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good morning for the easily makes me here this morning and welcome to the north of a AGC construction spending forecast writers planes land wars from Seaquest resident MacArthur fake baking manager and it's my pleasure to welcome you exploring your post again scot olson placement is recognized other members of our senior management team 30 this morning first of all motion steve martin our executive vice president and chief credit officer dr. glaston see us resident commercial goal State Tara Tesla who is the senior vice president of construction lending and also Alicia true sister danville was their senior vice versa division and reproductive plenty service marbella office we also had several debate officers and staff here like anything else recognize to the side we're based mission is to be Alaska's most trusted financial institution we're committed added value to our customers into our communities and its licensees immunity to our customers who this morning we thank you for your business and for those of you who may not be customers yet you see all these bankers they are interested in applying himself with you and your business and working with you towards our future now this is the 10th edition of the construction spending forecast and it's actually the fourth time of course intended privilege of sponsoring Whitney GC in an effort to bring important information about the year ahead to you about commercial construction northington crowdfunded these valuable space produced by I sir which is an organization which were dissociated over a million dollars to 40 years for programs and research supporting economic development here in Alaska scott will smith has always been invaluable colleague whose unique review is always on target and I don't steal from Scott Thunder that I think you're going to be placed with the healthy increase in spending that we see here coming Alaska especially considering our sister I invite you to enjoy this morning's presentation at the conclusion please remember to pick up your copy of the construction spending forecast on your way out I also want to remind you that North our bait is also sponsoring our legal economic Russian coming up vehicle for will be getting a full presentation on overall economy and tackling issues surrounding world tax reform our own day promised markets is here this morning to use anger as well now mr. Lee white girls is a longtime friend and he exactly a record associated contractors mr. John again because welcome contractors construction business seven o'clock morning is not early the associated general contractor's says he knows a stressful trade association with last 800 system members on factors have associate members who are directly involved in construction industry we sponsored and equal to get its forecasts are ten forecast personal does 2004 and it's primarily together by a part of HTC called construction industry progress on the cips the CIP f is an organization committed to advancing the interests of the building and construction industry Alaska the membership of the fund consists of number two parties boasting contractors who both Union America contractors who contribute ten cents an hour to the fun Tennyson's an hour for every employee works to the phone and a fun is managed by a balanced for both contractors business side of things and on the later side and the upper of the SDI together is to advance the interests of the billions and part of that ever to inform the public the positive contribution is for the last eight years we've done this book as you might've seen last week last Wednesday there's a program on Katie you you about energy in Alaska one-hour program and see idea got the opportunity to be the sponsor of that program and it was an excellent program if you haven't watched it access to it will be on our website and click on that movie too and watch the one-hour program an excellent program on energy and frankly energies probably the most critical thing facing us in Alaska day in energy directly relates dollars in the state's direct relation working construction industry I want to remind any honor to watch that happen please do that must also do sponsorships of us yes as I said this is that the tenth year we've done were cast this is the fourth year that northern bank has hundred of the forecast on the town of sky th would be opportunity to do that for years ago and has been a great partnership this is the before breakfast my dad due to unveil bring out the forecast and one thing the Masons breakfast popular is that you know these are free breakfast you don't have taken your forecast so you're forgetting bed and opening some good news to them and as part of known for its underwriting this forecast they were very insistent that objectivity and quality be maintained so they say completely out of it and we stay out of it and the to the false be in a professional setting social economic research or ISIL to do the research what we get to do is taking great photos to government printing get on another great cuddle on this one how do I to bug ya thang sdg to st. George Clinton for you know posting for that great shot I believe in Constantine for their good form that's a 75 meter tall tower by the way by that s calls the football field is long but on to the UH the program Scott rules net is the most emotional presentation today who does the research writing on this is someone who needs no introduction but i'm going to introduce him anyway he was a recently retired as a professor of economics University of Alaska Anchorage now holds the title professor emeritus or like the Pope is going to be holding Polaris study am minami's and kristen and masters and PhD from university of wisconsin scoffs primary research interests are regional economic analysis a statistical analysis Energy and Natural Resources so again Scott Wilson in Serbia they shine in the morning everyone thanks for coming out at this early hour we got a lot of material to cover saw get right into it if I didn't work this where do I just press as the veins the the main message today is that the construction spending is going to be out this year about 8% to for the first time over 8 billion dollars eight billion dollars yes number is hard to comic lately this has more than ten thousand dollars per person for the entire state of Alaska and let me tell you trying to track down all those dollars is an incredible job we do the best of the key a girl and I know that we missed some of our long way but it for me it's an amazing educational experience because it gives me an opportunity an establishment opportunity to really get into and Fred understand what's going on throughout the state so many or different communities and all various ways the construction industry contributes to the economy so it's a great project and eight billion dollars is a real challenge to try to find out all those and and the increase will be us spread among the three main categories of constructions spending we break out there's public spending private spending nine okay we throw that wide in a sense of trying to capture construction activity wherever in firms so we're not just looking at the commercial sector frost a construction of office buildings and retail space this is a very small part of the total pot we throw the net very wide and tried trying to capture so public spending up public spending about a third of the total car it's going to be on going to do to see a number single readin and that I was a trend of over the last 10 years yeah I like to produce a tenured ray dinner until 21 years of snapshot where r for cash does with with you turn up or down year for that Murray sector shows one thing but i like to supposed to be doing overtime the state your Transocean in the blue at the bottom spending than very fat very level in the public sector and that's not a bad thing and on the private sector you see an uptick starting a couple years ago largely to the oil gas enters I'm going to say it all the time recitation but that that blew my on the bottom for the last couple years in 2008 when rest of the country went down the toilet Alaska kept our spending a fairly good clip we kept a nice level based economy in large part and I accomplished our jams like Amazon to subpoena to the legislature putting out healthy capital bugs and I can't read more sad enough I say that the money in they put in capital budget has contributed state the only thing that I can really forecast with certainty about a forecast is that it will be wrong and this year there's particularly a lot of uncertainty about how the construction industry do I think generally speaking the forecasting to be pretty accurate but there are a number of us or Pisa we haven't recognized and here's my the list when I put the finishing touches I was newspaper and what did I see but the news that the shell was not going to be trillions your letters in our forecast so we're gonna have to make some adjustments as we go but but that happens every year and I think that one of the if not the biggest uncertainty is what the oil industry will be doing this year there are a number of factors that on the diversity here and this is true every year resulting changes in plans here on the outside or a thousand well let me let me move and get passed quickly a little bit of bad news the same forecast year that this year and that's on the side of National Defense for a number of years national defense spending Alaska was a high flyer and if we look at a chart of history of military spending in the state we could see that the last ten years is been a very significant upward trend as plateaued on the high road and was the case back before two thousand well what's happened this year is that the National Defense estate Alea you may have seen that the news or may have attended a presentation by the Corps of Engineers explaining that national defense spending this year is coming down half of what it was last year last year was made over 500 million this year's to be closer to 250 actually good maybe 209 Billy and they hit is in one particular area of defense spending that we call milka as military construction primarily on the basis army bases and air force bases and that had been running over two hundred million dollars a year for quite a few years and this year is Justin sadish sound too 33 million dollars going to be doing very little construction work on the basis but the other components of national defense spending through the Corps of Engineers is holding up well that's pretty much consistent with past years and that's civilian programs associated with things language environmental work which has been growing in recent years is now that's both cleanup of environmental associated with environmental concerns old sites as well as current science current basis and then a couple of other smaller categories of spending like the missile defense agency which again in the earlier part of this millennium was much higher than it is today let me talk for a little bit about these sources of public spending where the cash comes from let's talk first about a federal skinny side again another graph that looks somewhat similar to spending by a military Alaska over the last 20 or 30 meters this is civilian spending by it's federal brass which is the biggest category includes both operating and capital branson capital grants to the big part of this snotty entire picture and what you see is a big run that started early 1990s surprise surprise we tweaked I don't have to tell you either one of the reasons for that but then you see that it plateaus and starts to taper off in 19 and two thousand nine and eleven we were fortunate he owes black top of the last Jabbar's as era spending Alaskan a lot of money as a result of the federal dollars pumped into state long bones for Gaddafi we did very well of that but but the major pattern of this is being brought up in the last decade and plateauing more recently well in terms of the biggest federal capital grant programs that kind of the state and there are four they fund highways airports safe water and housing people in rural housing primarily aimed at the native use the funnies how about pretty well in spite of that grab you in spite of the general squeeze the federal level the only one of those for programs that is really weaken or the past decade is a bill of state water program and then you really can't see a detail on this but the main trend in the in the bars move over time is we're gonna go to smaller and smaller so that in this program which which is funded from a variety of sources and that's why the bars have different colors as as we as you move up the bars has has been under some i would say tag but funny for this program it has been declined slowly over the last ten year period when we turn to a state gone spending of catholic construction the pattern is somewhat different here's a graph that shows state general fund controlling revenues over the last 50 years since I last ate steak and if you add up this is incredibly add all of these rebels and you throw it revenues per put them in today's dollars the total amount of money the sales receipt from trolling revenue tax penalties 178 billion dollars of that I'm saying a billion dollars for the 50 billion has been received in the last five years we've been extremely lucky unfortunate to be able to take advantage of the run out of oil prices and the change in tax policy of the last 10 yrs in terms of increased state capacity to fund whatever the legislature decides to fund in here yaman for deciding to make you aware something you're probably already aware of and I put this together last spring France last pipelines website look at their annual of oil flow through the piper throughput look at your day through book and part of this as a series of us and then that is on technical technologically able to that I gave my reception lesson man you get my on this swing see what the trend is and is this really business kinda it is an eye-opener it should be an eye-opener fair you know the net but that line is running down the way it is it means we're competent less oil pipeline and as you've heard many times that oil revenues funding summer between 85 nine percent of of the general fund funding for the state that's one piece for the capital budget operating budget we're more concerned on the catalytic site that's what pays for a lot of construction projects that are out there and we've got to reverse that money at the worst case we've gotta find that out so we don't so be done continue on down that's something that the legislators working on right now I'm entropy the oil tax build the money when in place 2007 you saw credit one previous graph you nobody got in the last five years oil dry wood has been great you know is reading and boosted our industry but you know it's it's it's spending is it soo facet of murdering from my perception we need to take that value and spread it out of the next you know generation our generation please that's the infamous find oil tax revision said the Legislature's going through and on their resume the progress work that I've seen going on down there's a fashion base and more concern based on seen happen this is a guest is a funding for the abolition four from four main sources shimoga on this graph the lot the solid line represents federal dollars mostly those grants that I mentioned already and see that's been running neighborhood roughly a billion dollars and there's really no trend upward or downward with that unless you want our pessimistic field a little bit of a negative trend but it's been pretty flat the biggest the other resources are the gentleman which is already restricted funds which is blue and the green is general obligation bonds and the most outstanding feature this graph is the fact that in the last three years in particular local sources of funding for the capital budget do bonds and other phones has outstripped the federal contribution and most of that has come from general fund spending so we're taking some of those people rebels and we're coming into the capitalism you could see it in the last two years capital budget has gone from a billion a half in local sources to two and a half the ad in t e federal government it's 3am billion dollars last year yeah I'd like to point out the importance of those green bars there there's only four of them that happened in the last ten years you know in 2003 there was a 350 million dollar transportation bondage of geo bombs and Barbie mom's first blond Asian tradition to the States as things went well Redmond started flowing the state stop wanting for things and was waiting said Reverend yummy lon well in 2003 I realized and i'm going to start longing to not because they didn't select but they need exercise at harbor state government people living cell phones and you said i'd rather than carry see dad was dead actually looks good on the books a certain amount of debt we had bombs and in 2008 out of her daughter Bonnie for transportation projects 2010 there was added to all facilities in 2010 put under the gun education laws that's what we've got seems to read on you that a couple schools were built out of that and the two engineering buildings were partially funded through that and what's interesting when you look at that is those bond issues that we've had the last 3i pipe I'm asking for one in 2002 most of the projects that were listed on the bond issue were not fully funded in and launch it was enough to get the project started but what I but you know I kind of feel that disingenuous and part of the legislators put out a bond issue only partially funded projects but you're not have come around the other side of that point you know I see some value in doing that this is an amendment on their part to say if the voters approve the projects we will commit to funding the residents and the bodies that passes November better case we wrote about 270 million dollar short I'm on 250 4 million dollars of the project so long as you can furnish about half the next few years regardless of what the revenue picture of state is the legislature is the honor to honor that commitment to fully fund those projects so I'll talk a little bit later about capital budget the legislature ask as we're both the government repose and you know it may appear eating on the outside but fairly confluence fill up and fill out with the capital projects before the legislature turntable just to avoid confusion John makes in terms of calendar years I think in terms of fiscal years so that last mean far there is the fiscal year 2013 which was no gun show exactly okay so what's in the two dozen fiscal year 2013 capitalism or what the parts is what we can see that is primarily overwhelmingly in the department transportation Public Utilities at public facilities and some was surprising to me and the part of Commerce and why is that it's because there's a big program in the Commerce many people are not aware of this call discretionary Leslie a grant program the excitement yeah well maybe next year anyway the discretion of legislative grant program is a program that allows individual legislators to put items in the capital budget and last year it amounted to probably a hundred million dollars and there was all sorts of stuffing and if you're really interested you can you can get the camera doesn't even look at estero arrested more than 40 days 40 majors of programs large largest law some that are obviously within the purview of what the state-owned should be doing but I asked my research associates to pick out a program that she felt didn't really fit in with what the sago it should be spending on and she came up with a two hundred thousand up now I hope there's no former Canadian to the eyes but she came up with a with a grant of 200 thousand dollars to upgrade the curling clubs of facility here language and I out early and it's taught me some real good plan and when the capital budget passes I I usually send out a link to the capital budgeted with my members and say you know in this area right near the book we made sure he said and page 92 big chocolate Olympics underneath pages long usually these are the discretionary grants is parked at converse tonight they say no for an exercise look through those grants and ask yourself why is government funding with this it is a real healthy exercising to uni can understand why governments money growth projects okay but why are they funding a Zamboni for a Lions Club ice and I just take on that as a 45 year old grant or you know that their bottom and you need to look at that and ask yourself that question and it's a difficult position and that a lot of legislators are put in with a SWAT money you know there's a lot of people there handout asking for thanks again and they're wrong examples in their place just don't feed it with government funding but we've got Houston and with the the outlook of revenue a hacksaw the 2014 capital budget this assistant year I need your thing right there is it's this calendar years captain budget you know the government presented capital budget on 750 it was 1.8 million dollars he said it's going to be lean this year and at one point eight about a billion ultra federal funds but it's only lean this year we don't have the revenue to us for equity or capital budget but you know my sense is the things you can come out differently than that and it usually does the the legislature takes their prerogatives as their the appropriators and they add money to a bi projects wood and we have co-chairs of house and senate finance our residence coats in the house where senator irony that the Senate and both of the blanket of the capital bugs would be recognized wut kappa sturdy doesn't state and conversations with them when i read that they said we're going to see fewer projects funded but they're going to be larger projects there's gonna have to be a number of those bombs projects lasting bond issues that need be backfilled hearing building but the whole hundred and six hundred seven millions need to complete both of those Billy one an angry janitor base whether that a full funding or another phase of funny I can't say but there will be funding from those there will be money that goes into the last gas line project that ASAP national adult importance been working on for couple years and believe they made remarkable progress on that line up the years now boy that's the line that mentioned goes forward or not I I can't predict what that's doing is is pressuring all these projects that are looked is the beginning of gas market and gas Nuala residents of Alaska moving ahead Susitna one ton of town the governor's got 70 million dollars in his power vegetables to continue to advance that project that's going to be a four and a half billion dollar hydroelectric project yeah you know I am supporter that not just because it's gonna be you know half a decade by six years of great construction but what that does is that provides low-cost energy electricity for leading the race if he said and he build the thing pretty much holds our frontiers and does that project required money on the street State Treasurer to build you listen to the presentation on that and if you go if you've got me of a market for the energy and you've got a price free energy but a red new screen and project like that so reven launch and piece of the rate payers pay for that the next 40 50 years great gosh you know you will finish the project we started and into the 2,000 gold transportation blocks shortfall to 171 billion dollars in those logs those are the bonds can be voted on last night member there's a shortfall most because they they funded project partially fully build the project requires a lot more and professor Kenneth H bombs or short hundred billion on so i often use people get a good capital budget you know there will be some threat in ended or some of those discretionary project gunner as his authority this is right to veto things the government will light up lock that you know i'm going to process of this whole capital budget groups compromising the Legislature will say don't believe this if you give sat so we have that program okay let's so quickly at the main categories of spending and more detail and the for highways it's going to be a we have the passage of the geobox which were about half devoted to high-risk on the transportation 227 million the federal government passed finally legislation authorizing expenditure of federal funds the federal highways program at least for a couple more years that talk we've always been uncertain as to what the feds going to do with that program and there will be uncertainty coming years but they essentially said in program as it currently exists republic year so so the state its share the system passage for hiatus town bridge construction continues this year believably completed 14 the discretionary grant program that i mentioned the ghost movie didn't work there's a lot of money in that for local roads and all the roast resources program the governor is strong standing at airport supports and railroads also also a good year also took advantage of the geobox Twitter million in the jaws for ports throughout the state Ottilie where bangash which received not only from geo bombs but fun one hundred million dollars we don't think that's how you spend this year to do to move forward the airport improvement program which is the big federal grant continues about the same level has passed and the rail extension to port McKenzie as John mentioned they need to complete their project that they're going to be moving forward with partial construction this year yeah on highways and aviation picture I need X 1 race loss we have Larson federal funded except for some what the legislature does we'll get continue funding at historical levels of here to sort the levels Scott mention the highway reauthorization last year deviation reauthorization they both came with a couple components that were called in it disp end times requirements remaining but a reduction in the reduction of the process that the project developers estate Yogi's have to go through the air project in construction what that translates into is that that ball that federal dollar who's actually worth more than it was because there's of use they don't have to jump through anecdotally we used to consider amount of the DoD that federal dollars for about 75 cents comparator state dollar that's about it i think we've not been able all that so if ever thought of any repeats get a priori about Quaker means that the work is a fascinating cost less the governor's wrote the resources program you know that is actually from circa that for counseling days and there's a lot of belly of that and I want to talk about that some other point that something and I on an estate fund transportation programs in AJ's at agc priority for years development of those hits like a federally funded program instead of spot and almost a shotgun blast approach funding these projects this is an organized inserted fund a dedicated funds from prostate registry usually soil motor fuel tax registration fees going to the construction program and once again for the third time last five years I resident Peggy Wilson's chair of the House Transportation Committee passed three bills to try accomplishes this ever HDR ten tuesday went through House Transportation Committee and passed out it would be a constitutional amendment that dedicates funds for transportation program and NTSB 122 and 123 are the actual vehicles that establish the program a wonderous this year's last year she was looking at creating and down from the 1 billion dollars this year's up the n2 billion device thing is happening this year you know we might get the constitutional amendments out of the legislature to go to vote equal in 2014 we might you know on that one but get on it takes a work in progress in every every legislative election we pick up a little more support on the thing or more people recognize dolls the big story education this year dollars already mentioned is what's happening University continued construction of the regus evil arena and two new engineering buildings one anguish and one in fairness unfortunately they're not fully funded yet but we think that the universities can go ahead with the label and hopefully they will be fully funded the state is also from the general fund funded to treasure to rural schools are a number of local schools will be utter destruction this year as well Dolly's Kodiak mat-su borough and the various communities have been floating bombs for smaller education related projects terms of utilities that surprisingly will also be others here drivers you see the new to get electric generating plant is essentially complete but as it turns out and this good electric association those alp are both planning construction of new generating facilities as well so that those are in stark under destruction later this year and so there will continue to be significant activity having our radar imagery lots of money in the state budget for renewable energy hydro projects saw the picture of the wind towers possibly stay assistance through renewable renewable energy program and also discretionary grant program also when utilities addition to electricity telecoms and with the move of verizon into the market they're always spent alone this year appears to be no exception health care is one second to now is so this sectors is take a breath patience breath there have been really free big hospitals under construction that are now officially complete 1001 and one barrel is not quite finish that will be this year's essentially now so three really big projects fish and there aren't any new projects coming along this year there's continuation of big hundred fifty million dollar multi-year expansion and province which will continue and there's target hope the new hospital in Ketchikan will be under destruction in the future but they're still looking for phony so it's going to be kind of pause here for hospitals but of course we're all getting older and what that means is that they're continually growing demand sector and will be now hospitals but also for senior centers and other facilities for senior citizens Scott mentioned down the youngest cousin boss community concern means you'll get eight years and it does this a year up here down here down you know we're all aging and technology is changing and there's a lot more invested in health care senior housing and senior centers so we have absolute forward to both the business side retired aside our lives the federal government specifying and men we realize I'm sure you're aware so we have to clean up the calculations by taking these other ways you can there's there additional funds that come through stake out the compliment that I already mentioned the village safe water program that's a water source that the large sources caddy visual sources camera is the hospital gram we're neighbor married housing self-determination and it s 5 100 billion dollars a year that comes to Alaska and it goes not through say that one that goes directly to the native hobby of work and that of course supports construction housing rural communities throughout the state urban communities as well in addition to that there there are slaughtered aazam direct federal capital assistance to federal agencies like the post office park service and so on and so forth you know the federal equation all this earlier slide that had the word sequestration in it and that's happening right now not happening right now is happening in December we have a fiscal cliff we're going to go over the cliff how bad is going to be how many Wall Street as long as a state that we've got to sequestration going on right now and then you know the president other equal administration we're talking about everything would not happen you know tsa who show up for work baby furloughed and everything will take longer because of all these furloughs cutbacks and federal spending you know you're going except that costs about two two and a half percent of you know I think anyone's appeared and pull two and a half percent out of your own budget and you know it might get hit over to that not really big deal sequestration is on a hike and you know they talk about how we would be firemen or this or that there's other say a thing is hold firemen first and that's what government as it's a racist this use this one go ernment has to to make me pop back to the bureau a scope okay we've gotta find the most obvious the most painful things that will happen and say that's not an apple so that so that we don't have to make these cutbacks all patients come round and father's dead and actually you're here sequestration is a lot of you know sequestration personalities we've gone off the cliff january because i think congress we need to wake up and the next thing that they're going to do is the continuing resolution that has to be done by march twenty seventh congress the senate has passed a budget for years Frank got together throne after that that's their jobs the best bug but they haven't house when it's over both one crisis to another crisis to another crisis it reminds me of one of my daughters from teenagers meaning company had big deal Kota and end in or crisis it isn't the moment to them that which is the small little hiccup in life and the Congress has just got to get on with things and take care it is a speaker but we really need to the over 17 trillion dollar national debt the unfunded liability Social Security Medicare Reagan for a trademark which we all experience the finer parts of that and then just a general his moment in Congress you know what I learned about Congress is that failures acceptable alternative goal if they don't succeed in we can fail if you run your business with that kind of acceptable alternative you don't run a business a healthy fail is okay it is not it you want to succeed you want you wanna come out ahead on this one so the federal equations are we basing the fastest today turning to the private sector nine driving industries the smallest in terms of cattle capital construction you should see food week we've only identified one new secret plan this video via somewhere in Alaska is a relatively small but stable spend my name is a lot better he's coming down a little bit this year but that's not a reflection of an unhealthy second last year there were significant upgrades of three are large rise Coco Fort Knox and Kensington and now they're they moved on to production phase with those upgrades there's only one large upgrade but this year and green screen so there's not quite as much going on that so that's why it is about a little bit this year but certainly as we look forward the opportunities in the sector just just my mom you got I look at it yeah you know I refer to my name is asleep you don't see it you know I'm in heaven 15-20 soaring buildings in town that's a core Alaska or on a boulder in my County nurse secret interview most of the miser are out remote Alaska providing jobs Ohio CEOs who does see them are the the equipment vendors in see machinery co mama you know the last four or five years but when it was a lot of people being sold in the instruction industry was being sold in my experience and it's been they feel you know there are no new large-scale construction going on this year lightly not next year who Betty expirations good prospects on the horizon Pattin continues on both sides you know the positive press that they're trying to pull out and the naked aggression some of our friends the environment without the world come to an end right let's go Donald on bold on properties custom Quinn they're going to be putting a major effort in this year and I mean five six seven billion dollar development to get that minefield commence coal reserves and ask you to provide opportunities out birla last relay like Red Dog paid for Western Alaska you know Donaldson had proposing a three hundred and thirty mile gas line from Cook Inlet to supply energy economy you know I'm nasus animation project and it's all privately funded by a good on the adult highway another high potential project wanna say minus four bombs out of out of Fairbanks new prospects probably the base ones the volcano Mountain rare-earth prospect on Prince of Wales Island you may have read last of years China has a most rare of men's medicine in the world and rare earths are necessary for a lot of electronics and little tiny molecules of a real rare minerals that if you don't have stuff just doesn't work both my Mountain got a prospect for forever minerals and as our kitchen an idea that is good that my mind that's not mine overall this to the site but it's not out of mind because we hear about so much for the the dark side it does not want these projects to their big I have a lot of courses oil and gas construction spending and we're optimistic this year course not everything that we projected last year actually came to pass which is typical so that's one reason why the numbers up as much as this year now taking it without the shells announcement yesterday needs to be shaved a little bit but not not too much and why why are the numbers up this year well I various nominations number of other factors that tend to drive up spending over time one of the force is production value our patrol continues to be really hot this is a graph that shows that the value over time is just production times the price and you can see that email today or cruising about for this muscle 1980's the value of that oil is about of course this is one reason why people recognize we're honest downward trajectory chanson so there's a lot of value in the oil is being produced today how are you that that's one reason why big company like BP say okay we're going to harvest what we have now not necessarily invest in new facilities but a test today get as much out of ground today as you can from currently known so I'd argue that's one reason why expense to high BP even though it has said that they're not n go forward under the existing plans of Liberty field they postpone them to revalidate how try to get that way and has they're not going in with their chops or the heavy water it's a heavy one the velvet hey whoa they're still spending a lot of money and it's taking on the words harvest another recent wise men use of it just because fields are aging infrastructure a lot of this 35 4 years old and you know that those severe conditions it takes so maintenance and upkeep Tico's facilities operated this is not a really good measure we have a good measure of it but the fact that the back in Germany's oil worker one over 250 barrels of oil produced each day now that ratio is down below 50 that is one oil worker generates average of less than 50 girls so staining more employees to get the oil department is the higher maybe sponsor well globally and certain rural Alaska to the unit possible Russian have gone up dramatically in the last 10 years the bars show you the index costs excuse me that connection cost of dollars per auspices this is worldwide data from cameras in people's research associates what's interesting about this tune interesting the fact that the costs have gone up so dramatically elasticity and the line costs have followed the price of oil over the day so the cost of doing anything we hear this from possibly priests dramatically over the last decade according to maintain the same level activity get to spend more and then finally I shouldn't play do come back to basics because one of the features of aces more recently yes to include the opportunity for welcome nice to see credits or certain types of new investments and you see on this graph Lindy amount of petroleum tax credit has been growing pretty rapidly over the last four two thousand at least hi hi so you can see it this is another source you know coming into to this part of construction you know add one thing this again right now saturday early legislate both in the house and senate they're looking at the oil taxes revisions to the two thousand seven nations bill and I have to distill thing in very simple terms so I understand it I Hartford who's writing in crayon and an asus did did to amend into a two major components it had wide credits in there as incentives to explore right now we're paying on with eight percent the cost of these companies involving swarf away and on the other hand has disincentives through Congress ippity to get that oil into production so repay them to explore we're not paying and there's no incentive to produce so what these oil tax bills the two efforts are because they're going to die down the credits or take those credits camp and apply them on production yeah there's a credit available if you explore but he can't take it until you get that market and take the progress enemy component and either get rid of it or altered I know the governor skills to get rid of it and he get a couple of new things in there that you know the source of that revenue would pass the Senate got rid of Congress enemy but the amount of tax rate from $25 or twenty-five percent on the thirty percent which kind of replace our acidity to flatten occur but it's you know they're doing what is there to be the right things taking those two major falls laces and this slide I showed you this one earlier right into depression lying on through put upon barrels per day grant / / I took one step further and our man had my house 0 get out man when production goes to 0 if if the production trend continues somewhere around 20 24 get on there snow oil pump through the pipeline reality is is there will be some additional oil put in whether it's enough to sustain things another aspect of the pipelines you can't pump 10 barrels a day through you know a pipeline doesn't work when it's half whole unless it's all grab me like sewer line pipelines like the water bodies down in charge full and under pressure and then pump the flow so that's kind of real I over today Musa is you know Matt and at some point we need to we're kinda dirty replace that oil and flatten that thing out or increasing slope into the postage side or we're going to be looking curvy most of the accident allow the gas sectors on the North Slope I show this map not expecting a good read but just demonstrate there's a lot of different things going on about our slogan is so difficult to keep track of anything is happening I hear a lot about exploration activities most of that is being conducted by the smaller companies consult the great bears the link oils and so forth we're certainly happy to see them there and there are certainly spending money on exploration the big rocks are still being spent by the majors not only me p but particular this your condo who's going to go ahead with their c5 satellite the fourth satellite rally help i feel they're going to be actually drilling moratorium l this year and they will be continuing to work in existing fields and car so they're getting any basis better this year so X I will continue to be working point Thompson their elevator big spender you don't hear that much about pioneer he and I fact you'll hear anybody why that is is they are continuing to develop fields came out most recently came online in boring and kya feels particularly mind years looking at a large expansion of the things that work feel but as I say mostly hear about us going out of the smaller companies explore most of the dollars are being spent to maintain existing facilities how much smaller scale Cook Inlet the big news there is the hill corpus has concluded their purchase America so they're they're going to be a big spender they his head spin and Gilda facilities that we've obtained and exploration again thanks to these credits a lot of smaller companies that's really what you hear most about smaller companies the smaller prospects that there goes again okay Activia this year very quickly residential commercial both of them a little bit what I think was what's represented the building firms because Steven came up huge several huge years the early 2000s and CA 2012 you look really closely slight updated and you know there's been a slight tightening both of residential commercial markets both in terms reflective elements of vacancy rates and terms of price and so there is a moving out a little bit so it seems to be on the outside of the downside this year for both residential and commercial and I think the best news is ladies and how the mall will be coming to Anchorage this year unfortunately won't be new construction redesign and last but not least other other stable local spending excluding transportation education health and until ities citation rate doesn't legislate grant program has as money for everything imagine and it's not a little bit this year because I've actually taken some stuff those in this category for years and moved it into where we belong health care and so on so forth it's really hard to follow all of the dollars also the state capital budget or some other buildings there's a slam building just saw you know Monday slam Billy State Library Archives Museum I don't know the details but it's expensive the energy we may program weatherization program us all in here grass for water too it's not that's the end what I have to say program on a residential side that has been one of the best investments states made in the last decade the hundred millions are so pumped into that residential rebate program you can upgrades the state will give you a grant or reimburse you for those a certain amount of those upgrades providing perform a certain level improvement than that effect that that is everyone that is participated in that has resulted in an average thirty percent reduction in the energy cost of your home to maintenance that's invested by the government has a grant and you know the reward should be in itself of the incentive to make those upgrades of your own house for the state participation kicked it off and everyone into this space has benefited that I have to point out the last kiss you aspire that regression line taken down was down to do today Pablo's in 2024 we have sixteen billion dollars somebody reserves anos our constitutional budget reserves so much most of that successful viable the majority legislature nine and three-quarters majority the Permanent Fund crossed the 45 billion dollar mark so he can be assured are we entitled to build the circuit right there we have a trembling laundry we need to keep bonding projects and exercising then moderating we have a pro-growth legislature we had a pro-growth administration and that really bodes well for us and especially in a resource side of the world can get abundant natural resources we just need to tap and monetize and what we expect you know I keep my eyes on the legislature this year because that's right where the action is in january april there Ruby revisions petroleum production taxes level to get that done by April nineteenth or we have to go into a special session completed I'm not gonna predict but they will take care of it they will address expiration tax credits and apply them we get consent from here to produce and they will take care of harbor city probably few little things and there's lots building I don't understand but comments looking at then we'll be progress on gas line but you continue that easy before it leaves the vehicle that representation all president Hawker put forward to continue that that operation they will progress on specific on damage they take one of the two names of that is here this isn't navigon or and they will be holding the operating budget we have two buttons in the state i'm at the federal government they passed one possibility we are operating budget funds the operations of government and get a capital budget that is for or capital expenditures with some goofy things in there like friends do various organizations but earlier you know the amount of effort that the finance sub makes you're working on various state agencies is there they're looking this year I'm CARICOM doesn't see the government proposed a three percent increase in the operating budget all those were like six percent increase to some operating things are shaping capital pro creations but right now these subcommittees which they expect to close out this week marine st their double the line well last year was very calm they are major things of people in its age sorry what are we going to do about this no three percent you can live with that sequestration that two and a half percent you know a budget multi-million all of us you can find it and Roman their whole but I'm very confident on all the lioness where the utrageous growth in government scale so i just did the calculation in my head eight point four billion dollar level spending translation about 20 million dollars a day so I think we go thanking you come to the precious one yes and enduring spot Isaac we try and lighten up a little bit that we can both be kind of driver talk about these things be sure to pick up your forecasters these you need on the way out I don't have anything out there but if you need more come buddy office in big more good hat around who to mail back your parent company see if you have parent companies here Bonnie agents your banks and everything so