- Gov. Bill Walker told the Greater Fairbanks Chamber of Commerce yesterday that he isn’t expecting oil to rebound and that fact will be reflected in budgets going forward, according to the Fairbanks Daily News-Miner.
- In really bad news, Bloomberg announced that Moody’s Investor Service has downgraded Alaska’s outlook
credit ratingto negative since the price of crude is so strongly attached to Alaska’s revenue.
- The Fairbanks Daily News-Miner reports that the AIDEA board is considering an extension for the challenged LNG trucking project, which has people wondering if it’s going to happen at all.
- The Anchorage Assembly finished the coup that it began last week! Alaska Commons reports that Patrick Flynn was voted out as chair and was replaced by Dick Traini with the ever-enviable Elvi Gray-Jackson as vice chair.
- In other Anchorage Assembly news, Suzanna Caldwell covered last night’s meeting where Assemblywoman Amy Demboski’s proposed ban on commercial marijuana was killed 9-2, which likely really bummed the Mat-Su Valley out.
- The end of the 113th Congress is official. While many people have remarked on this event with rather-err- colorful words, the Washington Post gathered quotes from senators who were on their way out the door. One of them, Democratic Sen. Tim Kaine from Virginia, even quoted Wittgenstein.
- The Washington Post reports that the U.S. will start talks to normalize relationships with Cuba after a successful prisoner swap. It turns out that Pope Francis helped negotiate the deal, according to The Hill.
- AIDEA announces $17 million dividend to the state!
- Surprise! Charlo Greene, of “F#ck it, I quit” infamy, is a very difficult neighbor, according to one exhausted neighbor who wrote to the Anchorage Press.
- Tucked away in the defense-spending bill was a provision that gives five parcels of downtown Anchorage land to the municipality. The Dispatch explains where these parcels are located and Mayor Dan Sullivan’s initial plans for these key pieces of land.
- You’ll have to read The Hill’s article to understand how Sens. McConnell (R-KY) and Reid (D-NV) are both using Sen. Ted Cruz (R-TX) to gain control of their factions.
- The Ketchikan Daily News was happy to report that the initial capital budget has earmarked $49 million for the borough.
- Juneau wasn’t as lucky as Ketchikan, per KTOO.
- Bernard Sanders (I-VT) told a handful of supporters and the New York Times at an Iowa (dog whistle for 2016 presidential candidate) that he does not have “a left-wing agenda.” Careful Bernie, me thinks I hear Hillary sharpening a toothbrush nearby.
- Politico wonders if Jeb Bush can win the all-important Iowa caucus, especially since congressional Republicans are not exactly rallying around him.
- The Mat-Su Valley Frontiersman reports that the planning commission met until midnight and ended up voting against a controversial landfill. So much time was taken by the landfill that the “tall towers” ordinance didn’t get a hearing.
- The Washington Examiner writes that while Pres. Obama has blocked drilling in Bristol Bay, Pebble Mine is unaffected. To take it further, nothing is really affected because there were no plans to drill in the area, and anybody would be crazy to try.
- At the White House Bristol Bay photo-op, counselor to the president John Podesta seems to be bored with such symbolic actions. The Washington Post captures the moment.
- It turns out that many communities along the proposed Ambler road aren’t fans of the project.
- The DailyBeast points out that Harvard’s GOP Congressional alumni now outrank Harvard’s Democratic Congressional members. The members of Lincoln’s Party include: Ted Cruz (TX), Ben Sasse (NE), Dan Sullivan (AK), Elise Stefanik (NY), Pat Toomey (PN), David Vitter (LA), Mike Crapo (ID).
- In awesome and cringe worthy news, the political wonks known as the Woodhouse Brothers got an unexpected call from their mother while live on C-SPAN’s Washington Journal. This is the stuff of jr. high nightmares.
Contact Amanda Coyne at amandamcoyne@yahoo.com
You’re correct. Capital project money appropriated but not spent should be examined for potential reallocation or reappropriation. General obligation bond proceeds still on hand can be used to call bonds (reduce outstanding debt). I hope OMB is doing this on a project by project basis right now.
Moody’s did not downgrade our rating, just the outlook, from “stable” to “negative.” There are only 13 states with the AAA bond rating that Alaska has. I don’t see a scenario where we’re going to try to sell bonds in the near future, so the downgrade is more emotional than impactful.
There are hundreds of millions, even billions, in unspent capital projects from earlier years. Perhaps they could be reallocated – so the “pork” from year’s past could be used for more urgent needs?
Wait, what’s the advantage, from the state’s point of view, of turning down federal money?
We really do not yet know if the Walker administration is up to dealing with this huge deficit. The deficit may be close to $6 billion for the current and coming fiscal year combined. The cuts to the capital projects of the previous administration for the coming fiscal year just don’t amount to enough money to be within the rounding error of the deficit. Do we pull that much out of savings?
It’s more alarming to see the state is headed into this period of low oil revenues with $2 billion in general fund debt than it is to see the negative outlook. After all, if we don’t sell any more debt then the lowered outlook is a problem for owners of the outstanding bonds but not for Alaska. That $2 billion is of course principle only; debt service will require substantially more than $2 billion out of revenues because interest must be paid. Even before this lowering of oil prices the state would have been a single-A credit without the rating agencies relying on the Permanent Fund corpus, and in fact any court would require using the corpus to meet debt service if it came to that. Given the projected revenue horizon, Alaskans should see any new Alaska general fund debt as a way to access the Permanent Fund corpus without asking permission of the voters because in fact that is what it would be. However, Governor Walker is an honest man and therefore I would not expect to see any new general fund bond proposals.
By far the largest state general fund debt is the unfunded liability in the public pension funds. The unfunded liability, possibly $9 to $10 billion today, is the past due amount. Apart from that unfunded liability, additional annual amounts are due for every public employee enrolled in the defined benefit tiers and still working. The plans are Constitutionally protected and probably a claim on state money that is at least equal to general obligation debt if it comes to that, and the rating agencies see it that way.
My view is that bringing state spending down to a supportable level quickly and surely is the best way to avoid a train wreck. How commitments already made such as pensions and debt service, entitlements like Medicaid, and commitments that can be changed more easily such as formula funded programs like the BSA fit into the arithmetic will be decided during the upcoming first session of the 29th Alaska Legislature.
All of Ketchikan’s money is Federal. It has been programmed and expected through processes like the STIP…only the state match will be required.
Call me when the state says no to ANY federal money the State is required to match…lol.
We could save A LOT of money if we had the cojones to say “No Thank You! Uncle Sam” It may start a fad……
But, alas, we are a young state and babies love to eat, among other things….
Mike Crapo is the U.S. Senator for Idaho, not Wyoming.