April 6, 2017

Renewables boom; Total U.S. energy consumption inches up

Fuel Fix, David Hunn, April 5, 2017

House ‘working on’ votes to approve income tax
Alaska Journal of Commerce, James Brooks, April 5, 2017

Tempers flaring as House, Senate spar over budget fixes

Alaska Journal of Commerce, Tim Bradner, April 5, 2017

Budget crisis highlights need for spending cap
Alaska Journal of Commerce, Jeremy Price, April 5, 2017

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Morning Headlamp – Walker Discusses Role in Budget Negotiations

April 5, 2017 | Posted in : News

Walker’s “Behind the Scenes” role. Governor Bill Walker discussed the Legislature’s progress and what he thinks is left to do in an interview with the Alaska Dispatch News. Much of the discussion was about the competing deficit-reduction plans offered by the House and Senate. According to Walker, he wants to take a “Behind the Scenes” roll this year as opposed to discussing the issues in front of a camera. “Last year we were arguing about whether there was a problem. There were those that felt there wasn’t a problem. And I had a number of press conferences where I expressed my concern about the lack of focus on addressing the problem. I don’t think there’s anybody — well, I shouldn’t say anybody. The vast majority of the people here now recognize that there is a problem, we’re in a crisis and we need to fix it. We’re in a recession. So, that part’s done […] Now the discussion is more internal. I’ve never said no to a legislator this session and I meet with leadership on a weekly basis — sometimes multiple times a week. My activity this year hasn’t been in front of a camera at a podium, concerned about lack of concern by legislators that we have a problem. They’ve embraced that now. So, it’s a different role for me. I’m just as active as I was before — it’s just that I’m not in front of a camera when I’m doing it.”

Mayor costs Railroad real money. Anchorage Mayor Ethan Berkowitz and the Alaska Railroad Corp. are at odds over a longstanding stream of federal transportation grants that neither side will receive until the dispute is resolved.

The railroad took a $7.4 million loss in 2016 that CEO Bill O’Leary says is directly attributable to Berkowitz’s refusal to sign a joint letter the Anchorage mayor and railroad head must send to the Federal Transit Administration before $15.3 million in 2016 formula grant funds is released.

It is the first annual loss the Alaska Railroad has posted since 1999. The two entities must settle on how the funds are apportioned because the Municipality of Anchorage, which has bus service, and the state-owned Alaska Railroad, which has year-round scheduled passenger service, are the two public transportation entities in the city. Headlamp certainly hopes the city and Mayor Berkowitz aren’t trying to balance their budget on the back of a profitable corporation. We don’t like it when the state tries it and we won’t like it in this case.

Asia becomes our biggest customer. China became the biggest buyer of U.S. crude oil in February, surpassing Canada by importing 8.08 million barrels of U.S. light crude, nearly quadrupling its January purchases. The surge in U.S. shipments to Asia comes as the Organization of Petroleum Exporting Countries trims output in an effort to end a glut that battered the economies of global energy exporters. Saudi Arabia reduced its pricing for some of its April crude sales to Asia as supplies from the U.S. became more competitive. U.S. crude exports in February jumped 35 percent from a month earlier, according to the U.S. Energy Information Administration.

AMA says what Headlamp is thinking. Executive Director of the Alaska Miners Association Deantha Crockett expressed deep concern for the message we’re sending investors and resource development companies.

“For a company to conclude there are better places than Alaska to invest millions of dollars is discouraging at best. The Chuitna Coal Mine was projected to exceed an investment of $600 million in the project’s development and operation. The mine would have created up to 500 jobs during construction and 350 full-time, year-round jobs during operation, and exceed $300 million in revenues to the Alaska Mental Health Trust and millions of dollars to local governments and the State of Alaska.  At a time when we’re seeing thousands of layoffs and budget deficits in the billions, it is more important than ever to ensure Alaska has policies that encourage investment in our economy.  I am hopeful that our policymakers see this announcement as a red flag, and focus on policies that strengthen our economy, encourage new investment, and show that Alaska is open for business.”

Headlamp couldn’t agree more.  

Let’s build things together. Witnesses before the Senate Committee on Energy and Natural Resources testified about the need for infrastructure to access Alaska’s vast natural resources. First we must invest in mapping upgrades to find where the potential supplies of new or under-utilized resources are located or where infrastructure is necessary in order to access those resources, said Steven Masterman, State Geologist and Director of the Division of Geological and Geophysical Surveys in the Alaska Department of Natural Resources. Additionally, Alaska’s limited road system impacts the cost of transportation of goods to its communities and presents challenges to the exploration and development of untapped resources. Other areas that require attention are the state’s deep-water ports which received a D grade in 2017 from the American Society of Civil Engineers. While the increased maritime activity brings much-needed economic opportunity to the state, it also creates risks without the infrastructure to support the needs of the larger vessels. There is an “unsettling lack of basic infrastructure in the Arctic region,” agreed Kara Moriarty, President and CEO of the Alaska Oil and Gas Association, and rectifying the situation could help the country achieve energy independence. Headlamp agrees that as Alaskans, investing in infrastructure to bring our resources to market is a great way to move Alaska forward, bring jobs and investment to the state and continue to responsibly develop our resources.

One if by air. An official with Lockheed Martin told Alaska lawmakers on Tuesday that efforts are on track to bring a modern cargo airship to the state in 2019. Advocates say the airships eliminate the need for costly roads and runways, making them perfect for delivering supplies across large swaths of Alaska without highways. The ships will be able to carry large loads and land at isolated clearings such as snowfields, ponds and frozen lakes. Anchorage-based PRL Logistics, which organized the movement of cargo, people and fuel for ExxonMobil’s $4 billion Point Thomson field, is working with Lockheed in the effort. Plans call for development of a 285-foot-long airship that can carry 22-ton loads.

Furie pays fine. Furie has agreed to pay the U.S. government $10 million in what amounts to the largest penalty ever levied in the history of the nearly century-old Jones Act. After violating the act in 2011, Furie discovered natural gas in the Kitchen Lights Unit in Cook Inlet, helping resolve concerns about a looming gas shortage in Alaska’s most populated region. Now Furie produces some of the fuel that heats homes and provides electricity across the region. The Jones Act is a protectionist measure from 1920 that preserves U.S. jobs and the U.S. transportation and shipbuilding industries by requiring that American ships and crews be used to haul goods from one U.S. port to another. The company violated the act when it used a foreign ship to haul the Spartan 151 jack-up drill rig from Texas to Alaska. U.S. Customs and Border Protection, an agency within Homeland Security, assessed a penalty of $15 million.

 

 

First Reads

Alaska Gov. Walker: ‘My focus is what we get done, not when we get it done’

Alaska Dispatch News, Nathaniel Herz, April 5, 2017

Anchorage, railroad clash over split of federal funds

Alaska Journal of Commerce, Elwood Brehmer, April 5, 2017

China Surpasses Canada as Top Buyer of U.S. Crude

Bloomberg, Catherine Traywick, April 5, 2017

Alaska’s abundances require access, say witnesses

Daily Energy Insider, Kim Riley, April 5, 2017

Furie agrees to pay $10 million in biggest-ever Jones Act fine

Alaska Dispatch News, Alex DeMarban, April 5, 2017

Lockheed Martin: Cargo airship on track for Alaska delivery in 2019

Alaska Dispatch News, Alex DeMarban, April 5, 2017

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