Elizabeth Earl

Road shows kick off in Kenai: Dunleavy advocates for budget while House goes own way

SOLDOTNA — The members of the House Finance Committee and Gov. Michael J. Dunleavy are both on the road this week, hitting many of the same communities but talking about two different budgets in two very different meetings. Dunleavy kicked off his roadshow in Kenai on March 25, talking to a crowd of about 150 people about his budget plan and the three constitutional amendments that accompany it. Three nights before, Reps. Gary Knopp, R-Kenai, Jennifer Johnston, R-Anchorage, and House Speaker Bryce Edgmon, I-Dillingham, hosted a packed meeting to gather public input before the House develops its own budget. The House Finance Committee is dispatching members to communities all over the state to hold town hall meetings. So far, the meetings have reportedly all been packed with residents; in Kenai, more than 200 people filled the Soldotna Regional Sports Complex to deliver public testimony. Johnston, who serves as vice chair of the House Finance Committee, said she kept a tally in her notes of what the testifiers supported. “I think it was fairly civil,” she said. Though people spoke both for and against Dunleavy’s proposed budget, the majority opposed the cuts and asked for the Legislature to look at taxes and using the Permanent Fund Dividend to pay for government services. Johnston said she noted a lot of support for reducing the PFD. These House Finance meetings are part of the process as the House builds its own budget, she said. The majority of people opposing the cuts mentioned concern about the reductions to K-12 education spending. The Kenai Peninsula Borough School District, which operates 43 schools for approximately 8,800 students, is proposing to cut the majority of its extracurriculars and close five schools, among other cuts, to balance the budget. Pegge Erkeneff, the communications liaison for the district, told the committee members that that doesn’t even meet the cuts they expect. “I’ve been accused of (these projections) being a scare tactic,” she said. “I can assure you it is not. It’s still $5 million shy of $22.4 million if we implemented everything on this sheet.” Several people also noted that they appreciated the opportunity to speak at the House Finance Committee meeting, as Dunleavy’s planned meeting on March 25 would not be as open a forum. Dunleavy’s administration also received some pushback after it became public that his roadshow was organized and hosted by Americans for Prosperity. The governor’s meeting was held at the Cannery Lodge, a private facility in Kenai. Attendees were admitted by a Kenai Police Department officer and the gate at the front of the property was closed shortly after the meeting began. While there was no open planned public comment, attendees at the meeting submitted written questions that could be asked during a panel Q&A session. Ryan McKee, the Alaska state director for Americans for Prosperity, said the group approached the Dunleavy administration several months ago about doing a speaking tour with them and that the timing of the announcement just happened to fall as the House Finance Committee announced its own tour. Dunleavy has worked with AFP in the past, so the organization didn’t feel the meeting was out of place, McKee said. “The governor is going to be the one who goes out and does the big town halls; it’s not really our place to host that for him and have this big space,” he said. “We’d rather have this small space where we can have these questions asked … and everyone can walk away feeling like they got something. I’m sure he’ll have bigger events, but that’s not really what we were looking at.” Dunleavy said the partnership with AFP helped the state save money while enabling him to travel and speak to residents about the budget. The organization offered a venue and time, and the administration is willing to work with other partners, he said. “We didn’t want to spend money from the government to go and do a very expensive roadshow,” he said. “…I know there are some who would prefer we partner up with other outfits. Let us know who they are.” Dunleavy brought Alaska Department of Revenue Commissioner Bruce Tangeman, Office of Management and Budget Director Donna Arduin and Alaska Attorney General Kevin Clarkson with him on the tour to talk about both his proposed fiscal year 2020 budget and long-term plans. Much of the discussion lingered over the Legislature’s spending habits, with Dunleavy asserting that the state’s problem is primarily overspending. One of his three proposed constitutional amendments would set a new state spending cap, tying it to inflation and the state’s population. The other two amendments — one enshrining the PFD in the state constitution and the other requiring a public vote before the institution of any new broad-based taxes — are also part of the administration’s long-term fiscal plan. While Americans for Prosperity doesn’t take a formal position on the PFD issues, the group strongly supports a spending cap and the vote before new taxes, similar to Colorado’s Taxpayer Bill of Rights. “(This year), you’re having meetings, the House is having meetings — on the budget, we’re supporting the process,” he said. “The spending cap, we support that 100 percent, and the Taxpayer Bill of Rights.” Clarkson explained that the Legislature has to approve the resolutions for constitutional amendments by a two-thirds majority before they go to a public vote to be ratified. “If you have legislators out there who you are in contact with, you need to let them know that they should be voting for the governor’s amendments,” he said. Tangeman said what the administration has heard is that the House is starting with the fiscal year 2019 budget and planning to go closer to status quo and look at implementing taxes. “There is no way you can tax $7 billion out of our economy,” he said, referring to long-term projections of what would be required to pay for the budget at current annual increases if the Permanent Fund Earnings Reserve account is depleted. Both Dunleavy and the House Finance Committee planned meetings throughout the week in various communities around the state, while the Senate began holding hearings on the first of the constitutional amendments on March 21. ^

PWS Tanner crab fishery gives winter season a boost

A rejuvenated Tanner crab fishery in Prince William Sound is showing positive signs of finishing out its second season in 30 years. The fishery opened for the first time since 1988 in 2017, operating on commissioners permits. A test fishery operated as an information-gathering pot fishery in the area in 2016 to a limited number of vessels. Based on Alaska Department of Fish and Game survey data, the stocks were good to go for another season this year, opening March 1 and closing either by EO or on March 31. So far, 11 vessels have landed about 16,850 Tanner crabs, totaling about 28,699 pounds. Harvest has been better than expected in two areas, said Jan Rumble, the area management biologist for commercial shellfish fisheries in Prince William Sound. One, in federal waters off of Cape Puget, had a harvest of 14,754 pounds and the Icy Bay/Whale Bay area harvested 7,042 pounds. “Fishing for the first week of the fishery has been more spread out than last year, and not as focused in one statistical area, with 10 statistical areas fished to date,” she wrote in an email. Fishermen in the area are feeling fairly optimistic about the catches and catch per unit of effort so far, said Chelsea Haisman, the executive director of Cordova District Fishermen United. “The weather has been the biggest buzzkill,” she said. “(One fisherman has) sat out 11 days so far. It’s been hardly any fishing at all. It’s part of the game, I guess.” There was enthusiasm on the docks when the fishermen first came in with the crab in Whittier, Seward and Cordova, she said. The catch provides a new seafood opportunity for residents before the summer fishing season kicks into gear. It also fills in some of the space for the Prince William Sound fleet before the summer salmon season starts — there are several quiet months right now around December and January, and the salmon season doesn’t start in earnest until early May, she said. “It sounds like right now, the fishery can keep going as long as the biomass is there,” she said. “The fleet is seeing some smaller crabs that they are releasing back.” Deliveries have been made in Whittier, Seward and Cordova, she said. Tanner crab, often marketed as its cousin the snow crab, is a fairly valuable product for fishermen. In 2017, the average ex-vessel price was $3.53 per pound, the highest price since 1994, according to ADFG records. The scientific species name of Tanner crab is C. bairdi, though another species of crab — C. opilio — is also often marketed as snow crab and sold for more than $4 per pound at the dock in 2017, according to ADFG. The commercial Tanner crab fishery in Prince William Sound boomed from 1968 until the late 1970s, when the catch began to decline before the fishery was closed in 1988. At its peak, fishermen brought in 13.9 million pounds, according to a March 2017 memo from Fish and Game. That was before the minimum carapace width of 5.3 inches was set, though. By 1988, fishermen only brought in about a half-million pounds, with little to no harvest in the Eastern District because there were fewer legal males available. The collapse of the stock could be due to overharvesting and changes in environmental conditions, according to the memo. The early fisheries on legal-size males were limited by season rather than by Guideline Harvest Level, which is the current limit set by the Board of Fisheries for Tanner crab fisheries. “Handling mortality of undersized and female crab may have contributed to the decline, particularly during fishing seasons of seven months duration, which encompassed some of the molting and mating seasons,” the memo states. “Changes in environmental conditions, documented on a Gulf of Alaska-wide basis, may have caused high mortality of Tanner crab larvae, impaired growth and reproduction, and coincided with increased production of crab predators such as gadoid fishes.” The fishery depends on daily call-ins from fishermen on the grounds for tracking and port sampling of the catch. At the beginning of this season, ADFG asked fishermen to call in faithfully to provide accurate information so the fishery can stay open. In the face of less information, ADFG tends more conservative in its management in the best interest of stocks. So far, fishermen have been providing regular reports, Rumble said. “The mandatory call-in compliance has been good and has allowed harvest and effort tracking by the statistical area; harvest has been relatively stable,” she said. “The fishery will continue to be closely monitored via the call-in reports and deliveries for the next weeks to determine if any management action is necessary.” At this point, Fish and Game feels confident enough in its information that there are no immediate plans to close the fishery early, she said. Without early intervention from Fish and Game, the fishery will close March 31. Elizabeth Earl can be reached at [email protected]

Stakeholders seek ways to grow outdoor rec economy

A group of business owners and advocates are pushing for Alaska to place more of an economic stake in its outdoor recreation economy. Alaska boasts a massive number of tracts of undeveloped public land. Most Alaskans take advantage of all that land for various activities all year, and the summer brings tourists from all over the world, especially to fish. The founders of Confluence, an outdoor recreation advocacy group begun under the umbrella of the Valdez Adventure Alliance, think the state could advertise the outdoor economy better and enable more businesses to cater to it. A new study from the University of Alaska Anchorage’s Center for Economic Development establishes a numerical sketch for the industry’s impact as well. The study estimates that participants in outdoor recreation spend about $3.2 billion annually, excluding equipment purchases, and that the industry provides about 29,000 direct jobs and about 10,000 indirect and induced jobs. The report estimates that equipment purchases could be a similar sum. “A majority of Alaskans say that opportunities to get outside are a reason they choose to live or remain in the state, and a similar share of visitors come to Alaska to experience the great outdoors,” the report states. “Both locals and visitors spend money in the course of their activities that circulates throughout the state economy, making outdoor recreation a substantial industry.” During a House Resources Committee meeting on March 6, committee members heard testimony in support of legislation enhancing the outdoor recreation industry in the state. Lee Hart, one of the co-founders of Confluence, told the committee that Alaskans have long shown support for spending state resources on outdoor recreation, including taxing themselves for trail maintenance. “Since at least the year 2000, residents of this state have been clamoring for more access to the public lands and waterways that surround their communities,” she said. Nolan Klouda, the director of UAA Center for Economic Development, presented the study to the committee and noted that outdoor recreation is also an attraction for workers. An economic strategy for a geographically isolated state like Alaska may not necessarily be to attract firms, but to attract talented workers to live here because of the quality of life and thus lure the businesses to where the workers are, according to the study. Klouda said businesses often identify hiring talent as a major obstacle to operating. “Economic development increasingly is about attracting talent and keeping talent in your area,” he said. “Just the ability to hire any workers at any skill level that can fill the positions that you have, and Alaska businesses will tell you that that is a major challenge.” Exploring ways to attract and retain residents is one of four recommendations included in the report. The others include gathering better data about outdoor recreation consumers, adding an economic impact component to state recreation development and supporting entrepreneurship. The report points to efforts such as the Anchorage-based Launch Alaska and the Seward-based Alaska Ocean Cluster as examples of incubators for businesses in particular sectors. The study also references programs like the state of Vermont’s grant program for remote workers, which grants prospective residents up to $10,000 for living in the state while performing remote work, and to an effort in Valdez to start a telework center meant to attract tech workers from crowded, expensive areas like Seattle and Silicon Valley based on the local outdoor recreation opportunities available. In a handout presented to the committee, Confluence identified four priorities: raising awareness of emerging sectors, creating a blue ribbon commission to identify ways to reduce regulatory burden for outdoor industries, leveraging federal matches to fund outdoor recreation access, and management and preserving the Snowmobile Trails Grant Program. A number of stakeholders also wrote letters to the committee in support of the SnowTRAC program, in which snowmachiners pay an increased license and registration fee in exchange for maintained trails. Gov. Michael J. Dunleavy’s fiscal year 2020 budget proposes reorganization for the state recreational trails program, under which the snowmobile trail grant program is administered, by eliminating a position, according to the Office of Management and Budget. Michele Stevens, who represented the Petersville Community Nonprofit Corporation, said the snowmobile trails provide more than just recreational opportunity — they are important for search and rescue operations, as people are less likely to get lost. Matanuska-Susitna Borough Assembly member Dan Mayfield wrote a letter to Dunleavy that he was surprised that funding for the snowmobile trail program, known as SnowTRAC, was not included in the budget. “The money funds trail care, safety and grooming activities that, in turn, bring increased business through recreational visitation to each of the communities throughout the state who have qualified for these funds,” he wrote. “Failure to fund this program means the end of SnowTRAC, increased hazards on the trails, the failure of several non-profit organizations who work to support snowmobile activity and decreased business/revenue for communities up and down the trail system.” ^ Elizabeth Earl can be reached at [email protected]

Cook Inlet oil infrastructure review moves into second phase

Two years after a major gas line in Cook Inlet leaked millions of cubic feet of methane into the water, the citizen agency charged with monitoring oil and gas activity is assembling a panel of experts to review information related to the region’s aging industry infrastructure. The Cook Inlet Regional Citizens’ Advisory Council took on a project to conduct a risk assessment for the area’s oil and gas facilities about a year after Hilcorp, the operator of the leaking pipeline, announced in April 2017 that the leak had been stopped. The leak, which drew international attention, began in December 2016; the company said ice conditions made it too difficult to dive down and repair the line at the time. Later investigation indicated a rolling boulder — about 3 feet by 10 feet long, according to the Alaska Department of Environmental Conservation — at the bottom of the Inlet had damaged the line, which delivered dry natural gas to a production platform. The assessment included taking an inventory of existing infrastructure and its structural integrity. With funding from the Kenai Peninsula Borough and the Alaska Department of Environmental Conservation as well as its own dollars, CIRCAC began the first phase of a review in May 2018 and, on March 15, announced that it would move into its second phase. The CIRCAC and its sister organization in Prince William Sound were created by Congress after the March 24, 1989, Exxon Valdez disaster that spilled nearly 11 million gallons of crude oil. The second phase involves an expert panel of independent experts: Dr. Christopher Dash, James Howell, Andrew Kendrick, Christopher Myer and Dr. Shirish Patel. All five are pipeline safety experts, and four have direct Alaska experience, according to a March 15 announcement from CIRCAC. “Myers has an intimate knowledge of Cook Inlet oil and gas operations, while Howell and Dash have worked on pipeline safety in other parts of Alaska,” the announcement states. “Kendrick has consulted on risk management and safety for pipeline projects throughout the country, and Patil spent 30+ years teaching and studying petroleum engineering at the University of Alaska Fairbanks prior to moving to a similar role in Saudi Arabia.” Tim Robertson, the co-owner of Nuka Research and Planning Group, the contractor managing the project for CIRCAC, said the operators are still reviewing the information gathered in the inventory but that part of it should be publicly available by the end of the month. “It’s going to put out by a website, and that website should be live by the end of the month,” he said. “There is a second level of the inventory, which is a little more proprietary for the operators.” Most of Cook Inlet’s oil infrastructure dates back to the 1960s, when the oil boom began there in earnest. Companies in the succeeding years patched and repaired platforms and pipelines there, handing them off to newcomers as each successive company sold its interest in the Inlet. Hilcorp, which bought into the inlet in 2012, controls and operates the majority of Cook Inlet’s infrastructure, with Marathon Petroleum operating the former Tesoro refinery in Nikiski and Cook Inlet Energy, Furie Operating Alaska and BlueCrest Energy operating units of their own. Robertson said one of the challenges of assembling the inventory so far has been the sales between companies. Nuka Research previously worked on a pipeline risk assessment for the North Slope, where the infrastructure has mostly been built by the current operators. In Cook Inlet, assets have been bought and sold multiple times over the years and records of maintenance have not been easily available. The operators have been helpful where they can, but they’re often busy and sometimes may not have the records themselves, he said. “Recent information is really, really good, but if you go back beyond about 1995, it’s really fuzzy,” he said. “Likewise, we’ve had some variability in repairs. Again, that’s been really hard information to find out in some cases.” The panel members have already met via teleconference and will meet face-to-face in Anchorage on May 8, Robertson said. This will also be a chance for the public to participate and gather more information about the infrastructure in Cook Inlet. CIRCAC plans to announce the details of the meeting in the future. So far, the timeline has been going about as Nuka expected, Robertson said. There have been some delays because of hiccups in obtaining funding from the state and because of the schedules with operators — including the Nov. 30 earthquake that rattled Southcentral Alaska. Moving into the second phase, Nuka is planning for the experts to spend the next month reviewing the information before meeting in May to discuss it. They will then provide feedback, which Nuka will review before the panel meets again around August or September, he said. Right now, they don’t have a prescribed set of deliverables they expect from the panel. They may take a different form than the North Slope pipeline review’s recommendations did, Robertson said. “We certainly want the expert panel to take ownership of their recommendations,” he said. “They’re all members of the industry … some from a worldwide perspective, others from a Cook Inlet perspective. They all understand the industry. We aren’t putting any bounds on recommendations at this point. I think at this point, they’ll be looking at best practices and information gathering.” Elizabeth Earl can be reached at [email protected]

Ag industry frets over end of Alaska Grown, loan fund in budget

Some of the cuts in Gov. Michael J. Dunleavy’s budget would fall hard on Alaska’s farmers, even as they try to grow their sector into a larger part of the state economy. Farming is nothing new in Alaska. However, as Sen. Lisa Murkowski noted in her address to attendees at the Alaska Food Festival and Conference in Homer on March 8, most of the nation has no idea that there is any agriculture at all in the state. Farming in Alaska dates back to at least the 1920s, with people keeping their own gardens before and after that. But in the past three decades, farmers have been pushing harder to innovate and increase their presence with an eye toward providing more of Alaska’s food supply locally and toward exporting their goods. Farmers now grow everything from peonies to massive tomatoes to oysters in the state. However, Dunleavy’s budget includes a number of cuts to programs that would affect the industry. One of the major items is to significantly reduce funding to the state Division of Agriculture, which includes the highly visible Alaska Grown program. The budget would also zero out funding for the Agriculture Revolving Loan Fund, a state-administered fund issuing small loans to farmers for business-related expenses, and would eliminate the state agricultural veterinarian. Dunleavy campaigned on the promise that he would cut the state budget to match revenues without raising new broad-base taxes. His proposed budget cuts more than $1.2 billion, forgoing a number of federal match programs. “It was difficult to arrive at these decisions and it is certainly not easy news to share,” wrote Alaska Department of Natural Resources Commissioner Corri Feige in a Feb. 13 letter to staff. “However, it speaks far more to the state’s very significant fiscal challenges than it does to the good work performed by each of you.” The Alaska Food Policy Council, a group of food policy advocates, has been working on policies to advance food safety and local food availability for the past eight years. This year, members of the council were working on a farming pilot plan when the governor’s budget came out, at which point the focus shifted toward the impacts. “This year, I think everyone’s priority is the budget,” said Amy Seitz, a member of the Alaska Food Policy Council’s board and the executive director of the Alaska Farm Bureau. With significant cuts to the Division of Agriculture, the industry would lose an important link to creating opportunities to export their goods. Because of its geography, Alaska has long relied on trade partners in Asia; individual farmers may not have the ability to create those partnerships on their own, especially as foreign government entities may only deal with other government entities, Seitz said. Similarly, the Alaska Grown program is an important go-between for farmers to get their produce onto local grocery store shelves. Large grocery chains like Fred Meyer and Costco may not work with individual farmers who want to put their products on shelves there, and without that shelf space, farmers won’t be able to reach as many consumers. Alaska Grown has been an important partner to talk with the grocery chains and to help farmers with the paperwork, Seitz said. The “farm-to-institution” program would also disappear, as would the federal-state Crop Block Grant program. Accepting federal grants coming to the state would be difficult, as the Division of Agriculture usually accepts and distributes those — and with $16 million over the next four years provided to the state through the most recent farm bill, who would handle those funds will be unclear. The state dairy certification program would also be cut, impacting some operations already ongoing. The only operations that could then distribute local milk in the state would be through herdshares, which are fairly limited in scope. Essentially, the industry would be pushed back from its movement toward professionalism. “It would go back to hobby farming,” Seitz said. Outside the landscape of the proposed state budget, there’s optimism in the farming sector. The conference, attended by about 200 people from all over the state, featured items like connecting farms and consumers as a community food system, marketing, accepting food stamp benefits at farmers markets and food business financing. Discussions focused on opportunities to increase consumption and awareness of local foods and value-added products. The Alaska Food Policy Council advocates for state law changes that make food more affordable and available across the state, preferring local when possible. Bills like HB 16, which would allow for the sale of raw milk products in the state, would further the distribution of local foods, and the council is working on a farm pilot project that would allow farmers trying to get going to have access to shared kitchen facilities and other resources. The greatest obstacles aren’t necessarily getting people into farming, Seitz said, but rather “logistics and changing the attitude of people who are making policies.” The most recent farm bill, a sprawling piece of federal legislation passed in December, provides some other reasons for optimism. The reauthorization of the specialty crop grant program provides more funding for farmers in Alaska, who often grow crops like fruits, vegetables and tree nuts. Sen. Dan Sullivan, who gave a brief speech at the conference Friday, said his office supported that provision and hopes to continue facilitating farming in Alaska. “There’s a lot going on, and it’s positive, really positive,” Sullivan said. “We’re working on a lot of sustainable food security, but there’s a lot of areas where I think we’re just scratching the surface, particularly if you look at not just the farm on land but also … our oceans.” Elizabeth Earl can be reached at [email protected]

Kenai borough outlines budget impact of losing oil property taxes

Though the community of Nikiski on the Kenai Peninsula only has about 6,500 residents, its fire department boasts a $5 million budget. Most of that hinges on the fact that it’s the seat of the oil industry on the Kenai Peninsula. The community has reaped the benefits of local property taxes levied on the oil and gas properties nearby to pay for services since the first oil boom in Cook Inlet in the 1960s. That would change should the Legislature pass Senate Bill 57, Gov. Michael J. Dunleavy’s request to repeal municipalities’ ability to tax oil and gas infrastructure. The Kenai Peninsula Borough would lose out on about $14.7 million, or about 11 percent of its annual revenue. Impacts would ripple all over the borough, according to Borough Mayor Charlie Pierce. Nikiski’s fire department would lose about $3 million of its budget; to recover those expenses, the property taxes there would have to be raised to about 17 mills, or $17 on every $1,000 of property value. “You could see a Nikiski fire department with 17 mills to pay for the current level of services or a fire chief, an assistant fire chief and a bunch of volunteers,” he said. “…You cannot tax your way out of this.” The Kenai Peninsula Borough Assembly passed a resolution requesting that the Legislature amend SB 57 to simply reduce municipalities’ tax authority on oil and gas properties from 20 mills to 15 mills rather than eliminate it entirely. SB 57 has not yet been scheduled for any hearings in the Legislature. A second-class borough, the Kenai Peninsula is divided up into service areas, where property taxes are applied at different rates to pay for services like hospitals, emergency medical services and roads for its approximately 57,000 residents. Nikiski’s fire and emergency service area contains the oil platforms in the Inlet as well as Marathon’s refinery and the former Agrium plant, allowing it to collect taxes from that infrastructure and serving those platforms. But cutting 11 percent its total revenue would mean cuts elsewhere in the borough as well, Pierce said. The road service area, which incorporates the entire borough, also draws funds from the oil and gas infrastructure and would take a hit. Pierce noted the cuts would likely mean staff cuts, reduced services and delayed construction projects. While the Kenai Peninsula Borough is affected by many of the cuts, it’s not hit as hard by the oil and gas tax change as the North Slope Borough. The borough is home to the lucrative Arctic oil and gas fields and expected to collect about $313.7 million in property taxes from the 17.99 mill levy it applied to them in 2018, according to the North Slope Borough’s budget. The borough has to approve its draft budget by March 30, before it knows what the Legislature will do, so it’s planning for status quo at present. If SB 57 passes in its current form, the borough’s property tax revenue will fall to about $14.3 million, said Fadil Limani, the deputy finance director for the North Slope Borough. Much of the borough’s 95,000 square miles of area is on federal land and many of the residents live on Native allotments, making them exempt from property tax. The borough’s obligation to the North Slope Borough School District alone is $15 million, Limani said. “We’re facing extinction,” Limani said. “We won’t be able to survive if we don’t have the ability to tax … there’s nowhere else for us to tax.” The North Slope Borough is a high-cost place, with its villages scattered far and wide with no roads to connect them. The borough provides a number of services that others in the state don’t, including its own police force, search-and-rescue and wildlife management departments. The reductions in state services in Dunleavy’s budget and the cuts to its own revenue would send the villages back into a pre-modern lifestyle, Limani said. It would also limit the borough’s ability to issue bonds by damaging ratings; they likely wouldn’t be able to issue bonds at all, he said. D.J. Fauske, the government and external affairs manager for the North Slope Borough, said Dunleavy’s office did not discuss its plans with the municipalities before introducing them on Feb. 13. Instead of correcting the entire budget gap this year by cutting hard into the borough’s budget, he said the governor should take a slower approach and noted that the Permanent Fund Dividend paybacks included in the budget consume an enormous chunk of the state’s revenue. “They know the damage this will do to bond ratings,” Fauske said. “He’s not making any cuts. Where are some of the cuts (to operations) … if we don’t have a ferry system, why do we have state offices open in Southeast?” Municipalities all over the state have objected that the governor’s budget cuts at the state level but, instead of entirely eliminating expenses, shifts them to municipalities to provide. For those municipalities, that may mean local tax hikes to maintain the current levels of service. But for others, there is no way to make up that revenue. The Alaska Municipal League identified a number of items of concern in its response to Dunleavy’s budget, with some as cost-shifts and others as state preemption of tax collection. SB 57 is an example of state preemption, as is the proposal to stop sharing the fisheries business tax and fisheries landing tax, said Nils Andreassen, the executive director of the Alaska Municipal League. Dunleavy’s budget also proposes cutting the school debt reimbursement program and not funding the entire formula for public schools. Both of those are cost-shifts, Andreassen said, which the boroughs will have a hard time making up. The cuts to Medicaid are also likely to hit locally owned hospitals hard, especially in rural areas where Medicaid patients make up a higher percentage of the payer base. Not every municipality has the same types of taxes available, and some also have voter-imposed taxed on rates. The Kenai Peninsula Borough, for example, has a voter-imposed cap of $500 on taxable sales. Such limits reduce municipalities’ abilities to find revenue elsewhere, and many already struggle with deficits, Andreassen said. Some costs are fixed, such as municipalities’ participation in the Public Employee Retirement System and having to fund schools between the minimum and maximum funding allowed. “There’s already a struggle at the municipal level to have stable budgets,” he said. “I think we looked at (fiscal year 2017) budgets and roughly a third of municipalities budgeted for more expenses than revenues.” There’s no precedent in the state for boroughs ceasing operations, but cities have, Andreassen said. If the state preempts collection of certain taxes, the boroughs and cities will have to find other ways to make up the revenue, which may mean new taxes on industries, he said. “There’s not a precedent, but boroughs are statutorily required to tax, and if the state takes away one tax, it only means they have to find a different tax,” he said. “It means that industries and residents in those regions will have a different burden based on that. If you look at the petroleum tax and fisheries tax being preempted by the state, you can imagine that those industries would have other taxes levied on them.” The governor intends the impact on municipalities to be a conversation, one which began on Feb. 14, said Matt Shuckerow, press secretary for Dunleavy. “Where we are as a state is that we have spent $14 billion (from savings) in four years,” Shuckerow said. “We can no longer spend money that we don’t have, and we cannot spend on all programs … Municipalities have the option to do what the governor has done and find efficiencies and programs and find programs that may be no longer best serving their residents.” He said the governor has already talked with a number of municipalities and plans to continue to do so, including with the North Slope Borough. The hope with SB 57 is to find a fair and equitable distribution of the state’s wealth with the oil and gas property tax, he said. Dunleavy’s message is that the topic is “open for discussion,” he said. The budget was built on the principle of reducing state spending to match revenues without implementing any new taxes, and the governor is “fairly serious” about getting it done this year, Shuckerow said. “Here we are (six years after oil prices began to decline) and we’ve made very little changes to the amount of that we spend,” he said. “We’re up against the fiscal cliff, and we have to make a choice. The governor in the priorities of his campaign (said) that we have to put Alaska on a permanent fiscal plan. There’s no question Alaskans are now engaged. We hope that they continue to engage.” ^ Elizabeth Earl can be reached at [email protected]l.com.

Board votes down personal-use priority proposal

The Board of Fisheries has voted down a controversial proposal that would have given personal-use fisheries priority in its allocation criteria as well as two proposals to change the way the Alaska Department of Fish and Game sets and manages escapement goals. All three proposals attracted testimony from stakeholders across the state, both for and against, during the board’s Statewide Finfish and Supplemental Issues meeting in Anchorage from March 9-12. Though the board turned down several proposals related to escapement goals and allocation priorities, the members indicated they’d be open to longer discussions on those subjects in the future. Proposal 171, submitted by the Kenai River Sportfishing Association, would have changed the criteria in the board’s allocation policy to include a priority for personal-use fisheries. The personal-use fisheries in the state, most notably the Chitina, Kenai River, Kasilof River and Fish Creek dipnet fisheries, attract thousands of participants every year. Because they do not have participation limits and harvest sockeye, a valuable species to the other user groups, they are a frequent source of allocation conflict, especially in Cook Inlet. The Board of Fisheries uses the allocation criteria as a checklist for considerations when making allocative decisions about fisheries issues. Subsistence users always get a priority, but in nonsubsistence areas, the board can weigh the different user groups and factors equally. In its proposal, KRSA asked that the board rewrite its allocation criteria in nonsubsistence areas with a number of changes, including considering the number of residents and nonresidents participating in the fishery, the importance of each fishery to provide residents with fish for personal and family consumption and the history of the fishery within the last 20 years. During public testimony at the meeting, KRSA fishery biology consultant Kevin Delaney told the board that the criteria does not block the board from making decisions in favor of other user groups but would add weight to the criteria when making allocative decisions in nonsubsistence areas. “If the desire is to prioritize historical use as it has been, rather than generating broad public support and maximizing economic value, that decisions would still be possible,” he said. “It would just be transparently obvious that that’s the reason.” Large numbers of commercial fishermen, particularly from Cook Inlet, came out to oppose the proposal. Many cited feelings of being marginalized by regulations in Cook Inlet, where families have generations of commercial fishing history, while others cited concerns about the biological wisdom of prioritizing the personal-use fisheries. Duncan Fields, who represented the communities of Ouzinkie and Old Harbor on Kodiak and as the chairman of the Kodiak Salmon Workgroup, testified against proposal 171, saying it would tie the hands of future boards on allocation decisions and that it would set a precedent for allocation based on the number of users. “That goes to the very heart of what we believe in as Americans with a constitutional government where we protect aspects of minority rights, people who are not in the majority,” he said. “We have a common use clause, which means that the resources are to be used for the good of all the people, not just those who happen to have a majoritarian point of view. I think I’m most offended by the change in language that would change your criteria based on sort of a numerical hierarchy.” The board voted down the proposal 2-5, with members Israel Payton and Reed Morisky supporting it. Payton, who lives in the Matanuska Valley, said many people in the area have “given up” on policies improving the quality of their fisheries. The board is charged with making allocation decisions, which are difficult, but it’s important to consider the needs of a growing population in Cook Inlet, he said. “I sympathize with commercial fishermen in Cook Inlet who have a long history in commercial fishing that feel like they’re getting squeezed out,” he said. “But the population has grown … we’re not providing the opportunity for that growing need.” Board member Fritz Johnson noted there are biological issues in the Susitna River impacting salmon returns there as well, and there are ways to remedy that using board processes, but said he would oppose the proposal because of the majority of users being against it. Both Morisky and board member Robert Ruffner noted that they would be willing to discuss the issue further in the future, as it’s a common issue brought up between user groups. It continued the thread of the meeting, as the board held an entire special meeting Friday to discuss issues related to hatcheries. No regulatory action was taken, but the board listened to public comment and information from ADFG about current hatchery programs and research to gather more information after several years of the public raising concerns about hatchery operations in the state. Two other proposals, 169 and 170, also raised long-term issues. Both dealt with the way ADFG sets salmon escapement goals in rivers, which impact how managers are able to open fishing and regulate harvest. The department sets a variety of different types of goals, including sustainable escapement goals, or SEG, biological escapement goals, or BEG, and optimum escapement goals, or OEG, and develops them based on the data available. Proposal 169 would have rewritten the state’s policy for developing escapement goals and required the department to release them earlier, before in-cycle Board of Fisheries proposals are due, and proposal 170 would have changed how escapement goals are set and required management targets based on maximum sustained yield. The board turned down both proposals unanimously, but several members noted that the escapement goal setting process may be due for a review. Currently, the department reviews and sets escapement goals, presenting information to the board at each three-year meeting cycle, but the board does not necessarily vote on setting individual escapement goals. Ruffner noted that the process of how Fish and Game decides whether to set an OEG, BEG or SEG can be confusing and could use clarification. “I think if we ignore this, I think in a couple of years we’re going to be right where we are with hatchery issues, where we have to do something,” he said. “I’d much prefer to get ahead of that now with a committee process or something.” Jensen said he agreed with Ruffner about the long-term considerations on the escapement goal policies. Payton said he thought the escapement goal policy is one of the stronger documents the department has but there could be some improvements to the board’s action on goals. “Process-wise, I think we could work on some things,” he said. ^ Elizabeth Earl can be reached at [email protected]

Board of Fisheries to reconvene committee on hatcheries

For the first time in about a decade, the Board of Fisheries will reconvene its committee focused on the state’s salmon hatcheries. The Hatchery Committee — which actually consists of all the members of the board — is set to meet March 8, the day before the board begins its Statewide Finfish and Supplemental Issues meeting in Anchorage at the Sheraton Hotel from March 9-12. Rather than making regulatory policies, the committee meeting will focus on receiving reports from staff and hearing from the public on hatchery issues. Glenn Haight, the board’s executive director, said the committee will base its activities on a joint protocol on hatcheries developed in 2002. “The agenda shows that the department will provide a number of reports and then they were just going to open discussions not unlike Committee of the Whole,” he said. “It’s not clear to me what will come out of it. It’s an information session.” The Joint Protocol on Salmon Enhancement, signed in 2002 by the chairman of the Board of Fisheries and the commissioner of the Alaska Department of Fish and Game, outlines the authorities of the department and the board and outlines the board’s intention to hold meetings “on a regular basis wherein the department will update the board and the public on management, production and research relating to Alaska’s salmon enhancement program.” Most hatcheries in the state are run by private nonprofit organizations, funded in part by taxes paid by commercial fishermen as well as cost recovery revenue from harvests; the state also runs two sportfish hatcheries in Anchorage and Fairbanks. Their permits for egg-takes and salmon releases are administered by the state and vetted through the Regional Planning Team process. The board has the authority to regulate harvest on those returning salmon and to modify hatchery permits relating to the source and the number of eggs harvested. Sam Rabung, the director of Fish and Game’s Division of Commercial Fisheries and the former section chief for the division’s Statewide Aquaculture, Permitting and Planning office, said the committee met annually until 2008 or so. “Quite frankly, I think the board at that time just lost interest because there was nothing new or exciting happening,” he said. “In the 10 years that went by, there wasn’t an opportunity for the public to receive information, and because that information wasn’t being made available in public formats, it kind of created an information vacuum.” In a series of meetings in 2018, the board considered petitions and Agenda Change Requests from the public raising concerns about hatchery production — particularly about pink salmon production in Prince William Sound. The Kenai River Sportfishing Association, a Soldotna-based organization which advocates for sport anglers, connected its concern to an ADFG analysis showing that unexpectedly large numbers of hatchery-origin Prince William Sound pink salmon were straying into streams in Lower Cook Inlet in 2016 and 2017. The organization submitted a number of scientific papers connecting pink salmon abundance in the Gulf of Alaska to concerns about the Gulf’s carrying capacity for fish as well. Hatchery representatives and commercial fishermen countered these papers, submitting their own review saying many of the studies were flawed or incomplete, and asking the board to have a broader discussion on hatcheries before modifying permits or capping production. Division of Commercial Fisheries Chief Fisheries Scientist for salmon Bill Templin presented an analysis of the papers as well, saying many of the papers either had flaws or lacked context. The board members repeatedly voted down the requests to cap hatchery production or modify current hatchery permits, but agreed to reconvene the committee on hatcheries to open up the opportunity for more public forum on hatchery production and impacts. Hatcheries are important to many commercial fishing communities, enhancing the salmon returns to many areas. The cities of Juneau, Valdez and Craig all submitted letters in support of hatchery programs in the state, as well as a number of Native corporations and commercial fishermen in various regions. The Afognak Native Corp. submitted comments for the meeting supporting hatcheries and the reconvening of the committee, calling the Kodiak Regional Aquaculture Association’s work “critical contributions.” “We specifically request that the State support the convening of the Salmon Hatcheries Committee Meeting and Joint Protocol on Salmon Enhancement,” executive director Alisha Drabek wrote in the letter. “This Joint Protocol is particularly essential as it provides a forum for open discussion on hatchery topics to improve dialogue and transparency between the Board of Fisheries, ADF&G, fisheries stakeholders, and the public to generate statewide perspectives on issues associated with hatchery production of salmon.” Conservation and sportfishing groups submitted comments asking the board to take action with concerns about the effect of pink salmon on the ecosystem of the Gulf of Alaska. The Homer-based Kachemak Bay Conservation Society criticized Templin’s analysis of the scientific papers on the effects of pink salmon on the Gulf in its comment, saying ADFG staff menbers are not able to act in an unbiased manner on hatcheries. The group calls for an independent Hatchery Impacts Advisory Group to advise the board’s Hatchery Committee. “An independent Hatchery Impacts Science Advisory Group must be formed to determine whether release sized need to be limited by the board and/or sanctuaries for significant wild stocks need to be created,” wrote Kachemak Bay Conservation Society board president Roberta Highland in the letter. The Hatchery Committee is scheduled to meet on Friday, March 8, starting at 8:30 a.m., followed by the Statewide and Supplemental Finfish meeting starting Saturday at 8:30 a.m. Elizabeth Earl can be reached at [email protected]

On-site cannabis consumption rules delivered to Meyer

The Marijuana Control Board has approved regulations and paperwork for on-site consumption endorsements and businesses are now waiting on Lt. Governor Kevin Meyer’s signature for final approval. At its Feb. 20 meeting, the board approved the permit forms that cannabis businesses will have to complete in order to obtain an on-site consumption endorsement. The paperwork may still have amendments in the future based on industry and local government feedback, but for now, the checklist of items license holders need to apply has the Marijuana Control Board’s approval. However, businesses still can’t submit applications for the paperwork, be approved and open up their spaces quite yet. After the Marijuana Control Board approved the regulations, they were sent to the Alaska Department of Law for review. After that, they require the lieutenant governor’s signature before becoming official. Meyer has not signed them yet; his office just received the packet from the Department of Law on Feb. 28, according to Meyer’s Chief of Staff Josh Applebee. If Meyer signs off, they will take effect 30 days later and applications may be submitted. In December, Alaska became the first state to pass regulations to allow people to consume marijuana on licensed premises in a 3-2 vote of the board. It was a long-championed item by the cannabis industry, particularly those who own licenses in areas with large tourist visitation. However, concerns about public health and safety dominated the discussion for some time as the industry and the board members tried to work out how to implement regulations. Not long after the Dec. 20 vote, Gov. Michael J. Dunleavy dismissed Sitka Police Chief Jeff Ankerfelt from his public safety seat on the board and declined to nominate industry representative Brandon Emmett for another term on the board. Dunleavy instead nominated Vivian Stiver of Fairbanks, who led an unsuccessful effort to ban local commercial cannabis operations in 2017, to replace Emmett. Both Ankerfelt and Emmett voted in favor of allowing onsite consumption. With the summer tourist season coming, some businesses are hoping to have their on-site consumption areas open and available this year. The Ketchikan Gateway Borough, home to about 13,000 people, welcomes just about every Alaska-bound cruise ship every summer. As the first port a ship encounters upon entering Alaska, the city of Ketchikan can see days with 8,000 to 10,000 tourists in town. Mark Woodward, co-owner of cannabis retail shop Stoney Moose, says his store can attract about 10 percent of that influx — maybe 800 to 1,000 people per day on a busy day. Because the cruise ships don’t allow people to use cannabis on board and consuming cannabis in public is illegal, many of his customers have to resort to either smoking somewhere discreet around town or using edibles instead. “People will buy an edible and walk outside and open it up and pop it in their mouth,” he said. Opening up an on-site consumption area has always been part of the plan for his business, he said. Most Ketchikan locals will likely purchase their products and go home to consume them, so the site would be targeted mostly at the cruise ship industry. Set up in downtown Ketchikan where visitors can walk to and from the store, the shop has an advantage over others situated a little farther out of town. But it’s also a disadvantage for on-site consumption because of a clause the Marijuana Control Board included requiring businesses to be located in a freestanding building in order to allow smoking. While that may not be a problem for businesses in Southcentral Alaska, where the communities are more spread out and more buildings stand independently, it’s a huge hurdle for Southeast, where the communities are more densely developed. Woodward said he and his co-owners invested in a ventilated indoor room with the hope that on-site consumption would be allowed, but the inclusion of the “freestanding” clause negatively impacts that plan. They’d have to switch to a covered, ventilated deck instead. “We have a deck that it would be perfect,” he said. “It overlooks a salmon stream. We’re going to ventilate the deck. We have all these plans, but it’s just this unknown of can you have a freestanding building? Down here in Ketchikan, you just don’t.” The board discussed that consideration during its February meeting, noting the concern from some business owners who want to allow on-site consumption of edibles only. The freestanding requirement is a stipulation of the statewide Smoke-free Workplace Act and wouldn’t apply to an area that only allowed consumption of edibles. Board chairman Mark Springer asked if the Alcohol and Marijuana Control Office could look into developing separate forms for someone wanting to only allow edible consumption that would allow them to bypass the freestanding regulation. “We’re approving this, but it’s still going to be a work in progress, so would it be fair to say that if people in industry, people in government, have got thoughts on what all should be included in this, what would clarify it for local government, what industry might think … that they can either throw it in the marijuana mailbox or flag comments on this and it will be administratively considered,” he said. “Partly that’s because this continues to be a high-interest issue.” Elizabeth Earl can be reached at [email protected]

Alcohol, cannabis investigators locked out of public safety info network

The enforcement officers charged with inspecting and investigating cannabis and alcohol business licenses have lost access to the statewide public safety information network, and that is hampering their ability to do their jobs according to a top official. On Dec. 1, the Alcohol and Marijuana Control Office, or AMCO, lost access to the Alaska Public Safety Information Network and the Alaska Records Management System, two public records systems that the investigators had relied on for years to check criminal history and records in relation to license investigations. The loss of the access prevents the investigators from doing their jobs fully under statute and compromises their safety, according to a report from AMCO Executive Director Erika McConnell to the Marijuana Control Board. “AMCO investigators make scheduled and unscheduled inspections of licensed facilities to respond to complaints or tips about unlicensed activity, bootlegging, over service, under-age drinking, and other activities that threaten public health and safety,” McConnell wrote. “With no access to these databases, the investigators may go to interview someone who is subject to a warrant or possibly armed and dangerous, without having any warning or information. In the worst-case scenario, AMCO investigators could interview a wanted individual without ever knowing there was a warrant for that person, and the person could go on to commit new crimes.” AMCO employs a number of investigators to respond to complaints from the public and to conduct licensing inspections and investigations. Prior to 2014, the office only regulated alcohol licenses, ranging from breweries in downtown Anchorage to bars in remote communities; after voters chose to legalize cannabis for recreational use, regulating cannabis was added to the office’s responsibilities. The office was given 30 days’ notice by the Department of Public Safety. In a letter to McConnell, Alaska State Troopers Acting Director Major Andrew Greenstreet explained that in the past, DPS had determined AMCO to be a criminal justice agency under federal and state statutes. “However, after further consultation and analysis with the Department’s General Counsel and Records Bureau Chief … DPS has determined that AMCO does not meet the statutory definition of a ‘criminal justice agency,’” Greenstreet wrote. State statute defines a criminal justice agency as an agency that “devotes a substantial portion of its budget to a criminal justice activity under a law, regulation or ordinance,” which AMCO does not, Greenstreet wrote. Most of AMCO’s work is regulatory in nature rather than criminal justice-related. He added that if AMCO employees need specific information, they can communicate with specific DPS employees to retrieve it. Greenstreet did not mention marijuana issues specifically in his letter, but McConnell drew the connection in her report. DPS fears the Federal Bureau of Investigation may revoke the state’s access to criminal justice information due to marijuana regulatory activity because marijuana remains illegal at the federal level, she wrote. While DPS is still working with AMCO to provide the information, it seems unnecessary based on activity in other states and doesn’t match the authority given to the Alcoholic Beverage Control Board and the Marijuana Control Board in statute. During the meeting, she told the board that the change has implications broader than marijuana and alcohol business regulation. “There’s lots of ways in which the removal of these tools from our use is bad for public safety, bad for investigator safety and bad for the safety of other law enforcement officers,” she said. “I’m not so much talking about investigations of our licensees — we’re talking about particularly criminal investigations.” Enforcement officers sometimes have to investigate remote locations. They don’t have access to law enforcement radio networks to signal warnings or call for help, and they may not have access to public safety information for several days while communicating through DPS, McConnell wrote. AMCO also used the system to manage its enforcement cases. Without access, the office will have to purchase a new software system or find workarounds. Marijuana Control Board chairman Mark Springer and Alcoholic Beverage Control Board chairman Bob Klein have sent a letter on the topic to Alaska Department of Commerce, Community and Economic Development Commissioner Julie Anderson, who deferred action until after Dunleavy’s budget was announced on Feb. 13. AMCO may lose its investigative unit entirely from within the department as all statewide investigators move to the Alaska Department of Law. The change comes after Gov. Mike Dunleavy issued an administrative order Feb. 13 to establish a Statewide Investigator Unit within the Department of Law and form a task force to consolidate all state investigators into it. If they are moved to a statewide department, they may have access to APSIN and ARMS there, McConnell wrote. ^ Elizabeth Earl can be reached at [email protected]

Medicaid cuts threaten financially vulnerable rural hospitals

Proposed cuts to the Alaska Medicaid program may fall the hardest on organizations that can least afford it: rural hospitals and health clinics. Among Alaska’s budget line items, the Alaska Department of Health and Social Services is the gorilla in the room, with an approximately $3.2 billion budget in the current 2019 fiscal year. Within that, Medicaid services consume about $2.3 billion. Gov. Michael J. Dunleavy’s proposed fiscal year 2020 budget, to begin July 1, would cut about $250 million directly from the Medicaid budget, though how those cuts would be implemented is still unclear. Overall, the 2020 budget would cut about 25 percent from the DHSS budget. Medicaid provides medical coverage for Alaskans with disabilities, the elderly and low-income residents. Since former Gov. Bill Walker accepted the federal expansion for Medicaid eligibility in 2015, about a quarter of Alaskans receive Medicaid. During a hearing Feb. 22 of the Senate Finance Committee, DHSS Assistant Commissioner Sana Efird said the biggest reduction in federal funds came from the Medicaid budget. The Medicaid program is administered by the state but funded in part by matching through the federal government. “The reduction, at this point, it is allocated in the Medicaid services component,” she said. “We are currently working on a plan that will show the specifics of that that reduction will be allocated for.” Finance Committee co-chairman Sen. Bert Stedman, R-Sitka, said Sen. Natasha Von Imhof, R-Anchorage, would lead a subcommittee specifically on the DHSS budget. Those cuts could take shape as a reduced reimbursement rate or eliminating covered services. Von Imhof specifically noted a proposal to cut adult dental services from Medicaid coverage. Sen. Lyman Hoffman, D-Bethel, noted that the department is counting on renewing the Section 1115 waiver program, which allows states to use federal funds to cover Medicaid programs in ways not otherwise allowed under federal rules for the purpose of a demonstration project. The state received a Section 1115 waiver in November 2018 to expand substance abuse treatment and would have to renew it in November 2023. Efird said the department leadership is currently working on another waiver application to cover other types of services. Hoffman said the administration has “the cart before the horse” when counting on obtaining waivers in the future to pay for services with federal funds. “You cannot balance this budget with federal funds,” he said. “You say may not affect people’s lives, but they may affect people’s lives.” The Alaska State Hospital and Nursing Home Association asserted that the budget will force hospitals to close. Becky Hultberg, the organization’s president and CEO, said in a press release that the cuts will cost thousands of jobs. “While Governor Dunleavy may not believe government has a role in health care, his belief is disconnected from the reality that our current health care system relies on government payments for a significant percentage of total services, and our entire system will crumble without them,” she said. “This is a classic example of ideology taking precedent over practicality, and all Alaskans will feel the consequences.” Shaky Medicaid funding is already stressing rural healthcare infrastructure, and cutting it could push some rural hospitals and clinics over the edge. A report from health care consulting firm Navigant Health, released Feb. 22, noted that six hospitals in Alaska were at “high financial risk” of closing in 2018. That financial vulnerability comes from a “degradation” of the payer mix, leading to more reliance on the low reimbursement rates from Medicare, Medicaid or uninsured patients, declining inpatient care and inability to employ new technology or innovation programs, according to the report. Last summer, the state ran out of Medicaid reimbursement funds before the turnover of the fiscal year. For hospitals, that meant essentially holding their financial breaths until the state could appropriate more funding to pay for Medicaid patients; in 2018, that would have been longer than a month. For the bigger hospitals that have a higher percentage of private payers and more cash on hand available, that’s doable; for the smaller hospitals, which sometimes have less than a month’s cash on hand to pay for emergency expenses and payroll, those delays could spell disaster. Hospitals like Cordova, Homer, Seward and Wrangell rely on Medicare and Medicaid for about three-quarters of their reimbursements, according to a November 2018 report from ASHNHA. In Wrangell Medical Center’s case, the situation became dire enough for the hospital to strike a deal with the Southeast Regional Health Consortium to join its network on Nov. 1, 2018, taking some of the financial risk out of its hands. It’s been a huge relief for the hospital, said hospital manager Robert Rang. For one, SEARHC has invested in the facility, paying for new computer and phone systems. It’s also helped level off the concerns about the hospital’s cash-on-hand problem. “Suddenly, now we have the ability to cover the lows,” he said. “Before, it was peaks and valleys in our revenue sources. We’d get our long-term care money once a month … With SEARHC, your ups and downs are not quite as noticeable.” The other benefit to joining SEARHC was its status as a Tribal health organization. Tribal health organizations in Alaska operate a little differently on Medicaid; they draw down more on federal funds for Medicaid as opposed to relying on the state. Pending changes at the federal level, that may buffer hospitals and clinics within Tribal health networks if the cuts at the state level are only to reimbursement rates as opposed to cutting services entirely. For hospitals outside those networks, the hammer of those cuts may fall harder. At the Senate Labor and Commerce Committee hearing, Sen. Peter Micciche, R-Soldotna, asked that the state come up with a way to change program operations rather than just reduce appropriations because the shortfall lands in the laps of community hospital administrators. “Ultimately, the reason I’m saying that is this is a tax shift in that my community-owned hospitals picking up the cost,” he said. ^ Elizabeth Earl can be reached at [email protected]

Board adjusts some Chignik plans after 2018 fishery failure

Editor’s note: The original version of this story omitted two changes that altered some fishing opportunity for seiners near Dolgoi Islans and changing the opening schedules for setnetters in the area. The story has been updated to include these changes. With a year of poor sockeye runs, unfavorable ocean conditions and allocation fights before them, the Board of Fisheries chose to change part of the season for some nearby commercial fisheries to improve passage of sockeye salmon to Chignik. After a long debate, the board voted down some proposals to change the allocation in the Chignik management area at its meeting in Anchorage, but later passed two proposals to realign setnetting time and to close seining in June in parts of the Southwestern, Southeastern and Southcentral districts of the South Unimak and Shumagin Island fisheries. The proposals before the board were submitted before the 2018 season, when a disastrously poor sockeye run kept Chignik fishermen on shore for virtually the entire season, but they still scratched at an allocation itch between the terminal fishermen at Chignik and the commercial fishermen along the Alaska Peninsula.  During the public comment period, speakers oscillated between Chignik residents pleading with the board to restrict fishing to restrict offshore fishing so the fishermen in Chignik can harvest more sockeye and commercial fishermen pleading with the board to leave regulations as they are so the fishermen can make a living. “Sockeye salmon is the main and only industry in Chignik,” said Alana Anderson, a Chignik City Council member. “The city’s operating budget relies heavily on fish taxes … Chignik is a small fishery.” At the same time, further restrictions to harvest in other management areas — to the west and east of Chignik, respectively — would cut into the profit margins of the fishermen who have invested in boats and permits to fish in those areas. Multiple fishermen from Sand Point and Area M asked the board to leave regulations at status quo. The management plans of the Chignik area are complicated and rely on allocation percentages of the salmon passing through. The proposals the board considered were submitted before the 2018 season, but the poor runs last year played into board members’ discussion because of how significantly the Chignik economy depends on a single fishery. Within its allocation criteria, the Board of Fisheries includes a consideration for the importance of a fishery to a local economy. Board member Al Cain said during a debate over a proposal that would have changed allocation percentages that based on discussion with stakeholders in the area, he didn’t want to change allocation much during the meeting. “It seems there’s two very valid sides to every coin we’re looking at,” he said. “Both sides of the equation have valid points … it’s hard to make a decision when one side or the other may benefit or one side or the other may have something removed from them. The economy of the local area is very high in my decision.” The board members spent significant time debating the allocation percentages in the area, with several proposals failing on narrow vote margins. Board members Israel Payton and Fritz Johnson both suggested multiple changes based on one proposal to the Southeastern District Mainland management plan, which focuses on an area southwest of Chignik. Payton’s version of the proposal focused on changing some of the harvest patterns for seiners in Area M, reducing some of the harvest pressure on eastern-bound sockeye stocks. He noted that changes made to the management plan in 2004 resulted in increased harvest on eastern bound stocks, based on Alaska Department of Fish and Game data, and wanted to shift more of the harvest back to the west. “If you just add up all the harvest rates … it takes a pretty big chunk out of eastern-bound stocks,” he said. “Given the pressure, I think it is fair to shift the burden to the seiners.” With board member Al Cain absent from the debate on Payton’s amended proposal, the six remaining board members split 3-3, resulting in the proposal failing. During the debate, board member Robert Ruffner said he wanted to be cautious to make any major changes to fisheries that would result in shifting effort. Moving effort reactively based on one year’s poor run could result in damage to another stock in the future, he said. Plus, the poor sockeye runs in 2018 were most likely due to environmental conditions in the Gulf of Alaska, based on the fact that sockeye runs were poor everywhere from the Copper River to Chignik. “If we look at harvest and we think that this is going to solve those problems that are out in the Gulf that are apparent in all these stocks, I don’t’ think this is going to do it,” he said. “I’m just not confident enough at this point with what I know to think that we should start changing this allocation plan.” Board members John Jensen and Orville Huntington agreed with Ruffner and voted against the proposal. Payton replied that while the Gulf of Alaska conditions certainly had an effect, the board was obliged to do what it can. “What we catch is in our control,” Payton said. “That’s what we do. We control what we can. We can blame all these things, and kick the can, but this board is tasked with controlling harvest.” Later, the board moved to amend and passed proposals to limit commercial fishing time in sections of the fishery in the South Unimak and Shumagin Islands near Dolgoi Island. Proposal 138, which originally asked to reduce commercial salmon fishing time to 75 percent of the current level; the Board of Fisheries amended it to close the Dolgoi Island area to seiners throughout June. Ruffner noted that data showed that many of the salmon passing through the area in June are headed for Chignik and that removing the seine fleet could help the Chignik fishermen and the escapement to the river. “This would take the seine fleet out,” he said. “I know people want more, but if there’s one thing that we could do that according to the genetics data that we have, it does suggest … that this would be the most effective thing that we could do as one action to help.” On the proposal to shift setnet fishing schedules, the board amended the proposal to align the hours with the other commercial fishermen in the area. The final language allows setnets in the South Unimak and Shumagin Island fisheries to begin June 6 at 6 a.m. and fish for 64 consecutive hours instead of the previous 88, and then will open for 88-hour consecutive periods beginning June 10 until June 28. The board approved both the amended proposals unanimously. Elizabeth Earl can be reached at [email protected]

Dunleavy nominee to marijuana board hears major opposition

Cannabis industry members have their hackles raised at one of Gov. Michael J. Dunleavy’s appointees to the board that regulates their businesses with wide concerns about the administration’s long-term intentions. New governors regularly flip the membership of boards and commissions, particularly high-impact regulatory bodies. The Marijuana Control Board is no different. Dunleavy did not reappoint industry member Brandon Emmett of Fairbanks, instead nominating Vivian Stiver of Fairbanks. He also appointed Lt. Christopher Jaime, who works as a wildlife trooper at the Alaska Department of Public Safety’s Soldotna post, to the designated public safety seat. Jaime would take the seat from Sitka Police Chief Jeff Ankerfelt, whom the Dunleavy administration dismissed from the board in January. Both Ankerfelt and Emmett voted to authorize on-site consumption of cannabis in a 3-2 vote on Dec. 20, 2018. Stiver has owned several small businesses and worked in the legislative offices of Rep. Tammie Wilson, R-Fairbanks, and Sen. Cathy Giessel, R-Anchorage, previously served on the Fairbanks City Council and led an effort to ban commercial marijuana activity within Fairbanks city limits in 2017. Stakeholders immediately raised the alarm, in part because Emmett held a seat designated for the industry or general public, and had been one of two industry representatives since the board was formed in 2015. During a Senate Labor and Commerce Committee hearing on Feb. 12, members of the public testified on Stiver’s appointment for nearly two-and-a-half hours. A few people testified in support, but the vast majority opposed her confirmation. During her introduction, Stiver said she could put aside her personal views and be impartial. Her effort to ban commercial cannabis in Fairbanks had not been because of prohibitionist views, she said, but rather over concern with the city and borough’s readiness for businesses. “Our concern was are we ready? Are we ready for this industry?” she said. “There were many people in the group at that time that had different viewpoints from mine. I do believe there’s no problem with me working within the parameters of (the board) seat and working well for everyone involved.” She said she has been meeting with members of the industry and working to educate herself about the issues in the meantime as well. So far, the vast majority of operators have been responsible and no issues have come up, and those that have were dealt with, she said. A handful of people called in to testify in support of Stiver’s appointment, while other submitted letters saying they wanted someone on the board with an opposing viewpoint to balance the board. Some of the industry testifiers said they hoped Stiver’s statements were true and she would work fairly with the industry. Cole Hollister, the chairman of the Alaska Marijuana Political Action Committee and a co-owner of cannabis business Pakalolo Supply Co., agreed with another testifier that Stiver may be a “Trojan horse” for Dunleavy’s intentions in the future. “I believe that in removing one of our biggest voices, Brandon Emmett, and appointing Vivian Stiver, he’s spoken loud and clear of his intention toward the industry,” he said. “I don’t believe Vivian is telling the entire truth but I want to give her the benefit of the doubt.” Others offered no support based on Stiver’s previous work. Cary Carrigan, the executive director of the Alaska Marijuana Industry Association — a group where Emmett serves as the board president — testified against Stiver’s confirmation, saying the business people she had consulted did not include a broad swath of the industry and the AMIA had not been included. The AMIA sent out multiple emails to stakeholders before the meeting requesting that they testify against Stiver’s confirmation. “It’s impossible for a leopard to change its spots,” he said. “I think that it’s really interesting that we have somebody who’s as well versed in cannabis as Brandon Emmett being displaced by someone who has little to no knowledge whatsoever.” Public safety nominee Though the Labor and Commerce Committee hearing was supposed to include both nominees, the entire hearing focused on Stiver. Jaime’s hearing was rescheduled two days later, where the committee members heard less than half an hour of discussion before forwarding his name to a joint session for consideration. Jaime said he has worked in both rural and urban settings as a trooper and would listen to the industry within the lines of law enforcement. Since being nominated, he said he met with several Kenai Peninsula cannabis business owners and visited their operations to get a better understanding of the industry. “I am not looking forward to expressing my personal opinions about marijuana or going against the will of the people,” he said. The people who offered testimony on his appointment were cautiously optimistic or supportive. Ryan Tunseth, who owns the retail shop East Rip in Kenai, said Jaime has earned a reputation as a fair officer with the Department of Public Safety. His effort to visit with industry stakeholders offered an olive branch to industry members, he said. “(The stakeholders he visited) felt like it was very meaningful, that he would work to understand the inner workings,” Tunseth said. Both nominees were forwarded out of committee to a joint session for consideration. But even as the nominees move forward, the board they plan to serve on may not be long for this world. Dunleavy’s fiscal year 2020 budget, released on Feb. 13, includes a proposal for legislation to abolish both the Marijuana Control Board and the Alcoholic Beverage Control Board and delegate their responsibilities to the commissioner of the Alaska Department of Commerce, Community and Economic Development. Elizabeth Earl can be reached at [email protected]

ADFG cuts aim at logbook program, division directors

Sportfishing guides on Alaska’s rivers and lakes would no longer have to submit logbook records of what their clients catch if the cuts proposed in Gov. Michael J. Dunleavy’s fiscal year 2020 budget come to fruition. The elimination of the freshwater sportfish guide logbook program is just one of a handful of changes proposed for the Alaska Department of Fish and Game to save money. A letter from acting Commissioner Doug Vincent-Lang to staff sent out on Feb. 13 detailed some of those cuts to accommodate the approximately 4.3 percent proposed cut in the department’s budget. “As we all know, the state continues to face fiscal challenges in the wake of low oil prices,” Vincent-Lang stated in the letter. “I, along with our budget team and the staff at the Office of Management and Budget, have worked diligently over the last six weeks to align our programs with our core services and identify areas of opportunity for efficiencies.” Those cuts include moving the Commercial Fisheries Entry Commission into the Division of Commercial Fisheries, eliminating the director positions for the Habitat and Subsistence divisions, a 50 percent travel reduction for all divisions, eliminating General Fund support for Special Wildlife Viewing Areas as well as eliminating the logbook program. Currently, sportfishing guides have to meticulously record the fish their clients catch and submit them in a timely manner to the state so biologists can get a better idea of harvest rates and some survey information on stocks that may not be monitored. The department enumerates and tracks many runs of fish, especially salmon, using weirs and sonars, but the expense makes it impossible for all species on all rivers. Even some major stocks, such as coho salmon on the Kenai River, are not tracked by sonar or weir every year, though the department conducts periodic assessments in the river. This applies to guides both in freshwater and saltwater. Guides on the ocean would still have to record and submit logbooks, but the freshwater program would go away entirely, said Samantha Gatton, the acting director of administrative services for ADFG. Together, the salt and freshwater guide programs cost between $650,000 to $690,000 annually, she said. “(The freshwater logbook program) would just go away,” she said. “That doesn’t mean we don’t have fisheries biologists out in the field.” ADFG biologists regularly travel to remote locations all over the state in a variety of vehicles to monitor fisheries and wildlife, from periodic aerial salmon surveys to diving surveys for clams to moose collaring. Beyond just the staff, members of the regulatory boards of Fisheries and Game travel from their respective regions to where the regulatory meetings are being held. A 50 percent travel reduction would impact the entire department, including the boards. Gatton said the goal is to eliminate unnecessary travel. The department leaders also want to find ways to use technology instead of flying for some meetings, for example, which could save the time and expense for the boards. It might also improve logistics, she said — travel in Alaska can often be unpredictable. The changes to the CFEC aren’t coming from nowhere; former governor Bill Walker’s administration also tried to consolidate some of the agency’s functions into Fish and Game through an administrative order issued in early 2016. The CFEC, which administers the limited entry permit system for Alaska’s commercial fisheries, has been plagued by complaints of inefficiency in both expense and permit adjudication. A judge blocked the implementation of the administrative order in August 2016 and the Walker administration put the action on hold to consult more stakeholders. In the case of Dunleavy’s budget, the consolidation of the CFEC would have to be done through statute approved by the Legislature, Gatton said. Though contained within ADFG, the CFEC would retain independence in functions like permit adjudication, but sharing services and other expenses like office space could result in savings, Gatton said. “They would be creating efficiencies,” she said. “You’re kind of duplicating a lot of services right now.” Of all the state departments, ADFG is proposed to take one of the smallest cuts. That may be in part because the department has been working to shift away from its dependence on the General Fund to operate, Gatton said. When the Legislature authorized the department to raise its fees for sportfishing and hunting licenses, that helped access more federal funds and split the cost between user fees and federal dollars rather than relying on the state. The Division of Commercial Fisheries did not shift at the same time, so has experienced more general fund cuts as the Legislature has cut the budget over the past three years, she said. The specific cuts to the department were made in “a collaborative effort” between the Office of Management and Budget and ADFG, Gatton said. “The goal here at Fish and Game is to continue to do our core functions … while learning to operate within what we’re given,” she said. ^ Elizabeth Earl can be reached at [email protected]

Despite Republicans’ ire, Knopp says he won’t resign or change party

KENAI — Despite pressure from Republicans in his own district, Rep. Gary Knopp of Kenai defended his actions in the House and said he won’t resign or change his party affiliation. As the House elected a speaker— Rep. Bryce Edgmon, who recently switched from the Democrat party to undeclared — Knopp returned to Kenai from Thursday through Sunday to visit with constituents. Knopp has been at the center of controversy as he defied his party and refused to caucus with the House Republicans to form a fragile majority with the minimum 21 members. District 30 Republicans passed a resolution Feb. 11 offering Knopp an ultimatum: either join the majority or resign. After Knopp voted against electing Rep. Dave Talerico, R-Healy, as Speaker of the House on Feb. 12, Republicans in District 30 launched a “Recall Gary Knopp” Facebook page aimed at pressuring him to join the Republican caucus or face the consequences. During a breakfast hosted by the Kenai and Soldotna chambers of commerce on Friday, he told attendees that he chose to break from a 21-member majority because it was destined to fail. “We had no chance of functioning or succeeding the way it was,” he said. “In a 21-member coalition, you had virtually no experience.” Some attendees offered support for his decision, while others told Knopp they were disappointed. One asked that he switch his affiliation to Democrat if he wouldn’t vote with the Republican majority. “You can’t define ‘Republican,’” he said. “I’ve never voted down party lines. I’ve always been an issue-by-issue candidate, and I’ll remain that way. I think the Republican party has done more to divide us as Republicans in the last couple of years than any time in our state history. I think we’re on a path of correction now … I’ll remain Republican, I’ll always vote the issues, not on the party.” Knopp explained that during the initial organization days, he saw sharp philosophical divides even among the Republicans. Many members of the House have served fewer than two terms — including Knopp, who was elected to the seat in 2016 — and that level of inexperience has led to disorganization and would have caused the caucus to later implode, Knopp said. “I could see the divide in the opinions, and I could see the campaign promises,” he said. “I could see that big divide on the policy issues that we hadn’t begun to broach or have the discussion. I knew when we got to Juneau, if we had fixed them or resolved them … my fear was when we got to Juneau, we organized as 21, we got to those policy decisions, our divide would be so great we would never fix it.” On Friday, Feb. 8, he said he approached the Republicans and said he’d be their 21st vote to “move the needle” after a month of gridlock in the House. But on Saturday, he said he discussed concerns about the caucus instability with Rep. Louise Stutes, R-Kodiak, who proposed putting his name forward as Speaker of the House. During the floor session on Tuesday, Stutes moved his name forward, where a confirmation for him as speaker failed 20-20. Republicans said they felt misled after Knopp had promised them to support a Republican speaker. Knopp said he had engaged with conversations with Stutes’ coalition about possibly moving his name forward as speaker but that it was their idea. “They were more interested in the coalition concept,” he said. “…I didn’t know who they were going to put forward, even up to the day that they did it. They were very concerned. So we took a shot, we put my name forward, I voted for myself. If one of them would have supported me, we would have had a Republican speaker, and we could have coalesced around that concept. That didn’t happen.” Things are different in the state, he said. Members of the Legislature don’t have bargaining chips like capital projects funds to grease the wheels for votes between the caucuses anymore, “driving the need for this discussion,” he said. Among the crowd of about 100 people were former Reps. Kurt Olson, whom Knopp replaced in 2016, and Mike Chenault, who served as Speaker of the House for four terms and explored a run for governor in 2018 before pulling out just before the filing deadline. Both said they had never seen deadlock in the House organization like this year. Olson referenced Knopp’s comments about the inexperience of the members of the House. “We were always organized within a day or two after the election,” Olson said. Both said they weren’t surprised to see the magnitude of the cuts in Dunleavy’s budget this year, but they expected the Legislature to restore some of the cuts before the session is over. But Dunleavy does still wield the line-item veto if they restore too much, Chenault noted. The Legislature has been debating whether to raise revenue or drastically cut the budget for the last four years, with few to no long-term solutions. Chenault said the legislators will have to have similar debates with this budget on the floor. “I think a lot of Alaskans are figuring out what state the state is really in,” Chenault said. “Do you fill that hole or do you find that funding somewhere else?” Knopp also offered some critique to Gov. Michael J. Dunleavy’s budget, many of the effects of which would fall on the Kenai area. High on that list was the removal of some financial support for the Alaska Gasline Development Corp., which has been heading the development of the Alaska LNG Project.  The project is planned to build an approximately natural gas liquefaction plant on about 800 acres in Nikiski, a massive economic boon to an area that has lost a number of its oil and gas producers in the past decade. Though he’s been optimistic in the past, Knopp said Dunleavy’s budget seems to spell an end for the project. “I wanted to see it go through at least to the permitting stage and have those guys looking for markets for that gas,” he said. “For all practical purposes, it seems to be dead at this point. I hope to see it through to the final permitting stage, the EIS (environmental impact statement) … I believe the governor’s intent would be to engage industry back into that project.” Dunleavy’s budget slices more than $1.6 billion from the state’s budget. Cutting that much from the budget in one fell swoop seems harsh, Knopp said, and while he said he wants to see responsible spending, Dunleavy’s approach seems too broad. “I’ve never seen an administrator wield a big axe and take this approach to right-sizing government,” he said. “There’s a methodical, analytical approach to what we do, and that’s having the conversations.” Elizabeth Earl can be reached at [email protected]

Council takes first step toward rationalizing P-cod fishery

Pacific cod fishermen in the Bering Sea and Aleutian Islands, one of the last remaining unrationalized federal fisheries in Alaska, may finally have to cross that bridge. The North Pacific Fishery Management Council passed a motion at its meeting Feb. 9 to take action on the Pacific cod fishery, which is facing a number of issues in abundance, processing and participation. Depending on public review and the council’s action at the next several meetings, the Pacific cod fishery could see significant changes to seasons, limits and vessel participation. The motion hinges around an analysis developed on the trawl catcher vessel fishery and releases Alternatives 1, 2, 3 and 6 for public review separate from the rest. Rationalization, also known as catch shares, refers to a system in which set amounts of the harvest are issued as quotas to various gear and vessel types, typically based on participation history in the fishery. Halibut and sablefish were the first fisheries to be rationalized in Alaska in the early 1990s, followed by Bering Sea pollock later that decade and Bering Sea crab fisheries in the mid-2000s. Proponents tout the benefits of such programs for ending the dangerous, “derby style” races for fish and curbing bycatch; opponents point to the high cost of entry for newcomers to purchase quota shares, consolidation of effort and the accompanying loss of jobs. The council’s Advisory Panel, made up of fishing industry stakeholders, unanimously supported the move to release some alternatives sooner, in part because of the urgency of the problems in the fishery. The shortened season was a particularly painful point for many: the 2018 Bering Sea trawl cod season was the shortest in the fishery’s history at just 13 days. “The (Bering Sea/Aleutian Islands) trawl catcher vessel Pacific cod fishery is facing multiple issues simultaneously that are negatively impacting the sustained viability and rational prosecution of the fishery for all its participants,” the council motion states. “These factors include: decreasing Pacific cod TACs (total allowable catch), an increase in the number of participating LLP licenses, the potential for additional new participants, a race among existing participants (often in unsafe conditions), and an increasingly shortened season.” Pacific cod are managed by both the state and the federal government, with some fisheries allowed in state waters. In recent years, participation has been growing, both in the state and federal fisheries. The state Board of Fisheries recently created a new cod fishery for pot gear for small vessels near Dutch Harbor, gaining record-high participation in the fishery this January. Pacific cod is a valuable fishery in Alaska. Most of that value goes to out-of-state residents. In 2016, $76 million in ex-vessel value went to Alaska residents; $117.7 million went to out-of-state residents, according to a December 2017 report to the council. The harvest of Pacific cod was cut by 80 percent in the Gulf of Alaska last year, and by nearly half in the Bering Sea. That’s attracting more boats to the open access state waters fishery, where the harvest comes out of the overall TAC. In its report, the Advisory Panel also pointed to an increase in mother-shipping by catcher-processors in the Bering Sea and Aleutian Islands, pushing down shoreside processing and thus tax revenue for the Bering Sea communities. Those communities have long depended on the economic base provided by shore-based processors to sustain economies in incredibly remote, meteorologically hostile areas. During the council’s hearing, more than a dozen stakeholders offered testimony in person and by letter, and one by voicemail. Most testified in favor of the Advisory Panel’s motion and spoke about the danger of the fishery without changing the race for fish and the impact of the painfully short season this year. “Unfortunately, the season was so short this year that it allows me to be here to testify,” said Chris Cooper, who fishes on the F/V Perseverance. “…One thing that has not changed is our participation and commitment in this fishery. In the past, we’ve relied on the fishery for as much as half of our income … We’ve watched a two-and-a-half month to three-month season go down to under two weeks this year. To say that we’ve been directly affected by this change is an understatement.” The halibut bycatch is a perpetual problem for the trawl fisheries. The Pacific cod fishery, like other groundfish fisheries, have bycatch caps after which the fishery will close to protect non-target stocks. Brent Paine, the executive director of stakeholder group United Catcher Boats, said the halibut are victims of the race for fish; when fishermen are racing against the clock, they may not move to a new fishing area when they encounter large numbers of halibut in the bycatch. “In a 15-day fishery where these boats are racing for fish, you can’t exclude halibut bycatch. It doesn’t work,” he said. “We don’t like to compete. We can rationalize this fishery … if you just look at a catch share program.” The areas included in the fishery are often subject to poor weather, and with a breakneck race for fish before the managers close it, safety can go out the window. “The cod fishery has turned into a dangerous, irrational fishery recently here,” said Robert Smith, who said he owns and operates a trawler for cod and pollock. “We need to move forward with some kind of a rationalization program. The safety sometimes gets overlooked here. In these nice, warm rooms and stuff, I wish we could somehow convey how bad this weather can be up there at times.” Opposition came from the floating catcher-processors, who said implementing the rules suggested by the advisory panel would push them out of the area. Changing the rules on mothership deliveries would upset a large part of the fishery, said Matt Upton, representing U.S. Seafoods. “If you change it on us now, it’s basically jeopardizing our entire business operation,” he said. “We support the AP motion — it’s a wide range of alternatives for you to consider.” Shoreside processors said it’s important for the their sector to have a fair shot, as they support the communities that often depend on the economic support of the processors. Nicole Kimball, representing the Pacific Seafood Processors Association, said the council motion should not affect the Amendment 80 fleet, either, which is a group of Seattle-based groundfish catcher-processors. The council batted amendments back and forth but ultimately unanimously supported releasing the separated alternatives of the analysis. Council member Andy Mezirow said he hoped the federal process would not bog down the council’s ability to make progress on the changes before the next Pacific cod season, based on the concerns the members heard. “Hopefully, even though our schedule Is fairly jammed up here … hopefully in the three-meeting outlook we can get this moving,” he said. Council member Craig Cross encouraged members of the public to begin meeting and looking at the alternatives. Unlike other council actions, which start with an abstract discussion paper, this is further along in the process, he said. “I think this is further along and I think the public should understand that this is further along than a discussion paper, and it has intent,” he said. ^ Elizabeth Earl can be reached at [email protected]

IPHC to investigate ‘chalky’ halibut among research plans

After years of hearing concerns from fishermen about the prevalence of “chalky” Pacific halibut, the International Pacific Halibut Commission is planning to gather information for an investigation into it. Chalky halibut are fish that, when cut open, have a stiff, chalk-textured flesh as opposed to the normal pale and tender flesh. Chalky meat is not dangerous to humans but is not desirable and thus costs the fishermen at the dock. Dr. Josep Planas, who heads up biological research for the IPHC, noted plans to gather information about chalky halibut from stakeholders this year before moving forward with designing a study on it. “What we plan is to initiate this project by collecting information from stakeholders on the incidence of chalky flesh and trying to understand the conditions that lead to its development,” he said. “We would love to get any information from any stakeholders on this topic.” Chalky halibut is not a new phenomenon; fishermen and researchers have been seeing it for decades. IPHC research from the 1960s and 1990s connect the prevalence of chalky flesh with the buildup of lactic acid in the fish and lowered pH in the fish after death. Researchers have associated it with warmer ocean temperatures near the bottom, according to the IPHC. When the bottom temperatures reach 12 to 14 degrees Celsius, they tap at the upper thermal limits of Pacific halibut distribution, according to the IPHC. “The condition is reversible in live fish,” according to the IPHC’s website. “Flesh which might otherwise turn chalky does not develop the condition post-mortem if the fish are allowed a 1-2 day resting period after capture, and before killing.” The project is one of a host of research projects the IPHC is planning for the next two years. Those projects focus on topics including migration, growth patterns, reproduction, genetics and discard mortality, Planas said. He said the migration study, which incorporates a number of different methods for tracking fish through their migration patterns, will likely produce some results on larva distribution in 2019. The study on reproduction, which aims to craft a more detailed picture of the full Pacific halibut lifecycle, will likely produce results in early 2020. Researchers are also taking advantage of a new tool on many commercial fishing vessels: electronic monitoring. Some fishing vessels, to save the aggravation and expense of having a human observer on their boats, are opting to install cameras and other electronic systems to monitor their harvests and bycatch. After the first year, the National Marine Fisheries Service reported implementation and compliance went smoothly, with plans to enroll 165 vessels for 2019. The researchers are taking advantage of the presence of electronic monitoring devices onboard to test out different methods of tagging and tracking fish, Planas said. The IPHC is working on a study on discard-related mortality, and specifically how handling and release methods affect halibut injury and outcomes. On vessels with electronic monitoring, the researchers were able to closely track release methods and verified that the data was good. “What we can say so far is when you compare the electronic monitoring-determined release method to the actual, the correlation is incredibly high,” he said. “Sometimes 100 percent, but close to 97 to 95 percent. EM captures very well the release method.” The researchers are working on results to determine how release methods impact the fish’s condition upon release and thus survival. Planas said the study includes both the commercial and recreational sector and results may be incorporated into stock assessments as soon as late 2019 and 2020. The purpose of the research program is to fill in gaps about knowledge of Pacific halibut stocks and life history, he said. In the future, the IPHC is planning to work with other researchers for studies on whale detection techniques and possibly using LEDs on trawls to trigger flight responses in Pacific halibut, thus helping to reduce trawl bycatch, Planas said. ^ Elizabeth Earl can be reached at [email protected]

Credit union to offer financial services to cannabis industry in March

Starting next month, cannabis business owners in Alaska will have access to financial services for the first time. Credit Union 1, an Anchorage-based credit union, expects to launch its pilot program serving licensed cannabis businesses in March. CU1 has been working on the details of the program closely with business owners for more than a year and announced the pilot program in November, said Joseph Martin, who manages the marijuana-related business program for Credit Union 1. “The whole plan all along has been to launch it sometime in March,” he said. “We announced it so early because we wanted to give the industry hope, because they’ve been struggling for awhile now.” Because cannabis is still listed as a Schedule I narcotic under the federal Controlled Substances Act, financial institutions have been skittish about serving the businesses. Banks are federally insured and inspected, and taking on the risk of serving a business technically still considered illegal by the federal government could present risk. Thus, cannabis business owners and customers to date have largely had to work in cash, with huge deposits of cash going in and out of businesses by hand. That’s something that’s both inconvenient to businesses and dangerous to the public. Martin said that was one of its concerns as a community credit union — business owners are taking on a risk by having to transport large sums of cash down the street to pay bills and holding their payroll in cash. Credit Union 1 is a relatively small player in the larger world of financial institutions, with about $1 billion in holdings — for comparison, JPMorgan Chase has about $3 trillion — but its nonprofit status and community orientation allows it to take on more risk, Martin said. “Credit unions typically take on bigger risks than banks to serve the underserved,” he said. “I think marijuana kind of fits into that. It’s a big community safety issue to have all this cash running around on the streets.” Essentially, the pilot program will hinge on improved software to serve the cannabis industry. Because of the nature of the business, the credit union has to keep close tabs on what is coming in and out of the accounts and file reports on every deposit over $10,000 — which is basically all of them, Martin said — to report them to the federal government. That helps CU1 prove to the federal government that everything is above board and the accounts are not laundering money, he said. The financial industry occupies a strange tidepool in the world of back-and-forth cannabis legalization legislation. After Obama-administration U.S. Deputy Attorney General James M. Cole issued a memorandum in August 2013 essentially telling all federal prosecutors to defer to states’ legalization laws on cannabis, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network developed its own guidelines for banks wishing to serve the cannabis industry. Even after President Donald Trump’s former Attorney General Jeff Sessions retracted the Cole memorandum, the Financial Crimes Enforcement Network let its banking regulations stand, as long as banks complied. For those looking to open accounts, there will likely be a significant charge, at least at first. The cannabis banking programs are expensive. For one, the additional burdens of tracking the industry to comply with the FinCEN’s guidelines require significant manpower. Credit Union 1, which usually files about 2,000 reports of transactions more than $10,000 per year, expects its annual reports to increase to about 15,000, Martin said. “When you’re thinking of (the service) from inside the financial institution, it’s not information that we have readily available,” he said. “It’s very invasive … we have to know their product lines, their normal customer base, we have to know all their owners, anyone tied to the business.” But the software improvement should help Credit Union 1 bypass some of the staffing increases other banks have had to take on. For example, other banks have developed cannabis departments in which individual employees handle specific cannabis accounts and know the ins and outs of each business. The software Credit Union 1 has been working on will help avoid some of that, Martin said. Over time, he said he thinks the program will get cheaper as CU1 onboards more businesses and the employees get better at serving the cannabis industry. The federal burdens of reporting may decrease, too, as bills move through Congress to change the regulations on serving the cannabis industry. The U.S. House Committee on Financial Services held a hearing on just such a draft bill on Feb. 13. The bill, which would encode safe harbor banking practices, is championed by the National Cannabis Industry Association and supported by the Marijuana Policy Project. Though it’s only a draft, a final version could be introduced shortly thereafter, said Morgan Fox, the communications manager for the National Cannabis Industry Association. “There’s a number of comprehensive bills being introduced that all approach the issue from different directions,” he said. “Almost all of them would basically solve the banking issue.” Since the midterm election, many of the “obstructionist” legislators have left Congress and the NCIA feels the banking bills have a better chance of passing, Fox said. The particular bill being discussed on Feb. 13 would carve out a safe harbor for banks, but he said he had never heard of a bank being prosecuted for serving the cannabis industry. There aren’t very many of them, though. Though FinCEN’s official tracking documents roughly 486 banks maintaining service for cannabis businesses, Fox said the true number is significantly smaller than that — something like 40 financial institutions nationally have cannabis departments, he said. Having access to banking services is important for cannabis businesses from an economic angle and for states from transparency and regulatory perspectives, he said. “Without access to banking, they have to institute much more expensive measures … even paying taxes, security,” he said. “I think it’s really important from a regulatory standpoint.” Martin said Credit Union 1 has plans in place to unwind the program if the federal government is uncomfortable with it, but they’re fairly confident in the plan they’ve written out. One of the core things the bank hopes for is to normalize the legal cannabis industry as members of the business community in the state. “We don’t have a political or moral sense about this. You’re not going to see us sponsoring (bills) … but because it is legal in the state of Alaska, we’re going to service it like a business like any other,” he said. Elizabeth Earl can be reached at [email protected]

Legislators revive bills to abolish certificate of need program

Two legislators are again seeking to end the state’s healthcare certificate of need program. Identical bills filled prefiled for the 2019 legislative session by Rep. George Rauscher, R-Wasilla, and Sen. David Wilson, R-Wasilla, would abolish the program. It’s at least the third year in a row the Legislature will have considered a bill that would do so. The certificate of need, or CON, program sets up a protocol for hospitals, nursing homes and other healthcare facilities seeking to expand the services they offer. In order to build a new expansion costing more than $1.55 million, facility administrators must document and demonstrate a need for the added service capacity in the community to the state. Alaska is one of 35 states that have a certificate of need program; since the federal requirement for the programs was repealed in 1987, a number of states have scrapped them, according to the National Conference on State Legislatures. Those opposing the program say that it unnecessarily restricts health care facilities from developing new services and competition that could drive down prices. Small communities may not be able to open a full-service hospital or nursing home, for example, because the population is not large enough to pay for it and it does not meet the certificate of need requirements. In other cases, independent ambulatory surgery centers are not able to open and compete with hospitals because the hospital already provides that service. During committee discussions in the legislature in 2017, the federal government offered support for the repeal of the program in Alaska. The Federal Trade Commission and the U.S. Department of Justice submitted a joint letter in response to a request from Wilson detailing problems with the certificate of need program and stating that it may be limiting competition. “CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers,” the FTC and DOJ wrote in their letter. “For these reasons, the Agencies historically have suggested that states consider repeal or retrenchment of their CON laws. We respectfully suggest that Alaska repeal its CON laws.” Federal agencies have been working on ways to implement better competition in the health care industry after President Donald Trump issued an executive order in October 2017 to facilitate choice and competition in the health care industry. The U.S. Department of Health and Human Services identified the repeal of certificate of need laws as a priority in an update to the president. The hospital and nursing home industry largely opposes repealing the program. The Alaska State Hospital and Nursing Home Association testified against the bill in previous committee hearings and, in response, convened a workgroup last summer to outline suggested changes to the bill. Though the stakeholders see room for improvement in the program, a full repeal is overly simplistic, said Jeannie Monk, senior vice president of ASHNHA. “The people who want to repeal it think that we need to repeal it and just let the free market take over, and then prices will go down,” she said. “Based on what we’ve seen, we just don’t think that healthcare in Alaska is a typical free market system.” The competition argument doesn’t hold a lot of water for the industry, Monk said. Health care doesn’t behave like a typical capitalist market — when a new service is installed at a facility, it often just results in more people receiving that service rather than a price decrease, she said. Alaska also has the limiting factor of being an isolated state; unlike in the Lower 48, where people can cross state lines to visit competing hospitals in a neighboring state, Alaska is not a hotspot for medical tourism and has a relatively small population. “It’s not like you put in a new hospital and you can draw more people to use it,” she said. “(In Alaska) you’re either here or you’re not.” Hospitals have a disadvantage in competing against standalone facilities like independent ambulatory surgery centers; they are obligated to provide some services, like 24-hour emergency center care, regardless of the patient’s ability to pay. Hospitals rebalance that with a mix of insurance payers and across services. Private organizations, which do not have the same service obligations, would not have to take patients on Medicaid or Medicare, which have a lower reimbursement rate and are less profitable, Monk said. “(Hospitals) come with significant fixed costs,” she said. “Basically, without CON, healthcare providers can open up facilities that compete on the profitable services but not the unprofitable ones.” The workgroup convened by ASHNHA developed a series of recommendations for changes to the certificate of need program, all of which could bypass the Legislature and be done through regulation change. Many of those changes are technical, including how the net present value of a lease is calculated or how a “community” is defined. The suggested changes were sent to the state in June 2018; however, they didn’t get through the department before the transition in administrations in November, Monk said. Rauscher’s and Wilson’s offices could not be reached for comment. The two bills have not yet been scheduled for committee hearings. ^ Elizabeth Earl can be reached at [email protected]

State wrestles with sizeable backlog of Medicaid applications

Alaska is significantly behind on approving Medicaid applications and in some cases applicants are waiting for months. As of Jan. 29, Alaska had a backlog of 15,639 cases of new applicants or renewals on the books. About two-thirds of those, or 10,200 cases, were filed in 2018. The average wait time to be approved is currently 55 days, according to Clinton Bennett, the media relations manager for the Alaska Department of Health and Social Services. That’s the average, but not everyone is waiting that long, he wrote in an email. “Cases that are tagged as emergent, involve a pregnant woman or adding a newborn to any case are being processed on average within 2 days,” he wrote. Alaska has a fairly large Medicaid population with about 210,276 people enrolled in the Medicaid and CHIP programs as of October 2018, according to the Centers for Medicare and Medicaid Services. That’s about 24 percent of the state’s total population, and up from 123,335 people enrolled at the end of July 2015, just before the Medicaid expansion took effect in the state. Though it’s still a sizeable backlog, it’s significantly down from the total in May 2018, when the Alaska Ombudsman’s Office published a report highlighting the difficulties in the Division of Public Assistance. At the time, the ombudsman noted a backlog of more than 20,000 cases, itself down from 30,000 in July 2017. The eligibility staff couldn’t keep up, in part because of the increasing number of cases per worker — up 24 percent since the expansion in 2015 — and other types of applications for public assistance, such as food stamps, which began increasing during the height of the economic recession in July 2017. The state practices pre-enrollment eligibility verification, Bennett said, meaning that eligibility systems or workers must verify income before approving someone to enter the program. The state cooperates with the federally-facilitated marketplace, Healthcare.gov, to verify eligibility for low-income individuals. If Healthcare.gov is unable to determine eligibility, the state will take over from there. The Legislature also passed a bill reforming the state’s Medicaid program in 2016. One of those requirements was to implement a new technology system. Changing over systems amid the increased volume after the expansion may have led to the backlog boom, said Tricia Brooks, a senior fellow at Georgetown University’s Center for Children and Families. “I think that in Alaska, it was sort of a perfect storm,” she said. “… You have this new system coming in, (the state was) a late adopter of the Medicaid expansion, so you have this volume going on. The combination of those two going on is really tough, particularly when you’re in an environment where you’re changing the business rules.” Alaska is one of a handful of states that have an extensive delay for processing applications, Brooks said. The federal standard is 45 days for non-disability Medicaid applications, and 90 days for disability Medicaid applications. That delay can mean that some go without coverage, and it makes things complicated for the administrators when some are renewals as opposed to new applications. “Backlogs affect both new applications as well as renewals,” Brooks said. “If the state’s unable to keep up with renewals, they should not be automatically terminating someone because they’re not able to renew applications.” The Republican Senate Majority, which backed the original 2016 Medicaid redesign legislation, is concerned about the eligibility backlog as well. Senate President Cathy Giessel, R-Anchorage, said the current process is weighing the state down and allowing some people who do not qualify to obtain coverage. Other states dealing with a similar problem have hired third-party qualified contractors to screen applicants. Giessel said that’s a step Alaska should take, too. The backlog can be frustrating for providers as well as for recipients, she said. “I think it’s the frustration that any compassionate Alaskan has,” she said. “When they’re on waiting lists so long, it’s not compassionate. It’s not compassionate. We want to fix that. In addition, we know there are folks on the rolls that are not eligible, that shouldn’t be.” The reform was a big request of the department, but it is making some progress and reporting savings, Giessel said. There are still changes that could make things better such as moving regulations through that allow expanded coverage of services via telehealth and possibly breaking up the Department of Health and Social Services into smaller departments, allowing for more efficient management, she said. Two bills prefiled for the 2019 session propose adding work requirements for certain eligible adults. Giessel said that’s one other item the Senate is considering in the wake of Medicaid expansion, to encourage able-bodied adults on Medicaid to work. “Am I personally happy with the way Mediciad reform is going? It’s slow,” she said. “It’s very much like the glaciers in Alaska. They’re there, but moving very slowly.” To reduce the backlog in Alaska, Brooks pointed to a number of steps other states have taken, including the step Giessel mentioned to hire a third-party contractor to verify eligibility. Another way, which has been encouraged by CMS, is to use eligibility data from the SNAP program to determine eligibility for Medicaid. Most people who qualify for SNAP also qualify for Medicaid, Brooks said. Another logjam in the system can be as simple as people calling the Division of Public Health to check the status of their application. That takes staff time to answer the phones. One way to address that problem is to launch online account that allow people to check the status of their applications online, Brooks said. The majority of states have now done that, she said. “Online accounts really improve the efficiency of the eligibility operations,” she said. “I think there’s been less trouble with the online accounts than there have with the underlying eligibility rules engine. It is a way to offload some of the work volume.” ^ Elizabeth Earl can be reached at [email protected]

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