Morning Headlamp - S&P issues warning to Alaska
Failure to address the $4 billion budget gap may further lower Alaska's credit rating
S&P connects the dots where AK lawmakers cannot. Failure to address the $4 billion budget gap may further lower Alaska's credit rating said ratings agency Standard & Poor's in a statement yesterday. "The politics of reaching an agreement on some combination of fiscal reforms that would stabilize the state's budget outlook is proving every bit as difficult as we anticipated in January," the statement reads. "If lawmakers cannot reach an agreement on fiscal reforms that move the state toward fiscal alignment in the special session, we expect the negative pressure on the state's credit rating could intensify." The statement also notes that as prodigious as the state's base of investment assets is, it most likely cannot sustainably generate enough revenue from investments to support the current level of general fund expenditures." Headlamp would wager a bet that inflicting an aggressive tax regime on a massive, and hurting, industry has something to do with this as well.
Alaska's seasonally adjusted unemployment rate was 6.6 percent in April, unchanged from the previous month. The comparable U.S. rate was 5.0 percent. Preliminary estimates of Alaska's April job count show a loss of 2,500 jobs from the same month in 2015, driven by large declines in oil and gas industry and state government employment. Employment levels in the construction and professional and business services sectors also shrank, likely due to oil-related cuts. Losses were partially offset by job growth in the health care and retail sectors. Headlamp would note that employment in the oil and gas industry decreased another 100 jobs from March to April this year according to the Department of Labor's most recent numbers. Since employment in Alaska's oil and gas industry peaked in March of 2015 at 14,800, 2,400 jobs have been lost. That is more than $350 million in wages taken out of our economy. We ask policy makers again: how will raising taxes on the industry help increase production and get thousands of hard working Alaskans re-employed?
Dermot Cole penned a commentary in the Alaska Dispatch News where he advised readers to not "squeal" in opposition to Gov. Walker's oil and gas tax bill. Cole writes that, "The loudest opposition, and that which legislators paid the most attention to, came from the oil industry, winner of the "woe is me" award." Headlamp is curious if Cole would say this to one of the thousands of industry workers who have been laid off. Commentators like Cole fail to recognize the raw human element at the center of bad policies, like Gov. Walker's tax increase on the industry, that will lead directly to further job loss. Where is Cole's compassion for the thousands of Alaskans who have lost their jobs during this oil slump? Will he write a column on the hardships thousands of families are going through as a result of losing their job in Alaska's highest paying industry?
"Our community is empowered by oil and gas," testified Wainwright mayor John Hopson Jr. "As Wainwright's mayor, I support retaining the Arctic lease sales in the proposed program and remain committed to working with BOEM to ensure that future leases are developed in a way that protects our communities and environment." Hopson spoke at the Senate Energy and Natural Resources Committee hearing on the Bureau of Ocean Energy Management's proposed 2017-22 offshore drilling plan. Hundreds of communities rely on the economic power of responsible resource development, Headlamp applauds Hopson reminding the federal government of that.
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