Read the Examiner’s thoughtful essay on how the ‘Fiscal Cliff’ could affect Alaska.
Alaska Revenue Forecast Commentary
By
Dave Harbour
Today, we link to the Alaska Department of Revenue’s 2012 Revenue Forecast.
We begin by praising the cover photos provided by Rick Boots and John Tichotsky.
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Comment: Today at the Anchorage One notes that this would in large part be a subsidized program that increases government spending as government revenue continues to decline. -dh |
Chamber of Commerce, Meera Kohler, CEO of Alaska Village Electric Cooperative (NGP Photo), and Rob Jacobsen, vice president of science and technology with Marsh Creek, will discuss, "generating power with North Slope natural gas and delivering it via HVDC transmission lines to cities, villages and industrial users across the state to re-energize the Alaska’s languishing economy while securing energy independence."Some readers may associate the Brown Bear cover photo with what looks like an unsustainable, bear market approaching every Alaska neighborhood. Bears in the neighborhood appear when food is scarce. Bear markets can appear when government revenue and spending don’t match. This eventually leads to a ‘hard economic landing’ characterized by huge cuts in government spending, large layoffs of employees condensed into a short period of time. In Alaska, this unhappy era is likely to be accompanied by oil industry layoffs, spending cuts and investment climate lethargy. Alaska’s coming Bear market will be exacerbated by the Federal government’s obstruction of natural resource development.
This year’s revenue report verifies the declining production of Alaska oil which it also notes provides 93% of the state operating budget revenue. While the report focuses on ‘revenue’, our readers have observed history: Alaska’s unsustainable budget has not so far resulted in significant legislative spending discipline or gubernatorial vetoes of wasteful spending.
Some have counseled over the ages that ‘Hope is not a strategy’. While the state does not officially ‘hope’ for adequate oil-based revenue to successfully fund a state with declining production, its official position is a stated goal: "…to stem and eventually turn around the decline in production, which the state currently supports by participating in the oil industry’s investment in exploration and development through tax credits."
Tax credits are one time incentives. They do nothing to provide long term investment climate stability and investor comfort, like a reliable, reasonable tax base would do. What is discovered with subsidy may not be producible under a harsh tax regime. We believe that is why the Administration has been so dedicated to reforming the predatory production tax. Our readers may be a little perplexed that the Revenue Forecast did not say instead that the State’s goal is: "…to stem and reverse production declines by continuing to provide incentive tax credits, and, more importantly, to seek reform of Alaska’s uncompetitive suite of oil taxes, particulary the predatory and progressive production tax."
Since focus on Alaska’s unfriendly tax policy missed prominent mention in the Executive Summary, we wonder if tax reform will be a subject of discussion in this year’s legislative session, or not.
What should Alaskans who own real estate or raise children in the State be paying attention to?
For starters, citizens could carefully observe how decision makers resolve state tax revenue and spending policies, and restrictive Federal natural resource policies, as if our way of life depended on it.
-dh
Comment: Today, we are pleased to note Representative Charisse Millett’s (NGP Photo-R) letter encouraging approval of the Keystone XL Pipeline. Friday, we were pleased to note Senator Cathy Giessel’s (NGP Photo-L) defense
of Alaska’s  3939x3151 3939x3151.jpg)
economy against continuing EPA aggression.
We continue to urge Governors, Members of all State Legislatures and all other elected officials to defend Alaska and the national economy against overreaching federal jurisdiction and unreasonable obstruction of energy projects that are the backbone of America’s economy. Our provincial brothers and sisters in Canada have a similar problem requiring similar actions. -dh
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Responses to our Pearl Harbor Commentary last Friday, may be found here. |
Energy and Capital by Jeff Siegel. After six long years and about $5 billion dollars, Shell’s Arctic drilling program was once again temporarily thwarted. That’s not to say they won’t be back next year… They will. There’s too much at stake at this point. Still, it’s not going to be easy. In fact, less than three months after a containment dome failed, causing yet another setback for the company, we’re now getting word that it was much worse than initially reported.
Alaska Fiscal Policy| Hmm … "According to Parnell’s office, the core of the plan involves proposed legislation which would permit up to $275 million in Alaska Industrial Development and Export Authority bonding authorization and loans. Parnell also wants to commit $50 million in general fund dollars to the projects, as well as $30 million in existing gas storage tax credits."
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