In more very bad news for Alaska, not to mention Russia and Venezuela, The Financial Times is reporting that the Saudi oil minister, Ali al-Naimi, says that Opec won’t cut production even if oil drops to $20 a barrel.
“It is not in the interest of Opec producers to cut their production, whatever the price is,” al-Naimi is quoted in the FT as saying. “Whether it goes down to $20, $40, $50, $60, it is irrelevant.”
Opec has traditionally tried to keep prices high and the fact that it’s willing to let oil drop so low is a “dramatic policy shift” that hasn’t been seen since the 1970s, when OPEC leveraged its oil for political reasons by raising prices and causing an energy crisis.
Alaska needs oil to be at about $117 a barrel to balance the budget.
Four Alaska Democratic legislators wrote a letter to Gov. Bill Walker, calling on him to consider re-appropriating about $20 million that the state has set aside for the road through Anchorage’s U-Med district. Construction hasn’t yet started on the road, which will cut through UAA land to connect South Bragaw Street and Elmore Road and is expected to alleviate traffic. The legislators said that re-appropriating the money is a prudent thing to do given the “major fiscal crisis” in Alaska. Sens. Bill Wielechowski, and Berta Gardner, along with Reps. Geran Tarr, and Andy Josephson signed the letter. (Read the full press release below, and here for the letter.)
It should be noted that the Legislature appropriates and re-appropriates such funds, not the governor. However, the governor’s support could be influential. Democrats have long opposed the road, and have lost the fight against appropriating funds for the road.
In addition to the $20 million it is expected to cost to build the road, the university will be paid between $3-4 million for the land, according to UAA spokesperson Carla Beam. She said that the university believes that the road is “critical to provide safe and much-needed access to the university.” Indeed, the area can be among the most congested in town.
Prepare for $40 per barrel oil? Reuters is reporting that SaudiArabia vowed not to cut oil output even if non-OPEC nations did so. Saudi Oil Minister Ali al-Naimi told reporters: “If they want to cut production they are welcome: We are not going to cut, certainly Saudi Arabia is not going to cut.” Ouch.
KTUU’s Kyle Hopkins has a great piece in the LA Times about Alaska’s budget woes.
Twenty-five cents. That’s how much the AP reports that the average price of regular gas has dropped within the past two weeks.
KTOO reports that Canada has ok’d the controversial KSM mine’s environmental plans.
From the Bristol Bay Times: “An emergency measure to help northern Bering Sea halibut fishermen was defeated at last week’s North Pacific Fishery Management Council.” The measure would have transferred bycatch quotas from pollock trawlers to hook-and-line halibut fishermen. All of the Alaska reps on the council voted for the transfer, including new Alaska Department of Fish and Game commissioner Sam Cotton, who is on the council. Trawlers vigorously opposed the measure.
Add yet another reason salmon is proving its importance to Alaska. Science World Reports that fish such as the Dolly Varden have successfully evolved with climate change by altering its migration cues from following environmental shifts to following spawning salmon.
At some point, Sen. Lisa Murkowski is going to have to face the Valley tea party masses, which isn’t often pretty. Those people are not above yelling and hissing and booing, which might be okay if they also didn’t have a set of facts on hand to justify it all. They know all about cloture, and filibusters, and why Obama purposely infected the nation with Ebola. They know not only what the debt ceiling is, but how much it is, and they know that it’s all leading to some sort of UN takeover that involves a one-world currency and FEMA camps. They also know that they, along with other Valley Republicans—and unfortunately you can’t pick and choose– are the ones who will likely have a big hand in deciding who wins a Republican primary. Anyway, apparently Murkowski has had better things to do, for months and months now. This weekend, the first weekend after Congress adjourned for the break, she opted for the relatively urban, friendly confines of Anchorage, where on Friday, you could find her at the annual Republican Women’s holiday lunch at the Captain Cook Hotel. The annual luncheon was started by Sen. Ted Stevens in 1978 and Murkowski has continued the tradition and added her own touch: each table was decorated with holiday cookies from a traditional Murkowski family recipe. Guests also found ornaments, created by an Alaskan artist, on their plates and each was signed by Alaska’s senior senator. The room was packed. Also spotted: U. S. Sen.-elect Dan Sullivan and his wife Julie, Reps. Dan Sadler and Gabrielle LeDoux, Rep.-elect Cathy Tilton, Marilyn Stewart, Art and April Hackney, mayoral candidate Dan Coffey, Wanda Green, Angelina Burney, Robin Phillips, and Kara Moriarty. Kay Linton’s daughter, Dawn, hosted a table at the event with an empty chair to honor her mother, who before her passing was always a fixture at the annual event. Continue reading →
Gov. Bill Walker filled three key positions in his administration on Friday. Heidi Drygas will be the new commissioner of the Department of Labor. Darwin Peterson will be Walker’s legislative director, and Larry Hartig will stay on as commissioner for the Department of Environmental Conservation.
Born and raised in Fairbanks, Drygas went to undergrad at UAF and received her law degree from Willamette University. For the last ten years, she has been a lawyer for the Alaska District Council of Laborers. She also has an awesome food blog and won the Alaska Democratic Party’s annual chili cook-off contest last year.
The new legislative director, Darwin Peterson, was most recently Sen. Bert Stedman’s chief of staff. He’s well liked in the Legislature, particularly among Republicans, which is important given that the make-up of the administration so far appears heavy on Democrats.
Finally, few will likely have a problem with Walker’s decision to keep Larry Hartig on. He’s been the commissioner of DEC since 2007, and by accounts, he’s done a good job.
I realized when I posted Garand Fellow’s piece about Alaska’s credit rating being on the verge of being downgraded by two of the three credit rating services, that although it sounds really bad, I didn’t fully understand what that meant for Alaska.
First a little background: There are three credit ratings services, Standard & Poor’s, Fitch, and Moody’s. Alaska has a AAA rating from all of them, which is the highest rating and means that the state has “extremely strong capacity to meet financial commitments.” In 2013, it was one of 13 states to have that rating. (At an A-, Illinois had the lowest rank among states.)
If the state’s rating is downgraded, it means that we might have to pay a higher interest rate on future state-backed bonds. But given that ratings agencies are cautious, and change ratings in slow increments, it probably wouldn’t have a huge effect on the state if it were downgraded, said Department of Revenue Deputy Commissioner Jerry Burnett, adding that those ratings are very important and DOR is taking it very seriously.
If the state is downgraded, which is a big if, “The sky is not going to fall…We’d have to be downgraded to junk bond ratings for that to happen and that’s not going to happen under any plausible scenario,” Burnett said. Continue reading →
The Attorney General’s office announced today that a fund for the daughters of Assistant District Attorney Brian Sullivan has been established to allow the public and Brian’s colleagues to donate in his memory. Brian was shot and killed in Barrow, Alaska on Monday, December 8, 2014.
Brian, who was 48 years old at the time of his death, had worked in the district attorney’s office in Barrow since 2012 and formed a strong bond with the small Arctic community. Prior to taking the post in Barrow, Brian had worked as a private attorney in the Mat-Su Borough along with his previous work in the military as a paratrooper and JAG lawyer and his four years of service in the Washington House of Representatives.
In a comment on the story about Standard & Poor’s warning Alaska to get its fiscal house in order or risk a credit-rating downgrade, reader Garand Fellow argues that not only are the credit ratings agencies urging Gov. Bill Walker to make tough choices, Alaskans have given him buy-in to do so also, if he chooses to go that route. If he doesn’t? The agencies, which are watching Walker closely, will take note. “If there is a credit rating downgrade it will come not from lowered oil prices but from lowered expectations of this still new governor,” Garand writes.
He/she drives the point home: “This is a strong governor state. The governor can take action without having to convince an elected AG and an elected state treasurer. An Alaska governor who would rather not lead has no place to hide; no one else to blame.”
The credit rating agencies are not surprised that a credit has challenges, and even a triple-A credit is expected to have them. But there are additional expectations. Cash is king, but the agencies expect to see more leadership, and decisive leadership, out of say a triple-A credit than they might out of a double-A credit. They expect no games; no hide-the-peanut, no razzle-dazzle, no Hail Mary action. They expect quick, organized, decisive action explained very well to Alaskans and to the agencies. I cannot imagine that anything would be a higher priority right now for Governor Walker.
What does this mean? It means that Governor Walker must bring agreement early in the legislative session to some plan that matches revenues and expenses before the CBR and SBR are exhausted. Counting on higher oil prices coming to the rescue, selling bonds (including pension obligation bonds), and making proposals that the legislature is unlikely to accept would not be appropriate for even a single-A credit (although downgrades are done in small increments over time, otherwise the agencies look like they may not have been paying attention).
The best and arguably the only tool Governor Walker has for the remaining half of FY2015 and for FY2016 is reducing expenditures. Continue reading →
Medicaid released data today that showed that enrollment jumped even in states (including Alaska) that didn’t expand their programs. The New York Times drills down the data into readable bites.
Many communities are scrambling to figure out the best policies to govern marijuana possession and sales within their communities. It doesn’t help that Gov. Bill Walker is now talking about imposing some sort of delay. As the Fairbanks Daily News-Miner wrote: “(J)ust what mechanism Walker can use to delay the regulations is unclear” and would likely lead to a court challenge if he tried.
NovaCopper admits that they have ‘substantial doubt’ regarding the financial health of Ambler road without financial assistance from the state.
The LA Times Editorial Board wrote an extensive op-ed about Pebble Mine. Shocker alert: LA thinks Pebble is a bad idea.
On Monday night at the New Horizon hanger in Palmer, over 100 Valley residents turned out to visit Sen.-elect Dan Sullivan and his wife Julie. Sen. Mike Dunleavy, who showed with his pistol but without his mule, helped organize the event. He and Palmer Mayor DeLana Johnson were the emcees, which they did a rather unique job of. As Sullivan stood on the sidelines waiting to talk, they continually passed the mic back and forth because they kept on forgetting that they had just one other thing to say. But Valley conservatives—many of whom leave their cushy government jobs at the office when they clock out at 4:30 p.m.—tend to be a patient bunch, and a plethora of cookies helped. Sen. Charlie Huggins also spoke before Sullivan had at it. He made some allusion to Dan Sullivan being the “last boy scout,” which may or may not have had something to do with a 1991 Bruce Willis film involving a pro-football team, a politician and a murder. But Huggins, as he always does, spoke with enough confidence and aplomb that everyone seemed convinced that something prophetic was being said. But the crowd—including Sullivan–was sincerely and understandably touched when Tammy Miller, president of the Mat-Su Republican Women’s Club, presented Sullivan with a pair of cuff links that were made by Sen. Ted Stevens that read, “To Hell with Politics. Do What’s Right for Alaska.” But what brought the crowd to their feet was when Sullivan paid tribute to Alaska’s veterans and introduced Wayne Woods, a gold star parent, and Cajun Bob Thoms, a Vietnam vet who is the recipient of a silver star, two bronze stars and six purple hearts. Other legislators spotted: Reps. Bill Stoltze. Shelley Hughes, Wes Keller and Lora Reinbold. Also there: Bethany Marcum, Mike Coons, Ben and Kathleen Rowell, MEA’s Joe Griffith, Sonya Walden, Joe Balash, John Shepherd, Dave and Dana Cruz, Becky Huggins, Rep.-elect Cathy Tilton, John Lee, Noel and Jean Woods, Curtis Thayer, John Harris, Otto and Nancy Feather, Myrna Maynard, Mat-Su Borough Mayor Larry DeVilbiss and Assemblyman Steve Colligan, former Lt. Gov. Mead Treadwell and his mother Anne, and Wasilla City Council member Gretchen O’Barr.
Speaking of Mead Treadwell: He told me on Monday night that he was “not ruling out” running for Anchorage mayor. Continue reading →
In an analysis of the fiscal situation in Alaska, Standard & Poor’s wrote that in order to keep its credit rating, Alaska must reduce the budget deficit given the low price of oil.
“Although the rapid decline in oil prices exacerbates Alaska’s existing fiscal budget deficit, whether it will weaken the state’s credit quality will depend on the state’s budgetary response,” the credit rating service wrote. In most other cases, a $3.5 billion, equal to 57 percent of general fund expenditures, would “likely result in immediate negative rating consequences.” However, S&P is not changing its ratings yet because of the state’s large budget reserves, as well as the ability of the state to tap into the Permanent Fund earnings reserve balance, and the constitution budget reserve.
A decline in Alaska’s credit rating could cost the state hundreds of millions of dollars.
Here’s S&P’s analysis in full:
Alaska has built up layers of budgetary reserves that allow it to absorb one or two years of large operating deficits — just outside of our outlook time horizon –at its current rating level. But in order for it to avert credit quality deterioration, we believe the state must make material progress in reducing the deficit in its fiscal 2016 budget. Continue reading →
The opinionated Anchorage mayoral candidate Paul Bauer Jr. took a side-swipe on Facebook at fellow candidate for mayor Assemblywoman Amy Demboski over her proposed ordinance to ban pot in Anchorage, which failed.
My position: Marijuana. I did not vote for Ballot Measure #2, the legislation to legalize the drug marijuana in our community. I could not support legalizing inhaling a drug substance as I view it as a toxin to my body and to others around me.
However, contrary to the oppositions statements of a slim margin win; the people of Alaska spoke with a 53-47 percentage approval to tax and regulate the production, sale, and use of marijuana for adults 21 and over.
The ordinance by a mayoral candidate on the Assembly to “opt out” of the discussion Continue reading →
The Fairbanks Daily News-Miner covered the final day of hearings on the proposed Amber road project. Opposition is building and was vocal at yesterday’s meeting.
KTOO has an in-depth feature on how whistle-blowers and victims in the Alaska National Guard sex abuse scandal went unheard.
The Department of Health and Social Services has created and filled a new position to help the state reach its goal of expanding Medicaid. APRN announced the “lucky” person to steer this behemoth challenge is Chris Ashenbrenner.
RealityCheck.org wonders if Gov. Walker can overcome GOP opposition to successfully expand Medicaid.
The story-breaking machine Becky Bohrer broke the story about how the federal natural gas pipeline coordinator’s office is scheduled to close due to budget redistribution.
Austin Baird of KTUU compiled Facebook and Twitter posts on post-November 4th lives of Gov. Walker and former Gov. Parnell and wonders who really won that day.
Last Friday, I sat down with Alaska’s new First Lady for about an hour and a half in the family’s beautiful Turnagain home, a home with a view of the inlet that her husband, Gov. Bill Walker built. He’s handy like that, she said. Building things, moving things around, pounding nails is his therapy, she said, which she admitted can be a mixed blessing. If she’s the steady one, the homebody, the one who pays the bills and keeps the family on schedule, he’s always on the move, always fixing things, often enlisting the help of those around him. His children’s friends used to call the new governor, “the animal” because he had so much energy.
“Don’t get around Mr. Walker unless you’re ready to knock down a wall,” the kids said.
The home has some Alaska art on the walls. But the dominant decorations are the pictures of the four Walker children, and now a few of their children, with more little ones on the way.
We’ve heard a lot about Bill Walker, but I wanted to hear more about his wife Donna. I wanted to meet her. I hardly knew anything about her. And if I didn’t, chances are I’m not alone. Most who have seen her on television, say, or on the campaign trail, would likely describe her as a strong, independent woman. And she is. She’s the first First Lady of Alaska with a law degree. Ask anybody who was involved in the campaign and they’ll tell you how involved she was, how keenly smart she is and how she kept everything organized and kept the wheels running. Continue reading →