Movers and Shakers for May 5

Ken McCarty and John Sturgeon were confirmed as new trustees of the Alaska Mental Health Trust Authority on April 17. McCarty of Anchorage, currently in private practice as a licensed marriage and family therapist, brings more than 35 years of professional experience as a psychotherapist, clinical supervisor, administrator and in special needs education to the board. He has direct experience in providing marital family therapy, adolescent treatment, residential treatment and substance abuse/prevention treatment; including helping beneficiaries with opioid and alcohol addiction through medication assisted treatment. McCarty has served as the President of the Alaska Association of Marital Family Therapists, a member of the State of Alaska Marital Family Therapy Licensing Board and was an adjunct professor in the psychology department for National University in Redding, California. He has also worked as adjunct staff to the University of Alaska, Anchorage, with the Regional Alcohol and Drug Abuse Counselor Training Program to provide counselor training across Alaska. Sturgeon of Anchorage has an extensive background in forestry having worked for the U.S. Forest Service as the State Forester for the Alaska Division of Forestry and in the private forestry sector. He also formerly served as the CEO of Ouzinkie Native Corp. Sturgeon has served as a trustee for PNW Medical University and the Nature Conservancy of Alaska, and as a director on the Board of Forestry, Alaska Forest Association, the Wild Sheep Foundation and the Resource Development Council. He was awarded the Governor’s Conservationist of the Year Award in 2017. Elaine Kroll was named Cash Management and Anchorage Branch Administration director for First National Bank Alaska and was also appointed as senior vice president at the state’s largest, locally owned community bank. A graduate of State University of New York at Fredonia and the Pacific Coast Banking School, Kroll has earned the designation of Certified Treasury Professional and spent 24 years building her local banking experience. Cornerstone General Contractors announced that Macen Kinne and Mack Conn have joined the team as project managers. Kinne brings 29 years of experience in construction, starting off in the trades then later joined the Carpenter’s Union. Kinne has experience working on both government and private sector projects including defense infrastructure, oil and gas, industrial, and commercial. He also owned and operated a residential general contracting business that specialized in remodel, environmental, and demolition work before serving as a superintendent for a large company on many rural Alaska projects. Conn joins Cornerstone with more than 15 years in construction. Conn’s professional career has focused on large, commercial multi-family wood-framed facilities in Alaska, Colorado, North Dakota, and Idaho. Like Kinne, Conn also started out in the trades and owned his own framing company. In his role’s prior to joining Cornerstone, Conn served as a superintendent, general superintendent, and construction manager for major subcontractors and developers. Arctic Slope Telephone Association Cooperative Inc. announced Stacy Marshall was hired as the director of customer experience. Marshall brings more than 20 years of experience in the telecommunications industry. She most recently worked as the director of business sales for Alaska Communications over the commercial and healthcare vertical. Prior to that she held various leadership roles within the organization to include sales operations, retail, contact center, and was the key stakeholder in driving process improvement. Marshall will work with the executive team to meet and exceed customer expectations and retention goals across the North Slope. DOWL announced the addition of Alaska Aviation Manager Melissa Osborn, AAE, ACE, to its Fairbanks office. She brings extensive U.S. Federal Aviation Administration and U.S. Transportation Security Administration compliance expertise to the firm and will grow DOWL’s Alaska aviation services including TSA and FAA compliance. Osborn has been in aviation for more than 20 years having previously held positions as an airport operations superintendent at Fairbanks International Airport, an airport safety and security officer for the Alaska Department of Transportation and Public Facilities Northern Region, an operations officer at FAI, and a load planner for Alaska Airlines, Lufthansa, and Cargolux. Osborn brings valuable project management experience, having initiated and led a variety of short- and long-term airport planning programs throughout her career. She is an active member of several professional organizations and is an Accredited Airport Executive.

FISH FACTOR: Fish economics updated; skins show healing power

Why should every Alaskan budget watcher care about the price of fish? Because when the price at the docks goes up by just one penny, it means more money for state coffers. In 2017, for example, the average dock price per pound for all Alaska seafood was 41 cents. If the price had increased to 42 cents, it would have added nearly $2 million more from fisheries landing and business taxes. That was one of the takeaways in an updated McDowell Group report presented last week at the Alaska Seafood Marketing Institute’s spring board of directors meeting. It offers a good snapshot of the industry that spawned Alaska statehood and is now a seafood superpower. Here’s a sampler: Alaska’s seafood industry puts 60,000 people to work and supports at least $150 million a year in taxes and fees. More than 9,000 vessels are home-ported in Alaska and deliver fish to 87 large shoreside processing plants. Catches of nearly 6 billion pounds of seafood worth about $2 billion were the industry averages for 2016 and 2017. Pollock accounted for 57 percent of the volume caught and 22 percent of the value. Salmon ranked second for volume at 14 percent but was tops for Alaska seafood value at 34 percent. Cod catches were third and accounted for 11 percent of the value. Halibut, sablefish and crab each accounted for 1 percent of the total catch volume and 12 percent of the value. The U.S. is usually the largest market for Alaska seafood, followed by China, Japan, South Korea and the European Union. The export value over the past decade has averaged $3.3 billion, making seafood Alaska’s largest export by far. (By value, fishery products accounted for more than two-thirds of Alaska’s exports in the first quarter of 2017, according to the first quarter economic report by the state Department of Commerce.) Alaska’s top exports are pollock surimi and fillets (a combined $845 million) and frozen sockeye salmon ($313 million). Exports to China, which in 2018 comprised 32 percent of Alaska’s seafood sales and 23 percent of the value, dropped 20 percent due to ongoing trade spats with the Trump Administration. That included a 54 percent drop in Alaska salmon sales, a 49 percent decrease for crab and cod sales to China dropped 29 percent. In another trade hit: Imports to the U.S. of fresh Atlantic halibut from Canada have nearly doubled since 2012 to 8.8 million pounds last year. Looking at 2019, harvests of Alaska salmon, crab, halibut, sablefish and pollock are expected to increase, with declines for cod and rockfish catches. The market outlook for salmon is “stable to strong” said fisheries economist Garrett Evridge, who presented the report. “While there is optimism surrounding the harvest volume for the 2019 salmon season, we have been hearing reports of buyers pushing back against strong prices,” he said in an email message. Get skinny Those billions of fish skins tossed out each year could turn into a steady stream of more dollars for Alaska. Most recently, fish skins are making international headlines for their proven ability to heal burns. Last December tilapia skins treated the burnt paws of bears and mountain lions during the California wildfires. Earlier this year a tissue-like bandage created in Iceland from intact cod skins began use on burn patients in Europe and in the U.S. The fish skin product is called Kerecis Omega 3 Burn Treatment and when it is grafted onto damaged tissue, it builds up the body’s own cells to rapidly regenerate healthy tissue. Kerecis credits omega 3s for the healing power along with collagen. Fish skins contain the type of collagen protein that makes up most parts of human skin and bodies. Most has traditionally come from livestock and is used in a wide array of products. But the more remarkable properties of fish skins have experts pegging the value of marine collagen for the nutraceutical, cosmetic, food and medical market at $620 million in 2018 and nearly $900 million by 2023. Fish skins have extra appeal because they are available at a large scale and come with no religious constraints. “They’re fish — not beef or pork. So it satisfies kosher and halal dietary restrictions,” said Cindy Bower, a former U.S. Department of Agriculture food researcher at the University of Alaska Fairbanks. Bower’s studies also showed that skins destined for collagen extraction can be stabilized with common drying agents to hold them prior to shipment and don’t need to be chilled. Dan Lesh, a senior economist with the McDowell Group, said with catch volumes for Alaska pollock averaging more than 3 billion pounds annually, that adds up to over 1.4 million pounds of skins, assuming a 5 percent yield. Skin yield percentages were similar for Pacific cod and in the 8 percent to 10 percent range for salmon. Studies show that the fish skins are loaded with collagen. Nearly 20 percent was extracted from salmon skins and 11 percent from cod, according to a 2017 Portuguese study. Alyeska Seafoods and one other processing company in Dutch Harbor have reportedly been extracting collagen from fish skins for decades for sale to the Japanese cosmetic industry. And there’s this: fried salmon skins are becoming a snack rage in England. A former chef created Sea Chips after diners called for more crispy salmon skins as garnishes on their meals. The chips come in three flavors and are being cranked out at 100,000 bags a week. They are being sold at major retailers in Britain and the makers expect sales to top $1 million over the next 18 months with 10 percent going to ocean charities. Don’t do drugs Customer backlash has Chilean farmed salmon producers promising to reduce their use of antibiotics by half by 2025. Members of the Chilean Salmon Marketing Council made the announcement last month at Seafood Expo North America in Boston. The group will work with the Monterey Bay Aquarium’s Seafood Watch program to secure a coveted better rating by that watchdog group. Chile is the world’s second-largest producer of farmed salmon after Norway and most of the farmed salmon that Americans buy comes from Chile. The country was court ordered three years ago to disclose its antibiotic use after 37 companies refused to give any details, saying it would pose a “competition and commercial risk.” Chilean salmon farmers use florfenicol, a common veterinary antibiotic, to kill a bacteria that kills the fish that are grown in crowded net pens near coastlines. The court case was filed by Oceana that showed that Chile was using more antibiotics than any other fish and livestock producers in the world: 950 grams to raise one ton of fish. In 2014, usage was 1.2 million pounds of antibiotics on 2 billion pounds of fish. In contrast, Norway uses just 0.17 grams per ton of salmon. The Chilean marketing council said it plans to spend millions in its effort to win over wholesalers, retailers and food service companies with its new “Promise of Patagonia” campaign. Meanwhile, U.S. salmon lovers can easily tell if the fish they are choosing is drug free. Country of Origin Labeling laws since 2009 require fish sold in the U.S. to be identified as to where it comes from and if it is wild or farmed. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: Impacts of budget cuts at a local level calls for negotiated solutions

There’s a lot of good work being done to measure the impact of the Governor’s proposed 2020 fiscal year budget and produce a measured response. The Alaska Municipal League has worked to answer the questions that both Senate and House Finance leaders have asked – what will be the impact to Alaska residents, local governments and the economy? We can answer those questions when it comes to municipalities, and we can walk through the implications at the community level for residents and businesses. The governor’s proposed budget amounts to cuts (with direct and indirect impacts on local governments), cost-shifting (State responsibilities now asked of local governments) and clawbacks (preemption of local taxing authority) that amount to nearly $900 million as an impact to local governments. That’s just for the 2020 fiscal year. The proposal to repeal school bond debt reimbursement will shift another billion dollars to local governments over the coming decade. Further, the proposal that the Power Cost Equalization endowment (that’s earned 8 percent on average over the last 10 years) be swept into the general fund (where it would earn less than 2 percent on average of 10 years) is a billion-dollar impact. We can estimate the secondary impacts of cuts to the University and the Marine Highway System based on the economic impact they both have, and apply that to local government property and sales taxes, at roughly $20 and $9 million respectively. While Community Assistance — which keeps the lights on in many city offices around the state — has been reduced by 946 percent since 1985, adjusted for inflation, the governor has proposed that this be cut by another 30 percent next year. While the state does less with less, responsibilities can’t be shifted beyond the local level. Municipalities will have fewer options to deal with these proposals that result in roughly a $1,500 per capita impact or a 51 percent increase in local taxes or decrease in services. The impact is more than 50 percent of nearly 20 local government budgets, and more than 80 percent of 10. We know that for those local governments that face cuts of that size, history has demonstrated that they very likely cease operations. Our members have looked at this in each of their communities and provided some analysis of the trade-offs. There are three basic options at the local level: 1) increase or add new taxes, 2) reduce or eliminate services, or 3) try to make it work out of existing revenues. Reduction or elimination of services fall into basically three buckets: public works, public safety, and quality of life programs. Municipalities have said that while quality of life programs would be the first to go, public safety and public works budget would plausibly see reductions. An analysis of just one element — the state forgoing reimbursement for school bond debt — shifts $100 million back to 19 local governments. Local governments have overwhelmingly said they would need to increase taxes to make up the difference. That doesn’t just equate to a portion of a property owner’s PFD. For the largest commercial property owners, increases are substantial and will determine just how open for business Alaska is. Just for school bond debt reimbursement: Increased property taxes in the Matanuska-Susitna Borough will fall on Mat-Su Regional Medical, Enstar, Fred Meyer, Alaska Hotel Properties, and GCI, and amount to $547,944. Increased property taxes in Fairbanks will fall on Alyeska Pipeline, Fort Knox, Doyon Utilities, Alaska Communications, Petro Star, GCI, and Flint Hills, and amount to $1.85 million. Increased property taxes in Anchorage will fall on GCI, Alaska Communications, Alaska Regional Hospital, Providence Medical Center, Fred Meyer, Enstar, Hickel Investment, Alaska Airlines, BP, Dimond Center, and JL Properties, and amount to $1.52 million. Local governments have said that in response to the proposed budget, they would leverage every available option, and the combination of choices they have is the best way to mitigate negative impacts. We have had numerous reports from mayors and managers that describe the micro level implications of cuts and cost-shifting, which go beyond statewide employment. We know that in many of our communities, there’s a feedback loop between employment and quality of life, which attract families and businesses, which strengthen the community and economy. Decreased services result in the erosion of both. Yes, Alaska has a fiscal challenge. That won’t go away when the State shifts the burden to local governments. AML is looking forward to working with State leaders, developing better solutions, together. Nils Andreassen is the executive director of the Alaska Municipal League.

GUEST COMMENTARY: University of Alaska needs support from Legislature, governor

There’s been much discussion and debate about the appropriate amount of state support for the University of Alaska. As a “finance expert” with specific knowledge of University of Alaska (as a graduate, as adjunct professor at more than six campuses, and as a former UA vice president of Finance from 2000-06), I support reasonable state services and budget support for them, but not by draconian and dysfunctional cuts while paying out what I consider extraordinary PFD payments. The Permanent Fund Earnings Reserve can be a source of moderate budget support while downsizing and making public services more efficient over time while we work on other budget and service discipline and broader based revenue enhancements in a methodically planned, strategic and tactical manner. This is true for the university budget, and I agree with President Jim Johnsen that deep cuts will permanently and significantly harm an already challenged fiscal scenario for UA. Knowing that some cuts will be inevitable, I urge them to be minimal and for the governor to respect what is reported out of the Legislature. My wife and I have personally given significant contributions (including funding an endowment) to UA and while serving as an executive officer of various banks and Native corporations I advocated for and successfully influenced millions of dollars of private sector contributions to UA. I intend to continue to do so. I also served as treasurer for the UA Foundation and was a trustee for several years advocating for private support and advanced fiduciary investment practices and entrepreneurial partnering, intellectual ownership and competitive research. I also worked on the university’s land grant issue, trying to gain equity for UA, which is long overdue and currently nowhere near equitable when compared with other states. In short, I know from personal experience that there is no short term funding alternative to supplement the state operating budget support for UA, though everyone continues to seek alternative revenue solutions, operating efficiencies and reductions in redundancy of significant and heretofore mandated services in multiple locations. The university gets it and will work toward the gradual realignment necessary to modernize the system. I also voice support for a single appropriation to the university. While legislative intent and administrative direction to elevate workforce development is a worthy objective, the strategy to bifurcate direction through separate appropriations is a crude, ineffective and inefficient manner to achieve such a goal, in my opinion and in prior past experience. Managing budget allocations and oversight/approval by the Office of Management and Budget is not efficient, effective or motivational. I fear that political, regional and rural funding acrimony will result in reduced financial security for the community campuses — the opposite of the desire intended. The job of allocating limited resources and preserving or enhancing outcomes is more efficiently left to the Board of Regents and the executive teams representing UA (and especially community campuses) and adhering to legislative/executive influenced direction. I have worked closely with all regions and major academic units of UA and especially with the Schools of Management, College of Business and Public Policy, ISER, the Small Business Development Center and the Business Enterprise Institute. I cannot emphasize enough how linked and supportive our UA system is to our state and our citizen success and hope that our legislative and government leaders can and will support UA. Governor, please support the appropriation efforts of the Legislature to keep UA from permanent harm due to lack of funding – for our children’s sake and for our own. My advocacy and my plea is both personal and professional. I am convinced that UA will be making extraordinary consolidation and efficiency moves to keep it a viable solution to higher education needs in our state. Joe Beedle, retired, is the former President and CEO of Northrim Bank.

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