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Dear Friends and Neighbors,

Yesterday, the Alaska Legislature passed a compromise capital budget that spends about $140M of state money to leverage about $1.2B in federal funds. The House vote was 27-13 and the Senate vote was 15-4. Although either a “yes” or “no” vote was arguably justifiable, after some deliberation, I voted to pass this budget.

Contentious issues included:

1.    The Permanent Fund Dividend (PFD)—$1,100 for 2017

On June 14, my entire caucus voted for a capital budget that would have fully funded this year’s PFD at about $2,200.  But in conference committee, the Senate quashed full funding. The House Majority Coalition could have held out until October 1—the deadline to secure federal funding—but this would have been an unproductive spectacle. 

I see merit in both sides of the PFD funding debate. On one hand, state law requires full funding…if the legislature appropriates the funding. And because the Senate refused to pass any component of a balanced fiscal plan, it’s regressive and unfair to make PFD recipients bear the burden of balancing our budget. A “PFD-only solution” is an unbalanced solution.

On the other hand, most legislators see that any practical fiscal plan must entail some PFD reform. This, too, is debatable: Some argue that seriously increased oil taxes could make full PFDs affordable. Nevertheless, virtually every fiscal plan entails some PFD reduction. This side argues that full PFD funding could “crowd out” funding for things like public education, and they say that fully funding the PFD sends the message that our fiscal insolvency is not as bad as reported, when in fact it could actually be worse than reported.

2.    Alaska Liquefied Natural Gas Project (AKLNG)

We may be running out of oil, but we have a superabundance of North Slope gas. Transporting that gas 800 miles to tidewater and selling it in a very competitive global market, already awash in cheap gas, makes AKLNG a very challenged project. But pursuing the line a year or two longer is not harmful to the state and may—just may—be beneficial. Because the three major oil companies were unwilling to commit cash to building and promoting the project, in 2016 Gov. Walker asked the legislature to appropriate funding for the state to lead the project, and we did. At issue in this year’s capital budget was $100 million remaining for the Alaska Gasline Development Corporation’s efforts to find other means of financing, promoting, and permitting AKLNG.  Some wanted to raid the fund, and made persuasive arguments that those funds would do more good elsewhere, but in the end we left the fund intact.

3.    Oil Tax Credits

I have said repeatedly, and reiterated on the House Floor just yesterday, that if we agreed upon a balanced fiscal plan I would support quickly paying off the approximately $875M in tax credits the state owes oil companies. The bill we passed yesterday included $20M to pay credits, and the operating budget we passed last month included $52M for that purpose. So the outstanding $800M liability still clouds our balance sheet, but because of HB 111 (passed July 15 and signed into law yesterday) oil tax credits are now fixed and finite. That was a critical reform. Though the letter of the law does not require us to pay credits promptly, the state nevertheless created an expectation that we would. Once the Senate agrees to a fiscal plan that balances our budget, I will support paying off the credits as rapidly as we can. 

4.    Izembek Road

While I am sensitive to arguments about the life and safety of King Cove residents, I don’t believe we should spend $10M to fund this road. I am very troubled by this appropriation.

5.    Juneau Access Project  

We reduced funding for this project from $47M to $21M. The Governor does not support it, state funding to match federal dollars is inadequate, and the road needs an Environmental Impact Statement and years of permitting. So the project is stalled for now. I believe Juneau should remain our state capital, but this project would not help keep the capital there. To drive from Anchorage to Haines takes at least 16 hours, then, even with a new road, there’d still be a ferry ride and a couple more hours’ drive into downtown Juneau. Flying is comparatively cheap and quick. 

6.    Arctic Strategic Transportation and Resources (ASTAR)

We appropriated $7M to study potential roads in northern Alaska: ASTAR. I oppose the Ambler Mining District Road and development of that mining district, but the funds we appropriated yesterday will not promote that road.

In the end, I voted for this compromise bill. A bill with so many moving parts can never be precisely what someone wants. However, this capital budget will help stabilize our economy and help meet the real needs of Alaska and its people.

In Other News…

HOUSE BILL 111

Governor Walker signed HB 111 yesterday, effectively ending state cash credits for oil companies. Oil companies can still use credits as tax deductions, but those deductions will expire after 7-10 years if companies don’t claim them during that period.


“I’m pleased the Legislature came together across chambers and party lines to pass this bill in the spirit of compromise,” Governor Walker said. “This legislation is a small, but meaningful step towards addressing Alaska’s fiscal crisis. I thank Representatives Geran Tarr and Andy Josephson, and Senator Cathy Giessel for leading negotiations that resulted in the final product, and look forward to seeing this kind of collaboration continue.”

This is a great first step in protecting the financial future of our state.


ANCHORAGE YMCA

The Anchorage community YMCA celebrated their 50th anniversary this week. It was an honor to be able to present them with a citation for their many years of wonderful service to our community.

Get Involved!

  • The EPA has proposed to withdraw the Clean Water Act restrictions for the Pebble Mine (epa.gov/bristolbay). The EPA has opened up a 90-day comment period that will close on October 17, 2017. I would encourage folks to submit comments on this issue, as it has the potential to affect many Alaskans. Click here for instructions on how to comment.
  • There will be a Board of Forestry meeting on Tuesday, August 1, from 8 am to 5 pm. The public is invited to participate in this teleconference to discuss statewide forestry issues, including:  funding and management, legislation and regulations, wood energy, forest sustainability verification, fish habitat sampling and permitting, and cooperative forestry programs. Click here for a draft agenda and info on how to attend.
  • The Army Corps of Engineers (USACE) will host a public meeting Tuesday, August 1 from 6:30-9 pm to present their Draft Supplement Environmental Impact Statement (DSEIS) for the Alaska Stand-Alone Pipeline, the proposed small-diameter gasline that would serve Interior Alaska.  The meeting will be at Grant Hall, 4101 University Drive on the campus of Alaska Pacific University.  For more information, visit http://www.asapeis.com/publicmeetings.html.

If you have a topic or event that you would like to see in my next newsletter, feel free to get in touch with me or my staff. Please make note that my office will be based in Anchorage until January.

And as always, please call or email with any thoughts, ideas, or concerns.

I Answer to You!

Sincerely,
Andy Josephson[signed]

 
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Governor Bill Walker
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