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]

Corps extends comment period on draft Pebble review

The U.S. Army Corps of Engineers says it will extend from 90 to 120 days the public comment period for a draft environmental review of a proposed copper and gold mine in Alaska's Bristol Bay region. The corps had received comments arguing against an extension and comments urging more time. Notably, U.S. Sen. Lisa Murkowski last month requested extending the comment period to 120 days. Murkowski cited the draft's length, at approximately 1,400 pages, and complexity and need to ensure Alaskans can provide "meaningful feedback" on it. The comment period is now set to run through June 29. A corps spokesman said the agency would answer questions related to the draft next week. The proposed Pebble mine has been a source of contention between fishing and conservation groups and resource development advocates for years.

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