One could fairly ask if, “Alaska Is Continuing To Become The Worst Investment Climate In The United States”.   We hope not, but the question is reasonable.  The question is reasonable because for over two decades the University of Alaska’s Institute of Social and Economic Research has warned decision makers to control spending.  Over three decades ago, Common Sense for Alaska urged prudence in taxing and spending policies.  We have also documented in these pages a sad history of rapid, industry tax changes, application of punitive retroactive taxes, discriminatory industry taxes on top of vicious regulatory attacks by the federal government.

In the other column, we go into more detail.

Below, one of our readers presented testimony last week to the Alaska Legislature identifying another of Alaska’s self-inflicted economic wounds: allowing the web of regulatory obstacles for natural resource wealth producers to continue its attack on the floundering state’s economy.

We hope that HB 14 doesn’t pass.

One can only hope that many voices of such concerned citizens will grow into a “movement” sufficient to rein in Alaska’s profligate tax and spend and regulatory practices so that a prosperous economic future can again be seen in the 49th state’s future.   Also note reference to 1-31-17 Juneau Empire story re: HB 14.  -DH

Juneau Testimony:  House Fisheries hearing on HB 14 – An Act relating to the Bristol Bay Fisheries Reserve by Rep. Josephson.

Testimony of Mary Ann Pease

This bill would amend the 2014 Bristol Bay Forever Initiative and make a bad bill much worse.  Our top line view is this entire issue is unconstitutional under the separation of powers clause.

Key Topics to Cover:

Yes, Good Morning Representative Josephson and esteemed members of the House Special Committee on Fisheries and Resources

My name is Mary Ann Pease and I have my own consulting Business, MAP Consulting and I am an active member of the State Chamber, Commonweath North and several other pro- business and resource development organizations here in Alaska.  I have been a resident for over 30 years and my Alaskan born husband and I reside here with our 2 sons also born here in Alaska. My happiest moment was when my oldest son came home after college to AK. He has a job in Alaska thanks to the resource industry.

I am quite disappointed and Oppose the  introduction of HB14, which clearly politicizes Alaska’s resource permitting process by having our state agency decisions subject to review and approval by politicians/Legislators  rather than professional technical agency staff.  Best practices of review should reside with technical experts NOT Legislators!

I would also concur with the issue of Constitutionality as Mike H. has previously stated.

I want my Legislators focusing on ways to keep Alaska and our Economy OPEN FOR BUSINESS and not shutting it down.

Mines and resource development clearly help in solving rural energy issues that have plagued our state over the decades.  Resources Development supports jobs, our economy, diversified opportunities for our children, and a SUSTAINABLE future for our state!

  • I would also like to draw your attention to – One amendment proposed in HB14 that would make it mandatory for the commissioner of DNR to enact regulations to implement the law.  But the purpose of the statute is to require a legislative approval of a permitted mine.  Is DNR supposed to regulate the legislature? This appears to be merely an exercise in producing more red tape.
  • HB14 adds additional levels of bureaucracy to any decision making.  This type of uncertainty will add cost to investment decisions in Alaska.
  • Regardless of what has been stated previously….Clearly we are looking at Targeted Legislation.

This type of legislations Balkanizes permitting decisions in Alaska by making one set of rules for decisions in the Bristol Bay region while we have a different set of rules governing permitting requirements in the rest of the state.

Alaska and the Federal Government have a stringent, comprehensive permitting process. What is the advantage of adding a level of political oversight with added costs to a 3 billion dollar deficit and no potential for future resource revenues to offset!

Alaska is in a substantial economic downturn.

This type of legislation sends a message to the investment community that Alaska is unstable when it comes to permitting.  It will jeopardize and impact future investment and job opportunities for all Alaskans.

Commentary On Alaska’s Tragic Tax, Spend & Regulatory Landscape

by

Dave Harbour

After decades of reliance on its oil wealth, Alaska’s remaining tax base is much less diversified than any other state. That will make the budget gap extremely tough to close, according to Gunnar Knapp, director of the Institute of Social and Economic Research at the University of Alaska.  In just four years, most of the money we had been using to pay for state government evaporated. It’s gone, he said in a recent report on the state’s finances. “That’s why we have a big problem.”   CNBC

(See evidence of Alaska’s regulatory quagmire, column left.)

The United States stock market has dramatically improved following the presidential election.   Businesses believe the overall economy is on the uptake with regulatory and tax reform moving from the far-away horizon to near reality.  The total rig counts in the oil patch, are rising significantly, with a total of 729 U.S. rigs (Only 9 of which are in Alaska).  Optimism is growing in general, but even Ohio has more working rigs than the 49th State.

The former “pioneering state”, the former “last frontier” has become a magnet for those seeking and receiving benefits from government rather than a mecca of free enterprise.  

Yes, we are delighted at the entrepreneurial spirit represented by some in the Millennial generation.  We are delighted that Alaska has among the highest per capita population of veterans, pilots, float planes and of personally owned airplanes.  

And we appreciate the dedication and hard work — and courage — of some of Alaska’s public officials.  Yes, some have focused more on recreating a sustainable economy benefiting future generations, than pampering a spoiled economy and welfare system that has ballooned into an overweight, unsustainable entitlement nightmare that is up to 90% dependent on a volatile commodity — oil. 

But the majority of voters and their Baby Boomer generation of elected officials have brought Alaska to the precipice of an economic cliff, with one foot delicately planted on the edge and another resting on a banana peel.  Since the discovery of Prudhoe Bay in the winter of 1967-68, the human nature of Alaska’s traditional pioneering spirit began to care more for spending NOW than saving for the non-voting citizens of the future.

The current governor, Bill Walker, and the leadership of Alaska’s House of Representatives, seems intent on continuing this trend as they spend the last of their available savings on a growing, $3-4 billion annual deficit, not counting an unfunded public employee pension liability of double that amount.

Adding insult to industry (oops, we meant, “injury”), the governor and his legislative allies seem more intent on increasing taxes and regulatory burdens on those who produce the “golden eggs” — the private sector — than on cutting the enormous, per capita operating budget and entitlement system.  While we have no problem with low-taxed individual citizens paying more of the cost of government, any effort to increase private sector taxes during a recession should, at the least, follow dramatic spending cuts in the bureaucracy and entitlement zones.

We have written at great length here about threats of industry tax increases, and the impact of that on potential investors.  We have urged decision makers again and again to make Alaska a competitive, predictable destination for investment, a place where a deal is a deal!  

While we believe non-voting Alaskans in the coming generation support this proposition wholeheartedly, this legislative session is gripped in a modern Gordian knot wherein the Governor and House want more taxes and spending and the Senate wants more sustainable budgeting.

We end with a comment on Mary Ann Pease’s testimony on a House Bill last week that would be an environmental activist’s dream.  It would stymie the natural resource permitting process by tying the legislature and bureaucracy up in a potentially endless debate that, in effect, converts the constitutional guarantee of due process, into an endless process.

Readers may be somewhat comforted that there are still citizens — and supportive legislators — like Ms. Pease, who are willing to stand up and be counted as pioneers, citizens who care about providing the next generation with a sustainable, robust economy characterized by common sense and the rule of law.

That rebirth of the Alaskan pioneering spirit needs more kindling on the fire for it to grow into a real “movement”.