Wednesday, August 2, 2017

Oh good lord ...

The Alaska Journal of Commerce's Andrew Jensen and I must have different Alaska Statute books sitting on our desks (or in my case, in my browser bookmark list).  I just checked; mine is up to date.  Jensen may want to check his.

In yet another of his editorial screeds, Jensen writes this under the headline "The deadbeat, do-nothing Legislature,"
"Instead of beginning to settle the hundreds of millions in unpaid liabilities owed to small oil companies that already spent the money in good faith, the Legislature ended the program and will stiff those companies for a third straight year after Gov. Bill Walker vetoed $630 million in payments in 2015 and 2016. 
"Deadbeat and do-nothing barely begins to cover it."
When used as a verb, Google defines "stiff" this way,
1. cheat (someone) out of something, especially money. ("several workers were stiffed out of their pay")
2. ignore deliberately; snub.
Let's set the record straight in the event anyone relies on the Journal of Commerce editorial page anymore accurately to report the facts (surely a dwindling subset of the population these days).

The state has "stiffed" none of the oil companies -- none.  As we have explained repeatedly, the last two years as well as this coming one the state has paid annually exactly what it has owed the oil companies involved in the cashable oil tax credit program under the statutes as they have been in effect since the day the program began.  See "
Today's vote will demonstrate whether Alaska legislators believe in the rule of law,"

Let me say that again. Each. Year. The. State. Has. Paid. The. Oil. Companies. Exactly. What. They. Are. Owed.

The statute provides that the state shall pay each each year into the "oil and gas tax credit fund" -- from which payments are then made to the qualifying oil companies -- a statutorily-established percent of the production tax revenues projected to be taken in by the state that year.  The state may pay more each year, but the state's statutory annual obligation is limited to the percentage.

The state has paid the specified percentage every year of the program, including the last two and, as a result of the capital budget, the next upcoming.  It has complied with the statute and has paid exactly what it has owed.

In some past years the state used the discretion provided under the statute to pay more, but that doesn't obligate it to do so in other years.

Under the statute, the oil companies share with the state some of the risk of falling oil prices and production levels.  If production tax revenues decline, so do the state's annual obligation to pay into the fund.  Now that the risk has matured, the oil companies would like to dodge their share of it by cajoling the state into voluntarily paying more into the fund than required by the statute.

Understandably given the state's fiscal situation, the state has declined.  That isn't "stiffing" the oil companies; it's simply applying the statute as written.  Those truly concerned about the state's overall fiscal situation -- instead of one subset of it -- would be screaming if the state did anything else.

Jensen clearly needs to go read the statutes -- and maybe his dictionary -- again.

But we do agree with Jensen on this -- the Legislature is a deadbeat.

While not the oil companies, we agree the Legislature in fact has "stiffed" someone this session; well, approximately 635,000 someones.

As we have explained previously on these pages, the Alaska Statutes clearly require the state each year 
(by using the word "shall") to "transfer from the earnings reserve account to the dividend fund established under AS 43.23.04550 percent of the income available for distribution under AS 37.13.140."

For the first time since the founding of the Permanent Fund Dividend program in the early 1980's, the Legislature has refused to comply with that obligation, transferring less than half of the amount required under the statutes.  See "The Alaska Legislature tosses out the Rule of Law,"

The result?  The Legislature is shortpaying -- yes, "stiffing" -- each and every one of the 635,000'ish Alaskans that likely will qualify for the PFD this year a little north of $1,200 (or nearly $5,000 for the archetypical family of four).

And in doing so, the state also is shortpaying -- again, "stiffing" -- the overall Alaska economy the nearly $1.1 billion in additional income, counting the multiplier effect, that otherwise would flow into the hands of Alaska families and individuals, and through them, Alaska businesses, in the coming year.

That's an additional reduction in overall Alaska income of roughly 2.5% in an economy that already is in a worsening recession.

You would think the editorial page of an organization that publishes under the name the Alaska Journal of Commerce and claims to provide "the most in-depth and accurate information about business in Alaska" would be concerned about -- or at least mention -- such an effect on the overall Alaska economy and Alaska business when writing under the headline the "deadbeat" Legislature.

But no, the Journal's editorial page apparently prefers to focus instead only on what essentially amounts to fake news -- that the state is "stiffing" oil companies.

One of the problems Alaska faces currently is that its government continues to lurch from one side to the other trying to help out specific segments of the economy at the expense of the whole. It is focusing on saving specific trees while the forest as a whole withers.

Similar to the important role played by the editorial pages of the Financial Times, the Wall Street Journal and The Economist at the national and international level by 
keeping policymakers eyes focused on the overall economic prize, the editorial page of the Journal of Commerce could do at the state level.

Unfortunately, it's not.  It's become just another special pleader in a state that already has more than enough.