At the present time, Road Service Commissions (RSCs) perform the vast majority of work on Alaska’s roads off the state roads. Like all units of government, they have faced rising costs. Under the present law, every construction job requires RSCs to solicit Davis-Bacon bids for projects over $2,000 per Title 36 (section 36.05.070). This keeps the cost of road projects extremely high. House Bill 155 raises the project size for which Davis-Bacon bids have to be acquired. By raising the minimum project size from $2,000 to $50,000, RSCs can continue to operate effectively and efficiently. This will enable many smaller projects to be undertaken that currently are not because of costs, and help taxpayers get more for their hard earned dollars.
The vast majority of projects undertaken by RSCs range between $2,000 and $90,000. RSCs are Alaska’s most local unit of government, and operate at the subdivision or neighborhood level. They perform road services cheaply, efficiently, with priorities established after considerable input from the local neighborhood. Under House Bill 155, Davis-Bacon wages will apply only to contracts that are over $50,000. This means tax payers get more for smaller projects.
RSCs need your help in supporting HB 155. There is a movement underway to keep Davis-Bacon wages on projects at the $2,000 level. For most RSCs, this greatly raises the cost of providing road services. Many the projects can not be undertaken due to the $2,000 Davis-Bacon requirement. In many instances, costs could force RSCs to fold and hand their authority over to the borough government. If that happens, borough economic planners, not local resident boards, will determine project priorities. HB 155 will help keep RSCs an viable, economic alternative to borough maintenance and preserves the input of neighborhoods over their own road maintenance priorities. It will help taxpayers get more for their hard earned dollars. It is a good piece of legislation.
Please, take a few minutes today to send a POM to the state legislature to support HB155. Please, let your legislators know that is this is a crucial to keeping our RSCs working efficiently and effectively for local residents. To do this, click here in a new window, and create a POM account, and register your opinion today. If you don‘t know what to say, you can cut and paste the information below:
Please support HB155. Projects under $50,000 are too small for the application of the Davis-Bacon wage skill, and erode tax payer dollars. Currently, Davis-Bacon wages have to be applied to projects under $2,000. This greatly increases the cost of projects, and hurts taxpayers. Please support road service areas and support HB 155. Thank you, in advance, for your vote for HB155!
Also you can contact your local Legislative Information Office about HB155. Thank you for taking the time read this blog, post a response, and sharing it with your friends.
Saturday, March 12, 2011
Friday, March 11, 2011
Parnell's Proposed Tax Cut
For those of you trying to understand the Proposed Parnell Tax Cuts, there is a wonderful little video.
Please take a few minutes to watch it, share it, and act on it.
Please take a few minutes to watch it, share it, and act on it.
Thursday, March 10, 2011
Jesse Jackson: Champion of the Rich
Today on Fox, Megyn Kelly interviewed the Rev. Jesse Jackson on the events in Wisconsin. In case you are not following these events closely, Democratic law makers from Wisconsin have been hiding in Illinois to prevent a vote. After weeks away, the Gov. Scott Walker called for a special session, where Scott Walker’s measure passed. It now waits for a last vote. However, supporters of the unions have now blocked hallways and doorways of the Wisconsin capital in an effort to prevent democratic processes from working. This new effort is being led by the Rev. Jesse Jackson and Michael Moore. Fox New’s Megyn Kelly interviewed Jackson and his involvement in this matter. When asked about the protestors, Rev. Jesse Jackson said:
These people have no home, they lost them. These people have no jobs, they lost them….We support worker rights.
Really Rev. Jackson? I thought this was about the collective bargaining rights of teachers? Rev. Jackson, you have been an excellent champion for the poor. But that is not what is going on in Wisconsin. Are you saying that these teachers lost their homes? Teacher salaries in the state of Wisconsin average $78,000 a year. These teachers are homeless? If a teacher is making $78,000 a year and cannot find a home, then there is a big problem with that teacher’s ability to run their personal finances. Are union dues that high? Are taxes in Wisconsin that high? I am totally shocked that a teacher in Wisconsin would be homeless on that salary!
If teachers in Wisconsin can’t afford to live on $78,000 a year, there needs to be a close examination of the tax structure and union dues. Wisconsin teachers make 1.5 times the average household salary in Wisconsin. If teachers making $78,000 a year are suffering, then just think how much more the average non-teacher in Wisconsin, who makes $52,000! Yes, the average household in Wisconsin makes only $52,000. Who is speaking for them? Oh, yes, the Tea Party. Why isn’t the Rev. Jesse Jackson helping out the average household in Wisconsin, who makes much less that the average teacher? They are the ones who are truly poor!
The Rev. Jackson’s next point was that the Wisconsin legislature, “…ramrodded the vote.” Really? How many weeks have the Democratic law makers vacationed in Illinois? Was there some secret that this was an option? Were they elected to party in Illinois or to represent their citizens in Wisconsin? The whole nation knew what was going on in Wisconsin! How can they possibly claim that this bill was ramrodded?
Rev. Jesse Jackson concluded his interview with “you can’t close plants here.” Rev Jackson, where are the plants that are being closed in Wisconsin? It is the Unions who are calling for shutting down the schools in Wisconsin. Are those the plants you mean? Do you view the schools of Wisconsin as factories? Does the union view schools as factories? Factories of what? Test scores reported by both Rush Limbough and Glenn Beck suggest that whatever they are factories of, it is not education.
These are not factories, these are schools! Factories have to compete in the private sector. Who do Wisconsin’s “factories of education” compete with?
Jesse Jackson, you are on the wrong side. The real poor in Wisconsin is the average household is being taxed to death to pay teacher salaries. Rev. Jackson, there are school bus drivers who make over $100,000 a year, more than some state governors and more than many faculty members in the state of Illinois! Who are you fighting for? Is it for the average Wisconsin resident that makes $52,000? Or the average teacher who makes $78,000?
Collins, Dan. “WI Teacher Salaries in Context,” Piece of Work In Progress February 19th, 2011
http://powip.com/2011/02/wisconsin-teacher-salaries-in-context/
Megyn Kelly, Interview with Rev. Jesse Jackson, 3/10/2011
http://www.youtube.com/watch?feature=player_embedded&v=QSA9M9JxjuM
Limbaugh, Rush on Wisconsin Student Test Scores,
http://mediamatters.org/embed/clips/2011/02/23/14172/prn-limbaugh-20110223-witeachers1
These people have no home, they lost them. These people have no jobs, they lost them….We support worker rights.
Really Rev. Jackson? I thought this was about the collective bargaining rights of teachers? Rev. Jackson, you have been an excellent champion for the poor. But that is not what is going on in Wisconsin. Are you saying that these teachers lost their homes? Teacher salaries in the state of Wisconsin average $78,000 a year. These teachers are homeless? If a teacher is making $78,000 a year and cannot find a home, then there is a big problem with that teacher’s ability to run their personal finances. Are union dues that high? Are taxes in Wisconsin that high? I am totally shocked that a teacher in Wisconsin would be homeless on that salary!
If teachers in Wisconsin can’t afford to live on $78,000 a year, there needs to be a close examination of the tax structure and union dues. Wisconsin teachers make 1.5 times the average household salary in Wisconsin. If teachers making $78,000 a year are suffering, then just think how much more the average non-teacher in Wisconsin, who makes $52,000! Yes, the average household in Wisconsin makes only $52,000. Who is speaking for them? Oh, yes, the Tea Party. Why isn’t the Rev. Jesse Jackson helping out the average household in Wisconsin, who makes much less that the average teacher? They are the ones who are truly poor!
The Rev. Jackson’s next point was that the Wisconsin legislature, “…ramrodded the vote.” Really? How many weeks have the Democratic law makers vacationed in Illinois? Was there some secret that this was an option? Were they elected to party in Illinois or to represent their citizens in Wisconsin? The whole nation knew what was going on in Wisconsin! How can they possibly claim that this bill was ramrodded?
Rev. Jesse Jackson concluded his interview with “you can’t close plants here.” Rev Jackson, where are the plants that are being closed in Wisconsin? It is the Unions who are calling for shutting down the schools in Wisconsin. Are those the plants you mean? Do you view the schools of Wisconsin as factories? Does the union view schools as factories? Factories of what? Test scores reported by both Rush Limbough and Glenn Beck suggest that whatever they are factories of, it is not education.
These are not factories, these are schools! Factories have to compete in the private sector. Who do Wisconsin’s “factories of education” compete with?
Jesse Jackson, you are on the wrong side. The real poor in Wisconsin is the average household is being taxed to death to pay teacher salaries. Rev. Jackson, there are school bus drivers who make over $100,000 a year, more than some state governors and more than many faculty members in the state of Illinois! Who are you fighting for? Is it for the average Wisconsin resident that makes $52,000? Or the average teacher who makes $78,000?
Collins, Dan. “WI Teacher Salaries in Context,” Piece of Work In Progress February 19th, 2011
http://powip.com/2011/02/wisconsin-teacher-salaries-in-context/
Megyn Kelly, Interview with Rev. Jesse Jackson, 3/10/2011
http://www.youtube.com/watch?feature=player_embedded&v=QSA9M9JxjuM
Limbaugh, Rush on Wisconsin Student Test Scores,
http://mediamatters.org/embed/clips/2011/02/23/14172/prn-limbaugh-20110223-witeachers1
Shame on Illinois!
Law makers from Wisconsin have been in Illinois long enough for Illinois Labor Relations at the University of Illinois to issue a study on Wisconsin teachers. The study claims that Wisconsin teacher salaries have lagged over the past 16 years. How do they proove this? The do so by comparing Wisconsin teacher salary increases with Illinois salary increases. That is bad science and union propaganda at best. It is clear that these law makers have been in Illinois attempting to use the resources of that state to fight against their own people in Wisconsin. Shame on them, and shame on Illinois for being complicit. Shame on the people of Illinois for allowing THEIR tax dollars to be used to interfere in public policy matters in other states.
Collins, Dan. “WI Teacher Salaries in Context,” Piece of Work In Progress February 19th, 2011 http://powip.com/2011/02/wisconsin-teacher-salaries-in-context/http://powip.com/2011/02/wisconsin-teacher-salaries-in-context/
University of Illinois at Urbana-Champaign, “Study: Over 16-year span, Wisconsin teacher salaries lag private sector wages,“ 3/2/2011
http://www.physorg.com/news/2011-03-year-span-wisconsin-teacher-salaries.html
Collins, Dan. “WI Teacher Salaries in Context,” Piece of Work In Progress February 19th, 2011 http://powip.com/2011/02/wisconsin-teacher-salaries-in-context/http://powip.com/2011/02/wisconsin-teacher-salaries-in-context/
University of Illinois at Urbana-Champaign, “Study: Over 16-year span, Wisconsin teacher salaries lag private sector wages,“ 3/2/2011
http://www.physorg.com/news/2011-03-year-span-wisconsin-teacher-salaries.html
Wednesday, March 9, 2011
Everything Used to be ACES
Recently, the Alaska State House Resource Committee passed HB 110 that is aimed at reducing the tax on oil. Currently, Alaskan oil is taxed under the Alaska’s Clear and Equitable Share. It has a key component of triggering a higher tax rate when oil prices rise, known as a progressive component. When it was first enacted, it was aimed at “reclaiming” windfall profits from oil companies. An oil surcharge is imposed is and when the price of oil spikes; depending on the cost of oil, a 25% surcharge tax is imposed at around $56.00 a barrel. The tax rate increases as the price of oil increases.
When ACES was passed, the world was a different place. Back then, high oil prices were viewed as excess profit seeking and downright greed on the part of petroleum companies. Back then, dictators in the Middle East and other places maintained the political stability for oil production in many oil producing nations. In exchange for peace, these dictators often were able to extract tax rates up to 40%. Back then, the President of the US did not use every regulatory trick in the book to prevent production. It actually encouraged domestic oil production. Back then, Alaska could compare its tax rates to foreign countries and keep it lower than Bahrain’s tax, rather than compete with states like North Dakota, Louisiana, and California. Back then, the world was a different place.
Times change, and the number of third world dictators garnering 40% tax rates from oil companies have dwindled. However, so has access to those fields, at least for a time. Extreme political events have created disruptions in the supply of oil; so severe that oil futures have traded recently near $200 a barrel. In 2007, $80.00 a barrel would have been considered outrageous. Today, it would be considered a bargain. Back then, China and India were emerging and their demand for oil was growing. But now, in 2011, they have emerged, and they also have a demand for oil that rival‘s America‘s energy needs. Their demand has created a higher structural component in the demand for oil. The days of $9.00 a barrel for oil are long gone, as are the days of American dominance in the global demand for oil equation.
Once we had presidents that favored private sector activity. Oil companies nationally now face an openly hostile regulatory environment. Moratoriums, permit approval slowdowns (often dubbed permitatoriums), and the creation of new and bizarre regulations from the mind of the current Secretary of the Interior have created a hostile environment for oil companies. Oil companies, such as Shell, have invested millions in the production of wells that it may never recover due to the fear of catastrophic environmental damage on the part of the Secretary of the Interior. Despite the fact that our own nation does not drill, it should be noted that Cuba, China, Malaysia, and Russia have all announced intentions to drill in the Gulf of Mexico. They will not have to face the environmental regulations that American companies have to endure, and will have a clear cost advantage if they are allowed to drill there.
While oil fields outside the US are in a state of chaos, the same cannot be said for oil fields in the United States. Louisiana modified there taxes in 2007; historically their taxes have ran around 12% of value. California moved toward capping their oil tax at a lower rate. Most importantly, North Dakota began an aggressive program to attract oil companies. North Dakota taxes oil at 6.4% or lower on value (depending on well size) and has a 2% tax rate for smaller wells. When combined with their corporate tax rate, a large producer would face less than 15% in taxes. When compared to marginal tax rates that could climb to 75% in Alaska, North Dakota was able to attract investment.
Other things have happened quietly over time. While some like Senator Hollis French tout the success of the ACES program; but things have changed north of Anchorage. As the cost of production began to rise on a per barrel basis, oil companies were quietly disinvesting. British Petroleum cut its budgets by 30%, Shell’s drilling fell from 22 wells to 7 by 2010, and Conoco-Phillips canceled drilling in Alaska (Stone). Businesses related to the oil industry began to see the decline in the demand for their services (Cruz). As oil companies have voted with their feet out of the state, the entire business climate has dampened. Businesses in related industries, and those not so related, have formed lobbying groups to urge the state to cut the tax.
The situation has placed Alaska between a glacier and a hard place. On one hand, the revenue to be gained by keeping ACES is substantial in the short run. Cutting ACES, as proposed under HB110 could result in budgetary shortfalls. Estimates vary, but anywhere from one fourth to one third of Alaska’s current state revenue could be lost by HB110. Sadly, the state doesn’t have sufficient data to know for certain, because data reporting requirements on businesses are minimal. The state presumably has enough in savings to cover a $1.5 billion deficit, for the current year. However, it is unclear what remains for future years. As long as the state squirrels away their econometric modeling procedures like a squirrel hides acorns, we will just have to take their word for whatever estimates they produce.
It is clear that the state needs to cut its tax rate on oil, and probably pretty quickly. The question is how much. No industry would stay in a state when it faces a 75% marginal tax rate. In order to attract investment, the tax cut has to have an effective tax rate has to be lower than other states to attract oil producers. The tax rate has to place a firm at least “tax neutral” with respect to the competing states, and perhaps slightly lower than that to cover the higher cost of doing business in Alaska. At the same time, there are the realities of government. There has to be time for firms to invest, and begin producing for the revenue stream to rise. No one in the state wants to cut taxes and induce a large budget deficits. Taking out the progressivity must be followed with fiscal restraint. This is particularly the case when the state is also proposing large scale projects like the Susitna Dam, or other unforeseen budgetary items. One thing that is certain, passage of HB110, or a similar bill, is needed to revitalize Alaska’s oil production, and caution is needed to minimize any unanticipated state budgetary deficits.
Alaska Department of Revenue, Alaska’s Clear and Equitable Share Report, 1/14/2010.
http://www.revenue.state.ak.us/1-14-10%20ACES%20Status%20Report%20final2%20(3).pdf
Bradner, Tim “House committee approves governor's oil tax change” Journal of Commerce 03/04/2011
http://www.alaskajournal.com/stories/030411/loc_hcago.shtmlhttp://www.alaskajournal.com/stories/030411/loc_hcago.shtml
Bradner, Tim “Murkowski speaks to lawmakers on oil, fuels” Peninsula Clarion 3/8/2011
http://www.peninsulaclarion.com/stories/030811/new_796446978.shtml
Cruz, David, “Oil tax burden creates a ripple effect” Anchorage Daily News, March 7, 2011
http://www.adn.com/2011/03/07/1742106/oil-tax-burden-creates-a-ripple.html
French, Hollis. “My turn: Alaska's Clear and Equitable Share Measure is Successful” Juneau Empire12/10/2009
Hiltzik, Michael “A California Tax on Drilling?” Los Angeles Times July 15, 2009http://articles.latimes.com/2009/jun/15/business/fi-hiltzik15
Joling, Dan “Business coalition urges Alaska oil tax fix” Washington Examiner 02/23/11
http://washingtonexaminer.com/news/2011/02/business-coalition-urges-alaska-oil-tax-fix
Smith, Doug, “HB 110 would spur North Slope Investment,” Anchorage Daily News 2/27/2011
http://www.adn.com/2011/02/27/1726300/hb-110-would-spur-north-slope.html
Stone, Daniel “ A Pipeline Problem in Alaska” Newsweek 10/9/2010
http://www.newsweek.com/2010/10/09/alaska-oil-cos-balk-at-prudhoe-bay-tax-slap.html#http://www.juneauempire.com/stories/121009/opi_534186921.shtml
When ACES was passed, the world was a different place. Back then, high oil prices were viewed as excess profit seeking and downright greed on the part of petroleum companies. Back then, dictators in the Middle East and other places maintained the political stability for oil production in many oil producing nations. In exchange for peace, these dictators often were able to extract tax rates up to 40%. Back then, the President of the US did not use every regulatory trick in the book to prevent production. It actually encouraged domestic oil production. Back then, Alaska could compare its tax rates to foreign countries and keep it lower than Bahrain’s tax, rather than compete with states like North Dakota, Louisiana, and California. Back then, the world was a different place.
Times change, and the number of third world dictators garnering 40% tax rates from oil companies have dwindled. However, so has access to those fields, at least for a time. Extreme political events have created disruptions in the supply of oil; so severe that oil futures have traded recently near $200 a barrel. In 2007, $80.00 a barrel would have been considered outrageous. Today, it would be considered a bargain. Back then, China and India were emerging and their demand for oil was growing. But now, in 2011, they have emerged, and they also have a demand for oil that rival‘s America‘s energy needs. Their demand has created a higher structural component in the demand for oil. The days of $9.00 a barrel for oil are long gone, as are the days of American dominance in the global demand for oil equation.
Once we had presidents that favored private sector activity. Oil companies nationally now face an openly hostile regulatory environment. Moratoriums, permit approval slowdowns (often dubbed permitatoriums), and the creation of new and bizarre regulations from the mind of the current Secretary of the Interior have created a hostile environment for oil companies. Oil companies, such as Shell, have invested millions in the production of wells that it may never recover due to the fear of catastrophic environmental damage on the part of the Secretary of the Interior. Despite the fact that our own nation does not drill, it should be noted that Cuba, China, Malaysia, and Russia have all announced intentions to drill in the Gulf of Mexico. They will not have to face the environmental regulations that American companies have to endure, and will have a clear cost advantage if they are allowed to drill there.
While oil fields outside the US are in a state of chaos, the same cannot be said for oil fields in the United States. Louisiana modified there taxes in 2007; historically their taxes have ran around 12% of value. California moved toward capping their oil tax at a lower rate. Most importantly, North Dakota began an aggressive program to attract oil companies. North Dakota taxes oil at 6.4% or lower on value (depending on well size) and has a 2% tax rate for smaller wells. When combined with their corporate tax rate, a large producer would face less than 15% in taxes. When compared to marginal tax rates that could climb to 75% in Alaska, North Dakota was able to attract investment.
Other things have happened quietly over time. While some like Senator Hollis French tout the success of the ACES program; but things have changed north of Anchorage. As the cost of production began to rise on a per barrel basis, oil companies were quietly disinvesting. British Petroleum cut its budgets by 30%, Shell’s drilling fell from 22 wells to 7 by 2010, and Conoco-Phillips canceled drilling in Alaska (Stone). Businesses related to the oil industry began to see the decline in the demand for their services (Cruz). As oil companies have voted with their feet out of the state, the entire business climate has dampened. Businesses in related industries, and those not so related, have formed lobbying groups to urge the state to cut the tax.
The situation has placed Alaska between a glacier and a hard place. On one hand, the revenue to be gained by keeping ACES is substantial in the short run. Cutting ACES, as proposed under HB110 could result in budgetary shortfalls. Estimates vary, but anywhere from one fourth to one third of Alaska’s current state revenue could be lost by HB110. Sadly, the state doesn’t have sufficient data to know for certain, because data reporting requirements on businesses are minimal. The state presumably has enough in savings to cover a $1.5 billion deficit, for the current year. However, it is unclear what remains for future years. As long as the state squirrels away their econometric modeling procedures like a squirrel hides acorns, we will just have to take their word for whatever estimates they produce.
It is clear that the state needs to cut its tax rate on oil, and probably pretty quickly. The question is how much. No industry would stay in a state when it faces a 75% marginal tax rate. In order to attract investment, the tax cut has to have an effective tax rate has to be lower than other states to attract oil producers. The tax rate has to place a firm at least “tax neutral” with respect to the competing states, and perhaps slightly lower than that to cover the higher cost of doing business in Alaska. At the same time, there are the realities of government. There has to be time for firms to invest, and begin producing for the revenue stream to rise. No one in the state wants to cut taxes and induce a large budget deficits. Taking out the progressivity must be followed with fiscal restraint. This is particularly the case when the state is also proposing large scale projects like the Susitna Dam, or other unforeseen budgetary items. One thing that is certain, passage of HB110, or a similar bill, is needed to revitalize Alaska’s oil production, and caution is needed to minimize any unanticipated state budgetary deficits.
Alaska Department of Revenue, Alaska’s Clear and Equitable Share Report, 1/14/2010.
http://www.revenue.state.ak.us/1-14-10%20ACES%20Status%20Report%20final2%20(3).pdf
Bradner, Tim “House committee approves governor's oil tax change” Journal of Commerce 03/04/2011
http://www.alaskajournal.com/stories/030411/loc_hcago.shtmlhttp://www.alaskajournal.com/stories/030411/loc_hcago.shtml
Bradner, Tim “Murkowski speaks to lawmakers on oil, fuels” Peninsula Clarion 3/8/2011
http://www.peninsulaclarion.com/stories/030811/new_796446978.shtml
Cruz, David, “Oil tax burden creates a ripple effect” Anchorage Daily News, March 7, 2011
http://www.adn.com/2011/03/07/1742106/oil-tax-burden-creates-a-ripple.html
French, Hollis. “My turn: Alaska's Clear and Equitable Share Measure is Successful” Juneau Empire12/10/2009
Hiltzik, Michael “A California Tax on Drilling?” Los Angeles Times July 15, 2009http://articles.latimes.com/2009/jun/15/business/fi-hiltzik15
Joling, Dan “Business coalition urges Alaska oil tax fix” Washington Examiner 02/23/11
http://washingtonexaminer.com/news/2011/02/business-coalition-urges-alaska-oil-tax-fix
Smith, Doug, “HB 110 would spur North Slope Investment,” Anchorage Daily News 2/27/2011
http://www.adn.com/2011/02/27/1726300/hb-110-would-spur-north-slope.html
Stone, Daniel “ A Pipeline Problem in Alaska” Newsweek 10/9/2010
http://www.newsweek.com/2010/10/09/alaska-oil-cos-balk-at-prudhoe-bay-tax-slap.html#http://www.juneauempire.com/stories/121009/opi_534186921.shtml
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