Thoughts on Alaska Oil & Gas

Last Thursday Governor Walker’s office issued a press release announcing that, the following day at an in service training for some of its middle and high school teachers, the Anchorage School District intended to start rolling out proposed course materials “to bring Alaska’s fiscal challenge to the classroom.”  That was the first I, and from various reactions, a large number of others had heard about the intent to do so.

What caught my eye about the proposal was the following statement in the Governor’s press release:  “the lesson plans center on Alaska’s Revenue and Expenditure Model developed earlier this year by the Alaska Department of Revenue.”

As readers of these pages likely already realize I am not a fan of the Department of Revenue’s model.  As I wrote on these pages in June, in my view DOR’s model then was short-sited and strongly biased toward requiring new revenue options.  While there have been some improvements made in the model since the version I reviewed in that piece, it continues to contain limitations and deficiencies which continue to drive users toward those options.

More importantly, the model fails to identify and lead users to understand — and find pathways to solve — the structural defects in Alaska’s current fiscal model.  Following oil price and production ups and downs, Alaska’s historic fiscal approach repeatedly has led to boom and bust cycles in government spending over the last several decades.  Rather than address that fundamental issue, which goes to the heart of Alaska’s current fiscal situation, DOR’s model instead merely leads users to try to find ways to fill in the current bust cycle with “new revenues” — largely a PFD cap and broad based taxes. Continue reading →

At the request of the University of Alaska-Fairbanks student group, Students Who Enjoy Economic Thinking, yesterday Dr. Scott Goldsmith and I walked through a discussion of sustainable budgets at a forum on the UAF campus.  The slide deck we used is above.

It was an interesting discussion, with excellent questions.  For those interested, a summary written by News Miner political reporter Matt Buxton is in today’s paper, here (“Keithley, Goldsmith talk sustainable budget“).  My favorite quote in the story is this, quoting Scott:

“Here’s My Proposal” (1hr, 50 min)

Fashioning a Compromise (38 min)

While I work on this week’s Sunday Morning Note here are the segments from Saturday’s  (Sept. 19, 2015) forum on Alaska’s Fiscal & Economic Future that featured the “citizen proposals” offered by former Attorney General John Havelock, First Alaskans Institute CEO/President Elizabeth Medicine-Crow, former Senator Gary Wilken, and me.  A copy of the proposals prepared by each are available here.

The first segment (“Here is My Proposal”) is the presentation of the proposals, questions from the panelists to each other, and questions of the panelists by former Deputy Revenue Commissioner (among other things) Larry Persily, Legislative Finance Director David Teal and conference organizers Gunnar Knapp (Director of the Institute of Social and Economic Research) and Cliff Groh (Chair, Alaska Common Ground).

Following an announcement of the results of the polling conducted after the first segment, the second segment (“Fashioning a Compromise”) is a discussion among the panelists of the factors involved in reaching a compromise among the various positions, and an outline of what form a compromise might take.

In preparation for the coming week — the discussion today on Alaska Public Radio Network’s Talk of Alaska, a meeting this evening of the Alaska Republican Assembly and my participation in Saturday’s forum on Alaska’s Fiscal and Economic Future — I have been working to refine my focus for the coming 2016 legislative session (which will set the FY 2017 budget) to five top priorities.

Here is the slide deck that captures my current view.