DECEMBER 19, 2013

Representing District 15:
Midtown, University, and East Anchorage

I Answer to You!

Contact my office:
716 4th Ave, Room 390
Anchorage, AK 99501
(907) 269-0265
(800) 465-4939
 
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submit your 175 word letter to the Anchorage Daily News via e-mail letter@adn.com, or fax them to 258-2157, attn: letters to the editor.

Contact other elected officials

Governor Sean Parnell
907-269-7450
EMAIL: Gov. Sean Parnell

Senator Mark Begich
907-271-5915
EMAIL: Sen. Mark Begich

Senator Lisa Murkowski
907-271-3735
EMAIL: Sen. Lisa Murkowski

Congressman Don Young
907-271-5978
EMAIL: Rep. Don Young

Alaska's Fiscal Cliff

Dear Friends and Neighbors,

It is nearly time for my staff and me to move back to Juneau for the second session of the 28th Alaska State Legislature. Other than the mere fact that it is December 19th and the session convenes one month from today, the Governor just released his budget and the Department of Revenue submitted its fall report on revenue sources for Alaska, which are both tell-tale signs that session is coming, and in this case, that we need to tighten our belts. In this newsletter I will discuss both of these subjects and how each will impact the upcoming session.

As you may have seen, the Department of Revenue published a report quantifying Alaska’s various revenue sources. The report says that in fiscal year 2013 Alaska reaped $6.9 billion in total unrestricted state revenues with oil revenues accounting for 92% of those funds. The report also forecasts revenues for the coming fiscal years; it projected $4.9 billion in revenue earnings in fiscal year 2014 and $4.5 billion for fiscal year 2015. Ultimately, the state is predicting a $2 billion dollar reduction in revenues from last year, thus entering further in to deficit spending.

The Oil Wealth “Giveaway” is, unfortunately beginning to take a serious toll on our state budget and future. While there has only been a 4% decrease in oil prices, there has been a 40% drop in oil revenue. Therefore, price reduction alone is not the explanation. The Giveaway has sent our state into a $3 billion budget deficit over the next eighteen months. Proponents of The Giveaway claimed that the new law would incentivize production and stop the decline curve.

$2 billion projected loss in revenues for upcoming year

However, the Revenue Sources Book predicts quite the opposite. Last year, Alaska produced 530,000 barrels of oil/day, now the state is forecasting 490,000 barrels/day by 2017, falling to 320,000 barrels/day by 2023. When the Governor proposed SB 21 earlier this year, he said that Alaska would produce 1 million barrels a day within the next ten years. The projections made by the Governor’s own Department calculate 320,000 barrels/day not $1 million ten years from now.

Governor Parnell predicts a 4.6% production decline by 2017

The Giveaway cut oil taxes, but has failed to stem production, instead resulting in a forecasted 4.7% decline by 2017. I do not believe that ACES (previous tax structure) was perfect, but I also do not believe in giving away $2 billion a year to some of the richest companies in the world without receiving anything for our schools, roads, and public safety in return.

Governor’s budget cuts state funding for the capital budget

With $2 billion in lost revenue on the table, the legislature is going to have to make tough budgetary cuts in the upcoming session. Last week the Governor unveiled his proposed budget which requires a draw of over a billion dollars from state savings to balance the budget.

Because of the major deficits, I was disappointed to see no additional money will be given to local school districts to offset rising energy costs and annual inflation (if the Governor’s budget prevails!). The capital budget will also face major shortfalls. The $2 billion Giveaway risks funding for things like roads and public safety that ensures prosperity for all Alaskans.  Smaller capital budgets will have an impact on Alaska jobs, as this Alaska Public Radio article points out.

Attending the “topping out” event at the new UAA Engineering Building

Last week I attended the “topping out” ceremony (when the final metal beam goes in to place for a new structure) for the new UAA Engineering Building. The engineering building ensures that UAA will be able to meet the growing demand for the engineering program and maintain accreditation for its undergraduate engineering programs. Enrollment in the School of Engineering (SoE) at UAA has more than quadrupled, to nearly 1,200 students, since 2000.

Gorgeous background to the new UAA Engineering Building, view a live webcam of the construction here

Attending the event was a reminder that, as we head toward deficit spending, projects like this will become more and more challenging to fund. However, I was grateful that the Governor included $20 million more to complete the building in his budget.

As always, if you have questions about the content in this newsletter or anything else please contact me. Being of service to you and your family is my priority.

I Answer to You!

Sincerely,

Representative Andy Josephson
716 4th Ave, Room 390
Phone: 907-269-0265
Rep.Andy.Josephson@akleg.gov