Federal Reserve leaves benchmark rate unchanged

WASHINGTON (AP) — The Federal Reserve left its key interest rate unchanged May 1 and signaled that it’s unlikely to either raise or cut rates in coming months amid signs of renewed economic health but unusually low inflation. The Fed left its benchmark rate — which influences many consumer and business loans — in a range of 2.25 percent to 2.5 percent. Its low-rate policy has helped boost stock prices and supported a steadily growing economy. A statement from the Fed spotlighted its continuing failure so far to lift annual inflation to at least its 2 percent target rate. The Fed’s preferred 12-month inflation barometer is running at about 1.5 percent. In pointing to persistently low inflation, the statement might have raised expectations that the Fed’s next rate change, whenever it happens, could be a rate cut. The Fed cuts rates when it’s trying to stimulate inflation or growth. But at a news conference later, Chairman Jerome Powell declined to hint of any potential coming rate cut. He suggested, in fact, that the current too-low inflation readings may be transitory or might not be fully capturing real-world price increases. “The committee is comfortable with our current policy stance,” Powell said. The chairman’s comments appeared to deflate a modest stock market rally that occurred after the Fed issued its statement, with its mention of unusually low inflation. Stock losses deepened later in the afternoon, with the Dow Jones industrial average ending the day down 162 points. In its statement May 1, the Fed announced a technical adjustment to reduce the interest it pays banks on reserves as a way to keep its benchmark rate inside its approved range, rather than at the upper end of that range. The central bank’s decision to make no change in its rate policy — approved on a 10-0 vote — had been expected despite renewed pressure from President Donald Trump for the Fed to cut rates aggressively to help accelerate economic growth. The Fed sketched a more upbeat view of the economy, saying “economic activity rose at a solid rate.” In March, the Fed had said it appeared that growth had slowed from the fourth quarter of last year. The generally brighter outlook for the economy and the stock market represents a sharp rebound from the final months of 2018, when concerns about a possible global recession and fear of further Fed rate increases had darkened the economic picture. Stock prices tumbled late last year, especially after the Fed in December not only raised rates for the fourth time in 2018 but suggested that it was likely to keep tightening credit this year. Yet starting in January, the Fed engineered an abrupt reversal, suggesting that it was finished raising rates for now and might even act this year to support rather than restrain the economy. Its watchword became “patient.” And investors have responded by delivering a major stock market rally. The market gains have also been fed by improved growth prospects in China and some other major economies and by the view that a trade war between the world’s two biggest economies, the United States and China, is nearing a resolution. Last month, the government reported that the U.S. economy grew at a surprisingly strong 3.2 percent annual rate in the January-March quarter. It was the best performance for a first quarter in four years, and it far surpassed initial forecasts that annual growth could be as weak as 1 percent at the start of the year. If economic prospects were to brighten further, could Fed officials rethink their plans to suspend further rate hikes and perhaps resume tightening credit? Possibly. But investors don’t seem to think so. According to data tracked by the CME Group, investors foresee zero probability that the Fed will raise rates anytime this year. And in fact, their bets indicate a roughly 60 percent likelihood that the Fed will cut rates before year’s end. One factor in that dovish view is that the economy might not be quite as robust as the latest economic figures suggest. The first quarter’s healthy 3.2 percent annual growth rate was pumped up by some temporary factors — from a surge in restocking of companies’ inventories to a narrowing of the U.S. trade deficit — that are expected to reverse themselves. If so, this would diminish the pace of growth and likely hold down inflation. Indeed, for all of 2019, growth is expected to total around 2.2 percent, down from last year’s 2.9 percent gain, as the effects of the 2017 tax cuts and billions of dollars in increased government spending fade. At the same time, the Fed is still struggling to produce inflation of roughly 2 percent. This week, the government reported that the Fed’s preferred inflation gauge rose just 1.5 percent in March from 12 months earlier. Many analysts say they think the Fed won’t resume raising rates until inflation hits or exceeds its 2 percent target. Too-low inflation is seen as an obstacle because it tends to depress consumer spending, the economy’s main fuel, as people delay purchases in anticipation of flat or even lower prices. It also raise the inflation-adjusted cost of a loan. In the meantime, President Donald Trump has attacked Powell’s leadership as being too restrictive toward rates and has pressed the Fed to cut rates — something few mainstream economists favor. On April 30, Trump tweeted that the U.S. economy has “the potential to go up like a rocket” if the Fed would only slash rates and resume the emergency bond buying programs it unveiled after the Great Recession to ease long-term loan rates to stimulate spending and growth. Asked at this news conference about Trump’s attacks, Powell replied that the Fed is a “nonpolitical institution” that doesn’t consider outside criticism in making its policy decisions. “We don’t think about other factors” beyond how the economy and financial system are faring, Powell said. He said the Fed’s rate-setting panel thinks its rate policies are “in a good place.”

US productivity grows at solid 3.6 percent rate in first quarter

WASHINGTON (AP) — U.S. productivity grew at a solid 3.6 percent rate in the first three months of this year, the strongest quarterly gain in more than four years and a hopeful sign that a long stretch of weak productivity gains may be coming to an end. The first quarter increase in productivity was more than double the 1.3 percent rate of gain in the fourth quarter, the Labor Department reported May 2. Labor costs actually fell in the first quarter, dropping at an annual rate of 0.9 percent, indicating that tight labor markets are not creating unwanted wage and inflation pressures. If it continues, an uptick in productivity would be good news for President Donald Trump and his goal of achieving sustained economic growth above 3 percent. Productivity, the amount of output per hour of work, is a key factor determining an economy’s growth potential. With the strong gain in the first quarter, productivity over the past year has grown by 2.4 percent, the best four-quarter gain since a 2.7 percent rise in 2010. Productivity gains over the past decade have for the most part been lackluster, averaging annual gains of just 1.3 percent from 2007 through 2018. That was less than half the 2.7 percent gains seen from 2000 to 2007, a period when the economy was benefiting from technology improvements in computers and the internet. From 1947 through 2018, annual productivity gains averaged 2.1 percent. Economists have labeled the slowdown in productivity since the Great Recession as one of the country’s biggest challenges. However, recent signs have indicated that may be turning around. The economy’s potential to grow is governed by two major factors, growth of the labor force and growth in productivity. The overall economy, as measured by the gross domestic product, expanded at a surprisingly robust 3.2 percent annual rate in the first three months of this year. For all of 2018, GDP growth was 2.9 percent. The Trump administration has projected sustained GDP gains of 3 percent or better over the next decade, well above the 2.2 percent average GDP gains seen since the current expansion began in June 2009. In a separate report May 2, the Labor Department said that applications for unemployment benefits, a proxy for layoffs, held steady at 230,000 last week. That is a low level that indicates a strong job market. The government released its April jobs report on May 3 showing growth of 263,000 jobs. In March, employers created 196,000 jobs while the unemployment rate stayed at 3.8 percent, the lowest level in nearly 50 years.

Movers and Shakers for May 12

Amanda Moser was hired as the new executive director of the Anchorage Downtown Partnership Ltd., effective April 29. Moser comes to Anchorage Downtown Partnership having served the Municipality of Anchorage working in areas of elections and serving as the Deputy Municipal Clerk. Through her tenure, she managed and administered all aspects of Anchorage’s municipal elections for 122 precincts. Moser was a major factor of creating and successfully implementing the Vote by Mail project for Anchorage. Moser has also worked for the State of Alaska where she developed and implemented strategy and messaging, including planning and organizing logistics for Alaskan business leaders traveling to Asia for Opportunity Alaska: China Trade Mission. Moser brings with her a wealth of volunteerism and community engagement experience including but not limited to: Alaska Journal of Commerce Top Forty Under 40; Parlor in the Round Song Board; Institute of the North; United Way Emerging Leaders Advisory Council; Blood Bank of Alaska, 5-gallon donor to present; Lead North Advisory Council; Engage Anchorage; and, Alaska Women’s Giving Circle, and more. Coffman Engineers Inc. announced leadership changes to the mechanical engineering department. The commercial mechanical department is led by Brent Little, PE, and the industrial mechanical department is led by Trevor Buron, PE. Little and Buron are both principals and owners of the firm. Under Jeff Gries’ leadership the mechanical department has more than doubled over the last 15 years. As vice president of oil and gas services, Gries, PE, remains responsible for the development of Coffman’s oil and gas services throughout our company. Little has more than 15 years of mechanical design experience and has been with Coffman for a decade. He was born and raised in Eagle River and graduated with a bachelor’s degree in mechanical engineering from Colorado State University. Little leads a commercial mechanical engineering department of 10 staff and specializes in engineering for federal, corrections, utilities, education, and healthcare projects. Buron has 14 years of experience, all of which have been with Coffman. He was born in Fairbanks, raised in Healy and graduated with a bachelor’s degree in mechanical engineering from the University of Idaho. Buron leads the industrial mechanical engineering department of 12 staff and specializes in industrial facility engineering, pipeline design, and all aspects of implementing in-line inspections, integrity assessments, and repairs of oil and gas pipelines. Stantec recently added three team members to its Environmental Services group in Alaska, expanding in Anchorage, Fairbanks and Wasilla. Victor Ross, Steve Reidsma and Zach Baer join the 22-person Alaska environmental team, adding more than 75 years of collective project experience. Ross, Reidsma and Baer come to Stantec from another Alaska environmental firm, greatly expanding Stantec’s Environmental Services experience, with a particular focus on wetlands, baseline data collection, and permitting for mining and transportation projects. As a team, Reidsma, Ross and Baer have conducted baseline wetlands data collection and permitting around the state. They have completed the U.S. Army Corps of Engineering permitting for major Alaska projects, including the Donlin Gold Project; Kivalina Evacuation Road; Cape Blossom to Kotzebue Road; and expansions at Fort Knox, Pogo, and Red Dog mines. Ross is a senior associate and senior regulatory specialist working from Stantec’s Wasilla office. He has 40 years of experience, most of it in Alaska, working for private firms and both the USACE and the Bureau of Land Management. He has been involved in key decision documents and permits for USACE and BLM, including mineral exploration, placer and hard rock mines, oil and gas, sand and gravel, airports, and roads. He is a 20-year member of the Alaska Miners Association and has worked on some of the state’s major mine projects—Red Dog, Fort Knox, True North, Pogo, and Kensington. He earned a bachelor’s degree in mining engineering from the University of Alaska Fairbanks. Reidsma is a senior wetland scientist working from the Fairbanks office. He has more than 25 years of Alaska natural resources experience and leads teams conducting natural resource baseline and permitting work for small retail developments to larger transportation, mining and pipeline projects. Reidsma has completed wetland field delineations, functional assessments, and preliminary jurisdictional determination reports for projects throughout Alaska. He has conducted wildlife surveys, recreation management, reclamation and remediation work, and fisheries and wildlife management as the former environmental manager at Fort Wainwright. He is an Army veteran. He earned a bachelor’s degree in biology from the University of Alaska Anchorage. Baer is an environmental scientist and professional wetland scientist with 12 years of experience. He will work from the Anchorage office. Baer has focused on vegetation mapping, exotic and rare plant surveys and identification, stream characterization and monitoring, groundwater hydrology monitoring, GIS analysis, and other state and federal environmental permitting throughout his career. He earned bachelor’s degrees in both biological sciences and natural resources management from the University of Alaska Fairbanks. Kuna Engineering added Michael Willmon, BSEE, PE, CEM, as electrical engineering manager in the company’s Anchorage office. Willmon brings 27 year of experience in telecommunications, site design and construction. In this role, Willmon oversees the Anchorage office’s electrical projects and pursuits, as well as managing a team of electrical engineers and designers. Prior to joining Kuna, Willmon worked at GCI for 17 years as a project engineer including work on their terrestrial microwave network.

FISH FACTOR: Pebble mine critics cite concerns over dust from operations

Editor's note: In response to the statement below that "little to no baseline data on soil or sediments is presented in the draft environmental impact statement, or DEIS, compiled by the U.S. Army Corps of Engineers," the Pebble Partnership supplied the following links to appendices in the DEIS containing the baseline soil and sediments data: Appendix K3-14 discusses soils  Appendix K3-18 discusses sediments  Analytical chemistry database  EBD Chapter on Trace Elements  According to the Pebble Partnership, the appendices contain data from approximately 20,000 soil/sediment sample results collected from 150+ sites across several hundred square miles.  ORIGINAL STORY Bulldozers, blasters, excavators, vibrators, jaw crushers, drillers, graders, crushers, huge trucks and other heavy equipment are tools of the trade when building and operating large mines — and they all kick up a lot of dust. In the case of the Pebble mine, the project is expected to generate 8,300 tons of so called fugitive dust in its annual mining operations. Another 5,700 tons will come from building the 83-mile main road to Cook Inlet, and the 35 times daily round trips trucking mineral concentrates will churn out 1,500 tons of road dust each year. When it’s blowing in the wind, the dust will land on at least 1,500 acres of wetlands and 300 acres of lakes, ponds and streams, according to analyses done for the United Tribes of Bristol Bay, a tribal consortium representing 15 Bristol Bay tribal governments that represent more than 80 percent of the region’s total population. The dust will contain particles of the metals being mined, notably, copper, which when it leaches into water bodies, has been proven to be toxic to the olfactory system of salmon. “Increases in copper concentrations of just 2 to 20 parts per billion, equivalent to two drops of water in an Olympic-sized swimming pool, have been shown to impact the critical sense of smell to salmon,” said Dr. Thomas Quinn, a professor at the School of Aquatic and Fishery Sciences at the University of Washington. “Salmon use smell to identify predators, prey, mates, and kin. And importantly, they use sense of smell to return to their natal streams.” But little to no baseline data on soil or sediments is presented in the draft environmental impact statement, or DEIS, compiled by the U.S. Army Corps of Engineers that is currently undergoing public review. “One of the most eye-opening things was, when you’re looking at fugitive dust, you’re looking at it from the perspective of human health and there are 10 or 11 hazardous air pollutants that you must look at when you’re permitting for air quality. Copper is not a human health hazard, so that was completely omitted from any mention in the discussion on dust,” said Kendra Zamzow, an environmental geochemist with the Center for Science in Public Participation. Zamzow, who is from Chickaloon, has pored over thousands of supplemental documents to the DEIS called requests for information, or RFI, on behalf of the United Tribes. “They have a table in the soils chapter that lists how much they expect in concentrations of things like arsenic or cadmium or mercury increases over time in soils based on loading from dust. But there is no mention of copper. And this is going to be a copper mine,” Zamzow said. “We know from the element analyses they’ve done on concentrations in the ore and the waste rock that copper will be one of the top two components in the rock, and probably the highest of the trace metals. “And there’s absolutely no mention of the copper, which to me is really surprising because we know how copper is toxic to aquatic life, and everyone knows impacts to aquatic life is the entire reason that people are concerned about the Pebble mine.” The copper will inevitably leach into water bodies where fish and aquatic life in general will be exposed. “A lot of these particles could become available to the base of the food chain, the benthic feeders and zooplankton,” Zamzow said. The copper-saturated dust would blow from the mining area, whereas road dust would likely have a different composition. “The road dust is expected to impact a lot more waters than the mine site. But we don’t know to what extent concentrates could be making up part of the dust because it is not discussed at all. And mitigation mostly talks about watering the road,” Zamzow said. According to a 2014 Assessment of Potential Mining Impacts on Salmon Ecosystems at Bristol Bay by the Environmental Protection Agency, the transportation corridor in the Kvichak River watershed would cross approximately 64 streams and rivers of which 55 are known or likely to support migrating and resident salmonids, including 20 streams designated as anadromous waters. The corridor would run near Iliamna Lake and cross multiple tributary streams. Lower Cook Inlet also will get impacts from the Pebble dust as Amakdedori Creek in Kamishak Bay will be the export terminal to ship out the mined materials. Trucks from the mine site will transport the finely powdered concentrates to ice breaking barges for an 18 mile daily transit across Iliamna Lake, truck it on a 30-mile road to the coast, load it onto barges, then offload to a mothership 12 miles or more offshore. “They’re going to take 38-ton shipping containers off of trucks, lower them into a ship’s hold and turn them upside down to dump out the concentrates. And it will have very high concentrations of copper,” Zamzow said, adding that the DEIS says the transports will include nearly 630,000 tons of materials per year. Pebble’s mine site structures will include an open pit, a tailings storage facility, low grade ore and overburden stockpiles, quarry sites, water management ponds, milling and processing facilities, a 188-mile natural gas pipeline from the Kenai Peninsula to the site, a power plant, water treatment plants, camp facilities and storage facilities. “Building and powering a mine like Pebble or Donlin is like adding a new city to Alaska,” said Zamzow. “Dust is another example of how the Corps of Engineers has not done their job and is not holding Pebble up to a high standard of scientific rigor that Bristol Bay demands. And our decision makers are letting them,” said Alannah Hurley, United Tribes executive director. The public comment period for the Pebble Mine has been extended to June 29. Find more information at www.pebbleprojecteis.com. Expo No. 3 The third annual Bristol Bay Fish Expo is just weeks away as the region gears up for the world’s biggest sockeye salmon fishery. The event is a fundraiser for local childcare held in Naknek, the fishing hub for 10 major seafood processors and a fleet of nearly 1,000 boats. “There was no child care whatsoever in the community,” said Sharon Thompson, Expo co-organizer and board president of Little Angels Childcare Academy. The Expo so far has raised nearly $40,000 to open the doors and pay staff at the Academy, which received its state license last week to serve up to 15 children. “It has been the reason that Little Angels could continue existing while we got through the licensing process,” Thompson said. The Expo is on track to match or beat the 50 trade show vendors from last year. Other features include the premiere of The Wild, a film by Mark Titus and a visit from renowned sushi chef Taichi Kitamura who will be serving salmon dishes. Two of the biggest Expo hits are the Fashion and Wearable Art Show followed by an Auction featuring Bristol Bay fisherman and auctioneer Kurt Olson. (Donations are needed for the auction.) Invitations also have been sent to Alaska’s policy makers. “Those who are in public service and our politicians are forming the policies that will affect everything from our industry to our way of life. So, we are putting invites out to Sen. (Lisa) Murkowski, Gov. (Michael J.) Dunleavy, and a lot of others because it is an important part of our show,” Thompson said. The Expo theme this year is “feeding our families and fueling our dreams,” which Thompson said is exactly what the Bristol Bay salmon do. “We are just so grateful because our wild salmon resource is supporting all of this,” she said. “In times of budget crises, they’re putting food on our table, food in our freezers, and the wild salmon has provided a child care facility.” The Bristol Bay Fish Expo is set for June 9 and 10 at the Naknek school. See more at www.bristolbayfishexpo.com. ^ Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: Tesla’s warning highlights the eco-left’s hypocrisy

Tesla, the world’s current “it” auto manufacturer, is concerned. Their American-made electric vehicles, or EVs, require steady supplies of mined materials: lithium, copper, cobalt and more. And our current capacity might not be enough. Sarah Maryssael, Tesla’s global supply manager for battery metals, reportedly warned at a closed-door industry conference last week that a global shortage of critical EV components is coming. Tesla is warning of “long-term supply challenges” because of “underinvestment in the mining sector.” Tesla is right to be concerned about underinvestment in the mining sector, but who should they be concerned with? We need to be asking why hasn’t there been enough investment when we know the need for these elements is coming? The answer is simple: the environmentalist movement. For years, environmental groups have worked to raise the cost of opening new mines, especially here in Alaska, where we have plentiful opportunities. They threaten lawsuits, file legal actions, bring in protestors — actions that cumulatively make it more expensive and more difficult to open new mining facilities. And here’s the crazy part: The same environmental activists who are trying to push “green” energy and transportation are the people fighting the mining activities that can help make it happen. It’s hypocrisy at its finest: they demand green energy but protest the resources needed to make EV’s and battery storage a reality. In Alaska, for example, the public outcry from environmentalists against the Pebble mine has been deafening. Eco-activists say we must choose between mining and fishery health, and they have relentlessly pursued all means necessary to shutter Pebble before it has a chance to work through the permitting process. Don’t forget, Pebble would be primarily a copper mine — one of the inputs that Tesla is warning could face shortages. The same environmental extremism has begun against the whole of the Ambler Mining District, an area in Northwest Alaska that holds world-class deposits, because it will take a new road through state and federal lands to access the projects. The Aktigiruq deposit features zinc, gold and lead. Arctic VMS has identified copper zinc, lead, gold and silver in its deposit landscape. Bornite has significant copper and cobalt resource potential in its claim area, while Taurus has notable deposits of copper, gold and molybdenum. Graphite Creek has the largest large-flake graphite deposit in the U.S. All of these projects would help in one way or another to improve output of materials needed to build a more robust green energy world. If the eco-activists had their way, these resources would remain in the ground. Their protests then make no sense. Will the environmental extremists cede their moral high ground, stop fighting against the mining industry, and realize that resource extraction actually serves their goals in the long run? My guess is no. To do so would be to give up a potent fundraising method used to vilify responsible resource extraction, and the energy workers who are employed at those projects. Environmental groups in Alaska and abroad should heed Tesla’s warning. America can lead the way, develop our resources and create the inputs needed for new, low-cost forms of energy and storage — if only these groups would stand aside. Rick Whitbeck is the Alaska State Director for Power The Future, a nationwide non-profit focused on supporting energy workers, while pushing back on radical green groups and the ideologues who fund them. Contact him at [email protected]

GUEST COMMENTARY: A dividend Alaska can afford

During the May 1 Senate floor debate on the state budget, I offered an amendment to reduce this year’s Permanent Fund dividend from the proposed $3,000 to a more reasonable $1,200 per Alaskan. My reasoning was simple and practical: a $1,200 PFD is one Alaska can afford. It’s a matter of simple math. A $3,000 dividend leaves a gaping $1.2-billion deficit, while a $1,200 dividend would balance the budget and allow funding of core state services at sensibly reduced levels—all while providing a reasonably-sized dividend more in line with the PFDs Alaskans have received over the decades. A $1,200 dividend also keeps a promise the Legislature made to Alaskans just last year. With the passage of Senate Bill 26, we restructured the way Permanent Fund earnings are fundamentally managed and placed into law a fixed annual transfer of roughly 5 percent from the Fund to the state treasury. The goal was simple: protect the $65-billion Permanent Fund itself while creating a sustainable, long-term revenue stream — one that allows for a healthy PFD and helps pay for core state services like education, public safety and infrastructure. But by putting the state on course for a $1.2-billion deficit, a $3,000 dividend is anything but healthy. We have three basic options to close the budget gap created by a $3,000 dividend: 1. Cut another $1.2 billion from the budget. While I strongly support continued downward pressure on the budget, we need to continue making sensible, managed, multi-year reductions so we don’t send the state’s economy into a tailspin or cut core services too deeply. 2. Raise $1.2 billion in new revenue, which means either doubling oil and gas taxes or levying a hefty new income and/or sales tax on Alaskans. But to me it doesn’t make sense to torpedo the oil and gas industry with a massive tax increase or to tax Alaskans heavily with one hand just to send out a big dividend with the other. 3. Pull $1.2 billion from our dwindling cash reserves, which means either wiping out most of what remains of the state savings account or drawing from the Permanent Fund Earnings Reserve, a move that will reduce future dividends and our ability to fund core services down the road. Option three — a $1.2 billion draw from the Earnings Reserve — appears to be the course plotted by the budget just sent to the House for concurrence. This move prioritizes a super-sized PFD this year over safeguarding a reasonable dividend for future generations and providing funding for schools, law enforcement, roads, and other essential state services for years to come. The good news is that the budget is not yet finalized. The differences between the House and Senate versions of the budget — including the size of the PFD — will now get worked out in a conference committee. My hope is that a budget that considers the long game will prevail and a balance will be found between reasonable budget cuts, preserving state savings accounts, and paying a dividend Alaska can afford. ^ Chris Birch represents Senate District M, which includes South Anchorage and the Lower Hillside.

Alcohol, marijuana officers still blocked from public safety networks

Editor's note: This story has been corrected to state that the chairs of the alcohol and marijuana control boards sent a letter to the commissioner of the Alaska Department of Commerce, Community and Economic Development, who sent a letter to the state Attorney General. Enforcement officers with the Alcohol and Marijuana Control Office are still struggling to work around the loss of access to the state’s public safety information networks. The office employs a number of enforcement personnel to inspect licensed premises and to investigate potential violations. The majority of the office’s work is in alcohol licenses, though marijuana licensees take up an increasing portion of staff time. Until December 2018, the enforcement staff members were considered peace officers and had access to the Alaska Public Safety Information Network and the Alaska Records Management System. However, last fall, the Alaska State Troopers informed AMCO that its enforcement officers would no longer have access to those networks because they were not considered peace officers. DPS could provide the information, but the AMCO staff would be locked out. About five months later, the AMCO staff members are still struggling to get the information they need to conduct investigations, said Executive Director Erika McConnell. “Some information has been provided in a timely manner,” she told the Marijuana Control Board during its meeting May 1. “Some requests have been ignored or go unfilled after repeated requests. This continues to be a frustration for the office.” The state provides access to the networks to criminal justice agencies and to peace officers. It is a debatable point whether AMCO is a “criminal justice agency,” McConnell said, but enforcement staff have always been considered peace officers. She said the reason the interpretation has been changed is still unclear. Though the chairs of both the Alcohol and Marijuana Control boards wrote a letter to the commissioner of the Alaska Department of Commerce, Community and Economic Development requesting that he send a letter to Alaska Attorney General Kevin Clarkson requesting a clarification, there has been no response as of the May 1 meeting, said Marijuana Control Board chairman Mark Springer. Division of Enforcement Director James Hoelscher noted that the lack of access hampers the enforcement officers at AMCO despite the fact that the departments have the same goal. The investigators within AMCO have police backgrounds for inspection purposes. “It’s been burning — it’s been something in the back of my head for quite some time now and caused significant issues and questions,” he said “In my opinion, it is very clear that we are peace officers. What it boils down to is you have enforcement who is required to enforce Title 4 and Title 17 and we have been hamstrung on almost every level of the way to do that thing.” The Department of Public Safety did not reply to a request for comment as of press time. Impacts of legalization examined Meanwhile, AMCO is working on a data-sharing project of its own with the Alaska Department of Health and Social Services’ Division of Public Health. As part of the plan to legalize recreational cannabis in Alaska, the Legislature set up an excise tax with 25 percent going to marijuana education and treatment programs. The DHSS is working on issuing grants to promote youth education and substance abuse prevention, but as part of its education programming wants to conduct monitoring on the effects of marijuana legalization in the state, according to an outline submitted to the Marijuana Control Board. “Surveillance of youth and adult populations monitor trends in knowledge, awareness, attitudes, behaviors and use in the population,” the outline states. “We have incorporated marijuana-specific questions in our existing surveys to get a sense of how these attitudes and behaviors may change over time. Data from these surveys informs public health activities, providing the evidence behind evidence-based approaches to changing behaviors.” Part of the system for tracking commercial cannabis involved serial numbers for each plant, known as the Marijuana Enforcement Tracking Reporting Compliance, or METRC. DHSS wants to use the data there to track retail sales to see what types of products Alaskan adults are buying, while protecting licensee information. According to a draft data use agreement, the division wants information such as the price per usable gram, the value of sales, the number of transactions, the sales by product type, the average percentage of THC per gram and the number of sales by product type, among other data points. Eliza Muse, the acting director of the Office of Substance Misuse and Addiction Prevention, told the Marijuana Control Board that the division is keeping an eye on how use is affecting health of the Alaska population at large. “We’re also monitoring population health status to identify trends and potential health outcomes related to marijuana use,” she said. “We’re tracking data points such as marijuana-impaired driving or motor vehicle crashes, calls to our poison control hotline related to accidental ingestion, tracking emergency room treatment for children and the number of people entering treatment with marijuana identified as the primary substance of concern. “I do want to say that we have a lot of data points pre-legalization and post-legalization and we are not seeing an increase in any of those areas right now.” The Marijuana Control Board plans to review the data use agreement with DHSS at its July meeting. Elizabeth Earl can be reached at [email protected]

Dunleavy poised to lose battle over education budget cuts

Funding for public education is an omnipresent issue nationwide, but it can become particularly contentious in Alaska where often unavoidably high costs meet standardized test scores that rank near the bottom nationally. While the debate usually falls along party lines, this year Republican Gov. Michael J. Dunleavy’s administration has pitted itself against legislators of all political stripes. Dunleavy has repeatedly cited poor standardized reading and math test scores for Alaska 4th and 8th graders as reasons the state needs to overhaul its K-12 education system. Correspondingly, his budget proposal released in February calls for cutting the Department of Education budget by $325 million, or about 24 percent, of the $1.3 billion budget, which administration officials have said is a precursor to overall education reform that will focus on reading proficiency in early grades and algebra in middle school. The vast majority of that cut, $269 million, would be to the block of money that funds the state base student allocation, or BSA, formula that calculates how much state money each school district gets per student. Dunleavy also proposed pulling back a $30 million one-time appropriation for school districts that the Legislature last year for the upcoming 2020 fiscal year. The $30 million is in addition to the larger BSA block that the Legislature forward-funded in last year for the upcoming budget. However, Attorney General has Kevin Clarkson outlined the administration’s position that forward-funding state appropriations could violate the constitutional prohibition on dedicating revenue and the governor’s authority to veto appropriations. Attorneys for Legislative Legal Services contend that the future appropriations signed into law last year by former Gov. Bill Walker are not eligible for Dunleavy to veto unless the Legislature amends or repeals them. The administration has also withheld a $20 million supplemental payment approved for the current budget until the Legislature officially rejects a proposal in the supplemental budget to repeal it, prompting a lawsuit by the nonprofit Coalition for Education Equity. Legislators from every caucus — including the House Republicans who have been most supportive of Dunleavy’s policies — have supported funding K-12 at least at last year’s levels. Dunleavy said during a March meeting with the Journal and Daily News that the $269 million formula reduction close to matches what Alaska’s 53 school districts had available in reserves statewide. The districts could use that money to mitigate the impacts of the budget cuts as the policy reforms are implemented, according to the governor. “In my mind, I’m thinking, how can we do this so school districts have some money to work with so they can do a step down,” Dunleavy said. The governor’s spokesman Matt Shuckerow provided a chart indicating districts collectively had $291 million in operating, pupil transportation and capital funds in fiscal year 2017. The governor said at the time that his administration would be releasing education reform bills within weeks, but those have not yet been submitted. A March 8 letter from OMB Director Donna Arduin to the Senate Finance co-chairs states that the 2018 district fund balance totals weren’t fully available, but the administration estimated it would be $143 million. Association of Alaska School Boards Executive Director Norm Wooten said the districts use the reserves to manage cash flow and respond to unforeseen expenses as most other types of organizations do and it’s not in a district’s purview to have more money than they need to operate. State law limits districts’ reserves to 10 percent of their annual budgets. “It’s disingenuous to think we can run schools without a fund balance and there’s not a school district in the state to my knowledge that has an excess amount of fund balance that they are socking away,” Wooten said. The House and Senate have also agreed to at least partially fund the portion of school construction bond debt the state agreed to pay in prior years. The House budget funds half of the state’s $107 million prorated share, while the Senate fully funded the commitment. Dunleavy proposed eliminating the payments in his budget. Elwood Brehmer can be reached at [email protected]

Senate bill would strike down initiatives modified in court

A bill that would make it a little harder for Alaska voters to change or make laws on their own is halfway through the Legislature. The state Senate passed Senate Bill 80 on a 15-4 vote May 2, which would require the lieutenant governor to automatically reject a voter-sponsored initiative if the courts deem a portion of the initiative unconstitutional. SB 80 sponsor Sen. Chris Birch, R-Anchorage, said during floor debate that the bill is aimed at assuring an initiative — a proposed change to state law — that makes it on a statewide ballot matches what voters signed for early in the process. Alaska is one of 24 states that allow citizens to enact legislation through a voter-driven initiative. In Alaska, initiative sponsors have up to one year after the lieutenant governor certifies their application to collect signatures from registered voters at least equal to 10 percent of the number of voters in the prior general election with voters from at least 30 of the 40 state House districts. From there, the sponsors file the petition booklets with the Division of Elections for review. The division and the lieutenant governor, whose primary responsibility is overseeing elections, then have 60 days to certify the initiative as eligible to appear on a statewide ballot or reject it. However, the timing in that process can sometimes lead to incongruities between what initiative supporters sign their names to and what actually appears on the ballot. It’s what happened last year with the “Stand for Salmon” initiative and what Birch says SB 80 seeks to avoid. “Voters should be assured that the language on the ballot has not changed from the language in the petition booklets supported with signatures,” Birch said. According to the Department of Law, just two voter-sponsored initiatives have been amended by state courts and appeared on the ballot: the salmon habitat initiative and another, which also failed in 1988, relating to the state university system. Overall, Alaskans have voted on 54 ballot initiatives since statehood, according to Division of Elections records. The sponsors of the Stand for Salmon initiative — which sought to overhaul the state’s salmon habitat permitting regime and set higher bars for development projects in those areas — had their petition application rejected by former Lt. Gov. Byron Mallott in September 2017. Mallott rejected the proposed initiative language on the advice of Department of Law officials who said the salmon habitat initiative violated aspects of the state Constitution. That led to a Superior Court review of the initiative language and Judge Mark Rindner in October 2017 overturned Mallott’s decision, allowing the initiative to proceed. Rindner’s decision, in turn, was appealed by the Department of Law to the Alaska Supreme Court while the Stand for Salmon sponsors were gathering the more than 32,000 signatures needed to get their initiative on the fall 2018 ballot. The Supreme Court ultimately ruled unanimously in August 2018 that the most restrictive requirements the proposed initiative would have placed on development proponents were unconstitutional. The justices stripped those portions of the initiative out and allowed the remaining aspects to move ahead for a public vote because they determined it remained substantially similar to the original, but the version of Stand for Salmon that appeared on the ballot did not match what signatories supported; it was watered-down. The Stand for Salmon initiative eventually lost by nearly a 2-1 margin after an intense campaign. Birch, who strongly opposed Stand for Salmon, said in an interview that SB 80 is in response to how the salmon habitat initiative played out, but he noted that it “cuts both ways” for future initiatives if SB 80 passes. Public support in Senate hearings for the bill came primarily from pro-development groups that campaigned against Stand for Salmon last year, such as the Resource Development Council for Alaska, the Alaska Chamber and the Alaska Support Industry Alliance. “I think when you sign something in front of the REI store the expectation is presumably whatever you sign is going to be on the ballot and not substantially rewritten by the courts,” Birch said. Those groups stressed in written testimony that the language of a ballot initiative needs to remain wholly intact throughout the process and if it is changed by a court the Legislature should have an opportunity to review the modified initiative. The Legislature can nullify an initiative by passing a law that is “substantially the same” to the initiative, according to the Constitution, which lawmakers did last year in response to an initiative dealing with legislative pay and conflict of interest laws. The groups also contend SB 80 would limit the number of protracted legal battles over voter initiatives and discourage sponsors from drafting ambitious language with an implicit understanding that the courts can do the requisite editing. Sen. Jesse Kiehl, D-Juneau, said during floor debates that SB 80 would likely result in the opposite; opponents of an initiative could challenge it and hunt for any small inconsistencies that could result in the whole thing being sent back to square one. Valerie Brown, legal director for the environmental law firm Trustees for Alaska represented the Stand for Salmon sponsors in front of the Supreme Court, dismissed the notion that sponsors “shoot for the moon” in drafting an initiative and rely on the courts to refine its legality. “That whole (legal) process — you don’t want to go through it if you don’t have to. It’s time consuming; it’s expensive. You want language that adheres to the allowable restrictions on initiatives that do exist,” Brown said in an interview. She characterized SB 80 as a way to restrict citizens’ voices in the lawmaking process. “They saw a citizens’ uprising essentially demanding better protections for salmon and now we have this bill that’s an attempt to add another restriction to how you can use initiatives,” she said. SB 80 also faces legal questions of its own. An April 23 memo to Kiehl from Legislative Legal Services attorney Alpheus Bullard surmises that the bill could be unconstitutional because it would place additional restrictions on the initiative process beyond what is called for in the Alaska Constitution. Article XII of the Constitution, according to Bullard, requires that the rules for direct citizen lawmaking cannot be more restrictive than what the Legislature must abide by; and bills going through the traditional legislative process can be parsed. For his part, Birch points to Article XI, which states that, “Additional procedures (beyond those in the Constitution) for the initiative and referendum process may be prescribed by law.” “I understand protecting the public’s right for redress and petitioning their government but at the same time there’s an issue of overreach,” he said. “You can just put anything willy-nilly into the legislation and then it finds its way onto the ballot and you’ve got a huge (campaign) cost and impact.” More than $10 million was spent on a campaign opposing Stand for Salmon, while its supporters spent roughly $3 million. Brown suggested as an alternative to SB 80 that a formal process be set up in which initiative sponsors could consult with Department of Law officials about the constitutionality of their proposal. Currently, she said, it’s up to the department if such guidance is going to be offered. In the case of Stand for Salmon, Law attorneys first notified the sponsors before Mallott rejected it that several aspects of the initiative likely did not pass constitutional muster. The sponsors subsequently resubmitted a new version of their habitat permitting law change — which again was ultimately rejected by Mallott — but Law officials were criticized by opponents of the initiative for their assistance. “They caught a lot of flak for even being willing to tell us what they thought was wrong, so if they had an administrative process where in good faith the sponsors could work with the Department of Law that would be a chance to keep some of these challenges out of court,” Brown said. Ballot measure spending The version of SB 80 that passed the also includes a late amendment by Sen. Bill Wielechowski, D-Anchorage, that would prohibit state money from being spent to influence ballot measures such as initiatives, referendums, recalls and proposed constitutional amendments. Wielechowski said he thinks most people likely already believe it is illegal for state money to be spent on a ballot measure campaign; however, it is legal if the funds are specifically appropriated for that purpose. “The state’s role in the ballot process should be to conduct fair elections and then should be to implement the will of the people,” he said during debate on SB 80. To that end, the bill could make Gov. Michael J. Dunleavy’s radio ads promoting his administration’s proposed constitutional amendments illegal. Officials in the Governor’s Office said in a March 21 press release that a series of radio spots costing approximately $9,000 in support of his plan to enshrine the Permanent Fund Dividend in the Constitution would air in the Kenai, Mat-Su and Fairbanks areas. SB 80 is now up for consideration in the House, where it has been referred to the State Affairs and Judiciary committees. No hearings have yet been scheduled. ^ Elwood Brehmer can be reached at [email protected]

Oil market weighs OPEC output, Iran sanctions

President Donald Trump has the global oil market speculating whether he will allow last-minute waivers for countries to import Iranian crude, at the same time as oil buyers are waiting to learn whether OPEC and its allies will extend their production cuts past June. Each of the two decisions could either restrict oil output and drive up prices, or the opposite. Doing their part to boost supply, U.S. oil producers hit a record 12.3 million barrels per day during the last week of April. Texas, alone, is outproducing every OPEC member except Saudi Arabia. The collective uncertainty of too much oil, too little or just the right balance is bringing instability to prices at the same time as other events are affecting the market: • Russia temporarily cut back its oil production by a reported 10 percent after discovering it was shipping tainted crude to domestic and foreign refiners, Reuters reported May 3. • U.S. crude stockpiles are at their highest level since September 2017, according to the U.S. Energy Information Administration. Just a couple of weeks ago, the market was expecting that further reductions in Iranian oil exports, along with continued production declines due to civil unrest in Venezuela and Libya would help keep prices on the rise as buyers worried about supply. Brent, the global benchmark, had climbed from near $51 per barrel on Christmas Day last year to almost $75 on April 22. Alaska North Slope crude followed a similar climb, averaging about $74 the week of April 22. Alaska crude continues to track the global benchmark, separate from the U.S. pricing point for West Texas Intermediate crude, which traded under $62 per barrel last week. The strong growth in shale oil production is holding down U.S. prices, but a lack of pipeline capacity to move that surplus crude to the West Coast allows Alaska oil to earn a better price. However, it seems every time oil markets pick up amid fears that supply might not keep up with demand, something happens to steer prices the other way. The market fell by about $4 per barrel last week, sliding to their lowest point in a month, as supply fears eased. “Oil prices are under pressure,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “Growing U.S. oil production and the weaker trend to global growth have helped moderate the impact of OPEC production cuts and U.S. sanctions on Iran and Venezuela,” he was quoted in The Wall Street Journal on May 3. A lot of the market uncertainty is focused on U.S. sanctions against Iran and whether Trump will allow some countries to import Iranian crude despite his decision to halt sanction waivers as of May 2. “The U.S. is saying they’re going to … take away those waivers again, and the oil price is clearly drifting up because of that,” BP CEO Bob Dudley told CNBC during an interview at the Milken Institute Global Conference in Beverly Hills, California, on April 30. “I think the key — the wild card key — is will the U.S. at the last minute give some more waivers or not?” The answer to that question will influence whether oil prices rise or fall, he said. Trump’s threats last fall to impose tough sanctions on Iran — with no waivers — drove up the price for Brent crude to $85 per barrel in early October. But then prices dropped into the low $50s when he approved waivers in November for Iranian crude buyers. Now faced again with rising oil prices, the president has called on Saudi Arabia and its OPEC colleagues to boost production to help cover for the loss of Iranian oil in the market. A big problem for the Saudis, however, is that they need higher oil prices to cover the nation’s spending. Saudi Arabia needs Brent at about $88 per barrel to balance its budget, according to calculations by The Wall Street Journal. The United Arab Emirates needs $72 oil, while Angola and Algeria are at $83 and $84, respectively. OPEC+, which includes Russia, is scheduled to meet June 25 to 26 to decide whether to continue their self-imposed curbs on output, though Saudi Arabia and other producers reportedly plan to meet May 19 to discuss the question of boosting output to help cover for the loss of Iranian oil in the market. By playing host for the May 19 technical session, the Saudis “fear Trump will be fixated by the meeting,” The Wall Street Journal quoted a source May 3. The president said he called OPEC on May 3 and told them to pump more oil to help reduce prices. “You’ve got to bring them down,” he said. Earlier in the week, however, Saudi Energy Minister Khalid al-Falih said there is no need to produce more oil, though he added that the country may do so if customers ask for more supplies. Within days, Bloomberg reported that Asian refiners were asking Saudi Arabia for more crude in June and July to cope with supply disruptions from Iran and Venezuela. But with OPEC still recovering from last year’s slide to the $50s, some analysts expect the organization to move cautiously. Complicating the president’s call on OPEC — Saudi Arabia, in particular — to protect the market for any supply loss from U.S. sanctions on Iran is the doubling of American shale oil production in the past five years, threatening OPEC’s dominance in the business. It’s a tug of war, Gordon Gray, head of oil and gas research at HSBC, was quoted by The Wall Street Journal. And it’s a war where U.S. producers have a price advantage against the $88 or so that the Saudi government needs to cover its budget. “The U.S. oil price needed for shale oil to be profitable is around $53 a barrel or above,” said Roy Martin, an analyst at consulting firm Wood Mackenzie. ^ Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He is the incoming Atwood Chair of Journalism at the University of Alaska Anchorage School of Journalism and Public Communication.

No plan for Seward coal terminal three years after last shipment

Nearly three years after it went dark, the future of the Seward Coal Loading Facility is still unclear. The conveyor-belt loading dock extends out into Resurrection Bay from a yard near the Alaska Railroad Corp.’s terminal in Seward. From 1984-2016, it was used to load export shipments from the Usibelli Coal Mine near Healy. At its peak in 2011, the railroad moved about 200 coal trains back and forth to supply export demands, and the operation employed about 100 people between operator Aurora Energy Services, the railroad and Usibelli, according to information from the Alaska Railroad Corp. That changed in 2016, when the railroad decided to shutter the facility indefinitely after years of coal export declines. By that time, exports had decreased about 95 percent from a peak of 1.1 million metric tonnes in 2011 to 68 tonnes in 2016, only serving one ship as opposed to the 18 required in 2011. Cheaper coal from Indonesia and Australia pushed down the market price, cheaper natural gas entered the scene and the U.S. dollar was very strong, making it harder for Usibelli’s export business to pencil out. With that little volume, the railroad corporation operated the facility at an approximately $1.2 million deficit, according to the 2016 document announcing the closure. The facility isn’t useful for much else, but would remain intact for now, according to the announcement. “While unsuitable for unloading passenger vessels or cargo ships, the SLF dock can provide mooring services,” the announcement stated. “In light of the railroad’s mission to foster economic development, the facilities will be left intact for now to facilitate resumed operations in support of our customer if new opportunities arise. That meant Usibelli’s coal would be kept in Alaska to supply the state’s six coal-fired power plants. At its peak, about half of the mine’s production was being exported, so the operations took a hit when the export market disappeared. The company still views it as a temporary halt in its exports and is constantly looking for ways to reenter the market, according to Lorali Simon, the vice president of external affairs for Usibelli. However, the railroad corporation’s decisions about its coal operations have made that a higher threshold, she wrote in an email. “The Railroad, who has experienced tough financial circumstances for many years, made certain decisions regarding the Seward Facility that make it difficult to respond quickly to export opportunities,” she wrote. “The Railroad sold the coal cars used for the export business; (and) the Railroad put the facility into ‘cold storage.’ It will take capital (both time and money) to get the facility back up and running.” In 2016, the railroad corporation estimated that it would cost about $200,000 to bring the facility back online, take a 30- to 90-day lead time and require about eight shiploads annually to break even. However, that was before some of the coal cars were sold. In its 2016 announcement, the railroad corporation stated that it offered the aluminum coal hoppers to Usibelli for purchase, but the coal company declined. The railroad corporation does still maintain a fleet of coal cars. Though the railroad corporation does not have updated figures, it’s likely more expensive than that to get the facility online again, said Tim Sullivan, the director of external affairs for the railroad. “It’s probably a little bit more than that now,” he said. “If you leave it to lay fallow for a while, the costs go up.” Sullivan didn’t have an estimate available for what it would cost to dismantle the facility. At this point, the railroad’s plans for the coal loading facility haven’t changed, he said. Though it can’t be used for much else, ships can moor to it if necessary although that has been infrequent. The railroad has been reevaluating its facilities in Seward in recent years, aiming at repairing the passenger and freight docks, but those plans don’t really affect the coal loading terminal at present. The loss of the coal exporting business hit both companies in the wallet. Usibelli, which in 2011 employed 150 people, today employs about 100 people. Most of those employees have been lost through attrition rather than layoffs, Simon said. “Since roughly 30 percent of our employees are second-, third-, and fourth-generation employees, and the average tenure was close to 15 years in 2011, many folks naturally retired,” she wrote. The railroad corporation has taken hits in several markets in recent years, with a decline in the coal export business and in the oil field. Freight makes up the majority of the railroad’s revenue, with much of that coming from shipping materials north for oilfield explorations. Though the oil patch has been rebounding with increased exploration on the North Slope and potential new exploration in the Arctic National Wildlife Refuge, the last few years have still been financial tough on the railroad; its workforce has declined by about 100 to 150 year-round employees, Sullivan said. “We’re focused on the services that we continue to provide,” he said. “We saw the export coal market reduced and went away, and at the same time we were seeing the refined jet petroleum coming down from the North Pole refinery … decline and then disappear as well. It was a couple big hits for the Alaska Railroad. We’ve taken measure of those issues and we think we’ve gotten to a point where we can continue to weather what’s going on.” Since the beginning of the year, average coal prices on the market have declined, with production so far in 2019 about 7.2 percent behind the production at the same time in 2018, according to the U.S. Energy Information Administration. The long-term projections are for coal’s share in the U.S. energy generation sector to decline between the present and 2050, giving way to renewables and natural gas, according to the EIA’s 2019 Annual Energy Outlook. The U.S. is expected to continue to be a net coal exporter, but the actual amount of coal exported is not expected to increase because of competition from other producers closer to global markets, according to the outlook. At the same time, in the years since the Seward Coal Loading Facility closed, the federal administration has drastically changed to one much friendlier to coal. President Donald Trump’s administration has made several moves to change rules previously set in place during Barack Obama’s administration, including moving to reduce restrictions on emissions from coal-fired power plants. Congress also invoked the Congressional Review Act to repeal the Stream Protection Rule put in place during the Obama administration. Simon noted the repeal of the Stream Protection Rule and said the reduction in regulations “has allowed the mining industry to get back to work.” Elizabeth Earl can be reached at [email protected]

Study pinpoints trend toward fisheries specialization

Commercial fishermen in Alaska have gotten older in the past three decades. As it turns out, they’ve become more specialized, too. Fewer permits overall are in the water; between the early 1990s and 2014, commercial fishing permits in Alaska decreased by 25 percent. On top of that, fewer individual fishermen are moving between fisheries. From 1988-2014, the number of individuals holding multiple permits declined from 30 percent to 20 percent, according to a study published in the journal Fish and Fisheries. The bottom line: fishermen are increasingly putting all their economic eggs into one basket, and that makes them more vulnerable to the ups and downs of fishing. The study was born out of a workgroup that met through the National Center for Ecological Analysis and Synthesis at the University of California Santa Barbara, said co-author Anne Beaudreau, an associate professor of fisheries at the University of Alaska Fairbanks. The original intent was to study the long-term effects of the 1989 Exxon Valdez oil spill, but the data on fisheries specialization arose out of that work, she said. “As we worked on this, we realized there are so many things that have caused long-term changes in the Gulf of Alaska; in the fisheries, it’s really hard to see the long-term effects of the oil spill,” she said. “A lot of the focus of the working group was on the biological effects … this paper sort of came out of the end of that.” The group examined case studies in commercial fisheries: the Prince William Sound herring fishery, the statewide Pacific halibut fishery, salmon fisheries in Bristol Bay and in Prince William Sound, and fisheries in the region affected by the Valdez spill. All the fisheries have their own driving dynamics and factors of change, but common threads among many of them were long-term participation declines and increasing specialization. Some of that may be loss of opportunity; the cost of entering fisheries has steadily increased as limited entry and fishery rationalization have come into play in Alaska fisheries. Some of the fisheries in the case study are also not available due to losses in populations. The herring fishery in Prince William Sound, for example, crashed a few years after the Valdez spill and has never truly recovered. This is not an across-the-board trend, though. Some fishermen have been able to look elsewhere as their fisheries change, Beaudreau said. “I would say that fishermen are really good at diversifying,” she said. “I think that tends to be part of the nature of commercial fishing. You’re dealing with a lot of uncertainty — changes in fish populations, changes in regulations, changes in markets — all these are pressures that commercial fishermen are really good at responding and adapting to … For somebody, (finding opportunity) might mean specializing in something. For others, that might mean diversifying.” Specialization doesn’t always mean immediate impacts. For Bristol Bay, where sockeye salmon reign supreme, fishermen have actually seen less variability in their income and higher overall income. However, the point is the long-term fragility. Sockeye salmon are vulnerable to ocean forces, as was seen in the lower-than-expected returns across the Gulf of Alaska in 2018 that left fishermen in Kodiak, Chignik, Cook Inlet and Prince William Sound holding loose nets for much of the season. But the long-term warning flags of fishery instability remain, Beaudreau said. “I think it’s really more of the longer term concern,” she said. “If you’re putting all your eggs in one basket, what happens if there’s some major impact to sockeye populations?” The specialization study is the latest in a spate of research in recent years on cost of entry, reduction in opportunity and the increasing average age of commercial fishermen in the state known as the “graying of the fleet.” Fishermen statewide have noticed a trend among their peers that fewer young people are getting into the industry, but the studies lend statistics to back up observations and support potential legislative fixes. The study cites the work of another UAF researcher, Courtney Carothers, several times in reference to the impacts of the Pacific halibut fishery particularly. Carothers and a group of other researchers produced the 2017 “Turning the Tide” report, highlighting a number of the issues in loss of fishery access in rural communities and what that means for the future of those communities and the Alaska fleet. Since the implementation of limited entry programs in the 1970s, the number of rural residents holding permits in their local state fisheries has declined by 30 percent, and halibut quota holdings by locals in rural communities has fallen 50 percent since the implementation of the individual fishing quota, or IFQ, program in 1992 according to the Turning the Tide report. Much of that is due to the cost of permits in a limited entry fishery or shares in an IFQ fishery such as halibut or Bering Sea crab. Among the recommendations produced in that report were facilitating nonmarket-based access to commercial fisheries, establishing youth or student access licenses or mentorships programs, implementing programs to protect rural access to fisheries, supporting infrastructure to maintain fisheries and establishing a statewide fisheries access taskforce. Though lawmakers have expressed interest in it, legislation addressing these issues has yet to make it into law. One bill introduced in 2017, House Bill 188, would have established regional fisheries trusts allowing communities to form trusts to purchase commercial fishing licenses communally and lease them to fishermen who would otherwise not be able to afford them. After receiving a number of hearings, the bill was held in the House Labor and Commerce Committee and has not been revived in the current session. Beaudreau said her group’s study did not highlight potential solutions but rather shed light on the problem — and, among other items, how salmon fisheries can serve as a baseline fishery for commercial fishermen across the state. “Basically, we kind of saw salmon as a safety net, and it just speaks to how important it is for Alaskans,” she said. Elizabeth Earl can be reached at [email protected]

PFD is TBD entering final week of session

As is often the case, activity in Juneau is ramping up as the legislative session is winding down. The budget is at the center of almost everything legislators have done so far, but lawmakers in the House are also close to sending an omnibus crime bill to the Senate. That legislation, House Bill 49, would roll back many of the provisions of Senate Bill 91, the 2016 criminal justice reform package aimed at reducing state incarceration rates that has drawn ire from the public. SB 91 has largely been blamed for the statewide spike in property crimes in recent years, although Alaska’s concurring opioid epidemic and drawn-out recession have also been cited as reasons for the rise in crime. However, it’s unclear at this point what the Senate will be able to do with HB 49 with only about a week left in the regular session and the budget still unresolved. Gov. Michael J. Dunleavy has said he would be willing to call a special session if crime legislation is not addressed this year, but those calls will likely be left for after May 15, the last day of the regular session. House and Senate Finance leaders convened briefly May 7 for the initial operating budget conference committee meeting. The joint operating budget conference committee is being chaired by House Finance co-chair Neal Foster, D-Nome. At the highest level and on items other than the Permanent Fund dividend, the Senate’s unrestricted General Fund budget is $2 million less than what passed the House in April. Both budgets contain about $720 million more for agency and statewide spending, such as debt service, than Dunleavy proposed in February. While Dunleavy has emphasized closing the roughly $1.6 billion budget deficit without new revenues or reductions to the PFD, nearly half of his plan to close the budget gap came from redirecting existing state funds or diverting local petroleum property and fishing landing tax revenues to the state. The administration’s bills to shift the local taxes to state coffers have mostly been ignored by the Legislature. On the big budget items, legislators, to varying degrees, have split the difference between Dunleavy’s budget and current state spending levels. The Senate approved just more than $1 billion for the Department of Health and Social Services, while the House included an additional $54 million on public health and assistance programs. The difference is largely due to differing beliefs regarding how much of the administration’s roughly $100 million in regulatory and efficiency cuts to Medicaid can be achieved this year. Many of the administration’s cuts in DHSS to areas other than Medicaid were scaled back by legislators. The Senate DHSS budget is $142 million less than current, fiscal year 2019 spending, while Dunleavy had proposed $309 million in Health Department cuts. State hospital leaders said the administration’s original plan to cut upwards of $270 million from the state’s portion of the Medicaid program — which would mean forgoing approximately $470 million in federal matching funds — would severely strain the finances of smaller hospitals in the state, discourage providers from accepting Medicaid and would greatly harm the state’s already fragile economy. The Senate also roughly halved the governor’s $95 million cut to the Alaska Marine Highway System with a $44 million reduction that would keep the ferries running at reduced levels year-round. The House cut ferry funding by just $10 million. The governor’s plan to shut down the ferry system Oct. 1 while in the meantime studying alternative management structures was admonished by many coastal residents and legislators, particularly given statements during his campaign that he did not plan to drastically curtail ferry service. Dunleavy’s $134 million cut to the University of Alaska system was also largely disregarded. The House agreed to a $10 million university cut; in the Senate it’s $5 million. The Senate also chose to add $11 million above current levels to the Department of Corrections current $291 million budget, while the House landed on a $14 million cut and the governor proposed a $19 million reduction to Corrections spending. Both bodies also added about $10 million to the Public Safety budget, while Dunleavy planned to cut it by $3 million. They also left Department of Education funding largely unchanged from current levels after forward funding it last year. The Senate Finance Committee is also in the midst of finalizing its version of the capital budget. The Senate’s capital spending plan calls for $172 million in unrestricted General Fund spending largely to match just more than $1 billion in federal funds, mostly for highway and airport projects. The governor’s capital budget calls for $95 million in discretionary General Fund appropriations. The latest version of the capital budget also restores Alaska Marine Highway vessel maintenance and Tustumena ferry replacement funding. It also funds the Alaska Housing Finance Corp.’s popular home weatherization program and its Cold Climate Housing Research Center. What will be the final totals for both budgets is unclear at this point and Dunleavy’s expressed willingness to veto parts or all of the state’s budgets adds another major wrinkle to the situation. However, the strong and unusual bipartisan support for the budget in the Senate — it passed 19-1 — is an indicator that there could be enough support for the Legislature’s final budget to override any vetoes. Overriding a budget veto requires support from 45 of 60 legislators. Permanent Fund budgeting There are glaring holes in different places related to the PFD in both the House and Senate budgets. Despite being crafted by Republican Finance co-chairs Sens. Bert Stedman of Sitka and Natasha von Imhof of Anchorage — both of whom have stressed the need to protect the Permanent Fund and recalculate the dividend formula — the Senate’s budget contains full funding for a roughly $3,000 PFD. However, the large dividend results in a $1.2 billion deficit in the Senate’s plan. A fully funded 2019 PFD will cost the state slightly more than $2 billion, according to the Legislative Finance Division. The Senate’s budget would balance with funding to support roughly $1,200 PFDs, according to Finance figures. On the House side, the issue is the complete lack of a PFD in the budget. House leaders have said the PFD would be addressed in separate legislation; but the huge discrepancy leaves ample room for a compromised PFD amount to be worked out in the conference committee, which Stedman and von Imhof have indicated was at least partly behind their thinking to initially appropriate for full dividends. As a counterbalance, the Senate budget would also move $12 billion from the spendable, $18 billion Earnings Reserve Account of the overall $65 billion Permanent Fund to the constitutionally protected corpus of the fund. Such a transfer would discourage legislators from violating the 5.25 percent of market value draw limit on the Permanent Fund established last year, but could also put the Earnings Reserve at risk of being depleted if financial markets have several successive down years. This year’s 5.25 percent draw calculates to approximately $3 billion to be split for PFDs and government services. Completely draining the Earnings Reserve through ad hoc draws, poor returns, or a combination would leave no money for dividends or government support in future years. The House Finance Committee on May 6 sent a proposal to the floor from Sitka Democrat Rep. Jonathan Kreiss-Tomkins to transfer $8 billion from the Earnings Reserve to the Permanent Fund corpus. The smaller transfer is seen as a way to still protect billions from being spent while leaving additional headroom in the event of market downturns. Elwood Brehmer can be reached at [email protected]

US-China deal in flux after new tariff threat

BEIJING (AP) — President Donald Trump’s threat to escalate tariffs on Chinese goods has clouded prospects for a trade agreement, though preparations by Beijing’s envoys to still visit Washington this week are buoying hopes for some breakthrough to end the trade war between the world’s two largest economies. Beijing is “trying to get more information” after Trump’s announcement over the weekend that he would raise tariffs on $200 billion of Chinese imports from 10 percent to 25 percent on May 10, said a Foreign Ministry spokesman, Geng Shuang. Trump’s threat was seen as an effort to intensify pressure on Beijing to agree to a deal that would be to Trump’s liking. Stock markets initially plunged May 6 after Trump’s May 5 tweet over fears that China would abandon the latest round of talks in Washington, scheduled to resume May 8. U.S. stocks later regained some of their lost ground on hopes that the negotiations would proceed. Still, Geng offered no details on when exactly the talks would resume or who would join the Chinese delegation. He would not say whether Vice Premier Liu He, who has led China negotiators in previous rounds, will travel to Washington. The lack of details suggested that Beijing is wrestling with an internal conflict: Eager, on the one hand, to end a high-stakes trade fight that has battered Chinese exporters yet reluctant, on the other, to appear to bow to the Trump administration’s demands for far-reaching trade concessions. “We hope the United States will join efforts with China and we can meet each other halfway so we make a mutually beneficial agreement on the basis of win-win and mutual respect,” Geng said. The two governments have raised tariffs on hundreds of billions of dollars combined of each other’s goods in their dispute, which centers on the administration’s complaints about Chinese aggressive drive to achieve supremacy in global technology through illicit means. The confrontation has disrupted trade in goods ranging from soybeans to medical equipment. Trump threats Sunday to raise import taxes on $200 billion in Chinese products from 10 percent to 25 percent — and impose tariffs on $325 billion of additional imports, in effect covering everything Beijing ships to the United States — raised the stakes. His administration has already imposed 25 percent tariffs on $50 billion of Chinese imports, while Beijing has imposed penalties on $110 billion of American goods. On May 6, Trump stepped up his pressure, tweeting: “The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!” During Asian stock trading, China’s main stock index plunged 5.6 percent and Hong Kong lost 2.9 percent. Market benchmarks in France and Germany sank 2 percent. On Wall Street, the Dow Jones Industrial Average The Dow Jones Industrial Average was down around 240 points, or 0.9 percent, in early-afternoon trading. It had been down as much as 471 in the first few minutes of trading. Previously, Trump had postponed deadlines for a trade agreement in an effort to buy more time for negotiations. But on May 5, he complained on Twitter that a deal with Beijing was coming “too slowly, as they attempt to renegotiate. No!” The suddenly combative rhetoric from Trump came as a surprise. For weeks, administration officials have been suggesting that negotiations were making steady progress. Michael Pillsbury, director of the Hudson Institute’s Center on Chinese Strategy and an adviser to the Trump White House, said the president’s tweets suggest that Chinese leaders “are trying to take back concessions they already made.” Trump had raised tariffs on Chinese imports last July 6 in response to complaints that Beijing steals or pressures foreign companies to hand technology. The administration and other trading partners also want Beijing to scale back plans for government-led creation of Chinese global competitors in robotics and other technology. They say those violate the communist government’s market-opening commitments. Both sides say they are making progress, but no details have been released. Beijing’s negotiators have agreed to narrow the politically sensitive Chinese trade surplus with the United States by purchasing more soybeans, natural gas and other goods. They have offered to change industrial strategies but have ruled out discarding them outright. Another sticking point is U.S. insistence on an enforcement mechanism with penalties in the event Beijing fails to stick to any commitments it makes. Economists suggested Trump may want to step up pressure because China’s economy is improving, reducing the urgency for Beijing to strike a deal. The latest quarter’s growth held steady despite a slump in exports to the United States. That suggested official efforts to reverse a downturn were gaining traction. “China may have appeared less willing to offer additional concessions,” said Citigroup economists in a report. Trump’s threat makes going ahead with talks “very difficult politically” for President Xi Jinping’s government, said Jake Parker, vice president of the U.S.-China Business Council. He said the Chinese public might “view this as a capitulation” if Beijing reached an agreement before Trump’s May 10 deadline. If Trump carries out his threat, American companies in China “would be very concerned” about official retaliation, said Parker. A Chinese decision to pull out of talks could have global repercussions, causing turmoil in financial markets and dragging on economic growth, economists said. “The risk of an all-out U.S.-China trade war has increased significantly,” Tao Wang and Ning Zhang of UBS said in a report.

OPINION: Anchorage digs into couch cushions for camp cleanup

“Budgets reflect values” is a popular axiom of those who believe in government solutions to society’s problems, but whether that is true or not, budgets certainly reflect priorities. In that respect, the Anchorage Assembly can hardly claim that addressing the city’s homeless crisis has been reflected in the budgets it has approved over the last several years. The 2016 budget, for example, listed as a goal to “Eradicate homelessness and improve the health of the community.” The main source of funding that year was a one-time federal grant of about $425,000 from Housing and Urban Development. In 2017, the “Eradicate homelessness” goal appeared again, this time funded by about $339,000 in HUD grants. The 2018 municipal budget for homelessness initiatives was $500,000 between grants and matching funds. For the 2019 budget, with the Assembly and Mayor Ethan Berkowitz lobbying hard for voters to approve a 5 percent alcohol tax, once again a mere half-million dollars was appropriated split between $350,000 for homeless initiatives and another $150,000 for illegal camp cleanups. After voters rejected the tax and its supporting campaign of singling out a group of people and one industry as the most politically-expedient target for generating revenue, the Assembly has dug into the couch cushions to find another $355,000 to put toward homeless initiatives with $185,000 for the overflow shelter and an extra $150,000 for illegal camp cleanup. With about $855,000 now earmarked this fiscal year for homeless initiatives and illegal camp abatement, that represents a whopping 0.16 percent of the municipal budget of some $526 million. The total budget for illegal camp removal represents five one-hundredths of a percent of the budget. A charitable view of the budget would be that the municipality simply lacks the resources to deal with the homeless crisis absent a new source of revenue. A cynical view would be that the municipal government is using its failure to deal with illegal campsites as leverage over the taxpayers to compel them into voting for higher taxes. Much like the deteriorating homeless situations in Seattle, San Francisco and Los Angeles, the Anchorage greenbelts did not turn into Sherwood Forest overnight. Busy intersections littered by trash and the occasional piece of furniture did not spring out of thin air. Rather, the cruelty of compassion and misguided tolerance over many years has allowed this takeover of our public spaces at the expense of safety and the rights of the law-abiding to freely enjoy a city with another stated goal to be the best place to live in America by 2025. Instead, we have resources being dedicated to creating a 106-page “climate action plan” that won’t make a speck of difference in global temperatures even if the municipality took its carbon footprint to zero. Also coming down the pike this fall is the implementation of the plastic bag ban in another all-time great example of virtue signaling with no discernable benefit. If the plastic crusaders were truly concerned about waste entering our oceans, they would make it a priority to address the mountains of trash along the greenbelts of Anchorage creeks that flow into Cook Inlet and eventually the Pacific Ocean. If the mayor and Assembly want money for a new shelter, they should put it on the ballot along with all their other capital projects like schools or fire stations. If they want people to trust them with up to $15 million per year in new revenue, they should put a sunset clause on it as an incentive — and a promise — to deliver results. But what they should stop doing is pretending they are doing everything they can when the budgets they approve say something far different. Andrew Jensen can be reached at [email protected]

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