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Alaska: Governor's Compromise: Senate’s education head tax; $1,000 PFD; End oil & gas subsidies; Motor fuels tax; House’s operating budget; Governor’s capital budget By MARY KAUFFMAN - In an effort to resolve the current legislative stalemate that threatens to shut down government services on July 1st, Governor Bill Walker today introduced to members of all four caucuses a compromise fiscal package.

“I will be the first to admit that this package will not please everyone,” Governor Walker said. “In fact, there are pieces I don’t like. But we must all give a little to ensure a viable plan is in place well before July 1. Otherwise, government services - like issuing fishing permits, continuing ferry runs and addressing consumer protection issues - will be shut down. Alaskans deserve to have their elected officials come together in true compromise. This session cannot be determined by whose caucus won, otherwise all Alaskans will lose. We must pull together to end the uncertainty that hangs over classrooms, families and our future.”

According to a news release from the Governor, the proposed package will stabilize the economy using bills that have already been introduced and considered and the state gets a level of fiscal stability but must continue significant spending restraint.

“Last year, we had a deficit of at least $3.7 billion, and with this compromise, we will have a $300 million shortfall,” Governor Walker said. “All of the tools necessary to address this fiscal crisis are currently on the table. This compromise averts a shutdown in government services, provides greater long-term revenue stability and creates a foundation upon which we can build our future. There is no reason the legislature cannot reach a compromise within the next 10 days.”

The Alaska Senate gets its version of SB 26, close to the house version HB 111 and is able to make larger payments to the oil and gas industry for tax credits. But the Senate has to concede a modest broad-based tax structure and adopt the Alaska House’s operating budget.  Under the Governor's compromise proposal, the Alaska House is a big winner being assured a status-quo operating budget.

The Governor is also proposing the broad-based tax structure of Senate Bill 12, another form of an income tax. SB 12 would impose a limited educational facilities, maintenance, and construction tax on net earnings from self-employment and wages; relating to the administration and enforcement of the educational facilities, maintenance and construction tax.

While the $100 million in projected revenue from S.B. 12 would be directed to K-12 schools, the Alaska Constitution does not allow funds to permanently dedicate funds for a specific purpose, meaning the money generated from the tax could actually go to pay for anything if future legislatures decide that is necessary.

The Governor's compromise includes the end of cashable oil and gas credits.  In return, the House must accept a smaller dividend, meaning Alaskans would see a smaller dividend of $1,000 rather than the $1,250 proposed by House Democrats (Majority Coalition). The House must also accept less revenue and progressivity, and limited oil and gas reform.

S.B. 12, another form of an income tax, will tax wages and net earnings from self-employment of every resident; and nonresident and part-year resident with income from a source in the state.

Earnings and Tax:

(1) less than $20,000, the tax is $50 a year;
(2) $20,000 or more, but less than $50,000, the tax is $100 a year;
(3) $50,000 or more, but less than $100,000, the tax is $200 a year;
(4) $100,000 or more, but less than $500,000, the tax is $300 a year;
(5) $500,000 or more, the tax is $500 a year.

An employer will deduct and withhold one half of the estimated taxes due from an employee's wages from each of the first two regular payrolls of the calendar year. If the employee's first two payrolls are insufficient to cover the estimated tax due, the employer will continue to deduct and withhold from subsequent payrolls until the tax due to the state is fully withheld.

Self-employed will be responsible for paying their own taxes.

Motor Fuels Tax: Alaska’s base excise tax rate on gasoline and diesel fuel is 8 cents per gallon, with local sales taxes and the state’s spill prevention tax bringing the statewide average rate to 12.25 cents for gasoline and 12.75 cents for diesel fuel. The proposed tax rate increase would bring that amount to 28,25 cents for gasoline and 28.75 cents for diesel fuel. The Governor's compromise proposes either version House Bill 60 or Senate Bill 25. - More...
Monday PM - June 05, 2017

Alaska: UA Board of Regents discusses FY18 budget and enrollment strategies - The University of Alaska Board of Regents used its June meeting in Fairbanks to address the options for the university’s FY18 operating budget and agreed to reconvene later this month when the state budget is finalized by the legislature. The board also was briefed on enrollment strategies at UA’s three universities and on statewide higher education systems.

UA President Jim Johnsen presented budget scenarios, noting that UA must remain flexible in its budget preparation to adapt to a still undetermined FY18 appropriation. The legislature has yet to pass a state operating or capital budget, prompting university officials to develop plans ranging from $325 million unrestricted general funds (UGF) to $303 million UGF. UA has taken significant general fund cuts to its operating budget over the past three years, totaling $53 million. The reduction has led to downsized services and a loss of 933 employees statewide. The university still plans to prioritize and invest in strategic areas, including enrollment marketing and advertising, research, workforce development (e.g. nursing and teacher preparation), online program development and process automation. These focus areas are intended to strengthen the university’s academic programs and student services, diversify revenues and reduce long term costs.

Regents expressed concern about a continually unpredictable budget process and the effect reductions have had on the university community.

“We’ve actually lost 933 people, and that means there are fewer employees in the workforce and not buying groceries in the grocery store. There are local businesses struggling because of loss of employees here. There’s a real ripple effect in the community,” said Regent John Davies.

“Every time I look at that (workforce reduction) number and it’s increasing, it’s just devastating to me that UA has 933 fewer employees than two years ago. That’s a shocking number to me. It just tells our story in so many ways about what we are having to do – one person is having to do two jobs now, maybe more, as a result of our budget decrements,” said Regent Jo Heckman.

With regard to a “no budget” scenario, Johnsen said, "We are monitoring the state's progress very carefully, including guidance we receive from the state Office of Management and Budget. However, no decision about furloughs has been made. If we do find ourselves without an operating budget in the weeks ahead, I will consult with the Board of Regents and we will use our best efforts to maintain critical operations and services to our students and our communities."- More...
Monday PM - June 05, 2017

Alaska: Tustumena's Return to Service Further Delayed - The Alaska Marine Highway System announced today that more wasted steel was discovered in the engine room of the M/V Tustumena and repairs will require additional time at the Vigor Ketchikan Shipyard.

The Tustumena went in for its scheduled annual overhaul on March 13 and was originally scheduled to return to service on May 27. In early May, damaged steel was discovered in the engine room and the Tustumena’s return to service was initially pushed back to July 18. With this recent discovery of additional wasted steel, AMHS anticipates United States Coast Guard approval for the Tustumena’s return to service departing Homer at 5 p.m., Monday, August 15.

This delay impacts communities in Southwest Alaska and along the Aleutian chain. Usually, there are 10 trips scheduled along the Aleutian chain each year. Because of these delays, there will now be three remaining trips this year, with the first chain trip commencing on August 22.

The Tustumena is 53-years-old. A replacement vessel has been designed, but is awaiting construction funding in the pending fiscal year 2018 capital budget. AMHS staff is contacting affected passengers. - More...
Monday PM - June 05, 2017

COLUMNS - COMMENTARY

DAVE KIFFER: Catfood Gravity: It's not just a good idea, it's the law - It is a rainy day in Ketchikan.

Yeah, I know that is redundant.

We live in a rainforest, not a sunforest. Yadda, yadda, yadda.

But that means that the birds that flock to the seeds on our deck are busy elsewhere where it is not raining. They pretty much fly 10 miles north or south of Ketchikan, where it is not raining.

It makes you wonder why we have decided to settle in the wettest place around. Elsewhere - even in Alaska - it is summer. Heck, even in the southern hemisphere it is probably more summery than it is here right now.

It's funny because even on this island there are places where the weather is less inclement. Even on the other side of Gravina. Probably on the other side of Pennock. Probably on the other side of the Bar Harbor Breakwater.

But no, we chose to live here, in this spot, in this sun deprived realm.

This place where "Ketchikan" is a Tlingit word that means "place you don't want to live year-round."

Actually, that's not true. But in this world of alternate facts it has a certain "truthy" ring to it. - More...
Monday PM - June 05, 2017

CHRISTINE FLOWERS: Can We Start Showing Some Respect for Melania? - Michelle Obama was a very good first lady. To some, she was one of the best. She should be remembered fondly, even by those who did not vote for her husband.

I only wish that the people on the other side of the political aisle would reach across the divide and say some positive things about Melania Trump. I also wish chocolate flowed in rivers and lollipops cropped up in my garden, that gold dripped in lacy threads like moss from the trees and every day was a paid holiday.

Which is to say, I hope for miracles. Indeed, that is what it would take for the average Democrat or progressive to say something nice about our new first lady. It is impossible these days to hear her discussed without the words being squeezed through a scrim of sarcasm, stripped of any sense of empathy or admiration. Melania is either the butt of some very mean-spirited jokes, or vilified as a gold-digging prostitute who has a problem keeping her clothes on her lissome body.

For some people, mostly the sort of women who wear pink crochet hats in their Facebook profile photos and wept bitter tears when the glass ceiling turned out to be made of Lucite, Melania is not worthy of sisterly respect, and they look at her with an underlying tone of disdain at the thought that a Slovenian model is replacing the earth mother of the vegetable garden. - More...
Monday PM - June 05, 2017