The session is now in full swing! Over the last month, the Senate has been working hard to move bills through the committee process and we were glad to be joined by our colleagues in House yesterday when they officially organized. There are many critical issues facing our state this year. I am grateful for the opportunity to work hard toward solutions for you and the rest of our neighbors.
I value your feedback so please feel free to email me anytime or call my office at 907-465-3879 to share your thoughts and concerns.
As always, I'm honored to serve. Marta and I wish you a great weekend!
Blessings,
Willow Project is Halted
On February 13th, the 9th Circuit Court of Appeals halted winter work at the Willow Project on the North Slope while a lawsuit against it makes its way through the courts. This stage of the project requires the use of ice roads, which melt in the spring, so the delay effectively ensures that work will not begin this year.
This decision is a body blow to Alaskans already struggling to stay afloat in an economy crippled by a once-in-a-century pandemic, low oil prices, and budget constraints. In the Willow project lies the potential of hundreds of millions of barrels of oil and thousands of good-paying jobs for Alaskans for decades – all developed using the strictest environmental standards on the planet.
The primary beneficiaries of the court's ruling will be other petroleum regimes, many of whom are adversaries of the United States and do not adhere to the same high environmental standards. Now, more than ever, it is vital that we stand up for our statehood right to develop our natural resources for the benefit of all Alaskans and Americans. I remain hopeful that the law and common sense will prevail in the court’s final decision.
In another blow to Alaska’s economy, a recent decision by the Canadian government to extend their ban on cruise ships until early 2022 threatens Alaska with the loss of yet another cruise ship tourism season. The only way to avoid this is if a decades-old federal law, which requires cruise ships to stop in Canada before coming to Alaska, is suspended.
The cruise ship industry is crucial not just to coastal Alaska but also to many small business owners in our neighborhoods who rely heavily on the tourist industry and will suffer greatly if another cruise season is lost. To those ends, I joined several of my colleagues in sending a letter urging the Biden Administration to support a temporary waiver to that regulation.
Our Budget and the POMV Draw
In the graph above, the red bars represent the budget passed last year including position adjustments and transfers. The blue bars represent the Governors proposed budget this year, which the Legislature is now working on.
Historically, the Alaska Permanent Fund has been used as a savings device to generate revenues and pay dividends to eligible Alaskans. Since the price and production quantity of oil have drastically declined over the past several years, the Permanent Fund earnings have been helping to fund our state, as the fund was originally established to do. Today, the Fund is used to support the State’s General Fund through the yearly Percent Of Market Value (POMV) draw, which funds statewide services and programs, including the dividend.
The last few years, our budget has relied on the POMV draw from the Permanent Fund Earnings Reserve Account (ERA). For FY19 – FY21 the POMV rate was 5.25%, and for FY22 this will drop to 5%. Without this draw, the FY21 deficit would have ballooned from $900 million to over $3 billion. To put that into perspective, our entire UGF budget is just over $4 billion. This means the POMV draw from the ERA now supports 72% of Alaska’s undesignated general fund budget, with the rest coming from oil and other state taxes. Without the help of the Permanent Fund earnings, we would be short nearly 3/4 of our UGF budget. We should be very grateful to those predecessors who created the Permanent Fund for such circumstances.
Over the next few months, we will be analyzing projections of the current POMV draw on not only the current fiscal year, but the coming decades. Making sure the Permanent Fund remains permanent for future generations is one of my top priorities.
In summary, years of low oil prices and decreasing production have caused fiscal challenges for the State of Alaska. The undesignated general fund budget has been reduced from $7.8 billion in FY13 to $4.5 billion in FY21, a 43% decrease. While we have been, and should continue, responsibly trimming the budget, a prosperous Alaska will require responsible resource development as well as exploring ways to diversify our economy looking toward the long-term future.
Vaccine Eligibility is Expanded
Beginning on February 11th, another group of Alaskans are eligible to receive the COVID-19 vaccine. Those newly eligible are some Alaskan’s age 50 and above, many educators, some COVID response response workers, and those living and working in certain congregate settings. Those previously eligible are still able to get the vaccine. You can find out if you are eligible and book an appointment by clicking here.
Fun fact: Per capita, more people in Alaska have been vaccinated for COVID-19 than any other state.
Emergency Declaration and Mandates
The Governor’s emergency declaration expired on February 14th. To help clear up some confusion, restrictive orders such as mask mandates and business closures have been enacted on a local level, so the expiration of the declaration does not impact those restrictions. The declaration primarily gave the state of Alaska federal receipt authority for CARES grant funds, the paycheck protection program and additional SNAP benefits as well as the ability to temporarily suspend some regulations to help ease the burdens of businesses and the healthcare system.
Looking into the future, the Governor released his transition plan as well as four new health advisories which can be found here.
Legislative Update
In the Resources Committee, we are continuing hear presentations on the history of Alaska so we can better understand how to sustainably develop its resources. We have covered ANCSA, ANILCA, oil and gas, among others, and have started hearing legislation as well.
Additionally, SB 69, which I sponsor, is making its way through the committee process. Its passage extends a sunset date to allow small renewable energy producers (under 65 megawatt) to continue to be exempt from an extra layer of overburdensome regulation, as they have been for the last ten years. The purchase agreements between these small producers and utilities are still regulated, so ratepayers are protected from rate increases and reliability issues. The continuation of this exemption will encourage private investment dollars in renewable projects and give Alaska access to more sources of energy.
Commemorating Elizabeth Peratrovich
February 16th every year is Elizabeth Peratrovich Day. After experiencing blatant discrimination for years, Elizabeth Peratrovich, an Alaska Native of the Tlingit Nation, began petitioning the Alaska Territorial Legislature to enshrine civil rights for Alaska Native peoples in law. It was her hard work and dedication that eventually led the Legislature to pass its first anti-discrimination law in 1945, the first of its kind in the US. I am honored to remember her legacy and I am grateful for all of her hard work that has made Alaska a better place.
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