Fact Check: House Minority Leader Chris Tuck

January 5, 2016 | Posted in : News

The Alaska Dispatch published an article on January 1st asking legislators what their New Year’s resolutions were.  House Minority Leader Chris Tuck had this to say about filling the budget gap:

“The path forward must include major reforms to Alaska’s flawed oil tax regime and tax credit system that currently has the state paying out more in tax credits that we receive in production taxes.”

AKHEADLMAP anticipates many politicians will share this view in the coming year – so we offer a few FACTS:

  • To date, Alaska has earned almost $1 billion more in FY 15 and FY 16 under SB 21, than we would have earned under ACES.
  • Under SB 21, the state has received additional earnings, due to the 4% production tax floor, that are added to royalty, property taxes and corporate taxes.
  • Taxes collected under ACES at the current price would be $0.
  • Under the Walker Administration: Alaska is making $300-$400 million more with SB 21 than ACES.

Low oil prices are responsible for the decrease in production taxes.  Not an oil tax regime that is perceived to be flawed.

 

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The Morning Headlamp—Walker’s “self-healing” plan

January 4, 2016 | Posted in : News

Self-healing? In an interview with the Juneau Empire, Gov. Bill Walker emphasized that despite accelerating economic concerns facing Alaska, the state is still capable of fixing itself. When asked what will happen if the legislature does not follow his proposed budget, Walker warned that “Our ability to self-heal becomes much, much more challenging.” Headlamp would disagree that Walker’s budget plan is the only solution to Alaska’s fiscal crisis. A different plan that fixes Alaska’s budget woes, without raising taxes or capping the Permanent Fund dividend checks, is the sustainable budget model developed by Dr. Scott Goldsmith of the University of Alaska Anchorage Institute of Social and Economic Research (ISER). Dr. Goldsmith’s plan calls for unrestricted general fund spending of $4.5 billion, or lower, over the long run while only adjusting for population and inflation growth. The plan is a smart way forward because it creates fiscal certainty for the business world, while also inflicting minimal harm on the private sector. Headlamp encourages ALL Alaskan policy makers to carefully consider Dr. Goldsmith’s plan, and be ready to use the earnings from the Permanent Fund to avoid placing a large financial burden on the average Alaskan household.

All eyes on Alaska. Governor Walker appeared on CNBC’s “Closing Bell” defending his position on major tax hikes in Alaska. During the interview, Walker noted that $425 million in cuts from oil exploration credits are also on the table this session. Headlamp worries these proposed cuts are short sighted, and would substantially reduce Alaska’s ability to increase oil and gas production. This wasn’t the only national attention Walker’s budget proposal garnered as Fox News also examined the fiscal crisis facing the state.

A tough sell. Sen. Kevin Meyer, R-Anchorage, said in an email this week to 14 state senators that “in light of the taxation legislation package recently submitted by the governor, it seems a statewide sales tax should also be part of the discussion.” This isn’t the first time Alaska has wrestled with the idea of a sales tax. House Bill 293, which floated around the Legislature in 2003, proposed a 3 percent statewide sales and use tax. The measure would have brought in $120 million in the 2004 fiscal year and about $300 million each year after that, the Anchorage Daily News reported in 2003. It also included a 12-cent increase in Alaska’s gasoline and motor fuel tax, which would have brought in $40 million more. Headlamp is glad all solutions are being considered as legislators tackle the state’s fiscal crisis, but an increased tax on motor fuels should not be considered, nor should other taxes, until state government undergoes considerable downsizing. Furthermore, vastly increasing gasoline motor fuel taxes would punitively harm Alaskans who are already struggling to get by.

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First Reads

Walker: Alaska can ‘self-heal’
Juneau Empire, Charles L Westmoreland, January 3, 2016

2015 full of ups and downs for Alaska: State budget crisis topped negatives, military moves positive in turbulent year
Fairbanks Daily News Miner, January 1, 2016

Drop in oil prices rocks producer states, triggers historic tax hike plan in Alaska
Fox News, Brooke Singman, January 1, 2016

Alaska Senate president considering state sales tax
Alaska Dispatch News, Annie Zak, January 2, 2016

Alaska governor: Unless oil hits $110, we need a tax hike
CNBC, Anita Balakrishnan, December 30, 2016

What others say: Predictions for things to come in 2016
Peninsula Clarion, January 3, 2016

 

Alaska Politics

What are Alaska politicians’ New Year’s resolutions?
Alaska Dispatch News, Alex DeMarban, January 1, 2016

What DC has in store for Alaska in 2016
Alaska Dispatch News, Erica Martinson, January 2, 2016

 

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Economic Freedom on the Wane in the Last Frontier?

December 31, 2015 | Posted in : News

Alaska: the land of mountainous expanses, tremendous natural resources, phenomenal wildlife, rugged and independent people, and lack of economic freedom. Wait, what? You thought Alaska was a land of opportunity, overflowing with economic freedom? Think again. The Fraser Institute recently released their 11th annual Economic Freedom of North America report and the findings concerning Alaska are grim. The report measures how economically free North America is at a national and sub-national level.  According to the report, in terms of economic freedom, Alaska ranks 48th out of 50 U.S. states – just ahead of New York and California. Supporters of free markets and limited government should be exceptionally concerned that Alaska ranks anywhere near those two bastions of big government and tax and spend policies.

The Fraser Institute defines economic freedom simply as the ability of individuals to act in the economic sphere free of undue government restrictions. The report measures a jurisdiction’s level of economic freedom by analyzing numerous variables from different policy areas such as government spending, taxation, and regulation of markets. Unfortunately, data from the report shows Alaska severely lacks a robust level of economic freedom needed to spur strong job growth, raise living standards, and create greater opportunity for all. According to the report Alaska is losing its competitive edge due to high levels of state spending, generous subsidies, government employee pensions, a sizeable state government workforce, and several other factors.

The only policy area where Alaska shines is taxes,thanks to our lack of a state income and sales tax (though Gov. Walker and others are trying to reinstate the state income tax). It is worth noting that since the passage of oil tax reform under SB 21, our economic freedom measure concerning taxes has substantially increased!

In 2016 the Legislature and Gov. Walker should have one major goal: increase Alaska’s economic freedom in order to facilitate a healthier economy, lift people out of poverty, fix our fiscal crisis, and increase general well-being. Right sizing government, by cutting spending to the sustainable level of $4.5 billion as developed by Dr. Scott Goldsmith, is one of the most important ways to achieve this goal. Not imposing new taxes, not raising taxes on industry, advancing the AKLNG project, and increasing oil production will all help boost Alaska’s level of economic freedom. Headlamp hopes policy makers take notice of our dismal standing presented by the Fraser Institute, and will resolve to change it for the benefit of Alaska’s next generation.

A full copy of the report may be found here: https://www.fraserinstitute.org/sites/default/files/efna-2015-na-post.pdf

 

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The Morning Headlamp-Gov. Walker’s “year of the gasline”

December 30, 2015 | Posted in : News

“The year of the gasline.” According to coverage in the Alaska Journal of Commerce, Governor Bill Walker is ready to put 2015 in his rearview and focus on 2016. In an interview, Walker said that where 2015 was Alaska’s “year of the budget,” 2016 will be the “year of the gasline.” Headlamp questions the basis of this statement by Gov. Walker given the tenuous history of 2015, and the fact that Alaska faces another $3.5 billion deficit in the face of continued low oil prices. In 2015 Gov. Walker spent most of his time uprooting the structure of AGDC, which caused uncertainty to be the buzz word most frequently used to describe the AKLNG project. On the budget side, the Legislature stepped up to the plate and substantially reduced the budget. Furthermore, Gov. Walker just now unveiled his fiscal plan, which is likely to be highly contentious given its propensity for taxes over cuts as a way to close the deficit. Walker said he hopes his administration can present the Legislature with a virtually complete AKLNG fiscal package sometime in the second half of the upcoming legislative session, which begins Jan. 19. Walker’s desire to move the AKLNG megaproject forward is a welcome relief following an autumn that saw a legislative special session and a number of leadership overhauls to AGDC. “AGDC does look different now than a year ago,” Walker said Dec. 22. “But a year ago we weren’t in the pipeline business. A year ago we were looking at a portion of an LNG project and we’re looking at a pipeline, at the upstream conditioning. So now, we’re TransCanada; we need to look like TransCanada.” Despite what the Governor says, 2016 will also be a year dominated by his budget proposal. Headlamp is glad to hear he is excited to move forward with AKLNG after a less than perfect Fall, but for the Governor, wrapping up 2015 may not be as easy as replacing his calendar.

 

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First Reads

Walker: ‘We’re TransCanada now’
Alaska Journal of Commerce, Elwood Brehmer, December 29, 2015

A turbulent year for Interior gas: Energy project still vital, but facing serious hurdles in 2016
Fairbanks Daily News Miner, December 30, 2015

Time to put up or shut up for Legislature
Alaska Journal of Commerce, Andrew Jensen, December 29, 2015

Walker plans for better relations with Legislature
Alaska Journal of Commerce, Elwood Brehmer, December 29, 2015

 

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Would You Rather?

December 29, 2015 | Posted in : News

Yesterday the state Department of Transportation had this to say about pending budget cuts:

“According to DOT spokesperson Jill Reese, the DOT could lose six snowplow and sand-truck drivers in the Turnagain Arm and Kenai Peninsula areas as a result of the maintenance budget reductions proposed in the governor’s fiscal plan for 2017.

The proposed cuts also include a reduction in overtime for remaining winter equipment operators as well 46 pieces of the department’s equipment fleet and purchases of maintenance supplies such as guardrails and equipment grader blades.”

So – would you rather see the state travel budget increase by millions of dollars, as proposed in the Governor’s budget, or preserve funding that allows us to maintain safe roads?

 

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The Morning Headlamp—Gov. Walker’s self-evaluation

December 29, 2015 | Posted in : News

Gov. Walker, a review. The Associated Press interviewed Governor Bill Walker about his first year in office. The Governor, despite a turbulent start, believes that Alaska is continues to progress, but acknowledges the challenges right around the corner. Walker said one of his goals is to spend more time with legislators, talking with them and getting their input. In addition, the administration also is expected next year to bring contracts to the Legislature for consideration for the AKLNG megaproject the state is pursuing with the North Slope’s major producers. Headlamp is happy to hear that Walker’s goals revolve around communication and cooperation with the Legislature.

Using some portion of the Permanent Fund to fund state government is a key component of several budget “fix” plans – including Governor Walker’s.  What does that really mean for the fund and for the PFD?  Brad Keithley provides some hard numbers in a piece from his blog.

 

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First Reads

After a year in office, Alaska Gov. Walker reflects, looks ahead
Associated Press, Becky Bohrer, December 28, 2015

How deep are the Governor and GCI proposing to cut the PFD …
Brad Keithley, December 28, 2015

Savings absorb some shock of Alaska oil crash, but Legislature could still sink us
Alaska Dispatch News, Charles Wohlforth, December 28, 2015

As Oil Prices Stay Low, Alaska Mulls Income Tax
Nasdaq, Andy Tully, December 29, 2015

 

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The Morning Headlamp—Budget talks ahead

December 28, 2015 | Posted in : News

The New York Times covered Alaska’s ongoing fiscal woes as oil prices continue to fall. The piece highlights the fact that although other resource-based economies are also seeing the long-term impact of declining oil prices, Alaska’s situation is unique as Governor Bill Walker must address new taxes and Permanent Fund issues as well. While the piece does cover our state’s ongoing fiscal woes, it fails to mention that Governor Walker’s fiscal plans will call for increased taxation on oil production.  A federal coordinating office handling Alaska’s gas pipeline projects has been defunded by Congress and will no longer serve as a liaison between the public and organizers of the behemoth AKLNG project.  The long-anticipated move was made official when Congress enacted recent spending and funding bills. Federal coordinator Larry Persily plans to close the office, which operates the arcticgas.gov site and contains information about the project and each phase that it has moved through thus far. Persily is hoping to find a repository for all of the information that the office has gathered during its 10 years of operation. Persily noted that the public will notice less coordinated flow of information to the public. While any cuts made to the AKLNG megaproject are bad news, the removal of a bridge between the public and private sectors on a project of this nature is a critical loss and will severely affect the project’s progress.

A long five months. According to coverage in the Homer News, one main issue will dominate discussions in the second regular session of the 29th Alaska Legislature: the budget. That’s the Legislature’s only real job, Sen. Gary Stevens said at his Rotary talk. What budget it passes and how the Legislature deals with Alaska’s fiscal crisis is an open question. “It’s going to be a bad year,” Stevens said. Stevens said he thought the Legislature would go into double-overtime, with at least two special sessions extending its stay in Juneau beyond the 90-day limit for two more months. Despite the seriousness of the issues at hand, ideas like an income tax aren’t likely to pass in the next Legislature, not with newer legislators running for re-election, Stevens said. Asked for his remarks on the challenge ahead, Stevens said, “Bring it on.”

A recent study conducted by University of Alaska Anchorage’s Institute of Social and Economic Research (ISER),  claims that cutting $100 million by laying off state workers will cost the economy significantly more jobs and income than would an income tax to raise the same amoun. It is interesting that an agency funded by the state of Alaska focuses on potential damage of a hypothetical lay off of state workers while ignoring the reality of more than 900 oil field workers having already been laid off.  Should employees who could be impacted by state layoffs be performing the economic analysis on the impact? 

 

Help us spread the word. AK Headlamp is growing quickly, but we need your help to spread the word.  Tell your friends, colleagues, family and more to sign up today for the latest in AK energy, politics and industry.  Subscribe now here: http://bit.ly/1OdpLVY

 

First Reads

Election year may derail fiscal plan, says Stevens
Homer News, Michael Armstrong, December 24, 2015

How balancing the budget could harm Alaska’s economy in the short term
Alaska Dispatch News, Jeannette Lee Falsey, December 24, 2015

As Oil Money Melts, Alaska Mulls First Income Tax in 35 Years
New York Times, Kirk Johnson, December 25, 2015

Public pension fight heating up: State, municipalities spar over liabilities; storm inbound to Delta
Fairbanks Daily News Miner, December 28, 2015

The King’s First Budget – Spending Cuts, Less Oil Revenue, Economic Reform
Oil Pro, Jeff Reed, December 28, 2015

 

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The Morning Headlamp—AKLNG’s New Year’s resolution

December 23, 2015 | Posted in : News

A critical year indeed. The Alaska Journal of Commerce covered the significance 2016 will have on the AKLNG megaproject. If the project does proceed, the sales of natural gas from the North Slope, as liquefied natural gas, or LNG, will bring new petroleum revenues to the state to replace declining oil income. The most important agreements needed include a gas “balancing” contract among the producers that will govern how gas supplies are to be made available if there is a technical problem with production in one of the two fields supplying gas, Prudhoe Bay and Point Thomson. The second most important agreement — and this one is a “must have” for all three of the producers — is a contract on state fiscal terms on gas production, which would assure the companies, and LNG customers, that state taxes on gas won’t change for a period of several years, mostly likely the 20-year or 25-year term of LNG sales contracts. In the coming year, Headlamp looks forward to the four partners working together on the issues facing the megaproject. We will provide updates on these important milestones. 

While the administration frets over eliminating positions (not necessarily people) in state government, the private sector reacts to low oil prices responsibly.  Unfortunately, that means people are losing jobs –the highest paying jobs in the state – as discussed in this Alaska Dispatch piece about unemployment claims in the oil and gas industry: 

 

First Reads

A critical year lies ahead for Alaska LNG Project agreements
Alaska Journal of Commerce, Tim Bradner, December 22, 2015

New year will reveal impacts to economy from budget cuts
Alaska Journal of Commerce, Elwood Brehmer, December 22, 2015

Oil and gas industry jobless claims up for seventh straight month
Alaska Dispatch News, Jeannette Lee Falsey, December 22, 2015

North Slope companies to keep up spending
The Peninsula Clarion, Tim Bradner, December 22, 2015

 

Alaska Politics

Fights shape up over taxes, spending, revenue
Alaska Journal of Commerce, Time Bradner, December 22, 2015

Alaska lawmakers waste money on boondoggles and propose Alaskans cover the bill
Alaska Dispatch News, Sam Combs, December 22, 2015

Native groups, unions put cash behind effort to link PFD, voter registration
Alaska Dispatch News, Nathaniel Herz, December 22, 2015

 

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Would You Rather?—Time for Alaskans to make the hard decisions

December 22, 2015 | Posted in : News

As 2015 winds down, households across Alaska will be with their families reflecting on what is truly important. As 2016 begins, Alaskan lawmakers must do the same. When the legislature reconvenes in 28 days, legislators will have to rectify the budget Governor Bill Walker’s administration has proposed. This proposal, aimed at plugging the several billion dollar deficit, doesn’t solve the problem.  It does impose a whole host of new taxes, including an income tax, and actually increases spending.  New and higher taxes on Alaskans who are struggling to make ends meet, while sparing the bloated state budget are not responsible solutions to our state’s financial woes.   Taking more money out of the private sector to pay for a bigger state government kicks the can down the road and further hurts Alaska. This holiday season, Alaska needs to focus on what is truly important: its economic future. The state is in economic disarray and lawmakers need to do what is responsible and fix our budget.

No one is suggesting this will be easy, in fact, it will require lawmakers and Alaskans to make hard decisions on some of the state’s most complex issues. However, at the end of the day, what is more important than an economically stable and prosperous future?

As Headlamp continues to follow developments in Alaska’s budget, stay with us as we unveil our “Would you rather?” series; an in-depth look at the hard choices on Alaska’s horizon, their implications, and what your lawmakers can do to reduce the state budget while maintain a strong economy. Stay warm and stay tuned.

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The Morning Headlamp – Gas reserves tax supporter files to run for AKLEG

December 22, 2015 | Posted in : News

Still competitive. Alaska Public Radio News covered reports that despite freefalling oil prices, the AKLNG megaproject still potentially remains a globally competitive venture due to growing Asian markets. Coverage largely focused on the economic and geographic realities associated with the megaproject, specifically that Alaska is closer to Asian markets than the U.S. Gulf Coast, or the Middle East. With proven reserves, AKLNG is best positioned to serve the emerging market. Although the price of coal in Asia remains the cheapest option, an LNG market remains available for whoever has the means to supply it. Marty Rutherford, Deputy Commissioner at the state Department of Natural Resources, says the gas line is essential for Alaska’s economic future despite inherent risks associated with the megaproject. Headlamp agrees that AKLNG has tremendous global potential, but also emphasizes that Alaska still has work to do to keep the project’s cost of supply low. Alaska lawmakers need to put into perspective the opportunity that AKLNG represents and continue to move toward completion.

Time for school. Sit News reported that grants totaling $253,890 were awarded to 12 organizations through the Vocational Fund for Alaska’s Future (VFAF). Aimed at developing skills needed to be competitive in the state’s resource-based economy, the grants were largely awarded to organizations and projects that support rural Alaskan communities. Headlamp applauds the news that more resources are being made available to provide more Alaskans with the tools necessary to thrive in the many growing industries in Alaska.

Harry Crawford, organizer of the failed ballot initiative for a gas reserves tax has filed to run for office.  Again.  Crawford didn’t identify if he would run for the house or the senate – Rep. Lance Pruitt would be his opponent in a house race and Senator Cathy Giessel would be the opponent in a senate race. 

 

First Reads

Which office is former lawmaker Harry Crawford seeking? He’s not saying, yet
Alaska Dispatch News, Nathaniel Herz, December 21, 2015

Amid plunging gas prices, how competitive is Alaska LNG?
Alaska Public Radio News, Rachel Waldholz, December 21, 2015

$253,000 in Grants Awarded to Support Vocational Projects in Alaska
Sit News, December 22, 2015

 

Alaska Economy News

Oil collapse spurs budget shortfalls in U.S. oil states: Moody’s
Reuters, Mike Stone, December 21, 2015

 

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