Can you trust polling results? Good Polls vs. Bad Polls

February 4, 2016 | Posted in : News

It seems in the midst of Alaska’s budget crisis, we’re hearing a great deal about polling from various groups in Alaska. These polls are often intended to drive policy makers in one direction or another as determined by the polling results. But what makes a good poll? How are Alaskans to know whether they can trust a poll or not?

As Headlamp frequently stresses, accurate information is key to making good decisions. As lawmakers face a number of fiscal and political challenges, accurately knowing where the public aligns on issues matters.  But for every poll out there designed to provide a glimpse into the mind of the voter, there is one intended to skew the information and provide a specific outcome.

When you read polls, here are some questions you should be asking:

  • Who conducted the poll?
  • Who paid for the poll?
  • Who was sampled?
  • Is the sample population representative and randomly selected?
  • What is the sampling error?
  • How is the question worded?
  • How are the questions ordered?

Unfortunately, results from flawed polls are being widely touted as accurate representations of the Alaskan public’s opinion concerning our state’s fiscal crisis. Such actions don’t help foster an open and honest dialogue needed during these difficult budget discussions. For example, recent polls claim majority support for the governor’s plan, but used vague and sometimes leading questions, while another had questionable sampling and is being widely touted as representative. Lawmakers, and the public, need to be confident in the results of polls if they are to be used to craft meaningful answers to our budget situation.

Up next: Representative Sampling – why it’s important


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The Morning Headlamp — Walker’s Tax Credit and Permanent Fund Plan Get Questioned

February 4, 2016 | Posted in : News

Walker’s bill raises concerns. Gov. Bill Walker’s bill to reduce tax credits to the oil and gas industry, worth $500 million to the state primarily through reduced spending, underwent tough questioning during its first hearing in the House yesterday. House Bill 247 would reform a program that is expected to pay out $625 million next year, which the administration says is no longer sustainable now that the state’s petroleum-based income has collapsed with the price of oil. The bill also calls for raising the veil of secrecy that has surrounded the credits by disclosing companies that receive them. Rep. Mike Hawker, asked why Walker wants the Legislature to completely reverse its tax credit policy. A Senate working group convened last year by Sen. Cathy Giessel, recommended careful adjustments to protect advancing projects. Headlamp agrees with Sen. Giessel—protecting ongoing projects should be a principal goal of any tax plan the Governor puts forward this session. Pulling the rug out from current projects not only defeats the purpose of the tax credits, but also threatens to inflict considerable economic harm and disruption in how the financial industry views Alaska’s trustworthiness. Incentivizing sustained investment will keep Alaska’s head above water as lawmakers attempt to remedy the fiscal crisis. It is also interesting that the Governor is calling for “raising the veil of secrecy” just two days after finally posting the state’s online checkbook, despite it being offline for roughly seven months.

Arizona lawmakers propose new U.S. 12th Circuit Court; Alaska to be Included. A Sen Jeff Flake and Rep Matt Salmon of Arizona have introduced legislation to break up the 9th U.S. Circuit Court of Appeals. Flake and Salmon, both Republicans, want to move Arizona, Nevada, Montana, Idaho and Alaska into a newly established 12th Circuit. Arizona Gov. Doug Ducey supports the effort. Currently, the U.S. 9th District Circuit Court has jurisdiction over the State of Alaska. The bill introduced by Arizona Sen. Jeff Flake and Rep. Matt Salmon, would place Alaska, and four other western states, under the jurisdiction of a new U.S. court of appeals. Given the uniqueness of Alaska, the vast territory the 9th Circuit Court covers, and the excessive workload consistently faced by the Court, Headlamp thinks this is a bill to watch.

Rep. Hawker weighs in on PFD plans Gov. Bill Walker has proposed using the Permanent Fund earnings to pay for much of the state’s annual budget, but Rep. Mike Hawker has proposed another Permanent Fund bill that’s drawn attention, House Bill 224. It would appropriate an annual percentage of the Permanent Fund for the budget. He cited a provision of the Alaska Statehood Act that says the state’s natural resources should benefit communities, not individuals. “Direct, indiscriminate redistribution of that money, from the resource to people … that is pure socialism,” he said. “It’s confiscating wealth and redistributing it without any public purpose, and that’s just simply wrong.” “My bill respects the Permanent Fund for what it was intended for when it was established,” Hawker said. Hawker’s measure allows for much lower dividends, $250 or less in years where there’s a budget shortfall. “My bill respects the constitution, it respects the Statehood Act, and it utilizes our existing budget reserve funds for the purposes they were established. I don’t believe we need to re-engineer everything just to give it a different name, just to get the same outcomes.” Another key difference between the governor’s and the legislators’ proposals is revenue. Legislators want to see at least $500 million in budget cuts, while Walker has proposed $100 million in cuts over a two-year period.

Headlamp commends Rep. Hawker for putting together his own plan to address the state’s fiscal deficit. Rep. Hawker and other legislators are right to question the merits of Gov. Walker’s Permanent Fund Protection Act (his bill to ‘re-plumb’ state finances). Headlamp also has many questions and concerns with the Governor’s fiscal package. Is the Governor right to raise taxes on Alaskans by $400 million, while only cutting the budget by $100 million over two years? Do Alaskans know that the Permanent Fund dividends would be roughly $300-400 per year given current oil prices under Gov. Walker’s plan? Do Alaskans know that the Governor’s fiscal plan leaves the state with a roughly $400 million deficit this year? Many questions remain unanswered regarding the Governor’s plan. Headlamp hopes Alaskans provide their input today on SB 128 (Gov. Walker’s Permanent Fund Protection Act), by going to their local LIO and testifying.

Murkowski hit the nail on the head. As Sen. Lisa Murkowski continues to promote her bipartisan energy bill, she used a case study close to her heart—Alaska. “Alaska is an energy producer for the rest of our country and for the rest of the world. That’s our legacy and our future because we are blessed with an abundance of resources that most states and countries can barely dream of,” Murkowski explained, “As we produce more of our natural resources, Alaskans will benefit significantly. New jobs will be created. New revenues will be generated for our state treasury. And local energy costs will decline sharply allowing Alaskans to keep more of their hard-earned money.” Headlamp couldn’t have said it better ourselves. We’re thrilled to hear Sen. Murkowski continually promote Alaska’s energy opportunities.


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First Reads

Walker’s oil tax credit bill seeks more transparency, fewer loopholes
Alaska Dispatch News, Alex DeMarban, February 3, 2016

Flake, Salmon introduce bill to split 9th Circuit court
Associated Press, February 3, 2016

Three pitches for closing state budget deficit with the Permanent Fund
Alaska Public Radio Network, Andrew Kitchenman, February 3, 2016

Walker administration submits supplemental request
Associated Press, February 4, 2016

Murkowski touts Alaska benefits in bipartisan legislation
Homer Tribune, February 2, 2016


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The Morning Headlamp —Don’t try to “wave a magic wand” in AK

February 3, 2016 | Posted in : News

A Tax WarningUS News and World Report columnist and National Taxpayers Union president Pete Sepp stresses the fact that punitive tax measures on Alaska’s oil and gas industry is “bound to backfire.” Sepp highlights the fact that proponents of such measures believe that much like, “waving a magic wand, imposing punitive tax measures on certain industries supposedly conjures up money from thin air, without any kind of drawbacks.” Sepp argues that lawmakers cannot resort to “knee-jerk reaction” policies when faced with seemingly insurmountable fiscal problems. Sepp closes by arguing that “gas development appears to be the only real opportunity to create economic growth for the future, thereby bolstering the state’s flagging revenues. But if additional taxes are introduced during this time of lower production and lower prices, they could cripple a large investment in Alaska’s natural gas future.”

Headlamp applauds Sepp on his accurate and timely analysis of the challenges facing Alaska. As we have repeatedly stressed, reactionary policies have no place in Alaska’s fiscal plan, especially when Alaskan lawmakers could risk permanently damaging its largest revenue stream—the oil and gas industry. It is Headlamp’s belief that Gov. Walker’s proposal to raise taxes on the oil and gas industry by hundreds of millions of dollars, especially his proposal to raise the minimum production tax after promising not to touch SB 21, should be reconsidered.

Lawmakers, please use realistic budget numbers. In his Alaska Dispatch News column, Dermot Cole discusses the fact that the idea of a $4.5 billion “sustainable budget” is just not in the cards for Alaska. Instead, Cole agrees with the 2016 revised budget model put forth by ISER economist Scott Goldsmith, who proposes the state’s new target be $3.6 billion with a gas line or $2.8 billion without one. According to Cole, vague budget discussions without specifics is, “wishful thinking, founded on prayers that world oil prices will quadruple in four years and the gas line will be built a decade from now. Trusting that the future will save us from ourselves is hardly a sustainable plan.” Headlamp rarely agrees with Dermot Cole, however, on this instance we do. Alaska’s operating budget needs to undergo real cuts, and we believe many lawmakers are actually serious about reaching a spending level of $4.5 billion this year. Instead of rushing to tax Alaskans, lawmakers should pursue further efficiencies, real cost saving reforms to major programs, and wisely use our savings.

Through our “Would you Rather?” series we have presented different options for legislators to consider cutting the budget. We will continue to do this throughout the session. Goldsmith’s budget model is the most realistic plan Alaska can afford to follow, so Headlamp suggests we get to work. Also, it is worth noting how big or small the budget should be when a gas line is factored into Goldsmith’s figures.

The federal government will officially hand over two tracts of land in Alaska for Native use thanks to a bill passed by the U.S. House late Monday. One provision, sought for years by Alaska Rep. Don Young, hands over 2,500 acres of federal land in Point Spencer to the Bering Straits Native Corporation and the state. The bill also includes small steps aimed in the direction of acquiring a new icebreaker — a provision that would enable the Coast Guard to pay for an icebreaker in multiple payments, rather than requiring all the funding up front. While the terms of the icebreaker aren’t exactly to Rep. Young’s liking, he is hopeful that President Barack Obama’s promises for icebreaker funding would play out in the near future.

LNG exports move forward in Washington. The Senate is approaching a final vote on another sweeping piece of legislation that would strengthen the nation’s energy future by, in part, streamlining the federal approval process of U.S. liquefied natural gas exports. Similar to forecasts for crude, LNG exports, if expedited, are projected to deliver strong economic advantages from coast to coast including more jobs and bolstered economic revenue. The bipartisan “Energy Policy Modernization Act” was introduced last summer by Senator Lisa Murkowski, Chairwoman of the Senate Committee on Energy and Natural Resources, and Senator Maria Cantwell (D-Washington). Significantly, this bill is the first major overhaul of policies effecting the U.S. energy sector since 2007. But in a sea of hotly debated amendments, the provision on LNG exports continues to hold strong with steadfast bipartisan support. The goal is simple: alter a federal review process riddled with bureaucratic delays.

Sen. Lisa Murkowski has introduced an amendment to the Senate omnibus energy bill (S. 2012) that would give developers of the Alaska LNG Project greater flexibility to decide where to route a proposed 800-mile gas pipeline project. Murkowski’s amendment could be brought to the Senate floor for a vote this week as the lawmakers conclude work on the broad energy package. Supporters of the amendment say the change would give project developers greater latitude in choosing the safest and easiest route to build the pipeline. (“Reprinted from E&E Daily with permission from Environment & Energy Publishing, LLC 202-628-6500”)

With this amendment, Sen. Murkowski has helped the AKLNG megaproject significantly! Allowing industry leaders to do what they do best—build megaprojects—without unnecessary restrictions will make for a safer, more efficient, and cheaper energy system in the long run.

Two federal agencies have weighed in on the potential impacts the proposed Donlin Creek mine could have on subsistence along the Kuskokwim River. KYUK-FM reports that Donlin Gold LLC estimates it could excavate about 34 million ounces of gold over three decades from the proposed open pit mine near the village of Crooked Creek. Plans for the mine project include barging on the Kuskokwim River and a natural gas pipeline spanning 300 miles to Cook Inlet.

Headlamp fully supports the Donlin Gold project, and specifically their alternative (number 2) proposal laid out in the Draft EIS that is undergoing public testimony across the state. Headlamp hopes that the US Army Corps of Engineers’ assessment, that the mine would have a minor to moderate impact on subsistence practices and resources, is relied upon. The positive impacts, like high paying jobs, new affordable energy sources, and new state revenue, from Donlin Gold are likely to be enormous and would greatly benefit South Western Alaska; a region with the highest unemployment rates in the state.


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First Reads

Paying the Price in the Last Frontier
US News and World Report, Pete Sepp, February 2, 2016

State budgets and the false ‘sustainable’ number that never dies
Alaska Dispatch News, Dermot Cole, February 2, 2016

Congress passes Coast Guard bill transferring federal lands to Alaska Natives
Alaska Dispatch News, Erica Martinson, February 2, 2016

U.S. Energy Exports: First Comes Crude, Then Comes LNG
Forbes, Brigham McCown, February 3, 2016

Political groups that supported Walker violated law, settlement says
Alaska Dispatch News, Alex DeMarban, February 2, 2016

Questions emerge about constitutionality of governor’s Permanent Fund proposal
KTUU, Austin Baird, February 2, 2016

Federal agencies consider Donlin Creek mine impacts on subsistence
KTUU, February 2, 2016

Alaska’s education spending still outpaces the rest of the US by far
Alaska Dispatch News, Erica Martinson, February 2, 2016


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Alaska being hit harder than anywhere in the country

February 2, 2016 | Posted in : News

The turbulent quarter in energy prices has left many states wrestling with financial woes. According to a recent report conducted by the Rockefeller Institute of Government at the State University of New York, Alaska was one of 8 energy-producing states that saw total state tax revenues drop, averaging -3.2 percent over the four quarters leading up to September 2015. The remaining forty-two states reported an average growth of 6.5 percent

Alaska, is highlighted in the report as the state worst hit by low commodity prices, topping the list with a 67.2 percent decline in total state taxes. The report argues that these 8 states are victims of declining commodity prices “leading to cuts in production and employment, weakening mineral-state economies and likely leading to slower growth in state revenue from other tax sources.” Check out the study’s findings below.

Rockefeller Institute of Gov. Chart

While it’s comforting to know that other states are sharing in our economic turmoil, Alaska clearly faces unmatched fiscal challenges from the decline of oil prices. Though our economic situation may be dire, we cannot afford to fall victim to reactionary, short-sighted policies. As noted in the report, many of the governors of the 8 energy-states are implementing across the board cuts to their state governments. Governor Walker should follow suit. Last year the legislature gutted the capital budget, accounting for the bulk of the cuts. This year lawmakers must keenly examine the operating budget and consider fundamentally reforming the state’s major cost-driving programs in ways that are measured, proven, and have been tested by other states. Furthermore, unless we don’t want a strong private sector, we cannot tax our way out of a multi-billion-dollar deficit. Instead, Alaska needs policies that increase business and keep our economy moving before any frailties become permanent.


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The Morning Headlamp — State Online Checkbook & ISER economist on state fiscal woes

February 2, 2016 | Posted in : News

After months in the dark, transparency restored with online checkbook. A state website that details public spending is once again listing recent expenditures after a seven-month hiatus that prompted the Alaska Republican Party to accuse the Walker administration of suppressing information. Alaska Checkbook Online has listed payments to thousands of vendors and contractors dating back to 2007, after former Gov. Sarah Palin ordered state expenditures to be posted publicly.  New coding created complications associated with making sure that 27 confidential categories of state spending were not unintentionally posted, such as Child in Need of Aid payments and medical payments, both of which are protected under federal privacy laws. The new data covers a six-month period that ends Dec. 31. Expenses for January will be posted in the coming days, right on time.

For months Headlamp has been questioning the Walker administration’s handling of the state’s online checkbook; a tool meant to bring greater transparency to Alaska’s finances. Headlamp finds it ironic that the IRIS upgrade, meant to improve transparency and openness to Alaska’s finances, not only tanked a key program of the state’s transparency measures but also is slated to cost the state $87.7 million. Why are confidential payments such a big issue now, when in the past they never have been? Why was the financial information not placed online under the functioning old system, and then replaced when the IRIS system became operational? When the IRIS system upgrade is completed in 2017, Headlamp hopes to see the official payments up on the online checkbook.

UAA ISER’s Gunnar Knapp details Alaska’s fiscal crisis. According to the Alaska Dispatch News, Gunnar Knapp, professor of economics and director of the Institute of Social and Economic Research at the University of Alaska Anchorage, spoke with urgency to a room full of concerned business leaders at an Anchorage Chamber of Commerce event on Monday, emphasizing the importance of understanding the different pieces of Alaska’s financial situation before focusing on what solutions might be. “I think this fiscal challenge that we are facing is the perfect storm,” he said. “It’s critically important. It’s also very complex. We have very little time to address it. … It demands of all Alaskans that we become informed about our fiscal reality.” Without backing a specific proposal, Knapp said Alaska lawmakers will need to consider five different factors: what Alaska spends on the government, what it spends on Permanent Fund dividends, what new tax revenue the state might add, how to inflation-proof the Permanent Fund and what other growth the state might have in the Permanent Fund earnings reserve and the Constitutional Budget Reserve Fund. Headlamp agrees with Knapp that Alaska faces a plethora of fiscal policy decisions. We also agree that the challenge is not insurmountable. Alaskans have overcome tough times before. Now is the time for bold and decisive leadership, with a collective mindset focused on securing the fiscal health of our state government for the long term. It’s time for the state to tighten up its belt, and for lawmakers to make the hard choices about what size state government must be. Headlamp encourages our readers to speak with their families, friends, co-workers, and neighbors about these critical issues. We all benefit when more Alaskans are engaged, educated, and care about the fiscal future of our state. 

Chenault seeks to rein in the AG. According to the Alaska Dispatch News, Alaska House Speaker Mike Chenault launched a new salvo Monday in his battle against Gov. Bill Walker, introducing a bill to block Walker’s attorney general from serving on state boards and commissions. In an interview yesterday, Chenault said that “it’s important that we have an attorney general that’s looking out for the people of the state of Alaska, and not devoting the majority of his time to the Permanent Fund board, or any other.” Chenault’s co-sponsors for his bill include two of his close allies in House Republican leadership — Anchorage Reps. Charisse Millett, the majority leader, and Craig Johnson, chair of the House Rules Committee.

Hilcorp reiterates commitment to Alaska. As other oil and gas companies seek to trim expenses with layoffs and stalling development, Hilcorp Alaska has no plans to stop acquisitions. “Hilcorp is a growth company, acquisition-based,” said Chad Helgeson, the Kenai area operations manager. “That’s been our model.” The company’s workforce has also steadily increased. Of the approximately 520 employees statewide, 240 live on the Kenai Peninsula, Helgeson said. “As the price of oil continues to drop down, our goal is to be responsible and sustainable,” Helgeson said. “Our goal is to be here for the long-term. Our oil and gas contracts are going eight years out … we’ve got to be responsible.” This is incredibly fantastic news for Alaskan families employed in the oil and gas industry! Headlamp is thrilled to hear that despite a troubling economic climate, Hilcorp recognizes the importance of sustained private investment and resource development. This news in not only positive for Alaskans directly employed by Hilcorp, but also for the many contractors who make a living helping responsibly develop Alaska’s oil and gas resources.

In national news, Cramer says the oil price crash isn’t over yet. CNBC’s Jim Cramer stressed the fact that oil prices will determine the strength of the market as we move into February. Despite theories that oil prices have been hit hardest by a dip in Chinese demand, Cramer said there is “no evidence to pin that down at all.” Cramer went on to emphasize that “the inventory numbers are still too large. I don’t see any real demand at the $34-$35 level.

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First Reads

Amid allegations of secrecy, state restores online checkbook detailing spending
Alaska Dispatch News, Alex DeMarban, February 2, 2016

Economist: Alaska faces the choice ‘to become more like other states’
Alaska Dispatch News, Annie Zak, February 1, 2016

Cramer: Keep an eye on oil prices
CNBC, Fred Imbert, February 1, 2016

House Speaker wants attorney general off Permanent Fund board
Alaska Dispatch News, Nathaniel Herz, February 1, 2016

Despite downturn, Hilcorp continues to buy
Peninsula Clarion, Elizabeth Earl, February 1, 2016


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The Morning Headlamp — Busy week in AK politics and potential job loss looming

February 1, 2016 | Posted in : News

More AK jobs at risk. A 2016 economic forecast prepared for the Anchorage Economic Development Corp. projects a loss of 1,600 jobs in Alaska’s largest city, including 600 in the oil and gas sector. Alaska petroleum jobs are expected to follow a national decline because of persistent low prices and global oversupply. For much of 2015, Anchorage had 3,700 people employed by oil companies. By December, that already had fallen by 300, said Bill Popp, president and chief executive officer of the nonprofit group formed to encourage growth and diversity in the Anchorage economy.

In addition to the AEDC report, new analysis from the Alaska Department of Labor showed that in December unemployment claims by former oil and gas industry workers has doubled from the year before. There are now over 1,020 Alaskans who had previously been working in the oil and gas industry collecting unemployment benefits, as compared to 518 in December 2014. As noted in the article, the departure of Shell from Alaska’s Arctic is set to affect 400 jobs in Anchorage alone. Many Alaskan businesses that make up the backbone of the state’s economy are suffering. Following Shell’s exit, ASRC Energy Services Response Operations had to let 30 employees go. ASRC’s general manager, Gary Schliesing, said the situation “is having a devastating impact” on the company’s business operations.

The loss of these jobs will have a trickledown effect across Alaska’s economy. We know that Alaska’s core industry is reeling in the face of exceptionally low oil prices. More job cuts will continue if we don’t encourage our lawmakers to incentivize sustained investment from the private sector. Policies that restrict or dissuade business from believing in AK’s future will naturally leave industry with no choice but to make tough decisions.

AKLNG buoys local economy. According to the Alaska Dispatch News, AKLNG’s industry partners have reportedly acquired more than 150 tracts of land on the Kenai Peninsula as they piece together an expanse that could one day house a massive plant and shore side facility where liquefied natural gas would be processed and exported. The purchases have led to increased activity in the small real-estate market in Nikiski, population 4,500, and the nearby area, said Fred Braun, a broker at Jack White Real Estate in the nearby city of Kenai. “I’d say the LNG project has already been a mini-economic boom to a lot of people,” Braun said. Although the size of the plant is still being determined, Alaska LNG officials have said the large amount of land is needed in part to create a large buffer between the facility and other properties, providing a safe distance that reduces impacts from noise and emissions. Headlamp has stressed the benefits of this megaproject for months. AKLNG, and the billions in investment it represents, will be able to support an Alaskan economy that needs propping up. The boom occurring in Nikiski is a perfect microcosm of the economic impact the megaproject will have. Headlamp hopes the progress made on AKLNG continues in 2016.

A busy week in Juneau. Alaska lawmakers have their work cut out for them this week with several substantive issues to discuss. The focus on Medicaid will shift this week from the Capitol to a courtroom during an ongoing fight over expanded coverage in Alaska. Also, legislators plan to revive a bill calling for the federal government to transfer lands to the state. And a House committee is set to begin reviewing Gov. Bill Walker’s plan to overhaul oil and gas tax credits. On Wednesday, House Resources plans to begin hearing Walker’s proposed tax credit overhaul, which includes raising the minimum tax rate on North Slope oil and not allowing credits to be used to lower the tax rate below the minimum level. The bill repeal certain credits, among other things. Legislators plan to meet this week on bills aimed at curbing and containing costs within Medicaid. Meanwhile, on Thursday, a judge in Anchorage plans to hear arguments in a lawsuit challenging Walker’s authority to expand Medicaid without legislative approval. The Senate Resources Committee on Wednesday plans to hear a bill from House Speaker Mike Chenault calling for the federal government to turn over to the state the title to lands it holds by Jan. 1. The bill would exclude national park lands, land used for military purposes and land to which title is held by a person. Stick with Headlamp this week as we help unpack a very important week in Alaskan politics.

Governor’s fiscal plan lobbyists questionable meetings. According to the Alaska Dispatch News, consultant Art Hackney—contracted by Gov. Bill Walker—has been billing the state for meetings that never took place. Hackney’s invoices include charges for dozens of meetings with lobbyists, business owners and key political figures. But several disputed the details, and one said he never met with Hackney. “I don’t recall having a meeting with Art at all,” said Mike Dubke, another Republican political consultant, based in Virginia.  ADN publisher Alice Rogoff denied ever discussing the Governor’s fiscal plan with Hackeney. Walker, in the phone interview, said he wasn’t intimately involved with the details of Hackney’s work since the consultant didn’t report directly to him.  A KTUU report appeared to dispute this line of events, with Hackney telling KTUU that Rogoff had changed her tune: “I just contacted her, and now she quite clearly remembers.” Rogoff went on to request that KTUU refer to ADN reporter Nat Herz for additional reporting on the story. For now, it is clear that the Governor has retained Hackney, but there is some dispute over whom Hackney met with, and whether he discussed or advocated for the Governor’s fiscal plan. Headlamp is frustrated to hear that not only has Gov. Walker spent money on expensive consultants, but these consultants have been hired to promote a plan which grows state government and imposes new taxes on Alaskans. How will the Alaskan people ever be able to determine if these meetings occurred? Accountability, ethics, trust in government, and the truth matter. Our readers can trust in Headlamp to continue shining a light on this issue. Hopefully more answers – from both Hackney and ADN publisher Rogoff – come to light.

Murkowski spearheads America’s energy future. The first major energy bill in more than eight years is primed for passage in Senate—all thanks to Alaskan Sen. Lisa Murkowski. “I want to change energy policy and you can’t do that without the legislation becoming law,” Murkowski said in an interview last week. “And so not only do we need the support of the House, we need to have the president support it as well.” To make that happen, Murkowski worked with the committee’s top Democrat, Sen. Maria Cantwell of Washington. Murkowski’s pet legislation — to lift the decades-old ban on exporting U.S. crude oil — was introduced separately, and passed along with extended solar and wind tax credits in December as part of the government spending bill. Amendments of interest to Alaska so far include a bill focused on supporting Indian energy, which Murkowski said would help Alaska Natives, and an amendment that encourages new technologies for wastewater treatment, which Murkowski said could be a positive develop for some rural Alaska villages. Headlamp applauds Sen. Murkowski’s ability to reach across the aisle to secure a sustainable energy bill for America. Despite a less than ideal climate to be investing in energy, Sen. Murkowski clearly intends to focus on the future of energy in America. Hopefully Alaska state lawmakers can follow in her footsteps and pass laws that ensure a robust resource development future for Alaska.


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First Reads

Alaska LNG snatches up land, buoying a local economy
Alaska Dispatch News, Alex DeMarban, January 31, 2016

Murkowski takes aim at the middle ground on major energy bill
Alaska Dispatch News, Erica Martinson, January 31, 2016

Consultant to Gov. Walker appears to have billed for ‘phantom’ meetings
Alaska Dispatch News, Nathaniel Herz, January 29, 2016

Business group projects 1,600 job loss in Anchorage in 2016
Associated Press, Dan Joling, January 29, 2016

Medicaid lawsuit, tax credit hearings ahead for Alaska lawmakers
Associated Press, Becky Bohrer, January 31, 2016


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Friday’s Fast Five

January 29, 2016 | Posted in : News

Headlamp wants our followers to always be up to date with the developments in Alaska’s economy, politics, and industry. Check out this week’s rundown of the stories effecting you.

Top Story of the Week

Governor Bill Walker claims to be growing “increasingly concerned” with the megaproject’s status in a letter to AKLNG industry partners BP, ConocoPhillips, and ExxonMobil. Gov. Walker stated that he wants agreements, including complex gas balancing terms, completed by the end of the session in April. The full letter can be viewed here.

Top Reads of the Week

Senators Probe Gov. Walker’s Plans for the Permanent Fund
Alaska Commons, Craig Tuten, January 28, 2016
Members of the Senate State Affairs Committee demonstrated Thursday they are not yet sold on Gov. Walker’s plan to “re-plumb” the Permanent Fund. Questions about the plan’s constitutionality remain unresolved.

Alaska job forecast holds steady despite plunging oil prices
Alaska Public Radio News, Rachel Waldholz, January 26, 2016
As oil prices have dropped to levels that were unthinkable just a year ago, many Alaskans are wondering whether the state is facing economic calamity.

Two BC LNG plans gaining ground
Petroleum News, Gary Park, January 29, 2016
The Petronas-led Pacific NorthWest LNG consortium has edged closer to a sanctioning decision, with federal scientists determining the project poses little environmental risk.

Quote of the Week

“Something is different this morning, different in a good way. Something is genuinely different, and I think it’s genuinely fabulous.”—Sen. Lisa Murkowski


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The Morning Headlamp — Poll problems and Senators question Walker’s plan

January 29, 2016 | Posted in : News

More Polls. A new poll by Alaska Dispatch News shows majority support for Gov. Bill Walker’s plan to close the state’s budget gap — though the proposal, which would reduce Alaskans dividend checks, is opposed by Republicans, according to the poll, and comes amid a drop in Walker’s approval rating. The poll, conducted by Ivan Moore Research, had a 3.8 percent margin of error — meaning that at the time the poll was conducted, it is nearly certain that the results are within 3.8 percent of the true proportion of opinions held by Alaskans. In the poll of 651 registered voters, conducted this month, 52 percent of respondents said they supported Walker’s plan and would be more likely to support a legislator who voted for a proposal like it, while 43 percent said they opposed the plan. The poll, conducted in the second week of January, is the latest in a series of surveys of Alaskans’ ideas about solutions to the state’s financial crisis — though entities that commissioned the other two surveys, the Rasmuson Foundation and a group called Alaska’s Future, are also pushing lawmakers to take specific actions in response.

Among Republicans polled, 58 percent oppose Walker’s plan, which would reduce Permanent Fund dividends and levy a small income tax, compared to 35 percent who support it — which is perhaps one explanation for the skepticism expressed by many of the Republicans who control the state Legislature. Even so, 71 percent of GOP poll respondents said it was very important that lawmakers enact a plan of the same sort as Walker’s, and another 22 percent said it was somewhat important. Anchorage Rep. Craig Johnson, said his decisions on the state’s budget crisis would be “based upon the facts as they are in committees…I will not be anywhere based on a poll,” he said.” He dismissed the poll’s data on Walker’s fiscal plan, saying one of the questions was misleading by painting the proposal in a favorable light. Rep. Johnson and a staff member noted that the question refers to the package as “continuing to reduce government spending” and stabilizing dividends at “about $1,000.” “Go back and read that question in the context of reality,” Johnson said. “There are no cuts.” While Walker’s plan would cut $100 million from the state’s agency operating budget, the state’s total spending for next year would, in fact, increase by 1.2 percent. And the plan only guarantees dividends at $1,000 for one year; without that guarantee, dividends could be $500 or lower and would remain low unless oil prices rise.

Headlamp is glad to hear that at least one Alaskan lawmaker will base their policy making off facts, rather than ambiguous poll results. Furthermore, while polling isn’t an exact science, it’s worth noting that Ivan Moore’s polls have not traditionally been seen as the gold standard in Alaska. During the 2014 Senate race between Dan Sullivan and Mark Begich, Moore predicted Begich would win by six points. Sullivan went on to win by nearly three points. While successful polling can be a valuable tool from a public policy standpoint, a poorly done poll can be just as counterproductive.

Yesterday, Senate State Affairs Committee unpacked Gov. Bill Walker’s plan for the Permanent Fund as questions ranged from feasibility to constitutionality. The Legislative Finance Division expressed concern that co-mingling royalties and taxes intended for appropriations with the protected interest of the Permanent Fund changes the nature of the earnings reserve. Appropriations from the CBR require the support of three-fourths of each legislative chamber, raising the possibility that at least 45 legislators would have to vote to fund the budget every year. Senate State Affairs Chair Bill Stoltze said Thursday he was having a hard time reconciling the administration’s desire to protect the State’s savings, while moving CBR money protected by the three-quarter vote to the earnings reserve from which a simple majority can vote to appropriate. He described SB 128 as an effort to sidestep the constitution.

State Affairs members also questioned the fiscal sense behind Walker’s plan. Sen. Charlie Huggins called for additional cuts, and Sen. Lesil McGuire noted that while Wyoming’s population is slightly larger than Alaska’s, its budget is half the size. “The governor’s proposed budget is an increase,” House Rules Chair Craig Johnson said Thursday, “I find it hard to go back to my constituents and say, ‘We’re going to increase the budget and tax you.”

If Walker’s plan were in place this year and the PFD were tied to mineral royalties instead of investment returns as he proposes, the payout would be between $300 and $500. “I see a real problem there,” reacted Senate Majority Leader John Coghill. Coghill said Walker’s plan shifts risk from government to the people of Alaska.

If yesterday’s questions are an indication of what’s to come, it looks like Gov. Walker’s plan will go through quite the review process during this session—and Headlamp is happy to hear it. We know Alaska is facing quite the fiscal conundrum, but the Governor’s plan is not an option we think most Alaskans would be pleased with down the road. To remind our readers, the Governor’s plan does not balance the budget this year, it in fact leaves the state over $400 million in the hole. Likewise, it opens the door to taxing Alaskans income in perpetuity. The natural tendency of government over time is to grow; thus necessitating the need for more revenues being extracted from the private economy. If we fail to rein in government spending, and instead burden future generations of Alaskans with taxes, we should be ashamed. Headlamp applauds the lawmakers who are addressing the failings of Gov. Walker’s proposed plan.

According to Politico, Sen. Murkowski has nabbed Energy Secretary Ernie Moniz for a trip next month to Alaska that will include a Feb. 15 field hearing she will chair in Bethel to “examine opportunities for energy innovation and technology deployment in high-cost areas in Alaska and around the country.” The trip will also include a visit to Cook Inlet “to look at some of the offshore platforms there.” Other senators scheduled to make the trip are John Barrasso, Shelley Moore Capito, Angus King and Steve Daines. What a week for Sen. Murkowski! Headlamp looks forward to more US officials exploring the energy opportunities Alaska has to offer this month! We hope there is an emphasis on unlocking Alaska’s energy potential, especially in the Arctic.


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First Reads

New poll: Alaskans support Gov. Walker’s plan to close budget gap
Alaska Dispatch News, Nathaniel Herz, January 28, 2016

State oil income could hit zero if prices remain where they are
Alaska Dispatch News, Dermot Cole, January 28, 2016

Senators Probe Gov. Walker’s Plans for the Permanent Fund
Alaska Commons, Craig Tuten, January 28, 2016

Morning Energy: Senate gets to work on energy bill
Politico, Eric Wolff, January 29, 2016


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The Morning Headlamp — Managing Walker’s AKLNG expectations

January 28, 2016 | Posted in : News

Governor Walker’s AKLNG letter: Is this how a business partner would act? In a letter to BP, ConocoPhillips, and ExxonMobil last week, Governor Bill Walker said he’s growing “increasingly concerned” with the slow progress developing project contracts and agreements on AKLNG that he wants finished during the 2016 regular Legislative Session. Walker, threatening “unspecified action” if key agreements are not reached stated the following, “if the parties do not reach alignment on these important contracts and issues, then I will have no other choice but to consider other options for commercializing Alaska’s gas.” Asked how Walker would proceed if the agreements aren’t reached by the end of the legislative session, his spokeswoman, Katie Marquette, emailed a prepared statement: “We will need to consider all of our options going forward.” If terms are not agreed upon, progress on the project would be delayed until 2018. “That is precisely the fear,” said Marty Rutherford, deputy natural resources commissioner. State officials and oil company employees explained at a Senate Resources Committee hearing, that one area of focus is what’s called a “gas balancing agreement” — a key pact between the oil companies that Rutherford described as “foundational” to the project. One BP executive, David Van Tuyl, described the balancing agreement in an interview as “amazingly complex.” Rep. Craig Johnson was not overly concerned with Walker’s letter, but he pointed out that the gas balancing agreement being negotiated is so complicated that it’s “precedent-setting.”

This is certainly an interesting negotiating tactic for a business partner. As a quick reminder, the State of Alaska is already running behind on finalizing plans for property taxes for future AKLNG infrastructure and in identifying communities for gas off-takes from the future project.  Governor Walker appears to be putting the industry—Alaska’s partners in the project—in a corner amidst near record low oil prices and industry-wide cutbacks in capital investment. If Walker wants Alaska to be respected as a partner on the AKLNG megaproject he has to have realistic expectations of the economic climate, industry megaprojects, and his own administrations delays. In his letter Walker makes vague threats about bringing back the gas reserves tax, and acting on his own to commercialize Alaska’s gas should our partners not achieve his wish list. Headlamp ponders where Gov. Walker thinks Alaska will get the billions of dollars, and experience necessary to complete a project on our own?

Ending more than six months of speculation, on January 19, Senate Bills 129 and 130 were read across the floor of the Senate for the first time. Alaska finally got its first look at Gov. Walker’s solution for what he calls an “unsustainable” oil and gas industry incentive program. What started as a $10 million per year tax credit program in 2003 has grown to a $700 million obligation this year and that payment could eventually hit $1.2 billion if left untouched, the governor contends. SB 130, if enacted, would significantly trim the current credit program and nearly immediately save the state an estimated $500 million at a time when oil prices below $30 per barrel have edged the state’s budget deficit ever closer to $4 billion. Senate Bill 129 would form an Oil and Gas Infrastructure Development Program within the Alaska Industrial Development and Export Authority. A $200 million appropriation would be needed to jumpstart the fund, which would finance oil and gas infrastructure development projects on proven reserves for small and medium-sized companies in lieu of some credits.

Alaska Oil and Gas Association President Kara Moriarty said in an interview that she understands the fiscal pickle the state is in, but changing the tax credit system at a time when the companies are also cash-strapped brings about the ever-dreaded political uncertainty. “Policymakers cannot control the price of oil, so you want to have policies that attract investment even when the price of oil is low,” Moriarty said.

Headlamp agrees. We know that Alaska is facing tough economic times, but lawmakers need to think big picture and not so reactionary. Remember: while the state of Alaska has traditionally relied on oil production taxes for 90% of its revenues, the oil and gas industry relies on the price of their products for 100% of their revenues.  Increasing taxes risks accelerating jobs cuts and reduced investment. During the oil and gas tax credit panel held at the Alliance’s Meet Alaska 2016 conference and industry tradeshow, Kenai Peninsula Borough oil and gas expert Larry Persily noted that incentivizing Cook Inlet gas production helped stave off the natural gas shortages that were feared in Southcentral just three years ago. Persily went on to say, “There’s no question that tax credits have been good for Cook Inlet, good for utilities, good for customers, good for production — certainly good for the local economy and jobs.” Alaskans have directly benefitted, through jobs, and money returned to state coffers, from the oil and gas tax credit program. Gutting the program now won’t just harm oil and gas companies, but will no doubt trickle down to other Alaskan businesses. Our foremost concern with Gov. Walker’s proposal to gut the program are the negative effects that will occur downstream and out of the headlines to Alaskans during these already difficult economic times.


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First Reads

Walker issues ultimatum to oil companies on pipeline project
Alaska Dispatch News, Nathaniel Herz, January 27, 2016

State Senate Majority Releases Poll Results
The Midnight Sun, January 27, 2016

Walker bills would shift tax credits to development loans
Alaska Journal of Commerce, Elwood Brehmer, January 27, 2016

Walker’s Permanent Fund plan gets first Senate hearing
Associated Press, Becky Bohrer, January 27, 2016

S&P finds Alaska with ‘unique exposure’ to oil prices
Alaska Journal of Commerce, DJ Summers, January 27, 2016

Senate starts debate on broad energy bill
Reuters, Valerie Volcovici, January 27, 2016


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The Morning Headlamp — Walker’s new gas tax and international arctic investment

January 27, 2016 | Posted in : News

So it begins. The first component of Gov. Bill Walker’s plan to balance the state budget, a doubling of the state’s gasoline tax, received a quiet hearing from a joint session of the Alaska Senate’s transportation committee and transportation finance subcommittee on Tuesday afternoon according to the Juneau Empire. The bill, which would raise the state’s gasoline tax from 8 cents to 16 cents per gallon, and more than double the tax on jet fuel, was received with far more aplomb than a bill last session that raised the gas tax by less than one cent. “No one likes the idea,” said Sen. Peter Micciche chairman of the Senate Transportation Committee. “We spend our careers trying to keep the cost of being an Alaskan low…and we suddenly find ourselves facing some very challenging times.” Now that Alaskans are finally seeing the benefit of low oil prices at the pump, Headlamp wonders if legislators are considering the harmful impact the Governor’s proposal to hike gas taxes will have on low income, and rural Alaskans. Furthermore, independent pilots and small charter companies flying throughout rural Alaska will have their bottom lines impacted if the price of jet fuel jumps due to Gov. Walker’s tax hike proposal. Instead of raising taxes on Alaskans, Headlamp encourages legislators to find efficiencies in the Department of Transportation’s budget in which unrestricted general fund spending (UGF) has increased from $98.91 million in FY2005 to $244.02 million in FY2016.

Arctic investment still remains a priority—for other countries. Despite slipping gas prices, many foreign companies are investing in the Arctic in a big way. According to the Alaska Dispatch News, Korea’s Daewoo Shipbuilding and Marine Engineering launched the world’s first Arctic-class LNG tanker to serve Russia’s Yamal LNG project. That project, a large natural gas field in Russia’s Arctic, is on schedule to begin producing next year and has brought in $15 billion in investment so far. Meanwhile, Norway’s Arctic oil prospects will continue to see substantial investment too, with Statoil green-lighting a $7 billion boost in investment to develop prospects in Norwegian waters in the Barents Sea. As we consistently remind our readers, AKLNG is a global opportunity. Countries around the world are prepping their economies for major LNG projects in the Arctic and Alaska is slowly being left behind. Alaskans must do a better job communicating to the rest of the country that the U.S. is an Arctic nation, and that for a vast number of both national security and economic reasons we must expand our role and presence in the Arctic.

Holding steady for now. According to an interview with Alaska Public Radio News, economist with the Department of Labor Neal Fried argues that despite oil prices, Alaska’s oil and gas employment is still faring pretty well. In fact, oil and gas employment reached a record high in 2015. According to Fried, “We appear to be more project-based. When you undertake a project in Alaska, it’s usually a pretty big one. So if you’re in the middle of it, or a third of the way through, you’re not going to just probably quit.” It’s convenient that Alaska happens to have an ongoing megaproject then. As Headlamp has said before, AKLNG has the capacity to normalize and energize Alaska’s economy through sustained employment and investment. Furthermore, thanks to smart tax policies kept in place by Alaskan voters in 2014, investment by oil and gas companies has remained strong in the face of low oil prices. Headlamp cautions lawmakers from undertaking dramatic changes to the state’s current tax structure. To foster the creation of a strong economy in the future, Alaska must remain a competitive and attractive place to invest. Accomplishing these goals requires that we ensure stability in our regulatory, fiscal, and taxation regimes. Likewise, Headlamp reminds lawmakers to ease into any changes of the oil and gas tax credit program which has helped revitalize Cook Inlet production, ensured a strong supply of natural gas for Southcentral Alaska, and brought new producers to the North Slope.

Alaska’s Department of Education announced Tuesday that it will get rid of the new statewide standardized test less than a year after students in grades 3 through 10 took the exam for the first time. “After careful consideration, I believe that it is in the best interest of Alaska to consider new assessment structures that better align to instructional needs and are allowable due to changes in federal law,” Education Commissioner Mike Hanley said in the statement. Alaska must do better when it comes to education. The state spends more money on K-12 education, per pupil, than any other state, and yet we consistently see poor results in reading and math at the 4th and 8th grade levels. Headlamp questions the original cost of developing the Alaska Measures of Progress test. Why was it developed at the University of Kansas, and not in Alaska? We cannot afford to spend $25 million on the creation of a new standardized test, and then discard that test one year after implementing it. How do we even know how much was actually spent on developing this test, when the state checkbook for FY2016 is not online? This AMP mess is a disservice to both taxpayers, and students. Headlamp hopes a new test is developed quickly, cost effectively, and will fit Alaska’s needs for years to come.

“Genuinely different, and genuinely fabulous.” Following a blizzard that brought our nation’s capital to a standstill, Sen. Lisa Murkowski was one of only a few lawmakers who came into work when the capital building reopened. Furthermore, the Senator astutely pointed out that every lawmaker, page, and government employee in the chamber was a woman—something the Ketchikan lawmaker was extremely proud of. Headlamp continues to applaud Senator Murkowski for her dedication to her work and the people of Alaska.


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 here:


First Reads

Alaska job forecast holds steady despite plunging oil prices
Alaska Public Radio News, Rachel Waldholz, January 26, 2016

Post-blizzard, Sen. Murkowski notes that only women turned up to run the Senate
Washington Post, Emily Heil, January 26, 2016

This week in the Arctic: Energy investment and indigenous education
Alaska Dispatch News, January 26, 2016

Gas tax bill gets hearing, first of governor’s plan
Juneau Empire, James Brooks, January 27, 2016

Coalition calls for use of Permanent Fund earnings to close budget deficit
KTUU, Paula Dobbyn, January 26, 2016

Is this ethical? A look at concerns raised by legislators, staffers in 2015.
KTUU, Austin Baird, January 26, 2016

Alaska education department will replace new statewide standardized test
Alaska Dispatch News, Tegan Hanlon, January 26, 2016


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