Wednesday, July 26, 2017

In three paragraphs, why the Alaska Senate may flip D in the next election ...

Perhaps without realizing it, three paragraphs in a story Monday by KTOO (Juneau Public Media)'s Andrew Kitchenman help explain why the Alaska Senate may flip D (or its close cousin, "Bi Partisan") in the next election.  "Capital budget compromise unlikely to restore PFDs, address oil and gas tax credits," https://goo.gl/Xc3337.

Here are the paragraphs:
"The Senate capital budget didn’t include additional money for dividends. 
"But the Senate capital budget did include $288 million more for oil and gas tax credits. ...
"Senators have noted that the state owes companies more than $1 billion in credits that they must receive."
Why do those paragraphs foreshadow a flip in the Senate?  Because they make clear that, under current leadership the Senate is favoring parts of the oil industry over Alaska families and the overall Alaska economy.

The undisputed conclusion arising from various economic analyses over the last two years is that cutting the PFD, which Senate leadership has consistently pursued over that time period, does serious damage to Alaska families and the overall economy. Cutting the PFD, for example:


  • "Has the largest adverse impact on the economy [of all the new revenue options] per dollar of revenues raised," https://goo.gl/ZxR1Hw at A-15; 
  • "[W]ill likely increase the number of Alaskans below the poverty line by12-15,000 (2% of Alaskans)," https://goo.gl/iuTjv2 at 14.

As we explained yesterday, on the other hand there already is a statutory approach in place for dealing with the accrued, cashable oil & gas tax credits. "If this is the "deal" on the capital budget, we will urge a "no" vote," https://goo.gl/vX7fES.

The Senate leadership's efforts to change that statutory approach to accelerate the payments to some oil companies, while at the same time changing the statutory approach dramatically to cut the PFD -- with the resulting adverse effect to the overall Alaska economy and Alaska families -- clearly favors some in the oil industry over Alaska families and the overall Alaska economy.


In the intensity of an election cycle -- particularly one involving a Governor's race -- that bias will show through and put in play the seats of those Senators supporting the position.  If the D's are wise enough this time to capitalize on it by zeroing in on the inconsistency and promising to reverse the priority (something they failed to do in the last cycle by running "me too" candidates on PFD cuts), they are highly likely to carry a number of the seats.

The results for the state's overall oil industry could be devastating.  Proposed changes to the state's overall oil tax structure, which this session have been confined to the House, likely would be greenlighted through a changed Senate.  By trying to get more for some oil companies by accelerating the payment of cashable oil credits, the industry may lose a lot for all.

The realization of that potential likely is the reason we continue to hear rumblings of the intention by some to support primary opponents to several current Senate R's in next year's election cycle.

The view is that some Senate R's have walked too far out on the rhetorical plank to be salvageable against disciplined D challengers.  Replacing them with less tone-deaf R's may be the only way to maintain the seats.

There is a long way to go yet before the 2018 elections and things certainly may change along the way.  But if on election night 2018 the Alaska Senate flips, some will look back on the three paragraphs above and say they saw it coming.