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Homer fired up, ready to relieve three council members of their duty

In a week when the Trump Administration has released a list of sanctuary cities that refuse to cooperate with national immigration officials, a group of Homer, Alaska residents is well on its way to booting three city council members who tried to declare the town a sanctuary for illegal immigrants.

The group is halfway to its goal of 800 signatures on a petition they are circulating for a recall election.

They have until April 11 to submit the signatures to City Clerk Jo Johnson, who will then decide if they can hold a special election.

The recall relates to an effort by council members Donna Aderhold, David Lewis and Catriona Reynolds to pass a resolution opposing the administration of President Donald Trump and creating “sanctuary city” status for Homer, Alaska.

The final draft resolution that was presented to the council removed references to the president directly and was titled: A Resolution of the City Council of Homer, Alaska, Stating That the City of Homer Adheres to the Principle of Inclusion and Herein Committing This City to Resisting Efforts to Divide This Community With Regard to Race, Religion, Ethnicity, Gender, National Origin, Physical Capabilities, or Sexual Orientation Regardless of the Origin of Those Efforts, Including From Local, State or Federal Agencies. Aderhold/Reynolds/Lewis. It was voted down by all but Reynolds.

Other cities that have flirted with “sanctuary” status include Anchorage, where immediately following the presidential election in November, Mayor Ethan Berkowitz penned an opinion that was published in the Alaska Dispatch News. He and his wife wrote of Anchorage as a “Welcoming City,” where everyone should feel safe, secure and strong.

Welcoming cities are a notch back from sanctuary cities, “sanctuary-lite” in practice, and are part of a softened national movement toward the more militant, more lawless aspects of sanctuary cities.

Welcoming cities have plans for integrating and welcoming immigrants into their communities, and they generally adhere to the principles set forth by the nonprofit Welcoming America network. While there is no legal definition for sanctuary city, a welcoming city resists requiring local law enforcement agencies to  “do the federal government’s job of enforcing immigration laws. Many do this by preventing local officials from asking people about their immigration status. Other cities refuse to use local resources to detain immigrants. The main purpose for these types of policies is to comply with constitutional requirements and to protect public safety by maintaining positive relationships between local law enforcement and immigrant communities,” according to the group’s web site.

In Fairbanks, Mayor Matherly was asked to propose a sanctuary resolution in February by a dozen Fairbanksians, but he decided against it: “After researching the definition and implications of sanctuary cities, the mayor does not plan on supporting a resolution to designate Fairbanks as such,” he said in a statement. The calls and emails from residents were overwhelmingly against the proposal.

President Trump has threatened to withdraw federal funds from cities that refuse to cooperate with federal immigration authorities. This week his administration published a list of the municipalities and counties that are refusing to work with federal immigration officials. [See Table 3]

No Alaska communities are yet listed on the Immigration and Customs Enforcement document as sanctuary cities.

Homer recall petition gains ground

 

 

 

 

Governor, unions launch sneak attack on small business

Can your truck be considered a place of business if you’re an independent truck driver? Is your truck cab your office? Maybe or maybe not, says Gov. Walker.

If you don’t shell out cash to advertise for new customers, will the State decide you’re not really a contractor? Probably. At the very least, you’re going to have to prove you are an independent contractor to the Alaska Department of Labor. If Walker’s legislation passes, they’ll fine you first, ask questions later.

“Investigators will investigate as they always do and they will assess a penalty,” said Department of Labor Director of the Division of Workers Compensation Marie Marx to the House Labor and Commerce Committee on Wednesday. And if you don’t like the assessment, you can ask for a hearing, she said, calling it a more efficient way of doing business.

“We anticipate that fewer assessments will go toward hearings,” said Marx. She may be right — after all, independent contractors are awfully busy just trying to make a living.

Independent contractors in Alaska would be defined so narrowly by the Walker Administration that many would be relabeled as employees of other contractors, and would be required to be covered by  the prime contractor’s workers compensation insurance. This is a move that is hostile to small businesses.

It’s all part of HB 79, a job-killing bill that passed out of House Labor and Commerce Committee yesterday over the objections of pro-business Republicans.

The bill, offered up by the Department of Labor Commissioner Heidi Drygas, impacts tens of thousands of Alaska workers who are trying to make a living in a state that has a rapidly shrinking economy. Over 7,500 jobs are forecasted to be lost this year in a state that already has the highest unemployment rate in the nation.

HB 79 says that if you are a contractor who uses independent subcontractors in your business, in all-too-many cases you would be forced to consider them employees and cover them by your insurance.  But, that is not the half of it. Other benefits and payroll taxes would also be due, once the employer-employee relationship is established.

It’s a move that will sharply increase the cost of doing business and limit the free market.

In small Alaska communities, which is most of them, people work at various jobs to patch together a living. They may have a contractor’s license, but may do frequent work for a larger contractor who comes into town to do a job. They may have various contract arrangements. This is how Alaskans manage to keep going in small economies from Tok to Togiak, from Ketchikan to Kaktovik. It’s the way it’s been done in Alaska since, well, forever. And it favors the worker and the entrepreneur.

TRUCKERS HIT, BUT CONSULTANTS TOO

In House Labor and Commerce Committee, Aves Thompson, who represents the Alaska Truckers Association, explained to the committee that many truckers in Alaska get work by word of mouth. When they need a job, they don’t advertise, which is one of the check-box requirements of the Department of Labor as it evaluates whether you are truly a contractor.

“We dealt with this issue last year in a piece of legislation that was in fact introduced by Rep. [Gabrielle] LeDoux,” said Thompson. “We think this bill in principle is good — we just have a few difficulties with it in this independent contractor paragraph.”

Thompson said the bill was sprung on the business community this year. “We didn’t hear anything about it from anybody until the bill popped up in February, and they said ‘Here it is and here are the definitions.’

“We made contact with the department and started talking about it, and we give them credit, they made significant progress from original bill to the committee substitute.

“We felt that was progress,” he continued. “We again said we supported the bill in principle and there was some misunderstanding about what our level of support by our association was for this bill. I believe I tried to express my apology for that last Monday, for whatever part I played in making that error.”

Thompson was apologizing to the committee for the second time in a week.

Rep. Sam Kito, D-Juneau, lectures Alaska Trucking Association President Aves Thompson, and accuses him of trying to delay a bill that makes it harder to be an independent contractor. Thompson is shown in the box in the lower corner of this screen shot from 360north.org

But his apology wasn’t enough for Committee Chairman Sam Kito, a Juneau Democrat, who took after Thompson in front of the entire committee and dressed him down at length.

“I do think the department [of Labor] has done an admirable job of putting together and trying to accommodate the situation with the independent contractors. And I do think that efforts to try to delay the bill really are not appreciated,” Kito lectured Thompson.

Kito has been romantically linked to Commissioner Drygas, but sources in Juneau say that liaison is not current. He has never acknowledged the conflict of interest.

“So I would encourage you to work productively and constructively and provide statements that don’t misstate the position of the truckers, because on March 9 it seemed to be everything was OK, and now it’s not,” Kito said, jabbing at the air toward Thompson, who maintained a diplomatic silence during the rather unusual dressing-down.

The truckers aren’t the only ones who have trouble with the bill.

“It’s part of the broad theme of the Dept. of Labor being punitive toward employers,” said Rebecca Logan, president of the Alaska Support Industry Alliance.

“They are impacting wage payers. Instead of growing the pie of jobs, they’re trying to shrink the pie. They’re being punitive to employers by creating more policies so they can catch employers doing something wrong and fine them.” she said.

The business community — especially small business owners — use independent contractors and consultants (including professional consultants) to allow them to compete for jobs that are limited in time or that are very specific in scope. Many sole proprietors can only stay in business with the plug-and–play help of professional consultants who allow them to scale up their businesses as needed. This is especially the case in rural areas, but also relates to the North Slope oil patch. The independent subcontractors that these prime contractors use have their own business licenses and are fully accounted for in their transactions.

Colleen Sullivan-Leonard, a Republican from Wasilla, said she wanted the bill to be held until the identified problems were addressed.

But Chairman Kito refused: “I am interested in moving the bill today,” he said.

Rep. Louise Stutes, a Kodiak Republican who has thrown in her lot with the Democrat majority, agreed with Kito and said she was fine with the bill going forward, even though the business community objects: “This is year number three for me,” she said, of her years of experience. “And I’ve yet to see a perfect bill.”

Democrats Kito, Andy Josephson of Anchorage, Adam Wool of Fairbanks, and Democrat caucus member Stutes voted for HB 79, which now heads to the House Judiciary Committee, chaired by Democrat Matt Claman of Anchorage.

Rep. Chris Birch, R-Anchorage, Rep. Gary Knopp, R-Kenai, and Rep. Sullivan-Leonard, R-Wasilla were in the minority, voting against it. Their objections related to the punitive effect on small businesses and restricting economic freedoms.

House Democrats tackle Electoral College

The Alaska House of Representatives, having passed its no-more-cuts budget along caucus lines, turns its attention to other pressing matters this week — hiking oil taxes with HB 111, and taking down the Electoral College with HB 175.

HB 175, which has received scant attention to date, would have Alaska join an interstate compact to award all of its electoral votes to the winner of the national popular vote in a presidential election. The bill is sponsored by Democrat Zach Fansler, with cosponsors Les Gara, Justin Parish, Harriet Drummond, Scott Kawasaki, and Geran Tarr, all Democrats.

It will be heard in House State Affairs Committee on Thursday. It has no fiscal impact on the state budget, except as the presidency can impact the state budget.

The interstate compact among participating states would go into effect after there are enough states to represent an absolute majority of votes, which is currently enough states to equal 270 Electoral College votes.

If passed, in the next presidential election, the joining states would award all of their electoral votes to the electors associated with the candidate winning the popular vote across all 50 states and the District of Columbia. In other words, if Hillary Clinton won the popular vote across all states, the compact members would award all their electoral votes to her.

In this way, the winner of the popular vote nationally would always win the presidency, because he or she would gain the majority of the Electoral College votes.

The “mob rule states” would be breaking-and-entering through the backdoor of the U.S. Constitution, Article II, Section 1, Clause 2, which lines out the rules by which the Electoral College operates.

The Constitution allows legislatures to choose how their states allocate electors. Currently, Alaska awards all of its votes to the candidate who wins the most votes statewide. This is how it is done in every state but Maine and Nebraska, which award them in a split fashion.

Today, Alaska has a House majority run by Democrats, and they are using it to their advantage to push through legislation that they feel will be favorable to Democrats in the next election — 2020.

Current signatories to the compact are the heavily Democrat majority states of California, District of Columbia, Hawaii, Illinois, Maryland, Massachusetts, New Jersey, New York, Rhode Island, Vermont, and Washington.

Unsurprisingly, Hillary Clinton won all those states’ popular votes:

  • California: 61.6 percent
  • District of Columbia: 92.8 percent
  • Hawaii: 62.3 percent
  • Illinois: 54.3 percent
  • Maryland: 60.5 percent
  • Massachusetts: 60.8 percent
  • New Jersey: 55 percent
  • New York: 58.8 percent
  • Rhode Island: 55.4 percent
  • Vermont: 61.1 percent
  • Washington: 54.4 percent

In Alaska, Donald Trump won 51.3 [corrected 03.24.17] percent of the vote. With HB 175, our votes would be awarded to Hillary Clinton.

WHY THE ELECTORAL COLLEGE MATTERS

The authors of the U.S. Constitution invented a system of Electoral College voting, in order to protect the rights of minority states like, for instance, Alaska, which has a small population. They rejected the simple majority vote because they are prone toward dictatorships and mob rule.

The system was designed by James Madison to protect citizens from the tyranny of direct democracy, where citizens could band together to form an absolute majority, and then strip the rights from the minority.

In Federalist Paper Number 10, Madison describes how, “By a faction, I understand a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community.”

Madison wrote that “a well-constructed Union” must “break and control … the superior force of an…overbearing majority.”

Protecting smaller, less populous states from being overpowered by larger states was an equally strong concern at the time, which led to the Connecticut Compromise at the Founding Fathers’ Constitutional Convention of 1787. It established a bicameral — or two-body — Congress that allocated members of the House of Representatives according to population but allocated Senators in equal numbers (two per state).

Madison’s electoral college simply extended the Connecticut Compromise to the election of presidents.  Electoral votes are awarded by total House and Senate seats combined, thus guaranteeing small states like Alaska a meaningful say in presidential elections.  This stroke of remarkable statesmanship has protected small states from the tyranny of large states since the birth of the nation.

There are 538 electoral votes available, and it takes 270 to win the presidency. Some liken the process to the World Series: It’s not the overall number of runs that wins the series, but the team that wins the most games. A team could technically score more runs throughout a series and still lose the series.

(We are not an accomplished student of baseball, but that happened in the 1960 World Series, where the Pittsburgh Pirates won over the New York Yankees. The Yankees won three blowout games (16–3, 10–0, and 12–0), but the Pirates won four games (6–4, 3–2, 5–2, and 10–9).

In U.S. election history, five presidents have won the Electoral College without winning the popular vote:

  • John Quincy Adams, 1824
  • Rutherford B. Hayes, 1876
  • Benjamin Harrison, 1888
  • George W. Bush, 2000
  • 2016, Donald Trump

Today, with our nation’s cities heavily populated by racial minorities, the Electoral College makes sense as never before, as it actually gives minorities a bit of an edge. They influence the entire electoral vote of their states.

House State Affairs will hear HB 175 during its March 23 meeting at 3 pm in Room 120 of the Capitol. The meeting will be teleconferenced. Four Democrat majority caucus members dominate the committee — Chairman Jonathan Kreiss-Tomkins, Gabrielle LeDoux, Chris Tuck, and Adam Wool. Republicans Chris Birch, DeLena Johnson, and Gary Knopp round out the committee.

As a clear case of “elections have consequences,” Alaska students of the Constitution should watch this legislation carefully.

Les Gara’s ’10-year recession’ is taxation sound bite

Rep. Les Gara, D-Anchorage

JUNEAU – Rep. Les Gara, the unwavering leftist anchor of the Alaska House of Representatives, has a favorite saying:

“I guess if you say something enough times, and convince people enough times with an inaccurate statement that you’re right, maybe they start to believe you.”

At least Gara walks that talk.

On Feb. 17, Gara, D-Anchorage, told reporters that State budget cuts would put Alaska into a “10-year recession.”

It was a round number, and it may have sounded good to him as a sound bite, one that he’s been repeating nearly daily for the past month without a challenge from the media.

No one in Alaska economic circles has repeated the theme, but Gara recycles it with confidence.

Cuts will “also get you one of the worst recessions in Alaska history, and a state where your children can’t find a job. You deserve real information instead of soundbites, so you can tell your legislators the path you prefer,” he wrote back in February in the Alaska Dispatch News.

“No solution will be as popular as those irresponsible political soundbites you hear. I’d rather hear from you than those who peddle false soundbites,” he concluded.

Monday, he said the House Democrats had cut $81 million from the $6.5 billion budget, which passed along caucus lines, 22-17.

But House Republicans said the budget is  actually $14 million bigger — two-tenths of one percent more than the governor asked for. Most Republicans voted against it, but three key Republicans joined with Democrats to pass a larger budget and enact new revenues to pay for it.

It depends on how you slice the numbers, whether the budget is smaller or larger than before.

Walker has proposed a gasoline tax that would raise $81 million a year, which masks the fact that significant cuts were not made. But the gas tax alone leaves a $2.78 billion gap.

The gas tax, one of several being considered, would cost average Alaskans about $150 a year, but would hit commuters from the Mat-Su Valley particularly hard, since many commute 50 miles or more per day.

“You’re taxing people who are driving to work, then taxing the work they do,” said Rep. David Eastman, a freshman from Wasilla, referring to the double whammy gasoline and income taxes that Democrats are also proposing.

A draw from the Permanent Fund Earnings Reserve Account is in the mix as well. The various taxes and Permanent Fund restructuring are included in HB 115, which was heard by the House Finance Committee today and held until Thursday for a hearing.

Gara went on to say that Alaska spends less than it did in 1975 in real dollars, but that is not borne out by the governor’s own slide deck from last year, which shows:

TAXES DRAG ECONOMY 

The problem with trying to tax Alaska’s way out of a recession is that taxes do not inject new money into the economy. Taxation only keeps the same amount of money circulating, but only after a portion of it is siphoned off by government, and is put back into the economy via government jobs.

In Alaska, with its limited economic diversity, the only way out of recession is by bringing in a lot more tourists, catching a lot more fish, mining a lot more gold, and putting a lot more oil in the pipeline.

There is also another penalty. When money is siphoned off by government, the main agent of economic growth is neutered — innovation and new ways of doing old jobs more efficiently. The economy suffers in the long haul. As in, over the next 10 years.

Or, the state can simply hope that price-per-barrel reaches above $70. Many economists believe prices that high are as much as a decade away. If so, Alaska will simply need to increase production.

As the statements from the House members were heard one-by-one just before they voted Monday on the biggie-sized budget, Gara brought out his favorite saying — the same one he has used whenever he’s had the microphone in front of him and a camera rolling during the past month: He argued again that cuts to government would put the state into a “10 year recession.”

There’s nary a data point to back that up. But at least he inadvertently admits it with his other favorite saying, “I guess if you say something enough times, and convince people enough times with an inaccurate statement that you’re right, maybe they start to believe you.”

Homer recall petition gains ground

 

A group of citizens in Homer, Alaska has had quite enough of three city council members who tried to make Homer a “sanctuary city ” — a place where illegal immigrants could find safe haven from the law.

The citizens want the three recalled. The reason? The city council members’ actions have harmed the economic health of Homer and constituted “improper behavior.”

As of this afternoon, the recall petition blew past 300 signatures in less than four days’ effort. That is 80 percent of the minimum total signatures that will be required.

HAL SPENCE TAKES CREDIT

In January, shortly after the swearing in of President Donald Trump, Homer City Council members Donna Aderhold, David Lewis, and Catriona Reynolds worked quietly on a resolution that rebuked Trump and declared Homer in resistance to everything about his administration, including his entire cabinet.

The draft resolution was a blistering “Whereas” document that contained the wordsmithing of former Homer News and Peninsula Clarion reporter Hal Spence.

Spence is the former president of the Alaska Press Club and, since early 2009, he has been on contract with a number of environmental organizations, such as Cook Inletkeeper, Alaska Marine Conservation Council, and World Wildlife Fund, according to his profile at the Hospice of Homer, where he serves on the board. He calls himself an independent environmental services professional on his LinkedIn social media profile.

Spence has written a letter to the editor taking credit for the original draft.

TOO LITTLE SOFTENING, TOO LATE

Later, the draft anti-Trump language was softened by Aderhold, Lewis, and Reynolds, and the resolution was introduced as a milder, “inclusivity” statement.

But the cat was out of the bag on the original intent of the resolution. It failed to pass after more than 100 citizens came to a hearing to testify on it. Many felt the entire exercise was divisive and disrespectful of the views of the 56 percent of Homer voters who cast a ballot for Trump.

Now, the recall petition is the talk of the town. The group has until April 11 to obtain 373 valid signatures needed for a vote.

Even if it fails, facing a recall election is a heavy price to pay for Aderhold, Lewis, and Reynolds. Lewis and Reynolds are facing reelection on Oct. 3, so regardless of whether they are removed early, this will be a campaign issue and they are likely to face stiff political headwinds.

Donna Aderhold, Catriona Reynolds, David Lewis, all city council members in Homer, Alaska, face recall after they collaborated on a santuary city resolution.

The last recall effort in Homer happened in August, 1965 to Mayor Ralph Cowles, who survived the vote. The petitioners said that Cowles, the city’s first mayor, was “discourteous and rude to Homer citizens who approach him on city matters.”

The recallers have established a storefront location to gather signatures from 11 am to 7 pm at 1104 Ocean Drive in Homer. Most of the people coming into the storefront just ask, “Where do I sign?”

But the group has also had to remove interlopers: A man started taking photographs of the process. A woman, who identified herself as a government employee, became argumentative with the petition sponsors, saying they were hurting the feelings of the three council members. She was asked to leave.

The petition sponsors have since set up better door security protocols.

PETITION CERTIFICATION NO SURE THING

Corbin Arno signs the recall petition in Homer, Alaska. (Photographer Barrett Moe)

The petitioners say the actions of the three council members constitute a dereliction of duty and “improper behavior.” Further, they say, the three council members have caused economic harm to the city. They cite cancellations of hotel rooms and fishing trips as evidence of that harm.

“[I]mproper behavior’ is a very subjective standard,” City Attorney Holly Wells said in a memo. Whether the city had declined the petition for recall or approved it, it would likely have been subject to legal challenge.

The city clerk is the decider, however. Once the signatures are turned in, Clerk Jo Johnson will judge the merits of the allegations and either refuse the petitioners or call a special election.

Because they are under the shadow of a recall election, the three council members have been advised by the city attorney to not speak of the matter either publicly or in discussions.

Grounds for recall include misconduct in office, incompetence, or failure to perform prescribed duties. Alaska laws governing municipal recall processes are summarized at Ballotopedia.

Previous stories:

Homer city council goes into full ‘resist Trump’ mode with resolution

Homer city council to consider ‘softened’ resolution after blowback

Homer City Council backs away from ‘resist’ resolution

Progressive thinking: Bring on the ride-sharing services

By WIN GRUENING

Win Gruening

I was surprised to read the recent Juneau Empire news story headlined “Why is Uber Wrong for Juneau?” It reported on proposed legislation, HB 132, SB 14, authorizing “on-demand” ride-sharing services in Alaska.

The headline is somewhat misleading since it’s obvious many residents and visitors wish it were available.

20,000 Alaskan residents have downloaded the Uber smart phone application (presumably to use when traveling) and over 60,000 people have opened the Uber app in Alaska. Despite this, Alaska is the only remaining state in the country that has not allowed such services.

Uber and Lyft, the two most visible ride-sharing companies, have experienced phenomenal growth. Uber is available in 500 cities worldwide and, together with other ride-sharing enterprises, have revolutionized the concept of local transportation by providing a platform for independent drivers to “share their ride” with others.

Service requests are handled through smart phone apps pairing potential riders with the nearest independent driver at pre-negotiated rates (including tip) that are well below standard cab fares. No money changes hands as the rider’s secure credit card number is on file.

The initial comments by some city leaders were puzzling. Juneau is a “connected” town with lots of bandwidth. Despite that and the many advantages services like Uber and Lyft offer, their reaction was unduly negative.

City Manager Rorie Watt referred to the “peculiar needs” of Juneau and stated “I don’t think we’re ready for Uber.” Assemblyman Jesse Kiehl expressed safety concerns about ridesharing services.

Yet these ride-sharing services now operate successfully in many cities across the country with similar characteristics as Juneau — with high seasonal visitor volumes and downtown parking issues, for example.

The misconception many people may have about ridesharing is thinking it’s just another cab service. However, statistics in states where Uber and Lyft are operating reflect a different story.

Initially, conventional cab rides decrease after ride-sharing services are introduced but overall total rides increase considerably more.

In other words, while some cab trips will be replaced by ridesharing, the overall increase is attributable to unmet demand that will take private vehicles off the road. Many Uber and Lyft drivers are driving their private vehicles on a route they would be driving anyway (such as to and from work). They aren’t adding to traffic but instead are allowing someone else the opportunity to ride with them — thereby taking that person’s carbon footprint off the street.

Other part-time drivers without regular jobs or retired, for instance, would be at home or running errands and available to share rides during the day and evenings — the point being they’re not burning gasoline cruising for fares or idling downtown or at the airport. This added capacity and convenience makes it easier for people looking for a “night out on the town” to avoid parking hassles and even a potential DUI on their way home.

The concerns regarding safety seem unfounded. While cab drivers are fingerprinted and Uber drivers are not, both undergo a background check before they are allowed to operate. Even without the fingerprinting, a standard background check for all drivers would reveal any disqualifying criminal convictions.

Besides, there are safety features built into the smart phone app. When confirming an Uber ride, the rider is provided the driver’s name, license plate number, photo and rating — so you know who’s picking you up. The app allows the rider to track the vehicle in real time on a map to monitor its arrival time. The rider can stay indoors in a secure location until the vehicle arrives. Contrast that with calling a taxi dispatcher and waiting outside in the weather without a good idea when and if it will arrive.

Another important issue our capital city struggles with is the lack of transportation options at our airport, ferry terminal and harbors. How many times have you arrived in Juneau and found a line of people needing transportation and no taxis were available? This reflects poorly on us as a capital city and continues to be a real sore point with legislators and staffers. During the summer, the problem is magnified when many taxicabs prefer to host sightseeing tours rather than pick up a cab fare.

The self-regulating feature that ridesharing services like Uber provide is also a major advantage. Drivers receiving unsatisfactory ratings by riders are not permitted to continue in the program. Unlike cab companies, vehicles must meet certain standards and the driver is graded on such things as cleanliness, friendliness, correct routing, safe driving, etc.

It’s a good thing when new technology creates opportunities for environmentally friendly efficiencies, lower costs and greater convenience. Our readiness to embrace these new ideas and the realization our community can adapt and benefit from them is what progressive thinking should mean.

Competition in commerce is always healthy. How can it be wrong to allow people to make their own choice?

Win Gruening retired as the senior vice president for business banking for Key Bank. He was born and raised in Juneau and graduated from the U.S. Air Force Academy.

Production-killing oil tax bill advances in the House

Reps. Andy Josephson and Geran Tarr, co-chairs of House Resources, confer during floor session.

An aggressive oil tax bill crafted by the co-chairs of the House Resources Committee was voted out of committee this week and is headed for its next stop, House Finance. It will be heard at 1:30 pm Monday.

Republicans on the Resources Committee had criticized HB 111 since its introduction as a committee bill, distancing themselves from it throughout the hearing process that began Feb. 8.

The vote to move the bill forward was along party lines, with Democrats Justin Parish, Geran Tarr, Andy Josephson, Harriet Drummond, and Dean Westlake favoring it, and Republicans George Rauscher, Dave Talerico, Chris Birch and DeLena Johnson saying no. Leaders from the oil and gas industry expressed dismay at the seventh tax change on their industry in the past 11 years.

The bill was crafted by co-chairs Andy Josephson and Geran Tarr, two Anchorage Democrats who have strong anti-oil beliefs. The two were recent presenters at the Alaska Center for the Environment, where they were caught on tape talking about their commitment to moving the state away from oil and into renewable resources.

Reps. Geran Tarr and Andy Josephson talk about their commitment to ending oil production during a meeting at the Alaska Center for the Environment last fall, as Lt. Gov. Byron Mallott, another oil industry critic, listens.

 

SNATCHING DECLINE FROM THE JAWS OF GROWTH

The Department of Revenue issued a fiscal note for HB 111 that predicts the State would capture an additional $45 million in taxes in 2018, $140 million for 2019, and up to $265 million per year by 2026.

Republicans on the committee said the existing oil tax system, adopted in 2013 as SB 21, is responsible for bringing more oil into production this past year, and that more volume is the goal. Oil flowing through the Trans Alaska Pipeline System is where the State of Alaska gets the majority of its revenue, but the pipeline is running at only about 25 percent of capacity.

The production boosting benefits of SB 21 became clear very quickly after adoption. In 2015, average pipeline throughput was 508,446 barrels per day. That rose to 517,868 in 2016, ending 15 years of consecutive annual declines. The trend so far this year is higher still, with a year-to-date average of 554,816 per day.

Even more encouraging are the several new discoveries recently announced by Caelus and Armstrong that may boost Alaska’s pipeline throughput substantially. But, in today’s low oil price environment, there’s no guarantee those finds would be produced under a markedly less favorable tax regime.

HB 111 increases the state government’s take by rolling back tax credits that companies get when they make new investments in the oil patch. It also raises the minimum tax on the gross value of production. These changes can ratchet up taxes 25-100 percent, depending on the producer, at a time when they are lucky to be breaking even.

The bill eliminates net operating loss credits that companies can subtract from their tax bills for North Slope oil. It changes how they can carry those credits forward into future years when they can use them to their advantage.

Kara Moriarty, president of the Alaska Oil and Gas Association, called the bill an ill-conceived policy “which would further damage Alaska’s economy by increasing taxes on the state’s largest private sector industry, and creating one of the largest regulatory processes in state history.”

She was especially critical of the portion of the bill that requires the pre-approval of oil company expenditures before the company could qualify for a potential net operating loss deduction. That would put state bureaucrats in charge of guiding oilfield investment decisions.

FISCAL NOTE FROM REVENUE, BUT NOT FROM DNR

How the state would handle such a pre-approval process was not accounted for in the bill.  And, there was no fiscal note from the Department of Natural Resources detailing the cost of standing up such an approval process, what state personnel might need to be hired to analyze and adjudicate the pre-approval process, or what the appeal mechanism might look like. That bothered Rep. George Rauscher, District 9. The problem with it was explained by AOGA in a statement:

“Due to a variety of factors, such as oil price, the industry does not know at the time of the expenditure if they will suffer a net operating loss. So essentially, the new regulations will mean almost every penny of every proposed investment in the state’s largest private-sector industry would need to be pre-approved by the State of Alaska before the expenditure could happen.

“This also means that expenditures will have to be pre-approved by DNR before they happen to qualify for a net operating loss deduction, and the same expenditures will be audited after they occur by the Department of Revenue in their auditing process to actually receive the net operating loss deduction.”

“This new process, yet to be defined or truly vetted, will add tremendous burden and uncertainty. It is unreasonable to expect every expenditure to be preapproved.” — Kara Moriarty.

During committee discussion on March 14, Rep. Dean Westlake of District 40, voiced his own concerns that, “What I’m seeing here is a little disturbing because we’re going to be micromanaging basically their leases. We want accounting and yet we are five years behind on our accounting.”

Rep. Tarr responded that all of the details of the legislation, which is a broad document, can be spelled out in the regulations that will be developed. “The statute should be less prescriptive in nature because the regulations spell out the details,” she said. “Really let it be dictated by the folks who know best, the folks who manage it” at DNR.

However, with no fiscal note from DNR, legislators have no idea how much time and money it will take to develop the regulations around HB 111 and then administer them.

More importantly, there is no way to accurately estimate the chilling effect this will have on Alaska’s most important industry, the one that pays the majority of the State’s bills.

But it is safe to say that, if this legislation were to somehow become law, the pipeline throughput growth Alaska is currently enjoying would quickly revert to a more familiar pattern of annual declines.

House Democrats cut off budget debate

Rules Chairman Gabrielle LeDoux at today’s press conference: “We actually have a fiscal crisis and we need to be doing other stuff.”

The House Democrat-led majority says enough is enough: No more budget debate after Friday at noon.

The $4.1 billion budget had 55 amendments as of 1 pm Thursday, most of them cuts put forward by the budget hawks in the Republican minority caucus.

Today, the House majority called those budget reductions a filibuster.

“We just decided basically that enough was enough,” said Rules Chairman Gabrielle LeDoux at a press conference attended by the cobbled together House majority members, made up of mostly Democrats, but also two indeterminates and three Republicans who have thrown their lot in with the Democrats.

“We just spent two and a half hours on an amendment. We have got a fiscal crisis that we’ve got to resolve,” LeDoux said.

“I mean at some point you got to figure out which are the important, the critical amendments, and have a robust debate on those instead of having a few things dribbling here and dribbling there.

The House has more important things to attend to, she said, such as developing new revenue sources from taxes on working Alaskans and oil producers to pay for the bloated budget that the majority is ready to approve.

“We actually have a fiscal crisis and we need to be doing other stuff,” LeDoux said.

The House minority that has fought for lower government spending was loaded for bear.

At their own hastily called press conference this afternoon, they said that if the majority wants to take $4 billion out of the Permanent Fund Earnings Reserve to pay for government operations, then there’s nothing more important than combing through the budget first looking for cuts.

ARMED TAX COLLECTORS STOPPED BY HOUSE BUDGET HAWKS

During that fine-tooth process, Republican House members pointed out that a proposed funding transfer from the Department of Revenue to the Department of Public Safety had created armed Revenue tax collection agents.

The funding transfer that would arm tax collectors was voted down, 31-9, when it was pointed out by the House minority.

House Speaker Bryce Edgmon told the press, “We’re now on day four debating, in the 25th hour of debate. We  made the decision to basically say look, we’ve had enough and the public has had enough. It’s time to move onto other important legislation in the building.”

Millett said that her caucus was doing its job, not filibustering. Neither she nor former House Speaker Mike Chenault could remember a time when budget debate was simply cut off.

“The budget has not changed, except it has gone up,” Millett said. “There have been no cuts in Finance Committee or on the floor, except for today on per diem.

“We have heard from the public they would like to see a sustainable budget. My caucus is not comfortable with the levels of spending,” she said.

Tempers in both the majority and minority caucuses were noticeably elevated today and the contrast between the two caucuses couldn’t have been more clear. From the Democrat majority press conference, members took the microphone and one by one stated their solidarity:

“It’s a filibuster,” said Democrat Les Gara of Anchorage.

“Time is money,” added Democrat Justin Parish of Juneau.

“It’s time to get on with the State’s business,” said Rep. David Guttenberg, D-Fairbanks.

And in the minority press conference:

“We have pointed out line by line fundamental flaws — and that is our only job,” said Minority Leader Millet.

“Our new Rules chair has been stifling debate,” she said. “We cannot use the word ‘slush fund,’ and can’t use the word ‘bureaucrats.’ We can’t talk about the Permanent Fund Earnings Reserve transfer. We should not be rushing this process.”

Rep. Tammie Wilson, R-North Pole, said she had turned in her amendments last week and was ordered to withdraw them, but she refused.

“We could have done them Friday, Saturday, and Sunday, but they waited until Monday at 11. They weren’t ready,” Wilson said.

“The budget is constitutionally the only thing we have to do while we are down here,” said Rep. Mike Chenault, R-Kenai.

Friday at high noon will be the final chance House minority members will have to present their budget reductions. By Friday afternoon, many legislators will be on Flight 65 bound for Anchorage.

The debate cutoff coincides with the time legislators need to get to the airport to check in for their flights home.

 

Censored: Republicans forbidden from saying ‘slush fund’ on House floor

Rep. Cathy Tilton, R-Chugiak-Wasilla, makes the case for reduced spending on the floor of the House.

While the dozens of budget cuts offered by Republicans in the Alaska House of Representatives are being summarily voted down in their entirety, House minority members are now being told what words they can and cannot use during House floor sessions.

House Speaker Bryce Edgmon and Rules Chairman Gabrielle LeDoux have issued rules of order that prohibit House members from using the term “bureaucrats” to refer to state workers, or “slush fund” to describe the miscellaneous funds that have no particular purpose, such as the one illustrated here:

Line 3011 in the Department of Labor and Workforce Development is labeled “Other Services,” and is described as “Other services for purposes yet to be determined.” Call it any other name, but it is clearly a slush fund.

The 2017 budget item for this slush fund was $323,800, which was almost double the 2016 amount of $137,300.

This year, the governor asked for  $411,200, a 27 percent increase in “slush” over 2017’s budget and a whopping 300 percent increase in two years. For purposes yet to be determined. At a time when Alaska is running a multi-billion dollar deficit. Yes, really.

And this is just one of the more glaring examples.  The operating budget is riddled with extra funds, but only in Labor and Workforce Development are they labeled in such a vague way. Budget hawks in the Republican minority have been combing through the budget looking for places to cut.

Rep. Cathy Tilton, R-Chugiak-Wasilla, flagged this item for reduction in a year when there are not nearly enough revenues to pay for the $4.3 billion budget the governor has proposed. Tilton’s proposed cut was voted down in the House Finance Committee but will likely be part of the package of amendments that is brought to the House floor for one last attempt at a budget cut.

Additional sanctions have been placed on Republican House members that prohibit them from making any reference to the $4 billion that House Finance Chairman Paul Seaton wants moved from the Permanent Fund Earnings Reserve Account, a move that would strip the Republican minority from being able to use its leverage on the budget.

Instead of calling budget items slush funds, Republicans are now referring to them as “supplemental discretionary spending funds.”

There’s no word yet on what they will call bureaucrats.

Cue George Orwell.