- Associated Press - Wednesday, July 5, 2017

Here is a sampling of Alaska editorials:

June 29, 2017

Ketchikan Daily News: Helpful funds

Ketchikan will gladly accept its share of payment in lieu of taxes from the federal government.

It amounts to $1.1 million. It’s not as much as the $3.5 million directed toward the Matanuska-Susitna Borough, but not as little as the $109,000 being paid to the Yakutat Borough.

The Department of Interior will distribute more than $29.69 million to eligible governments in Alaska, according to Sen. Lisa Murkowski. The payments are made to boroughs and counties across the United States to offset the cost of maintaining community services, such as schools, roads and emergency responders.

The payments offset the loss of taxes as a result of federal ownership of land, such as national forests, Bureau of Land Management public lands, national parks and other public land.

The payment for Alaska increased $734,000 this year over last. The total of $465 million for the nation is an increase of $13 million.

The payments will be particularly helpful to Alaska and its communities as most are experiencing a tightening of budgets.

With these funds, important services can continue.


July 3, 2017

Alaska Journal of Commerce: 75 million reasons SB 21 is working

What’s been obvious for several months became official on June 30.

The 2017 fiscal year ended with a final average of 528,484 barrels per day of production on the North Slope.

That is a 2.6 percent increase versus the 514,900 barrels per day last fiscal year, or virtually identical to the 2016 increase in production from 501,500 barrels per day in 2015.

To put this in perspective, the last time the state saw consecutive years of production increases was in 1987-88 when North Slope production peaked at more than 2.1 million barrels per day.

This would be a remarkable story in any circumstance given the number of early obituaries that have been written for North Slope production and the Trans-Alaska Pipeline System, but it is even more so considering the price environment and the ongoing attacks on the industry from Democrats in Juneau.

North Slope crude averaged barely more than the breakeven point at less than $50 per barrel for the fiscal year and the House Majority continues to demand tax increases on production despite the proof of the current policy’s success staring them in the face from the Department of Revenue’s daily reports.

The House Democrats want to double the effective tax rate at the current price, triple it should prices reach $70 per barrel, reduce deductions and eliminate the proven per-barrel incentive.

The per-barrel production incentive is the only explanation why companies have continued to invest billions on the North Slope even after prices started to free fall not long after Senate Bill 21 took effect.

They have certainly not seen the upside from the reduction in progressivity at high prices under SB 21; to the contrary they have paid far more in taxes than they would have had ACES remained in place.

Under ACES they wouldn’t be paying any production taxes at the current price. In fact, they wouldn’t be paying production taxes until prices went past $63 per barrel.

Because SB 21 taxes oil at a higher rate than ACES at low prices, the companies have taken the only tool at their disposal to reduce the effective tax rate: more production.

Every additional barrel brings down the effective tax rate. It’s that simple, and it is a win-win for the producers and the state, which collects both the tax revenue and the additional royalty share.

But never let a good fact get in the way of a Democrat argument.

SB 21, which took effect Jan. 1, 2014, has now been in place for three full fiscal years.

Since fiscal year 2013, the last full year of ACES, production has declined by a barely-measurable 0.6 percent overall (531,600 barrels per day to 528,400).

That is an average annual decline rate of just 0.2 percent.

The average annual decline rate during six years of ACES was 5 percent, or 2,500 percent greater than under SB 21.

Math - the Democrats’ kryptonite - tells a staggering story when comparing where we’d be under the ACES decline rate versus SB 21.

Had the 5 percent annual decline rate continued, fiscal year 2017 production would be 433,000 barrels per day, or about 95,500 fewer barrels per day than what we saw under SB 21.

Adding up the actual production compared to the ACES decline rate over the past four years, the state has collected tax and royalty income from an additional 75.3 million barrels; the 2017 production versus ACES decline alone is an extra 34.8 million barrels.

Democrats’ oil tax policies aren’t just bad. They are proven failures.


July 2, 2017

Fairbanks Daily News-Miner: Legislators shouldn’t let election concerns scuttle budget work

There’s a seldom admitted truth about the state’s fiscal crisis, which has now stretched more than two and a half years: If legislators are to make progress toward closing the deficit, it has to happen this year.

Why? Because 2018 is an election year.

It’s no secret that politicians are at least partly driven by a desire to be elected (or, in the case of incumbents, re-elected). It’s the nature of the job, and it’s important that lawmakers respect the wills of their constituents. But when the goal of securing re-election trumps the state’s fiscal future, that’s when we have a problem.

Elections are intended as checks on the tendency of lawmakers to stray from their constituents’ goals: Go too far afield, and those who voted for you last election will replace you with someone they think will do a better job. But elections can also provide a perverse incentive: Rather than getting to work on the meaningful but divisive issues that are necessary to keep the state on solid footing, lawmakers will often focus on topics likely to help their re-election bids.

During the state’s boom years, this would often result in a spike in infrastructure projects during election years, as legislators sought to show they were providing improvements and jobs for their constituents and the state. In lean times, it means avoiding actions such as Alaska Permanent Fund dividend cuts, taxes or service cuts that are unpopular with voters in their districts.

Though this calculation is craven, it stems from the reality that many Alaskans have a poor understanding of broader issues if they follow them at all. In many cases, the only attention paid by a voter to goings-on in state government are the few obvious points of contact the state has with their lives: the size of the dividend, for instance, the fate of university athletics or whether money is being deducted from their paychecks to pay for services. Many aren’t able to see the hundreds of ways state government subtly affects their lives, such as providing for tourism marketing that brings visitors to buy local products or funding spill response units so that toxic chemicals don’t leach into our water.

But the reactions of low-information voters are no excuse for lawmakers to not do their jobs. Alaska’s fiscal condition demands a solution as soon as possible, regardless of how it might affect prospects for re-election. Legislators have been effective in squeezing the state’s budget as much as possible without asking more of residents or axing essential services. But all except the most inflexible fiscal hawks in Juneau agree the operating budget, cut 44 percent during the past several years, has reached a level at which little more can be excised without major reductions in state services.

That means it’s time to implement revenue fixes that stanch the bleeding from Alaska’s savings accounts. Oil revenue, long the pillar that has funded Alaska’s services and provided the vast majority of funds, can no longer sustain the state on its own, and to count on a turnaround to reverse that trend would be irresponsibly optimistic. That means new revenue is needed to offset the deficit. The Legislature should make fixes this year - the emergence of some points of agreement on oil credits are a hopeful sign, but more work will be necessary to chart the course back to a balanced budget, such as restructuring permanent fund earnings and determining whether a broad-based tax is warranted.

If the Legislature needs to, it should call itself back into another special session after the present one to address these urgent and critical priorities. Alaska’s fiscal ship must be righted as soon as possible, without re-election as a primary consideration for legislators. After all, if voters come to the polls in 2018 and the state’s fiscal mess isn’t solved, what explanation from legislators could possibly justify their continued service as our leaders?

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