An engaged Alaskan democracy

Think you’re savvy about Alaska’s plight? Take this test.

Take this quiz from Cliff Groh, Chair of AK Common Ground published in the Alaska Dispatch News, Sunday, September 13th, 2015

Wondering why the University of Alaska is implementing budget cuts? Remember the Legislature’s drawn-out efforts to pass a state budget? Tracking what’s happening in the oil industry? Looking at house prices in Anchorage? If you answered “Yes” to any of these questions, you are warmed up for even more fiscal and economic questions. You could also win a free lunch at the Forum on Alaska’s Fiscal and Economic Future set for Saturday, Sept. 19, at the Wendy Williamson Auditorium at the University of Alaska Anchorage from 9 a.m. to 4 p.m.

1. At the current rates of spending and projected revenues under current law, when does the Alaska Legislative Finance Division project that the state of Alaska will run out of savings outside of the Permanent Fund?

a. Between July 1, 2016 and June 30, 2017
b. Between July 1, 2017 and June 30, 2018
c. Between July 1, 2018 and June 30, 2019
d. Never

2. At current oil prices, what is the size of the annual deficit during this fiscal year (July 1, 2015-June 30, 2016) per Alaskan (that’s every man, woman, and child in the state)?

a. $2,457 per Alaskan
b. $3,213 per Alaskan
c. $3,684 per Alaskan
d. $4,479 per Alaskan

3. What percentage of state employees would need to be laid off to balance the state budget during the current fiscal year (July 1, 2015-June 30, 2016)?

a. 10 percent
b. 40 percent
c. 100 percent
d. This number does not exist

4. At currently projected oil production levels, what price of oil did Gov. Bill Walker identify in July of 2015 as the price needed for the state of Alaska to balance its budget?

a. $42 per barrel
b. $86 per barrel
c. $109 per barrel
d. $146 per barrel

5. What have prices for Alaska North Slope crude oil been since July 1, 2015?

a. Between $31 and $42 per barrel
b. Between $45 and $62 per barrel
c. Between $78 and $91 per barrel
d. Between $122 and $159 per barrel

6. Recent trading in contracts for crude oil in September of 2020 imply that oil prices will then be:

a. Between $35 and $40 per barrel
b. Between $45 and $75 per barrel
c. Between $90 and $120 per barrel
d. Between $130 and $160 per barrel

7. At currently projected oil price levels, what daily oil production level did Gov. Bill Walker identify in July of 2015 as the level the state of Alaska needs to balance its budget?

a. 700,000 barrels per day
b. 850,000 barrels per day
c. 1.2 million barrels per day
d. 1.6 million barrels per day

8. What has Alaska North Slope oil production been since July 1, 2015?

a. Between 380,000 and 490,000 barrels per day
b. Between 750,000 and 900,000 barrels per day
c. Between 1.1 million and 1.3 barrels per day
d. Between 1.4 million and 1.5 million barrels per day

9. What year did the CEO of Royal Dutch Shell (“Shell”) identify in July of 2015 as the year that Shell plans to start offshore oil production in Alaska?

a. 2018
b. 2019
c. 2022
d. 2030

10. What is the earliest year that the Alaska Department of Revenue has projected in a public document that revenues could come to the state of Alaska from the operation of the Alaska Liquefied Natural Gas project (also known variously as “AKLNG,” “the big gasline,” or “the gasline”)?

a. 2018
b. 2020
c. 2024
d. 2028

11. When the multiplier effect is included, how many jobs did the University of Alaska Anchorage’s Institute of Social and Economic Research (ISER) estimate in February of 2015 that a $1 billion cut to the state of Alaska’s budget would cause to be lost in the Alaska economy?

a. 3,000
b. 6,000
c. 9,000
d. 15,000

With the will to act, Alaska need not repeat late 80s oil crash

Janet McCabe, September 9, 2015, Alaska Dispatch News

OPINION: Our economic situation echoes the dark days of the late 80s, but we have the means to pre-empt a crash.

“This city was dying!” That’s what Rick Mystrom said about the time between 1986 and 1989 when the Anchorage Organizing Committee made a valiant effort to be chosen to host the Olympic Winter Games.

I lived in that dying city, and watched loss pile upon loss, during the spread of the self-reinforcing economic decline caused by the combination of oil industry reductions and cuts in state spending. Former Mayor Mystrom’s comment accurately reflects the prevailing mood of the community during the late 1980s. It was easy to believe that the only thing that could save Anchorage was a huge infusion of funding from Outside sources.

In the end, economic rescue came from a disastrous accident, rather than joyous Olympic Games. On March 24, 1989, the Exxon Valdez oil spill caused environmental damage that resulted in a four-year infusion of new money into Alaska — $2.1 billion according to Exxon. As the headquarters of cleanup operations, Anchorage was yanked out of the economic doldrums.

The biggest difference between 1986 and today is that we have revenue options that, if quickly implemented, will prevent the same kind of downward economic cycle that builds on itself and gains momentum. Alaska has the natural and human resources, the location on a global crossroad, and, yes, even the climate, that can give our state a very bright future. Though still petroleum-dependent, our economy is more diversified. The Permanent Fund has grown from $6 billion in the 1980s to $52.3 billion today.

But this is still a precarious time for Anchorage and Alaska, a fact affirmed by the recent downgrading of the outlook for Alaska bonds from “stable” to “negative.” Most of us know about ripple effects that occur when a major source of new money spent in the community is cut off. When the prospective military (JBER) cuts were announced earlier this summer, government leaders immediately expressed concern about the effect on the service and supply sectors of the economy. Cuts in state spending work in the same way. Unlike individual or family budgets, changes in a public budget are not contained; instead, they spread a series of ripple effects throughout the community.

If the impact of major cutbacks in state spending and oil industry spending is large enough, the ripple effect can create an economic whirlpool that will affect the whole state, especially headquarters communities such as Anchorage.

That is what happened to Anchorage when the economy tanked between 1986 and 1989. Before the crash, when state income was buoyed by oil lease sales and increases in oil revenue, the Legislature spent lavishly, granting benefits to Alaska residents unheard of in other states. In 1980 the personal income tax was repealed, and the Permanent Fund dividend program was established. Legislators competed to include projects in the capital budget for their communities. Project 80s gave Anchorage the Sullivan Arena, the Egan Center, the Coastal Trail, the Loussac Library, the Alaska Center for the Performing Arts and more. The construction industry soared.

Then, in 1986, crude oil prices fell from an inflation-adjusted all-time high of $107 per barrel to $31 per barrel, a 71 percent decline. As a young state with few other options, the Legislature cut the state spending to balance the budget. The effect on the economy was not immediate. Uncompleted “Project 80s” construction projects had a brief sustaining effect, but soon the Anchorage economy started to wither.

The sudden loss of jobs, from state spending cuts and oil industry cuts, forced many Anchorage residents to leave town or reduce their own spending. This loss of new money circulating in the economy impacted the service sector, and owners of restaurants, gas stations, saloons and beauty salons, automobile companies, retail stores, architectural firms, and construction and maintenance companies, to name a few, found they had less business. They, in turn, were forced to cut staff or close and more people lost their livelihoods, found ways to spend less, or left Alaska.

As the ripple effects spread and people left town or downsized, housing supply exceeded demand. Streets had rows of “for sale” signs, and property values collapsed. Many people found that their mortgage obligations exceeded the value of their property. Frequently they were unable to sell. If a work-out was possible, the forgiven debt became taxable income in the eyes of the IRS. Under these circumstances, some homeowners simply drove away. One bank employee told me he hated to open the drop box on Monday because it would be full of house keys.

Burdened by bad debt, banks were hard hit. The Federal Deposit Insurance Corporation stepped in and merged failing banks into Alliance Bank, but within a short time that bank failed also. In the end, FDIC was left holding $359 million in bad or shaky loans. Eight banks, or 40 percent of all banks in Alaska, failed during the late 1980s.

The downward ripples continued. Losses in local property values meant losses in municipal tax revenue. Street cleaning, snow removal, park maintenance and educational services were reduced and yet more jobs were lost. Thousands of people left Anchorage, and more from Fairbanks, Kenai-Soldotna and the Matanuska-Susitna Borough.

The crash had huge human costs in terms of broken dreams and broken relationships. Families split up and friends left forever. A favorite bumper sticker in those days referenced the famous 1969 oil lease sale to read, “Oh Lord, please give me another $900 million. I promise not to p— it away.”

In 1989 the Exxon Valdez oil spill “rescued” the economy of Anchorage, but it was not until 2004 that oil prices started to climb. This year, the circumstances are hauntingly similar to 1986. We have seen a drop in oil revenue of over 50 percent in one year, with little likelihood that the price of oil will increase. What’s worse, oil production has fallen steadily since the late 1980s, leaving Alaska producing less than a quarter of what the state produced a quarter-century ago.

Today however, unlike 1986, we have revenue options that can take us off the merry-go-round of dependence on oil prices. Timing is of the essence. The Legislature needs to act now — immediately — to put Alaska’s economy on a stable footing. The Rasmuson Foundation’s recent poll of Alaska’s registered voters provides statistically sound information that voters favor revenue sources over additional cuts. The poll offers a basis for bipartisan legislative action to adopt revenue options while they are still available.

To understand the choices and their importance to all Alaskans, you are encouraged to attend a free forum on Alaska’s Fiscal and Economic Future sponsored by Alaska Common Ground and the UAA Institute of Social and Economic Research from 9 a.m. to 4 p.m. on Saturday, Sept. 19,  in the Wendy Williamson Auditorium at UAA.

Janet McCabe and her family have lived in Anchorage since 1964. A community planner specializing in employment and population projections, she was actively involved in numerous forums dealing with the 1980s fiscal crisis. She is a member of Alaska Common Ground.

List of Things Alaska Could Do Legally to Address the Fiscal Challenge

By Cliff Groh (Download PDF here)

The deep slump in oil prices since the summer of 2014 has exposed and exacerbated underlying structural problems in the State of Alaska’s fiscal system. These problems include:

  1. The dominant role of oil in the state budget—taxes and royalties from oil production account for more than 85 percent of the State of Alaska’s Unrestricted General Fund revenues (the Unrestricted General Fund is what most people mean when they say “the state budget”).
  2. The long-run decline in oil production that has left the Trans Alaska Pipeline System (TAPS) carrying less than a quarter of the oil it was carrying in the late 1980s;
  3. Increasing costs of producing that oil on the North Slope; and
  4. Partly because of (2) and (3) above, the unlikelihood of oil prices rebounding enough to bail Alaska out of this dilemma.

With revenues sharply down, matters are complicated by the desires many Alaskans have for more state spending in various areas.

Add it up, and you have an ugly picture. The budget this year (Fiscal Year 2015—or FY2015—which runs July 1, 2014-June 30, 2015) balances at oil prices of about $117 per barrel. Oil prices are below $50 per barrel as of this writing, and the Alaska Department of Revenue has reduced its oil price forecast to $65 for the rest of FY2015 and $66 for FY2016. With an approximately $6 billion state budget and revenues looking likely to be approximately $2.5 billion this year, the budget deficit at current oil prices and production would be close to $3.5 billion in FY2015. This means that the State of Alaska would have a budget deficit of more than 50 percent in the current fiscal year.

What follows is an attempt at a comprehensive catalogue of the steps the State of Alaska could take to address the fiscal challenge. This is an exercise in description, not prescription. No endorsement of any course of action is intended, and there is no discussion here of the many pros and cons of these approaches, whether philosophical, practical, or otherwise. Some of these items are obviously far less politically or practically possible than others.

Note also that although the list below includes dollar estimates for amounts possibly gained or saved regarding some of the items listed, not all of the fiscal impacts are easily predictable.

The items below can be grouped into four categories, with a more detailed list following:
1. Change spending
2. Collect more revenues
3. Use our savings accounts and/or money generated by or in the Permanent Fund
4. Get someone else to pay

I. Change spending
A. Reduce the budget as compared to the previous year’s spending (Notable facts about the budget include: 1. The State of Alaska’s budget is widely understood to be No. 1 in per capita spending among the states; 2. Roughly two-thirds of the budget is composed of three items—K-12 education, Medicaid, and retirement assistance; 3. The capital budget is only about 10 percent of the budget; 4. cuts could either be either targeted or across-the-board)

B. Re-allocate unspent and/or lapsed appropriations in the General Fund

C. Impose another constitutional amendment limiting spending (Alaska has had a constitutional spending limit since 1982)

1. Limit spending as a percentage of revenues somehow defined
2. Limit spending as a percentage of savings somehow defined

II. Collect more revenues
A. Adopt broad-based tax paid by individuals (Alaska is the only state in the union without either a general statewide sales tax or any form of a state income tax paid by individuals. Alaska had a state individual income tax until it was repealed in 1980; Alaska has never had a statewide sales or property tax paid by individuals. Note that a deficit of $3.5 billion works out to more than $4,500 per Alaskan, including children. According to Prof. Scott Goldsmith of the University of Alaska Anchorage’s Institute of Social and Economic Research, U.S. Department of Commerce figures show that combined state sales and income tax per capita averaged $1,812 for the U.S. as a whole in 2010.)

  1. State income tax (A 2010 legislative report estimated that an individual income tax in Alaska taxing 2.8 percent of adjusted gross income on a flat-tax basis would generate $500 million annually. This estimate was based on 2006 IRS data for Alaska residents and thus does not count income that could be collected from non-residents working in Alaska.)
  2. Statewide sales tax (That same 2010 report estimated that a state sales tax of three percent without exemptions would bring in $450 million a year.)
  3. Statewide property tax
  4. Others

B. Expand and/or increase selective sales and/or excise taxes

  1. Alcohol
  2. Tobacco
  3. Fuel
  4. Marijuana
  5. Others

C. Adopt other taxes, such as head tax or estate tax

D. Increase fees

E. Increase petroleum taxes

F. Impose and/or increase taxes on other industries

  1. Fisheries
  2. Mining
  3. Tourism
  4. Others

G. Increase the intensity of auditing of tax and/or royalties returns filed by petroleum producers

H. Increase the rate of return on the state’s savings

I. Promote economic development that allows the collection of additional revenues under existing taxes

  1.  Increase petroleum production
  2. Arrange for gasline/LNG export project to go into service
  3. Others

III. Use our savings accounts
A. Spend easily spendable savings—the Statutory Budget Reserve and Constitutional Budget Reserve contain together more than $10 billion as of January of 2015, and the Legislature could spend all of that money in the budget
B. Spend funds or accounts outside the General Fund, the Statutory Budget Reserve, the Constitutional Budget Reserve, or the Permanent Fund
C. Use Permanent Fund earnings in the budget in significant amounts (The Permanent Fund holds as of this writing more than $51 billion in assets. Of that more than $51 billion, the Permanent Fund Corporation’s most recent balance sheet (November 30, 2014) posted on its website shows $38.2 billion in the constitutionally protected principal (also known as the “corpus contributions and appropriations”) and another amount of more than $5.9 billion “not in spendable form—unrealized appreciation on invested assets.” More than $1.19 billion of Permanent Fund earnings are being distributed in Permanent Fund Dividends this year, and more than $660 million is reserved for inflation-proofing this year. Another sum of more than $5.55 billion is “assigned for future appropriations,” with $4.55 billion of that amount in realized earnings and the rest in unrealized appreciation on invested assets. The Permanent Fund’s principal is constitutionally protected and could only be spent by a vote of the people, while the earnings are as a legal matter available for legislative appropriation. The earnings of the Permanent Fund have traditionally been used almost entirely for the payment of Permanent Fund Dividends and inflation-proofing the Permanent Fund itself, with a fraction being used in the budget for functions related to the payment of Dividends.)

  1. Reduce share of earnings going for Permanent Fund Dividends
  2. Reduce share of earnings going for inflation-proofing
  3. Adopt a version of a Percent of Market Value (POMV) approach through a constitutional amendment that would both change how the Permanent Fund is protected against inflation and also change the allocation of Permanent Fund earnings in a way that would allow spending of significant amounts of Permanent Fund income in the budget

D. Amend the constitution to allow spending of Permanent Fund principal in the budget

IV. Get someone else to pay
A. Shift responsibilities from the State to local governments
B. Shift responsibilities from the State to the federal government
C. Borrow more money, perhaps through collateralization or from the Permanent Fund itself
D. Securitization, perhaps by selling shares in the revenues from a gasline/LNG export project

There are variations on these basic steps. Some of the most frequently discussed variations are:

1. Pump up the Permanent Fund’s principal to facilitate a slide into explicit rentier status, where the State of Alaska would finance its operations entirely or almost entirely through the use of Permanent Fund income (the word “Norway” has become shorthand in Alaska for this approach, apparently from a misunderstanding of Norway’s fiscal system)
2. Keep the Permanent Fund Dividend while bringing back the individual income tax
3. Guarantee some level of Permanent Fund Dividends in the constitution as a trade for using some Permanent Fund income in the regular budget
4. “Cash out” part or all of the Permanent Fund principal in lump-sum payments to all Alaskans as a trade for using Permanent Fund income in the regular budget
5. Cap the Permanent Fund Dividend to reduce the amount of money distributed each year so that the money not paid out can be used in the regular budget; such capping could occur either as a percentage of Permanent Fund income or as a hard dollar cap on either the size of the Permanent Fund Dividend or the amount of Permanent Fund income going annually to the Permanent Fund Dividend

The long-term decline in Alaska oil production—now compounded by the recent sharp drop in oil prices—poses tough questions for Alaska. Those questions are made tougher by the effects that the journey down the Prudhoe Bay Curve will have on the economy as well as the government, given that the oil industry accounts—directly or indirectly—for approximately one-half of all the jobs in the state. Alaskans need to think deeply and carefully about the implications of the various steps we could take to address these questions.

————————————————–

Cliff Groh is a lifelong Alaskan and a lawyer and writer. Groh authored a chapter for the 2012 book Exporting the Alaska Model: Adapting the Permanent Fund Dividend for Reform around the World (Palgrave Macmillan, 2012), and some of the material in this essay overlaps with that chapter. That chapter was one of four chapters Groh authored or co-authored for that book or for the 2012 book Alaska’s Permanent Fund Dividend: Examining its Suitability as a Model (Palgrave Macmillan 2012). Groh was involved in the creation of the per capita Permanent Fund Dividend Alaska has today while serving as an assistant to the Alaska Legislature in 1982. Groh was also Special Assistant to the Alaska Commissioner of Revenue in 1987-1990 and a delegate to the Conference of Alaskans in 2004. A board member of Alaska Common Ground for almost two decades, Groh became that organization’s chair in May of 2014.

Update from the Chair – Spring 2015

 

We invite you to Alaska Common Ground’s annual membership meeting followed by a forum on Healthcare Costs in Alaska on Saturday, May 9 at the BP Energy Center, 900 E. Benson Blvd. in midtown Anchorage.

Doors will open at 8:30 am for coffee and snacks, with the annual business meeting beginning at 9 am. We’ll bring you up to date on our successful forums and events this past year as well as what we’re planning for the upcoming year. As always we will elect board members and have time for member input and discussion.

Our forum on Healthcare Costs in Alaska will run from 10 am to noon. We will explore the high cost of healthcare in Alaska, discuss possible solutions, and drill down on how healthcare costs affect Alaska’s fiscal future. Forum panelists include Dr. Mouhcine Guetabbi, ISER; Deb Erickson, Executive Director of the Alaska Health Care Commission; Greg Loudon, member of the Health Care Commission, Insurance Broker and Health Benefits Consultant; and Doug Eby of Southcentral Foundation. Mark Foster of the Anchorage School District will moderate the panel. Forum co-sponsors include ISER, Anchorage Public Library, AARP, and the League of Women Voters of Anchorage.

On September 19, we will hold a second forum on Alaska’s fiscal future, building on our previous forum on this topic. In November, either the 7th or 14th, we will hold a forum on climate change, focusing on climate change impacts in Alaska and what a climate change policy for our state might look like.

Mark your calendars for all of these forums!

This past year was busy for Alaska Common Ground. Click here for a list of the forums we held and co-sponsored and related public and media events during the past year. We think you will join us in celebrating a successful year!

We want to thank you, our members, for your continued support. Alaska Common Ground is a member-supported organization. It takes lots of time, energy, and money to put on our forums, and we are expanding and growing our organization so that we can continue to put on multiple forums each year.

We encourage you to re-new your membership and consider upgrading your membership to a higher level, or contributing financial support for a particular forum to support this work.

As always we invite your ideas and suggestions and welcome you to participate in planning and presenting these events. Thank you for your continued support! It’s what keeps us motivated and able to present forums on important Alaskan public policy issues.

Mary Lu Harle, Acting Chair

Update from the Chair – Fall 2014

We have been busy these past few months and hope that you were able to attend one of our forums are came to our annual meeting last May. As you know, our organization put on five well-attended and well-received forums on Alaska’s important issues. Four of these five non-partisan forums covered the ballot propositions Alaskans voted on this year. The fifth was an all-day event addressing Alaska’s biggest and most complicated problem—the fiscal challenge caused by falling oil production and the threat of oil prices lower than expected.

These events had an extensive reach:

  • More than 800 people saw these events in person
  • More than 100 listened on audio livestreams
  • More people listened and/or viewed these events on Alaska Common Ground’s website
  • Thousands more got the chance to see or hear media coverage before or after the forums

Links to the audio and video of each of these five forums are available on this website under Forums.

Along with doing all this in 2014, we also sponsored the Let’s Talk Alaska dialogues on Wednesday evenings and held our annual meeting in May.

Alaska Common Ground was fortunate to have a lot of help in putting on these events. All our forums were co-sponsored by the Anchorage Public Library, the League of Women Voters of Anchorage, the League of Women Voters of Alaska, and Alaska Integrated Media. The University of Alaska’s Institute of Social and Economic Research (ISER) partnered with us on the Forum on Alaska’s Fiscal Future, which was also co-sponsored by Northrim Bank, First National Bank Alaska, Commonwealth North, and C.M. Bidwell and Associates. The co-sponsorship of Alaska Integrated Media (AIM)—a company owning five radio stations—led to the airing of more than 2,000 commercials promoting the forums, significantly increasing our visibility to audiences not typically reached by Alaska Common Ground.

Alaska Common Ground is a small non-profit organization run by and for Alaskans. Most of our work is accomplished by our volunteers—both our board of directors and our members—but some of what we do necessarily costs money. Alaska Common Ground needs money, for example, to pay for advertising for our events and for wages for our part-time staff member. Some of that money comes as grants from institutional sponsors, but most of it comes from individual members like you.

After much consideration—and after not raising the levels for a number of years—Alaska Common Ground has increased the membership levels to reflect the amount and quality of the work we do. This year the membership levels are:

  • Individual $50
  • Supporter $75
  • Contributor $100
  • Sustainer $250
  • Benefactor $500

In addition, we still offer our $10 membership for a person on a limited budget or a student.

I thank our existing members, and I welcome our new members for their support of Alaska Common Ground and this important work. I urge you to send us a check or go on-line to renew your membership—today. Please consider upgrading your membership category to help Alaska Common Ground to continue to put on high-quality, unbiased events of importance to Alaskans.

Thanks again, and I look forward to seeing you at an Alaska Common Ground event soon.

Sincerely,

Cliff Groh
Chair, Alaska Common Ground

P.S. One of the accolades for our events making me most proud came from Alaska Dispatch News columnist Mike Dingman. Writing about Ballot Measure No. 1, the oil tax referendum on the August ballot, Dingman commented “…I would encourage you to watch the Alaska Common Ground forum on the topic. That forum is different than most because it was two hours long, and allowed a significant amount of time for the answers to questions and tasked the spokespeople for each side with posing questions to one another.”

Public forum will ask how Alaska’s fiscal future can live with less

Gunnar Knapp and Cliff Groh, October 1st, 2014, Alaska Dispatch News

The debate over oil taxes and recent annual state budget deficits of more than $1 billion have drawn attention to one of the most important and difficult challenges facing Alaska: how we will balance falling oil revenues with growing demands and obligations for state spending.

In recent years oil revenues have accounted for about 90 percent of the state’s unrestricted general fund revenues which pay for most state government services, capital projects, and debt and retirement obligations. Although nothing about the future is certain, it’s very likely that our oil revenues will decline in the future — because it’s very likely that oil production will fall, and that oil prices won’t rise enough to make up for the decline.

Alaska’s North Slope oil production has been falling for a quarter century — at an average annual rate of 6 percent per year for the past ten years — because production from new fields isn’t enough to offset the decline in production from existing fields. Optimistic forecasts are that new investment might keep North Slope oil production level for a few years — but it’s a lot more likely that production will fall.

For most of the past decade, the effects of falling oil production on state oil revenues were offset by a dramatic increase in oil prices — from $45/barrel in 2005 to $113/barrel in 2012 — as well by as tax changes which increased the state’s share of oil production value. But we can’t count on oil prices to keep rising. Oil prices are driven by global oil supply and demand, and new technologies are driving big increases in global oil production — including production from Lower 48 states. This year’s revenue forecast assumed an average price of $105/barrel, but last week prices were about $95/barrel. For every dollar fall in the average annual oil price, Alaska loses about $90 million in oil revenues.

Regardless about how optimistic you are about future Alaska oil production or prices, it would be foolhardy to deny that our future state oil revenues could decline significantly, or that we need to think about the choices lower oil revenues could force us to face.

Read more here.

Have questions about Ballot Measure 4? Join the crowd to discuss Bristol Bay

Commentary in Alaska Dispatch News, August 11, 2014
Dick Mylius

Mining in the Bristol Bay region has been a topic for much discussion in recent years. On Nov. 4, Alaskans statewide will vote on the matter, but before then, pros and cons should be considered.

Mining in the Bristol Bay region has been a topic for much discussion in recent years. It has resulted in one statewide ballot initiative in 2008 and a local ballot initiative, Lake and Peninsula Borough, 2011. On Nov. 4, Alaskans statewide will vote on another ballot measure concerning mining in the Bristol Bay area, Ballot Measure 4, one the sponsors have nicknamed “Bristol Bay Forever.”

On Wednesday evening, Alaska Common Ground will host a forum from 7 to 9 p.m. to discuss this ballot measure at the Wilda Marston Theatre at the Loussac Library.

A yes vote on Ballot Measure 4 would establish a state law that requires legislative approval of a future large-scale metallic sulfide mine within the Bristol Bay Fisheries Reserve. The Legislature must find that a “large-scale metallic sulfide mining operation will not constitute danger to the fishery within the Bristol Bay Fisheries Reserve.” The bill defines “large-scale metallic sulfide mining operation” as “a specific mining proposal to extract metals, including gold and copper, from sulfide bearing rock and that would directly disturb 640 or more acres of land.” This legislative approval is in addition to any other required permits or authorizations.

A no vote will keep the status quo, which means that the existing federal, state, and municipal permitting processes will address any future large-scale metallic sulfide mine in the region but the Legislature will not be required to give final approval.

The Bristol Bay Fisheries Reserve is defined as the watersheds that drain into Bristol Bay, roughly from Ugashik Bay north and then west to Kulukak Bay, including the Kvichak-Iliamna Lake, Nushagak, and Naknek river drainages.

The reserve was established by the Legislature in 1972 to address concerns about oil and gas development. The existing reserve only requires legislative approval for oil and gas facilities built in state waters. To date the provision has never been used.

The initiative adds large-scale metallic metal mines to actions requiring legislative approval in the Bristol Bay Fisheries Reserve. It broadens the geographic area to include the entire drainage, not just state-controlled waters. It also applies to lands owned by the state and federal governments and by private entities, including Native corporations.

Until recently, there was uncertainty if the measure would be on the ballot because of questions about whether it was allowable as a topic for an initiative under the Alaska Constitution. On June 23, the Alaska Supreme Court ruled that the initiative could be on the November ballot. Litigation on the separation of powers issue may occur if the initiative passes.

This initiative is not a vote to approve or disapprove a future Pebble Mine. The Pebble deposit is within the reserve and would be a large-scale metallic sulfide mine. If passed, this initiative would require legislative approval at the end of the existing permitting process. To date, Pebble Partnership has not submitted applications to develop a mine. There are other known mineral deposits within the reserve that could also be subject to this state law.

Panelists advocating in favor of the initiative are Christina Salmon of Igiugig, one of the sponsors, and Anders Gustafson, executive director of the Renewable Resources Coalition.

Panelists advocating a no vote on the initiative are Deantha Crockett, executive director of the Alaska Miners Association and Richard Hughes, mining engineer/consultant.

We invite you to join us and learn about the pros and cons of this ballot measure so that you can make an informed decision in the voting booth in November. The forum on Wednesday evening is free and open to the public, and there will be time for questions from the audience.

The event is co-sponsored by the Anchorage Public Library, the League of Women Voters of Anchorage, the League of Women Voters of Alaska, and Alaska Integrated Media.

Dick Mylius is former director of the Alaska Department of Natural Resources Division of Mining, Land and Water and is a board member of Alaska Common Ground, a non-profit, member-supported organization dedicated to engaging Alaskans in respectful conversations about major public policy issues facing our state.

Link to the full article here.

Public debate of Ballot Measure 2 will help Alaskans weigh marijuana legalization

Peg Tileston, August 3, 2014, Commentary in the Alaska Dispatch News

OPINION: Ballot Measure 2 centers on a public policy issue that creates interest, emotion, and confusion, and a free public discussion can help voters consider their choice in November. Should Alaska become the third state in the U.S. to legalize recreational marijuana

The marijuana legalization initiative, Ballot Measure 2, “An act to Tax and Regulate the Production, Sale, and Use of Marijuana,” will be on the Nov. 4 general election ballot. This ballot measure centers on a public policy issue that creates interest, emotion and confusion. If passed, Alaska will be the third state to legalize the production, sale and use of marijuana.

What is the initiative really about? The proposed act is lengthy — eight pages long, consisting of three sections, which would add 17 new statutes and a severability clause to Alaska law. It would make the use of marijuana legal for persons 21 years of age or older. The bill would allow a person to possess, use, buy and grow set amounts of marijuana but would ban public use of marijuana. The bill would make the manufacture, sale and possession of marijuana accessories legal. It would create marijuana establishments including marijuana retail stores, marijuana cultivation facilities, marijuana infused product manufacturers and marijuana testing facilities. The bill would allow localities to ban marijuana establishments but would not prohibit private possession and home cultivation. The bill would require regulations and provide for regulatory oversight, and would establish an excise tax of $50 per ounce on the sale or transfer of marijuana from a cultivation facility to a retail store or marijuana product manufacturing facility.

What might be the effects if Ballot Measure 2 passed? What might be the outcome if the measure fails?

The marijuana legalization initiative is a multifaceted issue. Some questions include:

• What might be the effects of legalizing marijuana on youth and rural Alaskans?
• Will marijuana legalization improve life and economic opportunities for Alaskans?
• What are the costs to develop regulations and administer the program, and costs to law enforcement?
• What are the estimated tax revenues?
• What is the experience of legalizing marijuana in Colorado and Washington?
• Should we wait to see how it goes in Colorado, Washington and perhaps other states before Alaska legalizes marijuana?

Alaska Common Ground is hosting a free public forum on the marijuana legalization initiative. The forum will present a balanced panel with experts discussing the pros and cons of the initiative. There will be ample opportunity for the public to ask questions of the experts. Veteran Alaska broadcaster Steve MacDonald will moderate the forum.

Panelists supporting the initiative will be Bill Parker, a sponsor of the initiative, a former legislator and a former deputy commissioner of the Alaska Department of Corrections. He will be joined by Taylor Bickford, a spokesman for the organization “Campaign to Regulate Marijuana Like Alcohol in Alaska.”

Panelists opposing the initiative will be Deborah Williams and Kristina Woolston, both with the organization “Big Marijuana. Big Mistake. Vote No on 2.”

Overdue pay boost or job killer?

Alaska Dispatch News, July 27, 2014

OPINION: How can voters weigh competing claims about the initiative to change Alaska’s minimum wage that will appear on the November ballot? They can listen and ask questions of two experts who will share different perspectives.

In the Nov. 4 general election, Alaskans will vote “Yes” or “No” on Ballot Measure 3. That’s an initiative to raise Alaska’s minimum wage (set at $7.75 since 2010) to $8.75 on Jan. 1, 2015, and to $9.75 on Jan. 1, 2016. Thereafter, the minimum wage would be adjusted yearly for inflation. In any case, it would stay at least $1 above the federal minimum wage.

Data and studies on the impacts of Alaska’s existing minimum wage law are scarce. The federal minimum wage, however, has been well studied. So have the possible effects of a proposed rise in the federal minimum wage. As you might guess, there are dueling facts and findings. Still, the federal studies suggest some points for Alaska voters to consider.

But first, a few big-picture facts may help frame the issues. The U.S. Bureau of Economic Analysis, record-keeper for the nation’s income statistics, reports that by 2012, post-recession corporate profits had reached an all-time high as a share of total national income. At the same time, the share of wages and salaries had dropped to an all-time low. Profits are up. Wages and salaries are down. Meanwhile, the U.S. Census Bureau finds income inequality has grown much more extreme since 1980. Perhaps these broad trends are why minimum wage laws are now a live issue for Alaska and several other states and cities.

The Economic Policy Institute, a think-tank, estimated a proposed federal minimum wage increase to $10.10 by mid-2016 would affect 44,000 employees in Alaska. That’s about 15 percent of Alaska’s workforce. Alaska’s smaller proposed increase would likely affect fewer workers.

A recent study by the nonpartisan Congressional Budget Office supplies findings for both sides. The CBO estimated the proposed federal increase would lift 900,000 persons above the poverty level. The CBO also estimated that 500,000 employees would lose their jobs.

Generally, pro-labor groups and liberal economists favor minimum wage laws. Pro-business groups and conservative economists oppose them. Oddly, both advocates and opponents center their arguments on the impacts on minimum wage workers.

Advocates can point to studies that find minimum wage laws raise incomes for minimum wage and other low-wage workers, with few or no job losses. Advocates also say putting more money in low-income pocketbooks boosts consumer spending and creates new jobs. And better incomes reduce dependency on public income assistance programs.

Opponents counter that higher wages mean higher prices, lost sales, squeezed profits, and, soon, lost jobs. Some opponents also say such laws penalize minimum wage workers in other ways, such as loss of earned income tax credits, higher payroll taxes and reduced eligibility for food stamps and housing and health care subsidies. Additionally, minimum wage laws are ineffective because much of the gain goes to families already above the poverty line.

Alaska Common Ground is co-sponsoring a forum on the minimum wage initiative at the Wilda Marston Theatre in Anchorage’s Loussac Library from 7 p.m. to 9 p.m. July 30. Ed Flanagan, who supports a “Yes” vote, is former commissioner of the Alaska Department of Labor and an initiative sponsor and chair of Alaskans for a Fair Minimum Wage. Dr. Kyle Hampton, who opposes the initiative, is assistant professor of economics at the University of Alaska Anchorage and director of its Center for Economic Education. Audience members will have plenty of time to put questions to the speakers.

The event is free and open to the public. The League of Women Voters of Anchorage, the League of Women Voters of Alaska, the Anchorage Public Library and Alaska Integrated Media are co-sponsors.

Kevin Waring is a board member of Alaska Common Ground, a membership-supported, nonprofit, nonpartisan tax-deductible organization that focuses on fostering understanding and dialogue about Alaska’s public policy issues.

Read the piece in the Alaska Dispatch.

Annual Meeting Report from the Chair

Mary Lu Harle
May 3, 2014

We welcome both longtime members and new members to our 2014 Annual Meeting!

Over the past year, Alaska Common Ground has been working to energize our organization. We have updated our website, www.akcommonground.org, to improve the overall look and the calendar functions, as well as update our content. We continue to add information on topics of interest to our members and upcoming events. We also have a Facebook page, and are steadily increasing our followers. Please join them by “liking” our page.

During the winter, we held several board sessions devoted to focusing on ways to improve the events and forums we sponsor and to enhance our visibility and membership. We are currently in the midst of a membership campaign to gain new members. Today we are voting on proposed updates to our by-laws and to add two new board members. Finally we are planning four forums for the summer and another major forum in October. Over the past year, we co-sponsored an event with the Alaska World Affairs Council – “I can see Russia from Here: the 25th Anniversary of the Friendship Flight” with panelists Lt. Governor Mead Treadwell, former Governor Steve Cowper and Willie Hensley. We also co-sponsored the Robert Reich film “Inequality for All” with Let’s Talk Anchorage. The Bear Tooth Theater was filled for two evenings that resulted in a great deal of interest and discussion on the film.

Alaska Common Ground continues to support and co-sponsor Let’s Talk Anchorage, which has held a successful series of discussions. Bill Hall, who leads Let’s Talk Anchorage, is leaving the board, but Alaska Common Ground will continue our support and co-sponsorship of this program. It is a great opportunity for citizens to discuss and deliberate issues of the day. All these events can be found on our calendar.

We are pleased to present our program today – an overview of the initiative and referendum processes and an overview of the three initiatives and one referendum that will be on the ballots this year. This panel is a prelude to our Summer Ballot Measure Series, to be held on Wednesdays from 7:00 to 9:00 pm in the Wilda Marston Theater at the Loussac Library. July 23 – Oil Tax Referendum (SB 21 Repeal) July 30 – Minimum Wage Initiative August 6 – Marijuana Legalization Initiative August 13 – Bristol Bay Forever Initiative On Saturday, October 4, we will present a major all day forum on Alaska’s Fiscal Future, also held at the Wilda Marston Theater at the Loussac Library. We look forward to seeing you at these forums! If you would like to help with planning these events, let us know! We’ll keep you informed as we move forward on them.

Longtime board member Bill Hall is leaving the board, and we thank him for his work on the board and his leadership of Let’s Talk Anchorage. Leonard Lawson resigned from the board earlier this year due to health reasons and we send him our best wishes. We want to thank Alaska Common Ground members who have helped this past year. They have played an important part in our activities. Jenifer Kohout – Program Committee

  • Susan Klein – Website Committee
  • Karen Hunt – Let’s Talk Anchorage Steering Committee
  • Mia Oxley – Let’s Talk Anchorage Steering Committee
  • Dick LaFever – Let’s Talk Anchorage Steering Committee
  • Bill Falsey – Event planning
  • Taylor Brelsford – Annual meeting panelist and event planning
  • Harry Crawford – Annual meeting panelist

Our great thanks go to the Stoel-Rives Law Firm for generously allowing ACG to use their conference room, their telephone and refreshments for our board meetings. Our thanks also go to the Anchorage Public Libraries for co-sponsoring our upcoming forums and providing the venue for them. We offer a big cheer and thank you to our staff support, Kari Gardey. She takes care of ACG work, keeps us on track, and makes us look good! Finally we thank you, our members, for your continued support. You are the heart of Alaska Common Ground! We hope you will visit our webpage (www.akcommonground.org) and our Facebook page and stay in touch with us!

image_pdfimage_print