Elwood Brehmer

Revenue commissioner outlines fiscal options after cuts

Revenue Commissioner Randall Hoffbeck encouraged Alaskans to try their hand at eliminating the $3 billion-plus state budget deficit through mixing cuts and taxes on a computer model available on the state website during a June 22 talk to Anchorage Chamber of Commerce members. Hoffbeck said he tried to discuss increased revenue options shortly after taking the lead Revenue Department post last December, but Gov. Bill Walker told him major spending cuts would have to come first. “The price of admission to talk about revenue is reduction in the size of government,” Hoffbeck said. “We had to show Alaska that we had seriously attempted to bring the size of government and government spending down before we would be allowed to talk about revenue.” The fiscal model, available to the public through the Governor’s Office homepage, is the same software used during the governor’s Building a Sustainable Future weekend conference held in Fairbanks June 5-7. With a budget that is about $800 million smaller than last fiscal year finally passed in the Legislature, the first round of cuts is complete. More are likely coming for the 2017 fiscal year, but the state likely can’t afford cuts nearly as severe. The 2016 unrestricted general fund spend will be $5.2 billion, which is down about 35 percent from roughly $8 billion in 2013. Cutting another $500 million from the 2017 fiscal year budget, a number Hoffbeck said has been bantered by some demanding smaller government, would require significant programmatic cuts to the three largest cost drivers: education, health care and state retirement plans. About three-quarters of the $800 million budget cut came from virtually eliminating the state capital budget, something Hoffbeck said can’t continue long-term. Outside of funding the Kivalina school construction, the only significant state funds in the capital budget will be used to leverage federal match dollars, largely for transportation infrastructure construction. Hoffbeck echoed a comment made often by Associated General Contractors of Alaska Executive Director John MacKinnon, that there are enough projects “in the hopper” from prior year appropriations to keep construction crews busy for a couple years. However, “if we don’t have an active capital program at some point in time we will have some very significant impacts on the construction industry in the state,” Hoffbeck said. Adding back construction spending, if done through straight appropriations, challenges future balanced budgets even further. MacKinnon said in an interview the state might have to look once again at bonding for large project investments, a practice that has fallen by the wayside. Hoffbeck touched on a suite of options to increase cash flow — taxes and Permanent Fund options — and which ones might make the most sense for the state, near and long-term. The computer model contains 30 revenue options for users to play with. Waiting for oil prices to rebound and hoping for increased North Slope production will likely leave Alaska with an empty wallet, based on a chart in the model. Even if oil returns to $80 per barrel soon, a price Hoffbeck says could be a sort of price ceiling for awhile, as it is roughly the price that shale oil production becomes profitable, and even if 800,000 barrels per day were flowing down the trans-Alaska Pipeline System, the state would still be $1.3 billion in the red with the 2016 budget. He was quick to note that the Walker administration won’t consider changing the oil production tax structure, saying, “the people have spoken,” in regards to the oil tax referendum held last August upholding the current regime. There are, however, “modifications at the edges” of oil taxes that could improve the health of state coffers, according to Hoffbeck, particularly in regards to Cook Inlet oil and gas production. While the Cook Inlet credits help keep the lights on in the region, they do not stimulate significant tax revenue. Taxes on Southcentral basin production were locked at 17 cents per thousand cubic feet of natural gas and no tax on oil when the state transitioned from the economic limit factor, or ELF, tax structure to the petroleum profits tax, or PPT, model in the mid-2000s, he said. “All of the money that goes into Cook Inlet is producing more gas, more oil, but there’s no real nexus with the treasury,” Hoffbeck said. Changing the base tax rate would not help much now in a time of lower oil prices, while changing the minimum oil tax rate would help now with per barrel price in the $65 range, but wouldn’t increase revenue significantly when prices increase, he said. Reducing the amount the state pays out in reimbursable and per barrel tax credits, each in the $700 million range annually, could help significantly. Reimbursable credits do not require companies to produce, they must only meet guidelines for oil and gas field activity. Per barrel credits are tied to production, are part of the overall tax regime and work with the minimum and base taxes to come up with the final production tax rate, according to Hoffbeck. However, what impact adjusting credits could have on producers’ willingness to invest is unknown. Instituting a natural gas reserves tax was popular at the Fairbanks conference because it swung the budget pendulum towards balanced very quickly, but ultimately it is a “net zero tax,” Hoffbeck said. Used while TAPS was being constructed, the industry paid a tax that it was then able to write off at a 50 percent rate on production until the reserves tax was essentially refunded. “(A reserves tax) can be used as a loan against future revenues but it would not make any sense unless a gasline is under construction,” he said. It can also be implemented as a stimulus to get producers to put their gas or oil into a pipeline. When it comes to personal taxes, Alaskans can’t complain. The national average is $2,300 per person, Hoffbeck said, while Alaskans pay about $500 per person, the lowest in the country. “Let’s face it, we’ve had it pretty good for the last 40 years,” he said. Instituting a health care provider tax — Alaska is the only state without one — would bring the state in line with the industry norm, he said. A personal income tax at 15 percent of one’s federal liability, which has been proposed in the Legislature, would generate about $500 million per year. Some local governments with sales taxes are opposed to adding another state sales tax, while others would like a state sales tax because a local tax could be tacked on and administered by the state, Hoffbeck said. Alaska’s fuel taxes, which total 11.3 cents per gallon, are the lowest in the country and about a third of the national average, according to the American Petroleum Institute. If earnings from Permanent Fund are used properly, it could be a way to generate significant general fund dollars without impacting the hallowed dividend checks. The Permanent Fund has been the largest revenue source for the state and greatly exceeded oil and gas tax income over the last three years. State investment revenue totaled more than $8 billion in fiscal year 2014, while petroleum-derived income tallied $5.7 billion. “We really are kind of at that tipping point that I think was in mind when the Permanent Fund was put in place, that at some point it would become the financial engine for the state,” Hoffbeck said. Revising how the fund’s earnings are used to an endowment-type format — an idea floated during the administration of former Gov. Frank Murkowski and the last time oil prices were low for a significant time — could allow the state to use the earnings for the general fund, Hoffbeck said. After pulling from the earnings for this year’s PFD checks, there is still about $7 billion in a Permanent Fund earnings reserve account, available for use. However, Hoffbeck did note he feels the booming domestic financial markets are due for a correction soon, which could dampen revenues if that happens in the short-term. Simply capping the PFD check at $1,200 this year would have generated between $500 million and $600 million for the state to use, he said. Also, borrowing against the state’s assets, the nearly $55 billion of them, and then generating a return on the loan could generate safe income, he said. “Most likely it would be invested more in real estate and other assets that generate dividends or monthly rents so that there would be annual cash flow each year,” Hoffbeck speculated. Investing about $1 billion per year over 10 years would mitigate risk and allow for a $300 million return if a feasible 3 percent return could be made on the borrowed-invested funds, he said. Playing with the Permanent Fund is another option in the computer model. Overall, Hoffbeck said the fiscal situation is not a crisis yet with $10 billion still in the Constitutional Budget Reserve account — before the fiscal year 2016 deficit is covered — but could become one quickly if the state does not act. The Walker administration hopes to unveil a fiscal plan late this summer, he said. Hoffbeck said a conversation he had with his wife prior to the Fairbanks conference in his view summed up the challenges facing the state. “I said, ‘If I do my job right this year, by the end of the summer I could be the most hated person in the state of Alaska,’” he recalled. “She said, ‘I’ll still love you, but don’t take my dividend.’” Elwood Brehmer can be reached at [email protected]

Anchorage marks a hundred years, a hundred languages

“English plus 99, so 100 languages.” That’s not how many languages are spoken in the country, or even Alaska. As of last count there were 100 different languages actively heard in the Anchorage School District, Philip Farson said. Farson directs the district’s English Language Learners program, designed to help students adapt to an English-centric learning environment. More than 1,000 new students enter the program every year, he said. As a result, he is one of the first people in Anchorage to see the city’s changing population through its new students and their parents. There are now 100 languages spoken in the Anchorage School District. From 1993 to 2015, Spanish remains tops in non-English languages spoken, and Lao is still fifth. Hmong-speaking students have jumped up to second place with 1,067. Currently, about 6,200 students are in the language program, 13 percent of the ASD student body. In all, more than 10,000 students are in, or have graduated from, English Language Learners; that’s one-in-five public Anchorage students. At the beginning of last school year, minority students comprised 57 percent the district, up from 45 percent 10 years prior, according to ASD. Farson said it’s more than just the surface data, however. What sets Anchorage apart from other districts nationwide is the diversity among traditional minority groups, he said. Often, a district will have a dominant second language, such as Spanish, and very few speakers of other languages, according to Farson. “There are many districts that have as many or more languages than we do,” he said. “It’s just that they don’t have them in the same kind of mix that we do.” While the number of students that primarily speak Spanish at home was second to English with 1,344 speakers last school year in Anchorage, Hmong, Samoan and Filipino speakers are not far behind. Yupik, the language of Western Alaska Natives, was fifth and spoken by 279 students, according to ASD data. The next highest Alaska Native language on the list was Inupiaq at eighth, spoken by 120 students. It is the language of Alaska Natives from the North Slope and Northwest Alaska regions. At every level, elementary to high school, ASD has some of the most diverse schools in the country as a result, according to U.S. Department of Education metrics. Farson and his staff of 150 teachers and paraprofessionals try to help each student understand English academically, while at the same time encouraging the students and parents to embrace their home language. He said some parents eliminate their primary language from their homes in an effort to immerse their children in English, a noble effort that can sometimes stunt a child’s vocabulary and language development. “We encourage (parents) to speak whatever language they are most fluent in,” Farson said. “We want the students to have models of rich language. The reason for that is, if you’re using a rich vocabulary at home that will transfer over.” The worldwide immigration to Anchorage is a relatively recent phenomenon. “I don’t think people realize just how diverse Anchorage really is, how much it’s changed over time and how much it continues to change,” Farson said. Historical census data backs him up. Nearly 84 percent of Anchorage residents identified as white or Caucasian in 1980. The next largest racial group was African Americans at 5.2 percent of the city’s population, followed closely by Alaska Natives or American Indians at 5.1 percent. People of Hispanic origin were 3 percent of Anchorage in 1980. By 2013, Caucasians made up exactly two-thirds of city residents. Asians, less than 3 percent of Anchorage’s population in 1980, were nearly 9 percent two years ago. The Alaska Native-American Indian population had risen to 8.1 percent and Hispanics or Latinos were all of a sudden 8.6 percent of the Anchorage population. Also, Pacific Islanders showed up on the list of the largest racial groups in Anchorage at 2.3 percent, while those identifying as bi-racial were nearly 8 percent of the city. African Americans were 6.3 percent of Anchorage in 2013. Nearly 10 percent of Anchorage residents were foreign-born in 2013, and 17.3 percent did not speak English, according to U.S. Census data. By comparison, about 78 percent of the U.S. population identified as white in 2013. Much of the growth of minority groups in Alaska’s largest city has happened within the last 15 years. Anchorage’s population increased 12.1 percent between 2000 and 2010. Its collective Asian, Native Hawaiian and Pacific Islander population grew almost 40 percent during the decade, and the Hispanic or Latino population increased by 23 percent. The Alaska Native-American Indian population kept pace with overall population growth at about 12 percent, while the number of Caucasians and African Americans each increased by less than 3 percent. About 10 percent of all Alaska businesses were owned by immigrants in 2010, according to the Immigration Policy Center, or nearly 3,400 statewide. The reasons behind the moves obviously vary as much as the people themselves, but a recent influx of Middle Eastern and North African refugees is sadly a result of conflict. Farson said he is beginning to see more Arabic-speaking individuals in his work, a trend he expects to continue. “Ten years ago we had no Sudanese; now we have 700 (in Anchorage),” he said. For many of the city’s residents, particularly refugees relocated by government officials, Alaska is all these newcomers know of the United States, Farson said. “America is whatever we are making it for them to be, and that’s true even for a lot of those that come here by choice,” he said. Cook Inlet’s earliest settlers, of course, were the Dena’ina. The Alaska Native people had permanent settlements north of the Anchorage Bowl at Eklutna, across Knik Arm from what is now Anchorage and along the western shore of the Inlet at Tyonek. Early immigrants to the city of Anchorage were primarily immigrants from Greece, Russia, Norway, Sweden and Denmark, according to a 2002 joint publication by U.S. Army staff at Fort Richardson and Colorado State University. They sought work building and operating the new Alaska Railroad. Anchorage residents referred to all newcomers as “Swedes” in the early days, Cook Inlet Historical Society President James Barnett said. Even in its early days, Anchorage was a place where immigrants were not marginalized like they were in other parts of the country, he said. Anchorage passed some of the America’s first anti-discrimination laws, according to Barnett. Its lack of social classes is partially a result of Anchorage being a young city and traditions that have always favored immigrants, he said. “We’re all newcomers,” Barnett said. “In every case as we’ve grown we’ve grown because we’ve embraced the newcomer.” The population explosion during World War II and the early Cold War was because of military expansion in the city, which brought soldiers and airmen with ranging backgrounds from all over the country north. As still happens today, many of the military personnel stationed in Alaska fell in love with the state and stayed, or came back when their service is complete. More than 15 percent of Anchorage residents are veterans, compared with an average of less than 10 percent nationwide, according to the state Labor Department. Alaska has the highest number of veterans per capita of any state in the union. More than 25 years ago, Anchorage resident and well-known community organizer Mao Tosi was one of the city’s newcomers. “I’m Samoan — warm everything — but my heart and my soul are rooted here in Anchorage, Alaska,” Tosi said. “So it’s to know that this place becomes home.” Tosi moved north from San Diego with his family in 1989 with the allure of jobs and a fresh start ahead, he said. Tosi was 12 years old at the time. Since, he has witnessed Anchorage become a more colorful community not afraid to discuss racial issues, Tosi said. “I moved here in 1989 and to see the changes from then to now, it’s what you hope for most cities, to grow in a way where there hasn’t been much in the news about the segregation or the division of our community,” he said. “That says to me that Anchorage, that Alaska, is much different from the rest of the country.” Malcolm Roberts is an advisor to the Bridge Builders of Anchorage board of directors. He helped found the group that focuses on bringing Anchorage’s communities together as a member of former Mayor Rick Mystrom’s staff in 1996. “It’s still that frontier mentality,” Roberts said, explaining Anchorage’s increasingly diverse population. His wife, Cindy Roberts, traced the attitude back to the area’s pre-Anchorage, gold rush days. “We need talent,” she said. Before transitioning to non-denominational Alaska Pacific University in 1978, Alaska Methodist University worked to bring Pacific Islander students to Alaska, part of the reason for Anchorage’s Tongan community, Malcolm Roberts said. People from all over the world continue to come to Anchorage for education, jobs and that welcoming attitude, according to Tosi. He said Anchorage also benefits from being a small city, in which newcomers can easily become involved and feel as though they are a part of the overall community. “Nowhere else in the country do I see any city move as quickly as we do when there are issues that we come together on,” Tosi said. The fact that Anchorage is often ranked among the best cities to call home in America is not lost on those worldwide. Many newcomers quickly encourage their relatives to think about giving the city a try, according to Tosi. “It’s spreading like wildfire that this is a good place to live,” he said. Elwood Brehmer can be reached at [email protected]

Interior budget bill cuts EPA, tries again on King Cove

Sen. Lisa Murkowski unveiled an Interior Department budget bill June 16 with funding limitations on the Environmental Protection Agency and a provision that could lead to an emergency access route for King Cove. “Many of Alaska’s key initiatives have been addressed, whether it’s how we access our lands and our resources for development to strengthen our economy; whether it’s how we conserve our lands for use by Alaskans,” Murkowski said during a teleconference briefing with Alaska reporters. The EPA’s budget was cut by nearly 7 percent, a $540 million reduction from the current fiscal year. Funding for its regulatory programs was cut by $57.1 million, but cleanup programs got an additional $21.5 million. Murkowski said the EPA budget finds a balance between caring for the environment while not adding “unduly and unnecessary regulations to thwart our opportunities and further hinder development.” In total, the bill authorizes more than $30 billion of discretionary spending, plus $1.05 billion for emergency firefighting. It is about $2.2 billion less than President Obama’s budget request. Murkowski, who chairs the Appropriations Subcommittee on Interior and Environment, said the bill also funds several Alaska Native priorities through Interior agencies, including funding for Tribal courts at the federal level for the first time. Nationwide, the first version of the 2016 fiscal year Interior budget commits $4.77 billion for Indian Health Services, a $135 million increase over 2015, with $20 million dedicated to easing the IHS facility construction backlog, according to a subcommittee bill summary. Another EPA-related provision attempts to halt the agency from implementing the pending Waters of the U.S. rule by blocking any funding to the regulation. The Obama administration argues the Waters of the U.S. rule simply clarifies the EPA’s jurisdiction over navigable waterways under the Clean Water Act, and thus where and when it can require Section 404 fill and dredge permits for development projects. Republicans contend it vastly expands the agency’s authority to even small creeks and dry-run ditches and would make permitting many resource development projects an even slower and more costly endeavor. Alaska’s congressional delegation has been exceptionally critical of the pending regulation given the state contains about 60 percent of the nation’s wetlands. A close reading of the regulation finds the actual impact is likely somewhere in the middle. The EPA has broadly interpreted the vague Clean Water Act since it was enacted more than 40 years ago, and the Waters of the U.S. rule mostly codifies current agency practices. It remains to be seen whether cutting off funding will have any impact on the effectiveness of the new rule as federal agencies often manage to deal with funding challenges. Specifically to Alaska, Murkowski said the budget bill also contains language that directs the Bureau of Land Management to remove permitting roadblocks for oil and gas projects in the National Petroleum Reserve-Alaska, and has similar provisions for mining on federal land. “We’re trying to eliminate some of the redundancy (in regulation) that leads to additional cost and further delay,” Murkowski said. Murkowski said a provision also directs the U.S. Forest Service to take stock of Interior Alaska timber resources for the first time. New Mexico Sen. Tom Udall, the ranking Democrat on the Interior Appropriations Subcommittee said he is disappointed by, among other things, the EPA funding cuts that hurt efforts to limit climate change. “It underfunds education and health care for Tribal communities. It shortchanges communities that depend on national parks and other public lands to support their local economies,” Udall said in a formal statement. “And it includes dangerous policy riders that undermine environmental laws that have kept our air and water clean, protected imperiled species and safeguarded sensitive ecosystems for decades.” Murkowski said the funding levels in the bill follow the Budget Control Act, known as sequestration, passed by Congress and signed by the president in 2011. The bill provides $2.73 billion for the National Park Service, which is $112 million more than 2015, but $321 million short of the president’s budget. President Obama requested a one-time $326 million appropriation to prep the country’s parks and monuments for the National Park Service’s centennial in 2016; the bill authorizes $110 million for the centennial initiative. King Cove road Murkowski touted a provision in the budget bill that would allow the State of Alaska and the Interior Department to negotiate a “fair trade” land exchange and allow the state to build a road from the Alaska Peninsula village of King Cove to nearby Cold Bay. The 11-mile section of gravel road — through what is now Izembek National Wildlife Refuge territory — would give King Cove residents overland access to the large World War II-era runway at Cold Bay, and thus safe access to medical care in Anchorage during bad weather. While the bill allows the feds to enter negotiations with the state, it does not require a deal to be accepted. Murkowski dodged questions from reporters about how the land swap would be any different than one passed by Congress and signed by Obama in 2009, but was denied by Interior Secretary Sally Jewell just before Christmas 2013. That land swap, part of an omnibus public lands package, would have given about 56,000 acres of Native village corporation and state land to the federal government in exchange for 206 acres in the Izembek Refuge. “We offered up a pretty good exchange with the law that was passed several years ago, a 300-1 exchange,” Murkowski said. Since, Murkowski has blasted Jewell on the issue every chance she’s had, saying the road will be built one way or another. Jewell has said the road would damage critical waterfowl habitat in the refuge, which is home to nearly all of the world’s populations of some migratory birds at certain times of the year. During a February visit to Alaska Jewell reiterated her stance on the King Cove road and said the issue was a done deal. Eventually Murkowski admitted a new land swap could be denied, but also said that wouldn’t happen. “We’re not going to let the Interior Department say they’re not interested; we’ve already gone down that road once before,” Murkowski said. “What we’re trying to accomplish through this policy provision is that the people of King Cove will have access to an emergency, lifesaving road to get to Cold Bay.” She did not elaborate on how she would prevent a repeat by the Interior Department during her brief availability. Whether the road is ultimately built could have a lot to do with the upcoming elections in 2016. Elwood Brehmer can be reached at [email protected]

AIDEA approves $52.5M purchase of Fairbanks Natural Gas

Nearly six months after the idea was announced, the Alaska Industrial Development and Export Authority board of directors approved the $52.5 million purchase of Fairbanks Natural Gas during a special meeting June 11. Included in the purchase price are all of the companies under Pentex Alaska Natural Gas Co., the parent company to Fairbanks Natural Gas and Titan Alaska LNG, which operates the small natural gas liquefaction facility at Point MacKenzie. The two LNG-powered trucks used to transport LNG to Fairbanks are also part of the deal. AIDEA estimates transitioning the ownership structure of the Fairbanks utility from private to public will save customers more than 13 percent on their bills nearly immediately. “We expect the Pentex acquisition to be a short-term strategic investment that can play a significant role in helping achieve the long-term success for the Interior Energy Project,” AIDEA Executive Director John Springsteen said in a formal statement. “This acquisition will promote an integrated gas distribution system that can be built and operated in a more efficient manner for the benefit of Interior Alaska residents and businesses.” AIDEA and Pentex leaders tentatively agreed to the deal back in late January, and in the meantime have been negotiating finer points while the authority has done its due diligence on the deal. The current management structure at Fairbanks Natural Gas, which serves about 1,100 customers in the heart of Fairbanks, is expected to remain in place to operate the utility after the sale. Resolutions passed by the AIDEA board allow for up to $54 million to be used from the authority’s Development Finance Program fund, with the added money above the purchase price for working capital. The sale, separate from but related to the Interior Energy Project, also includes Hilcorp’s $15.1 million deal to purchase and operate the Titan facilities. That deal is under review by the Regulatory Commission of Alaska and Attorney General Craig Richards and is set to close by late September if it passes the regulatory inspections. It would also lessen AIDEA’s total investment in Pentex to $38.9 million. The proposed Pentex purchase came under fire from some Southcentral Republican legislators when it was announced who questioned whether it is appropriate for the state to purchase a private company and potentially compete with other companies that might want to supply natural gas to the Interior. While AIDEA is a state entity controlled by the Commerce Department, it is a financially self-sustaining development organization in terms of its day-to-day operations. Local Interior government leaders have voiced broad support for the plan. AIDEA leaders have said they plan to sell Fairbanks Natural Gas to a local entity within two years — likely the Fairbanks North Star Borough, which controls the developing Interior Gas Utility. Combining the utilities could provide additional operational and capital efficiencies and subsequent savings to customers, those knowledgeable with the work have said. Elwood Brehmer can be reached at [email protected]

Anchorage's port of necessity

​Editor’s note: This is the eighth in a series of 10 articles by the Journal of Commerce recognizing the Anchorage Centennial and examining the events and the industries that have shaped Alaska’s largest city. The series will be released as a single special edition of the Journal in time for the Solstice celebrations June 20 and will be available at centennial events throughout the summer. The drive along the lower Kenai Peninsula affords views few places can offer: snow-capped and active volcanoes rise above blue, fishing boat-dotted water like a defensive line collapsing on a third-string quarterback. Some days that water is so smooth it appears one could skate on it. Looks are deceiving. The water is constantly moving, and fast. The tidal currents in Cook Inlet regularly exceed five knots. At the upper reaches of “the Inlet” — the home of Alaska’s largest city — the tide can fluctuate 35 feet in little more than six hours. Combine that with shallow channels, which the currents are constantly changing, and you’ve got a mariner’s nightmare. For these reasons, Alaska maritime historian J. Pennelope Goforth calls the Port of Anchorage “the port that wasn’t supposed to be.” It abruptly became the port of necessity on March 27, 1964, when the 9.2-magnitude Good Friday Earthquake dismantled every other large dock in Southcentral Alaska. “(Anchorage) was the only one left standing,” Goforth said. “Seward, Whittier, Valdez, just gone, and I think it was at that point that people started to realize all the things you need a port for.” Opened for business in April 1961, the single-berth, 600-foot pile dock that withstood the second-largest earthquake known to man is still at the center of operations at the port more than 54 years later. Before the first big city dock, the port was largely a hodgepodge of development, Goforth said. There was little more than Ship Creek’s infamous tide mud at the port site when the city formed in 1915. By 1917, Henry J. Emard had opened the Emard Packing Co. near where the docks stand today, according to records from the Cook Inlet Historical Society. “It was a nice little dock with a warehouse that employed a lot of local people processing salmon,” Goforth said. The salmon cannery primarily processed Susitna River chinooks, Goforth said. One of those locals was eventually Dan H. Cuddy, the longtime president of First National Bank Alaska. Cuddy, who died May 12 at the age of 94, who got his first job from Emard. In a 2001 interview with the Journal, Cuddy remembered what Emard said when he was promoted to cannery superintendent. “He said, ‘I hand you this leaky boat,’” Cuddy said. “It flattered me highly.” Cuddy eventually gave Emard a seat on FNBA’s board of directors. For years after the founding of Anchorage, most infrastructure was developed organically, Goforth said. The city of today was a scattered collection of small towns — Anchorage, Muldoon and Spenard. A June 1920 copy of the Alaska Railroad Record reveals that the city was happy with its dock, new in November 1919, at least for its ability to handle freight from the S. S. Admiral Watson. “From the time the vessel passed the Forelands until the moment she tied up at the dock not a minute of anxiety was experienced by the skipper on account of the floating ice and the only answer made by him to the questions of the skeptical concerning the possibility of the ship’s progress being retarded by the presence of the floating ice was a knowing smile and a pointing finger at the vessel, made fast to the big dock,” the Record reported. “That the construction of the new ocean dock represents a big economy in the matter of unloading of vessels is reflected in the fact that in less than 14 hours actual unloading time, 562 tons of merchandise were taken from the ship’s hold and loaded aboard flat cars standing along side.” The Admiral Watson also carried 137 first-cabin passengers when it docked on Nov. 15, 1919, according to the Record, the official publication of the Alaska Engineering Commission, the federal group tasked with building the Alaska Railroad. However, when the Admiral needed a berth for repairs, the dock didn’t fare as well, according to Goforth. “The city dock was not much wider than (40 feet) and they had the huge Admiral there trying to repair it,” she said. “After that they started to build a little bit more but it was still all individual efforts.” War boom As was the case with most things in early Anchorage, World War II changed that. The need for an industrial-size dock was exemplified in the city’s rapid growth during the war. In April 1940, Anchorage had about 4,000 residents. By the middle of 1941, military activity pushed the city’s population beyond 9,000; and by 1950, Anchorage had a population of 32,000 people. Military construction brought nearly $1 billion into the city, and the materials for that work needed to come through a port. In 1943, the Anton Anderson Memorial Tunnel was completed and linked Anchorage by rail to the deep-water Port of Whittier, which served as the military’s primary fuel terminal. Most commercial goods came via rail from Seward. Still, Anchorage’s freight demand outpaced handling capacity. Goforth said a cement barge was anchored along the Anchorage dock during the war to serve as an additional loading platform. After World War II, the country’s appetite for infrastructure and a new method of shipping combined to transform to Port of Anchorage into at least part of what it is today, she said. The standard method of freight delivery to mainland Alaska was born on the East Coast, according to the National Museum of American History. Malcom McLean, a trucker and businessman from North Carolina bought a small steamship company in 1955 with the idea of loading ships with full semi-trailers. The next year, the S.S. Ideal-X, a converted WWII-era tanker ship, sailed from New Jersey to Texas with 58 trailers aboard. Sea-Land Services Inc. was born. “It used to be break bulk cargo, which is you get 10 people in a line and throw boxes to each other from the hold of the ship,” Goforth said. She likened the change in transport methods to the change in computer code from “command to HTML.” And a few years later, in 1961, the Port of Anchorage was really open for business with gantry cranes, a 50,000-square foot transit shed and 52 acres primed for industrial development. Despite having a brand new infrastructure, insured for more than $5.5 million, the Port of Anchorage did not attract the traffic the city hoped for in 1961. According to the port’s annual report from that year, the city approved a budget that projected handling 130,000 tons of cargo generating $602,500 of revenue and $433,207 of net income. The budget was approved on April 17, 1961, days after the new port officially opened. “The success of the Anchorage Port facilities can only be achieved by handling bulk cargo destined for the Anchorage and Fairbanks areas, which objective requires a diversion of cargo now being handled through the Seward ‘gateway,’” the 1961 report stated. “The City of Anchorage and its port officials should continue their efforts to bring about this diversion.” After the barge Kevalaska unloaded 330 tons of construction materials and vehicles on April 21 — the first vessel to dock at the new port — the final 1961 tallies were as follows: 38,476 tons of freight generating $189,999 of revenue for a net income of $47,383. Port records also indicate discussions between the city and Shell Oil Co. in 1961 to move the company’s fuel products over the new pier and steal business from Whittier as well. “It appears that if the petroleum now being handled over the Ocean Dock and through Whittier can be attracted to Anchorage port facilities, the revenues from this source may be in excess of $100,000 per year,” the annual report states. Cargo tonnage grew steadily the next several years as the aforementioned petroleum business grew from 208 tons in the first year to 98,900 tons in 1963. However, it didn’t explode until there were no other docking options in 1964. Quake mostly spared Anchorage port The Good Friday earthquake inflicted more than $500 million of damage to Anchorage and the surrounding area, including rendering the ports of Whittier and Seward unusable for weeks. Rail and road links to Seward were also severed. At the Port of Anchorage, several hundred feet of railroad track was destroyed and the two of the four gantry cranes lost their counterweights, according to the 1964 report. In total, the port suffered about $1.5 million of damage, all but $100,000 of which was covered by insurance. On May 7, less than two months after the earthquake, Sea-Land’s 496-foot S.S. New Orleans containership called on Anchorage with 126 containers filled with food and construction supplies. It was the first containership run in the Pacific Northwest, according to Sea-Land. The New Orleans made the voyage from Seattle in four days. It averaged 17 knots per hour, a speed traditional barge traffic could not match. Today, Totem Ocean Trailer Express Inc., or TOTE, provides twice-weekly service to Anchorage with two, 840-foot vessels filled with semi-trailers ready to be rolled off the ship upon arrival. Matson Inc., formerly Horizon Lines Inc., provides Anchorage with regular containership service. By 1965, the first full year of operations after the earthquake, the Port of Anchorage handled 940,000 tons of cargo, more than two-thirds of which was petroleum products. That business grew steadily until 1975, when construction materials for the Prudhoe Bay oil field and the trans-Alaska pipeline increased the general cargo business by more than 40 percent in a single year. Since that first dock, the Port of Anchorage has expanded to include three traditional dock terminals and two petroleum terminals, with the small Terminal No. 1 right in the middle. The five docks handle 90 percent of the goods headed for mainland Alaska. In 2014, the port handled 3.45 million tons of cargo. Activity peaked in 2005 at just more than 5.1 million tons. The U.S. Army Corps of Engineers commissions more than $10 million of dredging every year to keep the Port of Anchorage open. Glacial silt from the rivers at heads of Knik and Turnagain arms would quickly fill shipping channels and cut off the city from large traffic without the annual maintenance. The now-scaled back Anchorage Port Modernization Project, still a $485 million endeavor — after $300 million was spent during the first expansion that began in 2003 — will replace and grow the dock infrastructure, while going to four main berths equipped for larger vessels. Elwood Brehmer can be reached at [email protected]

Federal judge allows Pebble case against EPA to continue

Pebble Limited Partnership’s lawsuit against the Environmental Protection Agency will continue as a federal judge denied the agency’s motion to dismiss June 4. U.S. Alaska District Court Judge H. Russel Holland concluded that while the EPA may not have established the three “anti-mine” groups as described by Pebble in its complaint — the Anti-Mine Coalition, Scientists and Assessment Team — agency staff could have utilized them to draft the pending determination to block development of Pebble’s copper and gold claims near Bristol Bay. The mining organization’s attorneys argued during a May 28 hearing that the agency was in cahoots with area tribes and mine opposition groups for years prior to and during the Bristol Bay Watershed Assessment process. The exhaustive assessment, which found large-scale mining would irreparably harm the region’s robust salmon fisheries, is the basis for the EPA’s attempt to preemptively stop Pebble through its Clean Water Act Section 404(c) wetlands protection authority. Pebble’s primary argument centers on the claim that the EPA violated the Federal Advisory Committee Act, or FACA, which requires agencies to remain objective and follow strict public notice and open meetings guidelines on policy issues when taking input from interest groups. “We are convinced the EPA has pursued a biased process against our project that then drove their actions toward a predetermined outcome,” Pebble CEO Tom Collier said in a formal statement after the order. “Our fight with the EPA has been about a fair and transparent process for objectively evaluating a development plan for our project once we have presented it via the permitting process. In addition to this case, we are seeking documents to show the EPA’s lack of transparency and action under the Freedom Information Act.” He also said the group has commissioned an independent investigation into the EPA’s actions in regards to Pebble. The EPA Inspector General is in the midst of a review of the Bristol Bay Watershed Assessment that began more than a year ago. As far as the court case goes, Pebble will now seek to depose federal employees and members of third-party groups involved in drafting the assessment, Collier said. The agency claims that even if it unknowingly violated FACA, Pebble had ample opportunity to provide input during more than 30 meetings with EPA officials since 2003 — long before the assessment process officially began in 2011. The United Tribes of Bristol Bay and Trout Unlimited Alaska, two staunch opponent groups of the mine, issued statements saying Holland’s ruling doesn’t change the fact that the science behind the assessment proves Pebble would damage the region’s aquatic resources. “This case is simply another delay tactic from Pebble. The company’s complaints about the federal advisory process — a process Pebble itself participated in —in no way changes the scientific fact that this mine, in this place, will devastate our fishery, “ UTBB President Robert Heyano said in a June 4 release. “Today’s ruling was merely a preliminary step in a judicial process that isn’t over, and if further litigation is the price necessary to protect the Bristol Bay fishery and our traditional way of life, then it will be well worth it.” In November, Holland issued an injunction to halt all work on the 404(c) process until the court case is resolved. He dismissed with prejudice Pebble’s allegations that the EPA established the Anti-Mine Coalition and Anti-Mine Scientists groups in the latest order. Holland also dismissed with prejudice Pebble’s claim for injunctive relief. The EPA was also relieved from answering chunks of the amended Pebble complaint, which it claimed violated court procedure. “(Pebble’s) first amended complaint is lengthy and does contain irrelevant and redundant allegations and unnecessary factual details,” Holland wrote. “But rather than dismissing the first amended complaint, the court will excuse the defendants from answering” the sections that do not pertain to the FACA accusations. Holland called Pebble’s original, 138-page complaint, an “outrageous violation” of court procedural guidelines when issuing the November injunction. Also on May 28, a three-judge panel from the 9th Circuit Court of Appeals dismissed a previous lawsuit by Pebble — also heard and dismissed by Holland last September — that the EPA overstepped its authority by beginning the 404(c) process before a mine plan or permit applications were submitted. It was determined that case was not ripe for a ruling until the mine veto was finalized. Elwood Brehmer can be reached at [email protected]

Fort Wainwright to house combat Gray Eagles

Fort Wainwright is getting nine Gray Eagle unmanned combat aircraft, according to a June 8 release from Alaska’s congressional delegation. The Gray Eagle Company includes 128 military personnel that will relocate to the Fairbanks-area U.S. Army base, the release states. Army officials told the delegation that there are plans to construct a permanent unmanned aerial system, or UAS, facility at Fort Wainwright if the funding is included in the 2017 fiscal year budget. In the interim, the aircraft will be stored in an existing facility. The delegation members said the announcement confirms the importance of Alaska to Department of Defense strategy. “Alaska is the tip of the spear when it comes to the Pentagon’s strategic shift to the Asia-Pacific, but the Pentagon clearly sees it as a superior choice to also respond to increasing military activities in the Arctic,” Sen. Lisa Murkowski said in a release. In February, the Defense Department revealed Joint Base Elmendorf-Richardson and Fort Wainwright are on a list of 30 bases across the country that could see force reductions as part of a budget control effort to cut the Army’s total force from 570,000 soldiers to 450,000 by 2017. Residents of Anchorage and Fairbanks turned out in droves during listening sessions to tell Army leaders how much the military presence in the state means to Alaskans. “The Gray Eagle Company will provide benefit to Alaskan service members by allowing them to train as they fight — with support from Gray Eagles, Apaches, and Air Force assets at JBER and Eielson (Air Force Base),” Rep. Don Young said. Sen. Dan Sullivan, a Marine Corps Reserve officer, said military intelligence, surveillance and reconnaissance has never been more important. “Now more than ever, ground commanders need to see and understand the battlefield, and the Gray Eagle is a critical component of for the U.S. Army to do that,” Sullivan said. “Importantly, basing the Gray Eagle at Fort Wainwright, near the Joint Pacific Alaska Range Complex, will give the U.S. Army access to some of the world’s most expansive and robust training ranges.” The General Atomics Aeronautical Gray Eagle is a large UAS with a 56-foot wingspan and a ceiling of 29,000 feet. It has a maximum flight time of 25 hours, according to the manufacturer. Elwood Brehmer can be reached at [email protected]

Judge allows Pebble case against EPA to continue

Pebble Limited Partnership’s lawsuit against the Environmental Protection Agency will continue as a federal judge Thursday morning denied the agency’s motion to dismiss. U.S. Alaska District Court Judge H. Russel Holland concluded that while the EPA may not have established the three “anti-mine” groups as described by Pebble in its complaint — the Anti-Mine Coalition, Scientists and Assessment Team — agency staff could have utilized them to draft the pending determination to block development of Pebble’s copper and gold claims near Bristol Bay. The mining organization’s attorneys argued during a May 28 hearing that the agency was in cahoots with area tribes and mine opposition groups for years prior to and during the Bristol Bay Watershed Assessment process. The exhaustive assessment, which found large-scale mining would irreparably harm the region’s robust salmon fisheries, is the basis for the EPA’s attempt to preemptively stop Pebble through its Clean Water Act Section 404(c) wetlands protection authority. Pebble’s primary argument centers on the claim that the EPA violated the Federal Advisory Committee Act, or FACA, which requires agencies to remain objective and follow strict public notice and open meetings guidelines on policy issues when taking input from interest groups. The agency claims that even if it unknowingly violated FACA, Pebble had ample opportunity to provide input during more than 30 meetings with EPA officials since 2003 — long before the assessment process officially began in 2011. In November, Holland issued an injunction to prevent the EPA from finalizing the 404(c) process until the court case is resolved. He dismissed with prejudice Pebble’s allegations that the EPA established the Anti-Mine Coalition and Anti-Mine Scientists groups in the latest order. Holland also dismissed with prejudice Pebble’s claim for injunctive relief. The EPA was also relieved from answering chunks of the amended Pebble complaint, which it claimed violated court procedure. “(Pebble’s) first amended complaint is lengthy and does contain irrelevant and redundant allegations and unnecessary factual details,” Holland wrote. “But rather than dismissing the first amended complaint, the court will excuse the defendants from answering” the sections that do not pertain to the FACA accusations. Holland called Pebble’s original, 138-page complaint, an “outrageous violation” of court procedural guidelines when issuing the November injunction. Also on May 28, the federal a three-judge panel from the 9th Circuit Court of Appeals dismissed a previous lawsuit by Pebble — also heard and dismissed by Holland last September — that the EPA overstepped its authority by beginning the 404(c) process before a mine plan or permit applications were submitted. It was determined that case was not ripe for a ruling until the mine veto was finalized. Elwood Brehmer can be reached at elwood.brehmer[email protected]

Anchorage & aviation: Flying through time

Editor’s note: This is the seventh in a series of 10 articles by the Journal of Commerce recognizing the Anchorage Centennial and examining the events and the industries that have shaped Alaska’s largest city. The series will be released as a single special edition of the Journal in time for the Solstice celebrations June 20 and will be available at centennial events throughout the summer. “Owning a Widgeon, living in Anchorage and flying in Alaska, there’s just nothing left. You just can’t get any better than that,” said George Pappas in his deliberate cadence, with the hint of a grin showing through. The 86-year-old Pappas has lived the history of aviation in Anchorage for more than 60 years. For nearly 30 of those years he used the versatility of his Grumman Widgeon, an amphibious twin-engine aircraft, to enjoy the fruits of Southcentral Alaska and run a rare breed of business. A farm kid from Western Nebraska, Pappas came to Anchorage by way of California in 1953 with a new airframe and engine mechanic’s license (known today as an airframe and powerplant, or A&P, license). Growing up on the Great Plains, Pappas knew right away as youngster that raising sugar beets, the family profession, was not for him. “There was nothing I wanted more than to get involved in aviation,” he recalled. “Being a dirt farmer just wasn’t my way, wasn’t something I had any interest in.” His traditional education ended in the eighth grade, at age 12, when a bone infection pulled him out of school and put him in the hospital. At the time, Nebraska had a vocational program for kids in his situation. However, without an aeronautical program to fit his desire near home, Pappas headed to The Golden State to learn about the insides of airplanes. He graduated in 1948 at age 19. “That was very young for someone to have that license and frankly I didn’t know a damn thing,” Pappas said. His training timeline was backwards compared to most aircraft mechanics of the day; he got his education first and then began gaining experience with airplanes. When he arrived in the Territory of Alaska in the spring of 1953, he knew instantly he didn’t want to leave. “It was a glorious summer, just like we’ve had these past few weeks,” Pappas said June 1 from his Anchorage home. “I just knew that I had died and gone to heaven. Here I was in this beautiful place with beautiful weather and I was up to my armpits in airplanes.” He had landed a job as a mechanic with Alaska Aeronautical Industries, a maintenance shop at Merrill Field. An aircraft mechanic without a pilot’s license, it didn’t take long for his new acquaintances around Merrill to get Pappas into the cockpit of a Cessna 140, the plane he learned to fly in, he said. In 1956, with a new job at a local Cessna dealership, Pappas really began putting his pilot’s license to use. He started running “ferry trips,” flying commercially to the Cessna factory in Wichita, Kan., and returning in a new Cessna back to the dealership in Anchorage. “In the spring I would go to Wichita and pick up an airplane — first stop out of Wichita is West Nebraska so I could visit my folks,” he said. Pappas first flew a four-seat Cessna 170 north from Kansas, and eventually flew nearly every small plane the company made over the years up to a Cessna 206. He made the convenient trip off and on for nearly 30 years, he said, sometimes multiple times a year and often with his wife, Ruby, also a pilot. Pappas followed the Alaska Highway through Canada, a method of navigation that astounded Outside pilots, who said they would worry about getting lost above the wilderness. He said it was actually harder to stay on course farther south. “You take off out of Wichita and there’s just roads and railroads everywhere — pretty hard to navigate following a map,” Pappas recalled. “But once you get out of Great Falls, (Mont.,) and head north there was one road to follow.” The advent and popularity of the Cessna 180, a larger, more powerful four- or six-seat plane than the 170 series, helped Pappas launch the business he ran for 50 years, he said. Pappas formed Aircraft Rebuilders in 1959 after being tasked with recovering a ditched Grumman Goose near Redoubt Bay along West Cook Inlet. “The snow was about eight feet deep. The airplane was sitting out there and you could walk right over the top of it,” Pappas described. “It was the damndest thing you ever saw, but I managed to get down under it and I could see what was damaged and what it took to be repaired.” So, he flew back to Anchorage in a borrowed Cessna 170 and returned with new landing gear, parts to patch the fuselage and a piece of plywood to replace a window, he said. The plane was on an oil exploration site, so with the aide of a nearby crane it was lifted out, repaired, and flown home by an out-of-work Goose pilot Pappas paid $100 for the trip. “He took off (on the snow) on the hull just like water with the gear up and then when he got back to Merrill he could put the gear down and land on Merrill,” he said. “He beat me back to town by quite a bit and when I landed there was my repair job parked right in front of the hangar and I was in business.” Alaska Air Carriers Association Executive Director Jane Dale described Pappas as a “sheet metal wizard,” able to repair nearly anything that was remotely salvageable. Pappas credited the Cessna 180s for the duration of his recovery and repair business. The newer, expensive planes were “heavily financed and heavily insured,” he said, meaning there was great interest in getting damaged ones back in the air. “Whoever had an accident — you’d hardly stop sliding and there’d be an insurance adjuster there wanting to get that airplane back to get repaired,” Pappas said. With his Grumman Widgeon, Pappas could not only get to the best fishing spots on land or sea, but he could also land alongside nearly any downed plane that needed saving. When the repair business dried up in the 1980s as the major fleet of 180-series Cessnas aged, he moved Aircraft Rebuilders off of Merrill Field and transformed the business to primarily a custom parts shop. Pappas was honored by the Air Carriers Association as an Alaskan Aviation Legend in 2013, one of more than 40 individuals the association has recognized for their contributions to Alaska aviation culture since 2012. Dale said the acknowledgments were started the association board and former director Joy Journeay. “(Pappas) is quite a brilliant man and we’re just honored to be able to recognize him and share his story and get to know him,” Dale said. Wein, Merrill and McGee Thirty-one years before Pappas moved north, an Anchorage machinist named C.O. Hammertree changed Anchorage forever. His Boeing seaplane arrived on April 24, 1922, and introduced the infant city to aviation for the first time. The first flight in the state took place in nine years earlier on July 3, 1913, in Fairbanks. The first Anchorage flight was short-lived. Roy Troxell took off in the plane over Cook Inlet and began to turn back to the city once he gained a few hundred feet of altitude, according to an account of the flight by the municipality. Troxell quickly crashed in the mud flats and survived the accident, but the Boeing did not. In 1923, a year after Troxell’s ill-fated first flight, a strip of land at the edge of the Anchorage was cleared for a nine-hole golf course and a small runway. By the following summer of 1924 the Delany Park Strip was open for business. On July 4, having been in Alaska less than two months, Noel Wien performed aerial stunts in Hisso Standard biplane he named “Anchorage” to commemorate the opening of the park. A pioneering Alaska bush pilot, Wien also made the first flight between Anchorage and Fairbanks that same July. With his brothers Ralph, Sig and Fritz, he founded Wien Air Alaska in 1927, the first airline in the state. According to the National Aviation Hall of Fame, the quartet made $4,000 in the first two months of the airline. The state’s largest airline — Alaska Airlines — also traces its roots to this period. According to its official history, the airline dates to 1932 when Mac McGee began flying a three-seat Stinson between Anchorage and Bristol Bay; later McGee Airways merged with Star Air Service to become the state’s biggest in 1934. Alaska Airlines cemented its statewide reach in the late 1960s when it merged with Alaska Coastal-Ellis and Cordova airlines, and then acquired Horizon Air in 1987. Growth in the early industry spurred the development of Aviation Field in August 1929, Anchorage’s first dedicated airport. The city had crept beyond Ninth Street and the park strip couldn’t handle the flight activity. It had two runways and was almost instantly one of the busiest airports in the world. On April 2, 1930, the Anchorage Woman’s Club successfully pushed through a resolution to change the name of airport from Aviation Field to Merrill Field, in honor of Russel Hyde Merrill, another Alaska aviation pioneer, according to the municipality. Among other accomplishments, Merrill is known for being the second pilot to fly from the Lower 48 to Alaska. He also mistakenly found the most advantageous route through the Alaska Range from Anchorage to Bethel in November 1927, when he flew farther south than intended and went through what is now Merrill Pass. Less than two years later, Merrill had become a busy commercial pilot. During his third flight of Sept. 16, 1929, bound for Bethel, Merrill disappeared. A month later part of the tail of his plane was discovered on a beach along Cook Inlet. The cause of the crash is still unclear. A year after it officially became Merrill Field, the Woman’s Club got the city council to approve a tower and signal beacon at the airport. Also in 1931, the park strip was closed to aircraft and Merrill Field was it for Anchorage — on land anyway. All good in Lake Hood Once sporadic but consistently growing seaplane activity forced development the Lake Hood seaplane base in 1938. That year a channel was dug between lakes Hood and Spenard, thus creating what is today the busiest seaplane base on Earth. The Lake Hood Seaplane Base served 67,000 flight operations in 2012, according to a McDowell Group economic report. In June alone that year, there were 13,159 operations, an average of 439 per day. Lake Hood in total contributed 230 jobs and $42 million to the Anchorage economy in 2012, the study estimates. The floatplane hub — surrounded by wilderness when the channel was dug — also got a 2,200-foot gravel runway. World War II provided the state, particularly Southwest Alaska, with runways and airports. Infrastructure the military built during the early 1940s to support the war effort quickly turned civilian in the late ‘40s and ‘50s, PenAir founder Orin Seybert said. When Seybert founded Peninsula Airways Inc. in 1955 he was “just a kid out of high school and one airplane,” he said. That airplane was a two-seat Taylorcraft and Seybert was 19 years old. Peninsula Airways was shortened to its current “official nickname” of PenAir by passengers who refused to say the whole name, he said. Today, Seybert has logged more than 30,000 hours in a cockpit and serves on the Board of Directors of the Alaska Aviation Heritage Museum on the south shore of Lake Hood. He is also a former president of the museum. Seybert is eager to show off the restored aircraft and artifacts the museum has collected. “It’s so important to preserve this aviation history because it’s so unique in the whole United States,” he said. Anchorage goes International It wasn’t until 1948 that Anchorage’s flagship airport was born. In May, Congress authorized site selection for the airport and approved $12 million for its construction, which began the following spring. The site adjacent to Lake Hood was selected because it was away from the city and there was already a road from Anchorage to Lake Hood. It was open for business in January 1952 with two runways, a main 8,400-foot east-west runway and a 5,000-foot crosswind strip. A wooden control tower shipped in from Yakutat was used until the terminal was finished the following year, when the wooden tower was moved to Lake Hood. The Anchorage International Airport was transferred to the State of Alaska, its current owner, as a part of statehood in 1959. It was assessed at $11.65 million just prior to the transfer. The main runway grew to longer than 10,000 feet in 1961 and parking aprons were enhanced to handle growing commercial jet traffic. There was one fatality at Anchorage International during the March 27, 1964, earthquake. Tower controller Bill Taylor was killed when falling debris struck and killed him as he came down the tower stairs. Lighting and electrical systems were damaged at Lake Hood and the International Airport, but daylight operations resumed at the airport the following day. In the 51 years since the earthquake, the Anchorage International Airport, now named after the late Alaska U.S. Sen. Ted Stevens, has gone through a couple business transformations. In the 1970s, international passenger traffic was king in Anchorage, according to airport manager John Parrott. Before the Soviet Union opened its airspace, planes flying between Europe and Asia made a technical stop in Anchorage to refuel while on the circumpolar route. As Boeing’s 747 became the de facto choice for trans-ocean travel later in the decade, it was believed the stop in Anchorage would become obsolete, Parrott said, but that didn’t happen. Rather, the passenger business in Anchorage collapsed with the Berlin Wall and the opening of Russia’s skies. Fortuitously, Asia’s manufacturing industry and FedEx were growing rapidly at about the same time, Parrott said, and Anchorage International Airport quickly transitioned from a passenger stop to one of the world’s busiest cargo hubs — a title it retains today. Anchorage was the fifth-busiest cargo airport in the world in 2013, according to the Airports Council International. Nearly 2.5 million metric tons of freight landed at the airport two years ago. Domestically, Anchorage was second behind Memphis International, FedEx’s homeport. Even with most major cargo airlines flying the latest and long range capable 747-8s, it makes economic sense for the jumbo jets to carry more cargo and less fuel — thus making a technical stop in Anchorage — on their way from Asia to the Lower 48, rather than sacrifice carrying capacity to fly direct. Parrott said the latest 747s can make a trans-Pacific flight if about 100,000 pounds of cargo capacity is sacrificed. “At a dollar a pound, that’s $100,000 for stopping here,” per flight, he said. Aviation an economic force The impact aviation has had on Anchorage is visible everywhere. Ted Stevens Anchorage International Airport supports one of every 10 jobs in the city, either through direct jobs in the terminals and hangars or a myriad of related offsite positions, according to the Anchorage Economic Development Corp. Merrill Field and Lake Hood are still the centers of general aviation and small air-taxi services, many of which cater to the ever-growing tourist industry. Pappas and Seybert said the busy skies above Anchorage haven’t changed much over the years and the pilots familiar with the airspace know where to go and generally stay out of trouble without issue. However, Pappas said pilots he’s flown with from Outside are astounded at the number of planes in the sky. The one difference Pappas noted is that fewer flights out of Merrill Field are simply pilots flying for fun, mainly because of the cost of planes and fuel, he said. Yet, “there’s no place that has traffic like Merrill Field does on a sunny day,” Pappas said. And Anchorage’s airports — the five controlled airports among the 20-some uncontrolled lakes and airstrips within the municipal limits — still help support the 82 percent of Alaska communities that are reached only by boat or plane. Dale, of the Alaska Air Carrier Association, said during a recent meeting with Federal Aviation Administration leadership she was approached by an astounded FAA official. “He said, ‘Jane, what’s that number you just said, 82 percent of the communities?’” Dale recalled. “Not everybody is aware of that but it’s still incredibly relevant. All of the industries (in Alaska) rely on commercial aviation.” Its biggest city is no different. Elwood Brehmer can be reached at [email protected]

Dalton Highway could reopen June 5

The Dalton Highway could reopen on June 5 if everything goes right, according to the state Department of Transportation and Public Facilities. DOT issued a release Friday afternoon stating the tentative reopen date is dependent on weather conditions and the progression of repairs to the northern end of the haul road.  A more than 30-mile stretch of the Dalton was closed May 18, when melting ice covered the roadway in up to two feet of water. Since, the closure area has grown to more than 75 miles, from milepost 335 to milepost 413 near Deadhorse. Ice overflow from the nearby Sag River built up several feet thick in late winter along the northern end of the Dalton between mileposts 390 and 405. That melting ice is now flooding and eroding the roadway. DOT spokeswoman Meadow Bailey said when the road was closed in May the department had been expecting issues with the melting ice. However, unusually warm weather accelerated spring breakup and compounded the problem. When the Dalton does reopen, DOT says it will try to have passable corridor at least 20 feet wide through the work zone. There will likely still be some one-lane areas in order to get traffic to the North Slope as soon as possible, according to the department. Crews are currently installing culverts on the south end of the project area. The Dalton was closed for about a week beginning April 5 when water trapped by the overflow ice flooded the road surface. Gov. Bill Walker declared the Dalton Highway a state disaster April 7. Road crews began fighting the overflow in mid-March. The Legislature appropriated $5 million in emergency funding for the Dalton Highway to the capital budget passed in April. Elwood Brehmer can be reached at [email protected]

Dismissal arguments heard in Pebble-EPA case

Pebble Limited Partnership and the Environmental Protection Agency argued in court May 28 whether the agency violated federal law in developing the Bristol Bay Watershed Assessment, which is the basis for its effort to block Pebble mine. The oral arguments on the EPA’s motion to dismiss Pebble’s lawsuit were heard in Alaska U.S. District Court by Judge H. Russel Holland. Justice Department attorney for the EPA Brad Rosenberg said the agency did not violate the Federal Advisory Committee Act as Pebble contends, because the EPA had the same type of contact with Pebble as it did with the groups and individuals Pebble claims it conspired with to stop mine development. The Federal Advisory Committee Act, or FACA, was enacted in 1972 to set guidelines for federal agencies and ensure committees they form are objective and open to the public. Pebble claims it was shut out of the assessment process, but it had regular contact with EPA staff at all levels beginning in 2003, Rosenberg argued. “Pebble had a role in creating the Bristol Bay Watershed Assessment,” he said. “If anything, Pebble had unprecedented access to the EPA.” Rosenberg said the EPA officials all they way up to the administrator met with Pebble about 30 times from 2003 to 2013. The mine developers simply disagree with the science in the assessment, according to Rosenberg. He said the FACA requirements are narrow and do not apply in this instance. In February 2014, shortly after releasing the final version of the 1,000-plus page Bristol Bay Watershed Assessment, the EPA announced it would begin the process to block development of Pebble’s gold and copper claims with its authority under Section 404(c) of the Clean Water Act. Coincidentally on May 28, a three-judge 9th Circuit Court of Appeals panel dismissed another Pebble lawsuit against the EPA claiming harm from the 404(c) mine veto. Holland initially dismissed that case last September because the agency hadn’t issued its final action, thus making Pebble’s argument not ripe for consideration, at least for the time being. The assessment concluded that large-scale surface mining in the Bristol Bay region would significantly impact the robust salmon and resident fisheries in the area. Pebble filed suit the suit argued May 28 before Holland in September 2014, alleging the assessment to be biased. Holland issued an injunction halting the 404(c) veto process in November to prevent the agency’s action from becoming final during the lawsuit. Pebble attorney Roger Yoerges argued that the EPA set up “de-facto” advisory committees based on contact the agency had with anti-mine groups, which is evidenced in the documents obtained from Freedom of Information Act requests Pebble has submitted to the EPA. “The government is saying a federal committee cannot exist unless they say it exists,” Yoerges said. In its complaint, Pebble attorneys claim the agency set up three informal advisory committees the mining company dubbed the “anti-mine coalition,” the “anti-mine scientists” and the “anti-mine assessment team.” Rosenberg countered that an agency can’t inadvertently set up an advisory committee. A formal advisory committee must be made up of a balanced panel of members and publish actions in the Federal Register. He also said the 2010 emails between anti-mine activists and then-EPA ecologist Phillip North that Pebble has touted as prime examples of the bias within the agency were to a “low-level” agency scientist and had little impact on the assessment, officially undertaken in 2011. Yoerges said the EPA attorneys were arguing the facts of the case appropriate for a summary judgment motion during a hearing for dismissal, and that further discovery would allow Pebble to flesh out its allegations, he said. “We suspect more discovery will show more documents in support of our view,” Yoerges said. In his rebuttal, Rosenberg called the advisory committees “nothing more than a figment of (the) plaintiff’s imagination.” He said everybody wanted the EPA to hear their respective views during and before the assessment process. Rosenberg noted that the EPA regional administrator could have initiated the 404(c) process in 2010 if the agency’s mind was made up at that time, but decided to do a detailed scientific assessment of the resource in question. He said the Bristol Bay Watershed Assessment is a final, standalone scientific document, separate from the pending 404(c) action. However, senior EPA officials have cited the assessment as the basis for starting the mine veto process. Finally, Rosenberg said Pebble would still have a chance to further voice its position on the 404(c) process if the injunction is lifted. When Holland issued the injunction halting the veto effort last November, he said the 404(c) process could result in “no action, but it isn’t headed that way.” Elwood Brehmer can be reached at [email protected]

Proposed bill to access Constitutional Budget Reserve

The House Finance Committee introduced a bill May 26 that would put $6.4 billion from the Permanent Fund earnings reserve account into the Fund principal, putting it off limits to appropriation and triggering the means to draw from the Constitutional Budget Reserve with a simple majority vote to cover the fiscal year 2016 deficit. House Bill 2002 would put $4.9 billion from the Permanent Fund earnings reserve account on June 30, and another $1.5 billion from the account would go into the principal in June 2016. A draw from the Constitutional Budget Reserve, or CBR, is required to cover the 2016 fiscal year deficit that currently stands at $2.1 billion after Gov. Bill Walker signed a partially funded budget May 18. House minority Democrats have said any move to access the Fund’s earnings — which can be done with a majority vote — would put future Permanent Fund Dividend checks at risk. Drawing from the CBR requires three-quarters of the both houses in the Legislature to approve, and Democrats are holding out for several demands including education funding and Medicaid expansion to vote for the draw. However, the CBR only requires a three-quarters vote when other funding sources are available. By putting the earnings reserves into the principal of the Permanent Fund, that money would be inaccessible and allow the CBR to be drawn from without the minority Democrats’ support. Deputy Revenue Commissioner Jerry Burnett wrote in a May 19 email to Rep. Les Gara, D-Anchorage, that this year’s appropriation for dividends won’t be at risk; but that is not the case for future years. The earnings reserve fund is what pays for the annual Permanent Fund Dividend checks. As Burnett described it, dividends would not be affected as long as the 2016 fiscal year earnings are at or above the five-year earnings average. “The official forecast from (the Alaska Permanent Fund Corp.) indicates that the transfer will not affect future dividends,” Burnett wrote. “However, as we have seen a number of times in the past actual earnings fall below projections in many years. There is a real chance that if the balance of the (earnings reserve account) is reduced below the amount needed for dividends that dividends will be reduced in that year.” The Permanent Fund Corp.’s latest projections show statutory net income growing from $2.7 billion in fiscal year 2016 to $3.2 billion by 2020. For the 2015 fiscal year, $1.32 billion has already been appropriated for the PFD checks that will be distributed this October. Burnett noted the 2009 fiscal year, when the net income of the fund was $2.5 billion in the red, and wrote that another such event could reduce or eliminate PFDs entirely if the money is moved. The reserve account held nearly $5.8 billion in realized earnings on April 30. Another $1.3 billion in “unrealized appreciation on invested assets” brought the total earnings assigned for future appropriations to more than $7.1 billion, according to the latest Permanent Fund balance sheet. There was $55.3 billion in total liabilities and assets in the Permanent Fund as of April 30. Majority Democrat Reps. Bryce Edgmon and Neal Foster and Republican Reps. Jim Colver, Gabrielle LeDoux, Paul Seaton and Louise Stutes signed a May 20 letter to House Speaker Rep. Mike Chenault, R-Nikiski, urging him to negotiate with the minority to avoid tapping the reserve account. The six could eliminate the 26-member Majority’s voting power in the 40-seat House. A stalemate over about $100 million of program funding the minority Democrats want added back into the budget has pushed legislators into the second special session of the year. It began May 21 after the House and Senate adjourned Gov. Bill Walker’s first special session and immediately began their own in Anchorage. Heading the minority’s funding list is $48 million for the state Education Department. Several sections of the bill contain language that reads, “if and only if” the super-majority approval to access the Constitutional Budget Reserve is not achieved will the Permanent Fund earnings reserves be transferred to the principal. But in either outcome, the CBR would be accessed through the Democrats giving their votes to meet the three-quarter threshold, or by refusing and the earnings reserve account being converted to principal and opening up the CBR to a majority vote. The Republican-led House Majority has been investigating ways to get around a three-quarter vote needed to approve a draw from the CBR savings account to fund the deficit. Democrats have withheld from approving a CBR vote until a budget deal is reached and have accused the Majority of being unwilling to negotiate, noting that they are demanding the entire $100 million. House Minority Leader Chris Tuck, D-Anchorage, told the Juneau Empire on May 26 he wasn’t surprised by the bill dropping because “it’s nothing new.” “It doesn’t change anything,” he said by phone. “But there’s definitely got to be a change (in the way we’re negotiating). We definitely have to come up with a new way through this gridlock.” He said he would meet with House Speaker Rep. Mike Chenault, R-Nikiski, to “explore ideas on how to improve the process. ... We don’t have much time and we don’t want to have pink slips go out (to state employees).” “Hopefully we come up with something, even if it’s a coin toss,” he added jokingly. Republicans in both chambers of the Legislature have said they are being “held hostage” and “held up” from funding the budget by the minority Democrats. Walker has said his offers to mediate a deal were rejected. ‘Compromise’ bill introduced A Republican budget compromise was introduced May 27 in the House Finance Committee that would fully fund the Base Student Allocation and 2.5 percent state employee wage increases, while at the same time cutting nearly $30 million across state government, was introduced to the House Finance Committee during a May 27 meeting. The latest version of House Bill 2001, as described by committee co-chair Rep. Mark Neuman, R-Big Lake, would provide $16.5 million for the Education Department to bring the BSA up to the level prescribed in the education legislation passed last year. It would also put $29.7 million of general fund money towards union and non-union cost of living pay hikes. On the flip side, it would require Gov. Bill Walker and his executive branch leadership team to cut $29.8 million from state agency budgets as they see fit. “This has been a long time coming,” Neuman said. The funding adds are contingent on getting House minority support for a Constitutional Budget Reserve draw 0with a three-quarters vote. “I can’t help but feel I’m being leveraged a little in this budget,” said  Rep. Les Gara, D-Anchorage. The agency cuts could just lead to the some of the workers in line for pay increases to be laid off. Neuman said there have been discussions with the Walker administration as to where the agency cuts could come from. Elwood Brehmer can be reached at [email protected] Juneau Empire reporter Katie Moritz contributed to this story.

House Democrats: Erin's Law changes are a nonstarter

House minority Democrats say the changes made to the youth sexual abuse prevention legislation known as Erin’s Law gut the bill, and they don’t approve. The changes, which include allowing school districts to opt-out of the curriculum, were made during a May 19 Senate Education Committee meeting by Chair Mike Dunleavy, R-Wasilla. The Senate Education substitute for House Bill 44 would also prohibit school districts from contracting with organizations that provide abortion services like Planned Parenthood for course materials or instruction related to sexual education or sexually transmitted diseases. Dunleavy’s amended bill combines HB 44 with three other bills dealing with college readiness assessments, parental rights and teacher training. Rep. Geran Tarr, D-Anchorage, said in an interview that the “anti-Planned Parenthood” portion of the new bill has a companion bill in the House that never received a committee hearing. Should the new version of HB 44 pass the Senate and a conference committee, she said the House would be asked to vote on a bill it never vetted, and would amount to a “real abuse of the process,” Tarr said. “The special session is open to any topic, and (Dunleavy) can schedule hearings in his committee on those other pieces of legislation,” Tarr said. “Child sexual abuse and dating violence prevention are important enough issues that they can stand on their own.” Minority members said during a May 20 press briefing that they would not vote for Dunleavy’s version of HB 44. The original version of the bill had broad bipartisan support and passed the House 34-6 on April 18. Tarr noted that the state already has a law that allows parents to pull their children out of a classroom for any reason, and that’s why the version of Erin’s Law that passed the Senate unanimously last year did not have such a clarification. Erin’s Law is named after Erin Merryn, an Illinois woman who was a victim of sexual abuse as a child, and has made it her mission to get such prevention and education legislation passed in every state. Gov. Bill Walker made the bill part of the first special legislative session he called and four versions of Erin’s Law were introduced during the regular session. Tarr has been a vocal leader on the issue and prefiled one of the bills. She said the opt-out option for parents is the middle ground; it respects the rights of parents who believe the topics should be discussed at home, but at the same time is the best way to get the information to children who might be victims of such abuse. A sponsor statement from Dunleavy’s office states that the substitute “codifies in state statute the inherent right of parents to direct the upbringing and education of their children. Under this legislation, local school boards shall, working with parents, teachers and school administrators, adopt policies to promote the involvement of parents in the education programs for their children.” Elwood Brehmer can be reached at [email protected]

Fed dollars down, Denali Commission tries more with less

Denali Commission leaders are working to chart a new path for the rural development group based on leaner budgets and community partnerships. Built on federal funding, the commission was formed in 1998 at the behest of the late Sen. Ted Stevens with the mission of bringing basic infrastructure in rural Alaska up to the standards expected in the rest of the country, Denali Commission Energy Program Manager Jodi Fondy related at a May 22 Commonwealth North meeting. “Rural Alaska is much different than the rural folks think of down in the Lower 48. They think about a barn, a silo, but there’s a road and an intertie, and our rural is very, very different than that,” Fondy said. The Denali Commission has poured nearly $1.1 billion into rural Alaska since getting its first $20 million during the 1999 federal fiscal year. About half of that money, $507 million, has gone into energy projects, with another $302 million for health programs and clinics. During the mid-2000s, its budgets approached $140 million annually. That money came from a host of federal agencies and funds; at least 10 have provided funding to the Denali Commission at some point. These days, the commission is trying to get used to budgets in the $15 million range, Fondy said. That has led to prioritizing projects and sometimes just doing less. “We get asked a lot whether we’re still around,” she said. “We’re still around.” As a result, the Denali Commission is developing a strategic plan focused on how to best serve rural Alaska with about $15 million per year, Fondy said. As the last of its health care projects are wrapping up, she said the commission could revert back to its genesis, which is energy. Much of the energy funding has gone to improving traditional infrastructure: bulk fuel storage facilities, power plants, interties and distribution networks. Replacing a power plant or fuel storage tanks can cost several million dollars each, she said, which leaves the commission with a choice — fund a couple major projects each year or try to cast a wider net with smaller pots of money. When funding began to dry up in 2011, the Denali Commission held six listening sessions across Alaska to see where stakeholders felt remaining funding should go, Fondy said. The themes, energy, housing, health and economic development, remained the same. As a result, the commission formed the Strategic Technical Assistance Response Team with the Department of Energy to “look at communities holistically, energy and otherwise,” Fondy said. The first two rounds of assistance focused on five communities each and the third round will begin this summer, she said. Lower cost activities include holding energy efficiency workshops, equipment training, technical assistance and project support. It’s a shift back to the mid-2000s, when the commission did significant energy efficiency work on top of the infrastructure construction. “We’re starting to look at those projects again as our funding has declined, and it may be more cost effective to work on energy efficiency in communities versus the amount of capital it takes to put in some of this new infrastructure,” Fondy said. Other work is emphasizing maintenance as opposed to new construction. Testing, painting and refurbishing existing fuel tanks can cost less than $1 million, while the replacement cost is several times that, she said. This work should help extend the life of previous Denali Commission projects, too. Training and keeping qualified operations and maintenance staff is a continual challenge, she said. “We have trained somebody to operate and maintain something — and either with their new skill set they are able to find a job that pays better elsewhere or they get burnt out because they have taken on too much,” Fondy described. Either way, a community ends up with an untrained operator and there’s little the commission can do about it, she said. AVTEC, the state vocational school in Seward, does some power system training, she said, but funding is always an issue. Projects done in partnership with the Alaska Energy Authority and the Alaska Village Electric Cooperative can be remotely monitored, but someone in the community still needs to alert staff of potential problems, she said. The commission has also partnered with the AEA on a couple ventures that spurred state investment. In 2008, the commission had $3 million and AEA had $1 million, Fondy said. The two came together and solicited for the first round of projects in what is now the state Renewable Energy Fund. Eventually, 31 projects, mostly energy assessments, were funded that first year, she said. Since, the State of Alaska has committed $247.5 million, according to an AEA’s latest program report. With $11.5 million for the Renewable Energy Fund in the capital budget passed by the Legislature in April, the fund is one of few things that withstood budget cuts this year. The two groups also started what has become the state’s Emerging Energy Technology Fund, typically reserved for small-scale, cutting edge energy generation and efficiency projects. Elwood Brehmer can be reached at [email protected]

House bill to make Permanent Fund earnings off limits

The House Finance Committee introduced a bill Tuesday that would put $6.4 billion from the Permanent Fund earnings reserve account into the Fund principal, putting it off limits to appropriation and triggering the means to draw from the Constitutional Budget Reserve with a simple majority vote to cover the fiscal year 2016 deficit. House Bill 2002 would put $4.9 billion from the Permanent Fund earnings reserve account on June 30, and another $1.5 billion from the account would go into the principal in June 2016. A draw from the Constitutional Budget Reserve, or CBR, is required to cover the 2016 fiscal year deficit that currently stands at $2.1 billion after Gov. Bill Walker signed a partially funded budget May 18. House Minority Democrats have said any move to access the Fund’s earnings — which can be done with a majority vote — would put future Permanent Fund Dividend checks at risk. Drawing from the CBR requires three-quarters of the both houses in the Legislature to approve, and Democrats are holding out for several demands including education funding and Medicaid expansion to vote for the draw. However, the CBR only requires a three-quarters vote when other funding sources are available. By putting the earnings reserves into the principal of the Permanent Fund, that money would be inaccessible and allow the CBR to be drawn from without the minority Democrats’ support. Deputy Revenue Commissioner Jerry Burnett wrote in a May 19 email to Rep. Les Gara, D-Anchorage, that this year’s appropriation for dividends won’t be at risk; but that is not the case for future years. The earnings reserve fund is what pays for the annual Permanent Fund Dividend checks. As Burnett described it, dividends would not be affected as long as the 2016 fiscal year earnings are at or above the five-year earnings average. “The official forecast from (the Alaska Permanent Fund Corp.) indicates that the transfer will not affect future dividends,” Burnett wrote. “However, as we have seen a number of times in the past actual earnings fall below projections in many years. There is a real chance that if the balance of the (earnings reserve account) is reduced below the amount needed for dividends that dividends will be reduced in that year.” The Permanent Fund Corp.’s latest projections show statutory net income growing from $2.7 billion in fiscal year 2016 to $3.2 billion by 2020. For the 2015 fiscal year, $1.32 billion has already been appropriated for the PFD checks that will be distributed this October. Burnett noted the 2009 fiscal year, when the net income of the fund was $2.5 billion in the red, and wrote that another such event could reduce or eliminate PFDs entirely if the money is moved. The reserve account held nearly $5.8 billion in realized earnings on April 30. Another $1.3 billion in “unrealized appreciation on invested assets” brought the total earnings assigned for future appropriations to more than $7.1 billion, according to the latest Permanent Fund balance sheet. There was $55.3 billion in total liabilities and assets in the Permanent Fund as of April 30. Majority Democrat Reps. Bryce Edgmon and Neal Foster and Republican Reps. Jim Colver, Gabrielle LeDoux, Paul Seaton and Louise Stutes signed a May 20 letter to House Speaker Rep. Mike Chenault, R-Nikiski, urging him to negotiate with the minority to avoid tapping the reserve account. The six could eliminate the 26-member Majority’s voting power in the 40-seat House. A stalemate over about $100 million of program funding the minority Democrats want added back into the budget has pushed legislators into the second special session of the year. It began May 21 after the House and Senate adjourned Gov. Bill Walker’s first special session and immediately began their own in Anchorage. Heading the minorities’ funding list is $48 million for the state Education Department. Several sections of the bill contain language that reads, “if and only if” the super-majority approval to access the Constitutional Budget Reserve is not achieved will the Permanent Fund earnings reserves be transferred to the principal. But in either outcome, the CBR would be accessed through the Democrats giving their votes to meet the three-quarter threshold, or by refusing and the earnings reserve account being converted to principal and opening up the CBR to a majority vote. The Republican-led House Majority has been investigating ways to get around a three-quarter vote needed to approve a draw from the CBR savings account to fund the deficit. Democrats have withheld from approving a CBR vote until a budget deal is reached and have accused the Majority of being unwilling to negotiate, noting that they are demanding the entire $100 million. At the same time, Republicans in both chambers of the Legislature have said they are being “held hostage” and “held up” from funding the budget by the minority Democrats. Walker has said his offers to mediate a deal were rejected. It’s expected that HB 2002 will be taken up during the House Finance Committee meeting Wednesday morning at 9:00 a.m. Elwood Brehmer can be reached at [email protected]

House Finance introduces budget bill after majorities call own special session

Alaska legislators adjourned Thursday to end the special session called by Gov. Bill Walker, immediately called their own session and the House Finance Committee later introduced a budget bill now set for consideration Friday. The vetoed portions of the operating budget Walker signed May 18 were packaged in new legislation, House Bill 2001, which was introduced to the House Finance Committee during a meeting after the new special session was called. Combined, the partially funded HB 72 and HB 2001 are the equivalent of the full operating budget passed with minority objection on April 27. It would require $2.1 billion to fund state agency operations for the 2016 fiscal year. Another $1 billion would be needed to cover debt service, fund capitalization and retirement accounts. Rep. Tammie Wilson, R-North Pole, discussed the possibility of gathering funds from all the available state savings accounts to pay for the $2.1 billion and get around a three-quarter majority Constitutional Budget Reserve vote. “Most of those programs, whether it’s scholarships or Power Cost Equalization, we can still fund those they will just need to be funded next year,” Wilson said. Exactly how much the state has available in its various fund and savings accounts was unknown in the meeting. The House Finance Committee is scheduled to meet again Friday, at 10 a.m., and public testimony on the budget is set to be taken from 11 a.m., to 2 p.m., that day. During a floor session held Thursday at the Anchorage Legislative Information Office, Anchorage Democrat Sen. Bill Wielechowski requested the Legislature reconvene Friday in Juneau, where the governor ordered the session be held. “As much as I enjoy being in my hometown, Mr. President (Senate President Kevin Meyer), this session violates the Alaska Constitution,” Wielechowski said. A May 18 legal opinion from Legislative Affairs Director Doug Gardner to Wielechowski declared that the Legislature must meet in Juneau to comply with Walker’s call to a special session, but allowed there may be a way around that order: “A court would likely conclude that if the legislature wants to meet in special session in Anchorage, the legislature’s remedy it to adjourn sine die from the legislative session and convene its own special session in Anchorage. While it seems unlikely a court would invalidate the action of the legislature meeting under the governor’s special session proclamation in Anchorage instead of Juneau for the sole purpose of adjourning sine die, there is risk in doing so as described above.” “Sine die” is a Latin expressing meaning “without a future date being designated (as for resumption).” Wielechowski also noted that Democratic minority caucus members were not polled when the majority decided to call another session. The Legislature did not take action on any of the three issues — the operating budget, Medicaid expansion and reform, and the sexual abuse prevention bill known as Erin’s Law — during the special session. Walker, who signed a partially funded operating budget May 18 that would force layoffs for 15,000 state employees beginning at the start of the 2016 fiscal year on July 1, said that day he would continue to call special sessions until the budget is resolved. Senate Majority Leader John Coghill, R-Fairbanks, called reconvening in Juneau “practically impractical,” because of travel and scheduling challenges and the fact that the Capitol is undergoing a major renovation. During a House floor session later in the day, Rep. Sam Kito, D-Juneau, said there are adequate facilities in Juneau outside of the Capitol for legislators to use. Rep. Andy Josephson, D-Anchorage, said adjourning and reconvening is “disrespectful” to the office of the governor. Anchorage Democrat Rep. Les Gara said calling a new session on the budget takes the focus off of the governor’s Medicaid legislation, which is stalled in the House Finance Committee. There were 14 senators present for the Thursday floor session. The three Senate minority members present voted against adjourning; the motion passed 11-3. The vote in the House was 21-13 in favor of adjourning. Minority Democrats and Republican Reps. Cathy Muñoz of Juneau and Lora Reinbold of Eagle River voted against adjournment. Reinbold was kicked out of the Majority caucus during the regular session after voting against the operating budget because she said it does not cut government spending enough. Oral roll calls and votes were tallied by staff in the makeshift chamber rooms in the Anchorage LIO building. Legislators and staff passed microphones around during floor discussions. “We have not completed our job. We should not be adjourning,” Wielechowski said. The Legislature was assembled in Juneau when Walker called the 30-day special session April 28. House minority Democrats have refused to vote for a roughly $3 billion draw on the Constitutional Budget Reserve to fund the 2016 budget, a state savings account that requires a three-quarter vote from each chamber to access. They are holding out for at least some of about $100 million in program funding cuts they want put back in the budget, along with the passage of Medicaid expansion, and have argued that the spending cuts they have proposed which include capping oil tax credits are greater than what’s been approved by the House and Senate majorities. House minority members said during a May 20 press briefing that the Republican-led majority has refused to negotiate a budget deal. The new special session could go until late June while state agencies prepare for a partial shutdown if a budget deal is not reached sooner. Elwood Brehmer can be reached at [email protected]  

Legislature adjourns, convenes new session in Anchorage over minority objections

Alaska legislators have adjourned the special session called by Gov. Bill Walker and immediately called their own session. During a floor session held May 21 at the Anchorage Legislative Information Office, Anchorage Democrat Sen. Bill Wielechowski requested the Legislature reconvene May 22 in Juneau, where the governor ordered the session be held. “As much as I enjoy being in my hometown, Mr. President (Senate President Kevin Meyer), this session violates the Alaska Constitution,” Wielechowski said. A May 18 legal opinion from Legislative Affairs Director Doug Gardner to Wielechowski declared that the Legislature must meet in Juneau to comply with Walker’s call to a special session, but allowed there may be a way around that order: “A court would likely conclude that if the legislature wants to meet in special session in Anchorage, the legislature’s remedy it to adjourn sine die from the legislative session and convene its own special session in Anchorage. While it seems unlikely a court would invalidate the action of the legislature meeting under the governor’s special session proclamation in Anchorage instead of Juneau for the sole purpose of adjourning sine die, there is risk in doing so as described above.” “Sine die” is a Latin expressing meaning “without a future date being designated (as for resumption).” Wielechowski also noted that Democratic minority caucus members were not polled when the majority decided to call another session. The Legislature did not take action on any of the three issues — the operating budget, Medicaid expansion and reform, and the sexual abuse prevention bill known as Erin’s Law — during the special session. Walker, who signed a partially funded operating budget May 18 that would force layoffs for 15,000 state employees beginning at the start of the 2016 fiscal year on July 1, said that day he would continue to call special sessions until the budget is resolved. Senate Majority Leader John Coghill, R-Fairbanks, called reconvening in Juneau “practically impractical,” because of travel and scheduling challenges and the fact that the Capitol is undergoing a major renovation. During a House floor session later in the day, Rep. Sam Kito, D-Juneau, said there are adequate facilities in Juneau outside of the Capitol for legislators to use. Rep. Andy Josephson, D-Anchorage, said adjourning and reconvening is “disrespectful” to the office of the governor. Anchorage Democrat Rep. Les Gara said calling a new session on the budget takes the focus off of the governor’s Medicaid legislation, which is stalled in the House Finance Committee. There were 14 senators present for the May 21 floor session. The three Senate minority members present voted against adjourning; the motion passed 11-3. The vote in the House was 21-13 in favor of adjourning. Minority Democrats and Republican Reps. Cathy Muñoz of Juneau and Lora Reinbold of Eagle River voted against adjournment. Reinbold was kicked out of the Majority caucus during the regular session after voting against the operating budget because she said it does not cut government spending enough. Oral roll calls and votes were tallied by staff in the makeshift chamber rooms in the Anchorage LIO building. Legislators and staff passed microphones around during floor discussions. “We have not completed our job. We should not be adjourning,” Wielechowski said. The Legislature was assembled in Juneau when Walker called the 30-day special session April 28. House minority Democrats have refused to vote for a roughly $3 billion draw on the Constitutional Budget Reserve to fund the 2016 budget, a state savings account that requires a three-quarter vote from each chamber to access. They are holding out for at least some of about $100 million in program funding cuts they want put back in the budget, along with the passage of Medicaid expansion, and have argued that the spending cuts they have proposed which include capping oil tax credits are greater than what’s been approved by the House and Senate majorities. House minority members said during a May 20 press briefing that the Republican-led majority has refused to negotiate a budget deal. The new special session could go until late June while state agencies prepare for a partial shutdown if a budget deal is not reached sooner. Elwood Brehmer can be reached at [email protected]

Walker preps for partial shutdown

Gov. Bill Walker signed a partial state budget May 18, a move that could force the layoff of about 15,000 state employees and lead to a partial government shutdown if legislators can’t reach a budget deal. Left with few options, the governor vetoed much of the nearly $5 billion of state expenditures in the operating budget bill that passed April 27, House Bill 72, before signing it to bring it in line with the approximately $1.9 billion available to draw from in the Statutory Budget Reserve, he said. Because the bill was transmitted to him earlier this month, Walker had to act on HB 72 before 11:59 p.m., May 19, or the full bill would have become law. The Legislature scheduled regular floor sessions for both the House and Senate on May 21 to be held in Anchorage. A visibly tired Walker said at a press briefing after he signed the bill that most state agency funding would be cut by 72 percent under the enacted budget. The departments of Corrections and Public Safety are fully funded for the 2016 fiscal year, which begins July 1, as is the state judicial system, debt service and the Legislature’s budget, he said. The Department of Health and Social Services is funded for six months. “The only responsible thing for us to do is what we’ve done — to prepare for the worst-case scenario and hope and pray we don’t get there,” Walker said. Vetoing the budget entirely was not an option, he said, as it includes supplemental funding for the rest of the current fiscal year. A full veto would have initiated “complete chaos” in state government nearly instantly, Office of Management and Budget Director Pat Pitney said. The governor also sent a letter to state employees early May 18 explaining his actions. “Later today, I will sign the budget bill the Legislature passed in April. However, I have little choice but to veto the unfunded items in the bill,” Walker wrote. He continued: “One consequence of HB 72 being unfunded for 2016 is most state employees will receive a layoff notice in early June if the Legislature fails to pass a fully funded budget by that time.” A fight in the House over state spending and Medicaid expansion has led to normal legislative procedures being thrown aside. House minority Democrats are demanding the restoration of $47 million cut from education spending, among others, and approving the governor’s Medicaid expansion and reform package, House Bill 148, be passed before they will vote to approve a draw on the Constitutional Budget Reserve, a state savings account that requires a three-fourths majority to access. Drawing on the Statutory Budget Reserve only requires a majority vote. There was $10.1 billion in the CBR as of April 30, according to the Revenue Department. About $3 billion of that is needed for fiscal year 2016, Walker said, and the stalemate in the Legislature over about $90 million has pulled attention away from the bigger problem, which is the entirety of the nearly $4 billion deficit. “The irony of it is other states that have done this — they couldn’t go out and borrow money,” Walker said. “We have the money; we just cant get sufficient votes or the budget to match so they can access the funds that are there. Here we are with a Triple-A bond rating and we’re talking about this scenario of a potential shutdown.” Walker has been criticized by some Republican legislators for proposing to increase spending beyond the budget passed primarily on Majority votes. When the impasse between legislators became clear, the governor reintroduced his budget that would increase spending about $50 million over HB 72, a negotiating “starting point,” he called it. If it comes to a partial shutdown, Walker said all commerce — the summer fishing, oil and gas, tourism and other industries — that need state oversight would be impacted. “Let me be perfectly clear. Our coalition does not want a government shutdown and have been working daily to prevent a shutdown,” Minority Leader Chris Tuck, D-Anchorage, said in a release. “This current impasse is due to the Majority’s refusal to consider the huge spending cuts we have put forward while simultaneously slashing education funding and turning away millions from the federal government to expand Medicaid in Alaska.” The $47 million reduction in the Education budget came from the Senate. House Speaker Mike Chenault, R-Nikiski, said in an interview that he would have preferred Walker pass the whole budget, but that at the same time it was not a surprise. “The governor has to do what he believes is the right thing for the state given the fact that he has a partially funded budget because we’ve not been able to get a three-quarter CBR vote from our minority,” Chenault said. “We’ll deal with what (Walker) kept and what he vetoed and we’ll put that together in another bill and move it forward.” The Legislature is set to reconvene the special session May 20 in Anchorage. Walker called a 30-day special session to be held in Juneau April 28 to handle the operating budget, a sexual abuse prevention bill known as Erin’s Law and Medicaid expansion and reform. HB 148, the Medicaid bill, has since stalled in the House Finance Committee. Chenault said he met with Tuck, members of the Senate Majority and Walker’s staff May 15 and that all the issues are still “in play,” but the top priority is getting a complete budget. The state Capitol building is undergoing a major renovation and numerous legislators have voiced displeasure with the governor over the Juneau special session. “I guess if they would spend as much time on getting the business done as where they’re going to get the business done maybe it would get done,” Walker said May 18. The governor said he would continue to call special sessions until the budget is resolved. He expects to get a complete budget passed “pretty soon,” Chenault said. “Whether it’s this special session or we have to extend a little bit longer I don’t know, but certainly we’re going to pass a budget.” Elwood Brehmer can be reached at [email protected]

State budget could mean 15,000 layoffs

Gov. Bill Walker signed a partial state budget May 18, a move that could force the layoff of about 15,000 state employees and lead to a partial government shutdown if legislators can’t reach a budget deal. Left with few options, the governor vetoed much of the nearly $5 billion of state expenditures in the operating budget bill that passed April 27, House Bill 72, before signing it to bring it in line with the approximately $1.9 billion available to draw from in the Statutory Budget Reserve, he said. Because the bill was transmitted to him earlier this month, Walker had to act on HB 72 before 11:59 p.m., May 19, or the full bill would have become law. A visibly tired Walker said at a press briefing after he signed the bill that most state agency funding would be cut by 72 percent under the enacted budget. The departments of Corrections and Public safety are fully funded for the 2016 fiscal year, which begins July 1, as is the state judicial system, debt service and the Legislature’s budget, he said. The Department of Health and Social Services is funded for six months. “The only responsible thing for us to do is what we’ve done — to prepare for the worst-case scenario and hope and pray we don’t get there,” Walker said. Vetoing the budget entirely was not an option, he said, as it includes supplemental funding for the rest of the current fiscal year. A full veto would have initiated “complete chaos” in state government nearly instantly, Office of Management and Budget Director Pat Pitney said. The governor also sent a letter to state employees early May 18 explaining his actions. “Later today, I will sign the budget bill the Legislature passed in April. However, I have little choice but to veto the unfunded items in the bill,” Walker wrote. He continued: “One consequence of HB 72 being unfunded for 2016 is most state employees will receive a layoff notice in early June if the Legislature fails to pass a fully funded budget by that time.” A fight in the House over state spending and Medicaid expansion has led to normal legislative procedures being thrown aside. House minority Democrats are demanding the restoration of $47 million cut from education spending, among others, and approving the governor’s Medicaid expansion and reform package, House Bill 148, be passed before they will vote to approve a draw on the Constitutional Budget Reserve, a state savings account that requires a three-fourths majority to access. Drawing on the Statutory Budget Reserve only requires a majority vote. There was $10.1 billion in the CBR as of April 30, according to the Revenue Department. About $3 billion of that is needed for fiscal year 2016, Walker said, and the stalemate in the Legislature over about $90 million has pulled attention away from the bigger problem, which is the entirety of the nearly $4 billion deficit. “The irony of it is other states that have done this — they couldn’t go out and borrow money,” Walker said. “We have the money; we just cant get sufficient votes or the budget to match so they can access the funds that are there. Here we are with a Triple-A bond rating and we’re talking about this scenario of a potential shutdown.” Walker has been criticized by some Republican legislators for proposing to increase spending beyond the budget passed primarily on Majority votes. When the impasse between legislators became clear, the governor reintroduced his budget that would increase spending about $50 million over HB 72, a negotiating “starting point,” he called it. If it comes to a partial shutdown, Walker said all commerce — the summer fishing, oil and gas, tourism and other industries — that need state oversight would be impacted. “Let me be perfectly clear. Our coalition does not want a government shutdown and have been working daily to prevent a shutdown,” Minority Leader Chris Tuck, D-Anchorage, said in a release. “This current impasse is due to the Majority’s refusal to consider the huge spending cuts we have put forward while simultaneously slashing education funding and turning away millions from the federal government to expand Medicaid in Alaska.” The $47 million reduction in the Education budget came from the Senate. House Speaker Mike Chenault, R-Nikiski, said in an interview that he would have preferred Walker pass the whole budget, but that at the same time it was not a surprise. “The governor has to do what he believes is the right thing for the state given the fact that he has a partially funded budget because we’ve not been able to get a three-quarter CBR vote from our minority,” Chenault said. “We’ll deal with what (Walker) kept and what he vetoed and we’ll put that together in another bill and move it forward.” The Legislature is set to reconvene the special session May 20 in Anchorage. Walker called a 30-day special session to be held in Juneau April 28 to handle the operating budget, a sexual abuse prevention bill known as Erin’s Law and Medicaid expansion and reform. HB 148, the Medicaid bill, has since stalled in the House Finance Committee. Chenault said he met with Tuck, members of the Senate Majority and Walker’s staff May 15 and that all the issues are still “in play,” but the top priority is getting a complete budget. The state Capitol building is undergoing a major renovation and numerous legislators have voiced displeasure with the governor over the Juneau special session. “I guess if they would spend as much time on getting the business done as where they’re going to get the business done maybe it would get done,” Walker said May 18. The governor said he would continue to call special sessions until the budget is resolved. He expects to get a complete budget passed “pretty soon,” Chenault said. “Whether it’s this special session or we have to extend a little bit longer I don’t know, but certainly we’re going to pass a budget.” Elwood Brehmer can be reached at [email protected]

Pebble, EPA agree lawsuit should continue

Pebble Limited Partnership and the Environmental Protection Agency finally agree on one thing: their court fight should move forward. Each side filed seven-page briefs May 14 requesting Alaska U.S. District Court Judge H. Russel Holland continue with an oral argument hearing in Pebble’s lawsuit against the EPA scheduled for later this month. Holland ordered the sides to file short-notice briefs May 4, asking if an Office of Inspector General evaluation of the EPA’s Bristol Bay Watershed Assessment would impact court proceedings and if the lawsuit should be suspended until the Inspector General report is released. The assessment, released in January 2014, is the agency’s basis for its move to preemptively ban the copper and gold mega-project near Iliamna before Pebble applied for permits or released a mine plan. Pebble claims the EPA developed the 1,000-plus page Bristol Bay Assessment under false pretense — that the agency used science from biased experts dead-set against the mine project, and decided to use its authority under Section 404(c) of the Clean Water Act to stop mine development years before the assessment was released. The EPA has resoundingly denounced Pebble’s allegations in court and through its public affairs campaign. Holland’s May 4 order indicated the federal judge was unaware of the pending Inspector General review until he read a May 3 Alaska Dispatch News story that summarized the Pebble fight. The IG review began nearly more than a year ago and has been reported on extensively by multiple state and national news outlets. In November, Holland issued a preliminary injunction ordering the EPA to halt its 404(c) process until the lawsuit is resolved over whether the agency violated public process and objectivity laws in drafting the Bristol Bay Assessment. Without the injunction, the seldom-used 404(c) project ban could have been finalized over winter, as EPA officials have said the process initiated in February 2014 usually takes about a year to complete. Holland dismissed another suit against the EPA in September filed by Pebble that claimed the agency was overstepping its authority with the 404(c) action. He ruled Pebble did not have a case on that front because, among other reasons, the EPA had not officially finalized its decision. The agency has never before stopped a development project in such an early stage as Pebble via its 404(c) authority. In the EPA’s latest brief to Holland the agency’s attorneys wrote that “the government is very concerned that postponing a decision on its motion to dismiss (set to be argued May 28) would unduly delay this litigation.” If the suit is delayed the EPA will be under the injunction for more than a year without resolution to whether or not Pebble has a valid argument, according to the agency’s brief. The court filing states that an IG representative told EPA counsel that a final evaluation report is not expected until February 2016. Further, EPA attorney’s noted that the IG evaluation can have no bearing on the court case. Pebble’s filing states it is “well aware” of the IG evaluation and included several letters Pebble and its parent investor Northern Dynasty Minerals Ltd. sent to the office that they claim details the EPA’s biased actions. In a Feb. 27 letter to EPA Inspector General Arthur Elkins, Jr., the mine developers state documents Pebble obtained through a Freedom of Information Act request prove EPA Region 10 ecologist Phillip North “collaborated” on a petition to initiate the 404(c) process submitted by regional Alaska Native groups with the groups’ attorney Geoffrey Parker months before the official assessment drafting began. The correspondence took place in early 2010, according to the letter. A March 12 letter states that “Pebble has recently obtained a document from the National Park Service that further proves that EPA colluded with anti-mine activists to veto the Pebble mine, even before (Pebble Limited Partnership) submitted an application for regulatory approval.” Elwood Brehmer can be reached at [email protected]

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