Opinion

COMMENTARY: Confidence in state govt. plunges amid budget concerns

A $4 billion spending gap isn’t the only crisis facing lawmakers and the governor this year. Elected officials are also facing a crisis of confidence. Each year the Alaska Chamber conducts a statewide poll to gauge voter perception of business and the economy. The results this year clearly show all eyes are on Juneau, and Alaskans are increasingly pessimistic that we are on the right path toward a balanced budget. Juneau, we have a problem... The state’s inability to restructure government to a sustainable level is reflected in Alaskans’ perception of the economy. Last year, most Alaskans held state government in relatively high regard, with 64 percent reporting a favorable or better opinion. The number of Alaskans with faith in state government has plummeted over 20 points in 2016. We’ve also heard increasing concern regarding the state’s money troubles impacting Alaska’s economy as a whole. In 2015, Alaskan’s were well aware that state spending had ballooned to unsustainable levels. More than half of voters polled recognized the budget was a problem; one-fifth said state spending was a crisis. But this year the number of Alaskan’s concerned about state spending is overwhelming. Voters declaring the budget as a crisis have more than doubled, climbing to 49 percent in 2016. What’s behind these big swings in public concern? Rewind to early 2015. Alaska had a new governor with tough talk on spending. Legislators were arriving in Juneau with commitments to make the difficult decisions needed to prune a $6 billion spending habit down to a sustainable level. Now — 15 months, two legislative sessions, and a bewildering collection of special session activities later — Alaskans no longer believe the state is willing to make lasting changes to spending. A universal concern When asked what the most important issue the Alaska Legislature should tackle this year, Alaskans resoundingly answered, “fix the budget.” In 2015, balancing the budget was already the most mentioned expectation for lawmakers. The issue eclipsed constants like education funding and even spending cuts; those two priorities were tied in second place. This year, however, 48 percent of Alaskans polled want the state budget deficit dealt with. The second most commonly volunteered priority is cuts to spending. Funding state services like economic diversity initiatives, and even education funding, are in the single digit percentages. These numbers illustrate a dramatic uptick in public concern. Last year, Alaskans were bullish about the economy, even while acknowledging that public spending was an item of concern. This year the number of Alaskans stating the economy is good or very good dipped below 50 percent. Correspondingly, 71 percent of Alaskans now believe that Alaska is on the wrong track, up from just 32 percent in 2015. So what do Alaskans believe is the solution to the state’s budget woes? More than anything, Alaskans want deeper cuts to state spending. More than any option, including new taxes or tapping into Permanent Fund earnings — more even than a combination of taxes and cuts — voters want a state government that Alaska can afford. And they are correct in wanting this. Efforts in Juneau this year are focused predominantly on “new revenue;” fees, cutting industry incentives, new taxes, and increases to existing taxes. But while debates over these catch-what-we-can revenue initiatives are dominating discussion, they fail to address the budget crisis. Using the fiscal notes from the Office of Management and Budget, all new revenue measures combined generate $855 million. That’s enough money to fund state government for a little over a month. Alaskans are concerned about the other 11 months of each year. The Alaska Chamber believes spending must be brought in line while Alaska savings are still available as a resource. To that end, we support efforts to reduce the state’s operating budget to a sustainable level by creating an endowment model or similar framework to use Permanent Fund earnings to support essential services. Only then should we explore new, broad-based taxes, if needed. Alaskans are aware of the problem. They’re accepting of the necessary solution. They’re just waiting for leadership with the discipline and resolve to get the job done. Curtis W. Thayer is lifelong Alaskan and serves as president and CEO of the Alaska Chamber.  

COMMENTARY: Touted cuts not reducing total size of government

State government is simply too big and the state Legislature has not made adequate progress in reducing the burden of big government. According to the State of Alaska Office of Management and Budget, only minimal reductions in the total operating budget have been achieved in the last two years. Note that the fiscal year 2015 operating budget was off trend and higher because of an extraordinary $3 billion dollar direct appropriation for the state retirement liability. Comparing fiscal year 2014 and fiscal year 2016 total operating costs, a reduction of only 4.2 percent was achieved in two years! And for fiscal year 2017, don’t hold your breath, preliminary budgets recommended by the governor, and proposed by the House and Senate are projected to remain at historical highs. Surprised? Despite the budget cutting rhetoric coming out of Juneau, little progress has been made on real cost reductions. The numbers are clear, the impact is real, and this level of spending on state government is unsustainable. It is time to fundamentally change the cost structure of government before we take more hard earned money from the citizens of Alaska, or raid the Permanent Fund, the savings account which fortunately is protected by our state Constitution. So, why are the numbers so different? The House and Senate claim 10 percent cost reductions in proposed fiscal year 2017 Unrestricted General Fund, or UGF, expenditures. And similar budget reductions have been reported for the current fiscal year 2016 budget. Here’s the problem. Reporting a reduction in expenditure from only this one funding source is misleading. The UGF is only a portion of the state operating budget, albeit a significant portion. The total state operating budget is comprised of expenditures from the Unrestricted General Fund (UGF), Designated General Fund, other state funds, and federal receipts. When we talk about the cost of government, shouldn’t we talk about the total operating cost? When you talk about the budget for your household, wouldn’t you balance total expenditures (total operating cost) against your total income (revenues)? If you look at the total operating cost there is a clear reality — we have not reduced the massive footprint of big government. While the Legislature works to cut UGF, our savings accounts are being quietly depleted to back-fill reductions in the UGF. Also, when supplemental budgets are implemented they offset reductions reported in prior budget years. This is evident in fiscal year 2016, where a supplemental spending request of approximately $185 million is pending in Legislature. We must fundamentally change the way we construct the yearly state operating budget. Currently, the budget is constructed from the top down. We start with last year’s budget and the governor’s request, and ask, “Is there anything we can cut?” We hold hearings where department commissioners vehemently defend their budgets, and special interest groups intensely lobby for their pet funding. Every potential budget cut has a constituency, and potentially a lobbyist, arguing passionately to keep their funding. Human nature and politics usually prevail, which make it very difficult to cut funding after programs and benefits have been established. Unfortunately, we grew state government during the good times, because again, human nature prevailed, i.e. it’s easy to give away someone else’s money to make someone happy. There are many people and organizations coming to Juneau pleading for us to not reduce funding. However the reality is we cannot afford to continue to spend at historic levels. The problem is that this bad behavior has left us in a difficult situation with difficult choices. While making these budget decisions we must never forget about the valued constituency, the businesses, the people and the next generation that will be asked to pay for these Denali-sized budgets. In my opinion, we, the State of Alaska, need to go through every department, every function, and every state owned entity, and ask, “Do we really need this function?” and “Is it government’s role to provide this service?” Secondly, we need to benchmark the cost of state government, by comparing the total operating cost for state government in Alaska to other states across the nation. As a starting point, we should target operating our state government at the national average. So here’s the bottom-line. State government is still too big, too costly, and too inefficient. Gov. Bill Walker should take the lead and restructure his departments, improve operating efficiency, and demand accountability. Benchmarking costs would provide a standard and a goal for achieving cost efficiency. We must not tax Alaskans and draw from the Permanent Fund before we first ensure that Alaska is paying only for essential government services and delivering those services efficiently. Rep. Lora Reinbold represents District 14 in Eagle River.  

GUEST COMMENTARY: Sustainable budget doesn’t require onerous taxes, PFD cuts

The Fairbanks North Star Borough Assembly just passed a resolution asking the Legislature to implement a sustainable budget. I voted against it since it specifically asked for taxes, and those aren’t helpful or necessary for the present situation. During the testimony it was shown that there were a lot of misconceptions about our state budget situation, so I wanted to clarify some of the details. First, the state will be entering an economic downturn, or recession. It has nothing to do with the legislature making cuts; the state spending more dollars will not stop the recession. We should all be prepared for this natural response to low oil prices. Please understand that the lingo about “don’t cut too much or we’ll get a recession” is just a political ploy by big spenders in the legislature who don’t want the gravy train to stop. They’ll use it in the elections the next few years to try and sell the voters that any legislator that made cuts caused the recession. Please think for yourself and don’t buy it. Remember, if taxes or Permanent Fund Dividend cuts go into effect, that money will be taken out of the economy. So any government spending from that was with money already withdrawn from the economy, so it gives no help to the economy. Actually, it makes it worse because government can’t redistribute money without using some, so less gets back to the economy than came out of it. Second, most of the proponents of taxes or PFD cuts are targeting a goal of having a zero deficit. This isn’t needed, and in fact goes against having a sustainable budget, since it has a mindset that we should spend all we get. Since the large money started coming in from high oil prices the state has budgeted based on high oil. The governor’s plan is now reacting to that and budgeting based on low oil. To achieve a sustainable budget, we need to realize that oil prices are cyclic, the will rise and fall over and over again. We can therefore create a budget that is the same (indexed for inflation) ongoing by knowing that fact. Once you get to this sustainable budget number (around $4.3 billion now), you can have a structured deficit in the lean years, and build your savings back up in the good years. Isn’t that why we have savings accounts, to handle unexpected crises? Third, a sustainable budget plan I’ve described has already been worked out by Economist Scott Goldsmith with ISER (University of Alaska Anchorage Institute of Social and Economic Research). It is based on using our two current primary revenue streams, oil and investment income. With that revenue and cutting to a sustainable budget number, we won’t have to implement onerous taxes or PFD cuts. Fourth, the investment income is mostly put into the Earnings Reserve of the Permanent Fund. It doesn’t affect the Permanent Fund, and it doesn’t have to touch the PFD at all. We can completely protect the PFD while implementing this plan. I agree that we need to appeal to the Legislature to implement initiatives to achieve a sustainable budget, and I would encourage everyone to do that. Please remember when doing so, that it can be done with a structured deficit, without taxes or PFD cuts, by using our existing revenues. I was here in the late 1980s when we had our last big recession, and while it was miserable, we survived, and we can do it again. Hopefully this time we learn our lesson and stop increasing government spending constantly in the future. Lance Roberts is a member of the Fairbanks North Star Borough Assembly.

FISH FACTOR: Economist: Many factors involved in retail salmon prices

If a fisherman gets 50 cents a pound for his reds, how can the fish fetch $10, $15 or more at retail counters? “It’s all the other stuff that happens after he sells the fish. A lot of costs, margins and profits are included in that retail price,” said Andy Wink, a fisheries economist with the McDowell Group in Juneau. It’s an “apples and oranges” comparison when it comes to using weights paid for the raw goods and the end product. A lot of weight is lost going from a whole fish, which fishermen are paid on, to a fillet at retail counters. “Most sockeye fillets amount to 40 to 50 percent of the round fish weight. If fishermen sold sockeye at $0.50 per pound, there’s about $1.10 of raw material cost in a $10 per pound fillet sold at retail,” Wink explained. “This might seem like a high mark up, but it’s a decent reflection of all the costs and acceptable margins built into the product.” The average wholesale price Alaska processors received for sockeye salmon (round) at the end of 2015 was $2.40 per pound, according to the state Department of Revenue; and $5.73 per pound for fillets. Costs add up as the fish makes its way to retail counters, where most will tout a “full retail price,” and then tweak it throughout the year using discounts and promotions. “A retailer will run sockeye promotions of say, $9.99 a pound. That way they can say they have discounted the product $8 so it looks like a big saving for the consumer. Instead of promoting the fish for four weeks, maybe they will run it for 10 or 15 weeks out of the year. It just depends on how much success they have with it,” he explained, adding that processors and distributors often have to pay (or reduce their prices) to get a retailer to promote product at a discounted price. The increased supply of sockeye from back to back bumper years at Bristol Bay also has had a big impact on what buyers are willing or able to pay. The big harvests mean more of the reds must be sold through discounts; that leads to a lower wholesale price, which affects the exvessel (dock) price. “Promotions and discounts are a double-edged sword,” Wink said. “They lead to lower prices, but are a necessary tool to move larger volumes of product through the supply chain. Without them, inventories would swell and product would go to waste.” Grundens for gals Grundens, the go to brand for heavy-duty rain gear, has launched a line for women. “Women would send us emails saying, ‘We love your gear, we wear it all the time, but it’s built for guys, said Eric Tietje, Global Product Director. “Either the sleeves are too long or they are too big in the shoulders. It was really just uncomfortable and cumbersome for women to wear.” Tietje credits a push by the social media site Chix Who Fish, for getting the new gear rolling. “All these women really banded together and became a loud voice, telling retailers that they are a market that is not being served,” he said. “We heard from lobster women in Maine, female marine researchers, and women in Alaska.” The result: Sedna Gear, designed for a fishing woman’s dimensions. The new line of rain gear has brought a wave of good responses, beyond the better fit. “The women have told us that by creating this product, it recognizes and validates what they do in the industry, and that means something,” Tietje said, adding that it’s made a big difference on deck. “It’s not just a piece of clothing,” he said.” We view these as pieces of equipment that people use to do their job.” Coming soon from Grundens: light weight gear and base layers for women, ceramic coatings on outer gear for added safety, and fabrics using Alaska crab shells that absorb sweat and eliminate odor. (That product is produced by Juneau-based Tidal Vision LLC.) ComFish flash Big names, hot topics and fish competitions are headlining the 36th annual ComFish Alaska trade show, hosted March 31-April 2 by the Kodiak Chamber of Commerce. In the line up: Alaska Senators Murkowski and Sullivan both are scheduled to hold open meetings; as are state commercial fisheries director, Scott Kelly, and Rep. Louise Stutes (R-Kodiak), who also chairs the legislative Fisheries Committee. Gunnar Knapp, director at the Institute of Social and Economic Research at the University of Alaska/Anchorage, will discuss salmon markets and how the state’s fiscal crunch might affect fisheries. Alex Stone of the Washington, D.C.-based consulting firm Booz Allen Hamilton will provide updates on Navy training exercises in the Gulf of Alaska. Presentations also include: impacts of ocean acidification on crab fisheries, slow growing halibut, better trawling methods, new fishing vessel safety regulations, the “graying of the fleet,” challenges in access to Alaska fisheries, a cannery history and much more. ComFish wraps up on April 2 with the annual fish-filleting contest organized by Ocean Beauty Seafoods. It includes contestants from each of Kodiak’s seven processing plants who are timed and judged on fillet and trimming speed, form and quality. New to the ComFish line up is an Alaska Sea Grant Fishermen’s Showcase featuring contests in knot tying, net mending, hook throwing, coiling and more. The ComFish dates are March 31-April 2 in downtown Kodiak. www.comfishalaska.com. Visit www.alaskafishfactor.com or contact [email protected] for information.

The Bookworm Sez: Be the best at being your own boss

Another desk at the office is empty this week. Another co-worker packed up, leaving the place short-handed. Another downsize, and another reason for worry. What will you do if you’re next? You can’t just start over but you can’t retire yet, either. So read the new book “Be Your Best Boss” by William R. Seagraves, and see if you have what it takes for a new beginning. William Seagraves likes to drive. When he’s with friends or colleagues, he’s always the first to offer his car, which is a good metaphor for his worklife: he likes to be in the driver’s seat in business. Yes, he enjoyed some autonomy in his last position, but he says, “I could not stand (the) lack of control.” Seagraves left his corporate job and tried his hand at being an entrepreneur (“That scary twelve-letter word”) in a few different ways before he discovered something he liked. Today, he runs a successful company that helps entrepreneurs get started; in this book, he offers guidance on deciding if owning a business is for you. First: what’s your pain? Are you being forced out by younger workers? Downsized? Or are you disillusioned with corporate life? What are your passions? Knowing answers to those questions will help winnow your options and overcome the “Yeah, Buts.” Look at your skills and experiences and understand that you’ve already won half the battle. You know how to play nice with others. You’ve grown a thick skin, “practiced making money,” and learned the rules of a lot of games. Many of the traits you’ll need to be an entrepreneur are inherent in you now. Next, take the quiz Seagraves includes and understand that “size matters.” Are you more of a “Company of One” kind of person? Would you be better as “Boss of a Few”? Is a “Business of Many” more your style? And what about a franchise? Know the pros and cons of these entrepreneurial methods, take things “one step at a time,” keep in mind that change is the “only constant,” and remember that “… a smart business owner always plans for the exit, and there are more options than you might think.” Self-employment: the most frustrating, irritating, horrible, wonderful, awesome, terrific thing you’ll ever do for yourself. Are you ready? “Be Your Best Boss” will help you decide. As you might expect, author William R. Seagraves is mostly encouraging in his book. There’s a lot of surface positivity here, but entrepreneurial readers with a mindset of doing it will absolutely find the help they need to do it right. I was happy to note plenty of quizzes to guide future business owners into the kind of endeavor that best fits their personality and work-style, and the Pros and Cons pages here are invaluable. While younger entrepreneurs might appreciate this book, it really seems to be more for older readers who’ve been in the workforce awhile. Corporate life may have soured for Boomers and early Gen-Xers, but “Be Your Best Boss” won’t leave them empty handed. Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

AJOC EDITORIAL: Read their lips: No new taxes

With operating budgets passed in the House and Senate but not yet funded, at least one thing is now clear: Gov. Bill Walker’s proposals to raise taxes on individuals and businesses by nearly $460 million in the next fiscal year aren’t going anywhere. Senate Finance Co-Chair Pete Kelly, R-Fairbanks, couldn’t have been more blunt — or, frankly, rude — in response to a question about how the Legislature plans to pay for the fiscal year 2017 spending that figures to outpace revenue by $3.7 billion. At a Finance Committee press conference March 15, Kelly took the opportunity of a question that did not mention taxes to state unequivocally that he has no intention of plumbing a well to the private sector to fill whatever gap remains once some means of drawing from Permanent Fund earnings is chosen. Kelly noted he was speaking for himself, but with all but one of Walker’s proposed tax hikes still sitting in committee or yet to receive a hearing, there can be little doubt his opinion represents the Republican majorities. The only tax proposal that has moved out of its original committee is the doubling of the fuel tax from its current national low of 8 cents per gallon that is projected to raise about $49 million per year. The increase has received a large amount of support from stakeholders in the transportation industry who recognize the importance of maintaining the infrastructure on which their livelihoods depends. Of all Walker’s tax proposals, it’s also the fairest and most broad-based, especially at today’s depressed fuel prices. The Legislature still has a heavy lift ahead to select a means to use the Permanent Fund earnings and because it won’t raise additional revenue through taxes, the majority in the House is going to have to cut some deals with the minority Democrats in order to draw from the Constitutional Budget Reserve, or CBR. And just as an aside, Kelly and fellow Finance Co-Chair Anna MacKinnon, R-Eagle River, attempted to argue that a budget paid for with the Earnings Reserve and the CBR is “balanced.” A budget is balanced when revenue covers expenses. A budget that relies on savings is funded. There’s a huge difference, and as far as spin goes it can’t turn a pinwheel in a hurricane. Nevertheless, the majorities are correct that it is far better to make a relatively small draw from the CBR than it is to kick Alaska’s economic drivers in the guts while they’re down. The oil industry that’s propped up Alaska’s government spending for nearly 40 years is always a juicy target — for this governor in particular — but no knowledgeable observer could look at the daily stream of news about layoffs, delayed projects and idled rigs and think raising taxes on its members by some $100 million as Walker has proposed is anything but a terrible idea. Alaska’s most valuable fishery with the greatest number of workers — salmon — is in the midst of its own price crisis yet Walker wants to extract $18 million out of the industry by raising every fish tax. Minerals prices have also trended lower, and global sluggishness is reducing demand along with other factors such as transitions away from coal that caused Usibelli to halt exports last year. The governor and his Revenue Department asked the University of Alaska Institute of Social and Economic Research to study the effects of budget cuts on the broader economy. That ISER’s original analysis did not consider the impacts of private sector job losses was a glaring omission that still managed to be revealing. What we can see from the ISER study is that government job losses have a multiplier effect of less than one. A loss of 900 government jobs results in a loss of about 700 indirect jobs. ISER may not have looked at private sector losses and their multipliers, but the McDowell Group has done plenty of work in this arena over the years. What McDowell Group has found is that every direct job in oil production creates an additional nine in the private sector. When the role of oil taxes are accounted for, each oil industry job pays for another 10 state and local government jobs. Mining and fishing have 2-to-1 job multipliers according to various McDowell Group studies. Breaking it down, the Legislature’s priorities should be clear: Preserving private sector jobs is more important than preserving public sector jobs. As a business publication, we don’t want anyone to lose their job, but this is the tradeoff the state faces. Walker may not like it — and he’s certainly welcome to go out and advocate for taxing Alaskan incomes at a $400 million annualized rate — but refusing to raise taxes during an economic downturn is the right call from the Legislature. Andrew Jensen can be reached at [email protected]  

FISH FACTOR: Salmon permit values sink; halibut quota prices spike

Firesale salmon prices last year and a dim outlook for the upcoming season have caused the value of Alaska fishing permits to plummet. To another extreme, the prices for halibut catch shares have soared to “unheard of levels.” Starting with salmon permits: “A lot of people had disastrous seasons last year, whether it was drift gillnet or seine permits, and the values have declined dramatically,” said Doug Bowen of Alaska Boats and Permits in Homer. At Alaska’s bellwether fishery at Bristol Bay, a base sockeye prices of 50 cents per pound helped push drift gillnet permit prices into the $98,000 range, down from $175,000 last spring. “That may be the bottom; they seem to have come up a bit,” Bowen said, “but it’s still way below what they were trading for at this time last year.” The lower prices have spawned little interest in Bay drift permits; likewise, for salmon seine cards across the state. Seine permits at Prince William Sound are priced in the $150,000 range, down from over $200,000 a year ago. Kodiak seine permits have sunk into the mid $30,000s, and a Cook Inlet drift permit is valued in the $60,000 range. Bowen doesn’t expect the tide to turn anytime soon. “I’m afraid a lot of the same factors that contributed to the low prices we saw last year are pretty much the same this year. It’s not an optimistic outlook for salmon, and that is depressing the market for permits, and also the boats,” he added. “There are lots on the market, lots of sellers, not that many buyers. “There’s not a lot of extra money floating around in the salmon industry. So folks wanting to upgrade their vessels or pick up permits in another area, we’re just not seeing that happening.” The situation is slightly better in Southeast Alaska, where driftnet permits are getting a plug of interest. “More than I thought compared to all the other salmon areas,” said Olivia Olsen of Alaskan Quota and Permits at Petersburg. “We started at $78,000 in November and drifts now are going for $85,000 and they may creep up from there. Same with power troll permits. They’ve been pretty steady sales at about $35,000, which is down about $6,000 from last year, but still a pretty good price when you listen to all the talk about bad salmon prices. Hand troll permits also are on the upswing to $12,000.” Both brokers said salmon permit prices tend to tick upwards the closer it gets to salmon season. “I think the main issue is what we are going to see for prices, Bowen and Olsen said. Halibut share shocker This year’s small increase in halibut catches combined with hopes of a repeat of $6-$7 per pound prices was enough to send quota share prices skyrocketing. “There was a big rush after the halibut numbers were announced in late January,” said Olsen at Alaskan Quota and Permits in Petersburg. For the first time in nearly two decades, the coast-wide halibut catch was increased by 2.3 percent to nearly 30 million pounds. Alaska’s share of 21.45 million pounds is up 200,000 pounds from 2015. “I would say quota prices shot up $10 a pound since December,” Olsen said of Southeast shares. “We have current sales pending at $63 and $65 per pound, with rumors of going higher. Those prices are just unheard of, and to jump up that high in that short period of time — oh, my golly!” Are people buying at those nosebleed prices? “There’s a lot of people drawing the line, but there are a few who have bought. They’ve been waiting a long time for it and are just going to bite the bullet,” Olsen said. The same holds true for quota prices in the Central Gulf, Alaska’s largest halibut fishing hole. “Those are bumping up to $60,” said Doug Bowen of Alaska Boats and Permits in Homer. “We’ve had offers of $59 but no takers. Quota shares for the Western Gulf have increased by around $5 and are in the $40s if you can find it. There is strong interest there and also in Bering Sea regions. But it’s the same scenario: more buyers than sellers and the market is really tight.” Olsen added: “It will be interesting to see if these prices will last.” Got ice? A grass roots push is underway in Kodiak for a self-pay icehouse and crane at Oscars Dock at its downtown harbor. “It’s common in fishing communities throughout Alaska and the nation,” said Theresa Peterson, a fisherman and outreach director for the Alaska Marine Conservation Council. “It’s kind of strange that Kodiak doesn’t have this facility, being that we are the No. 2 port in the nation, and home to the largest and most diversified fleet in Alaska.” The need and benefits go far beyond commercial fishing, Peterson stressed. It would serve Kodiak’s five outlying villages, whose residents travel by boat to town and load/offload provisions, sport charter operators, recreational anglers and hunters. Fisherman Darius Kasprzak, who calls Kodiak’s lack of a public icehouse “flabbergasting,” is worried that a lack of it will drive the island’s fleet of small salmon boats out of business. “More processors are requiring RSW (refrigerated sea water) systems and are phasing out all the ice boats. Only a few processors are still accepting fish iced in holds, and most of those are grandfathered in,” Kasprzak said. “So all these little boats that don’t have room for RSW or don’t have the money are walking on pins and needles. But if there’s public ice that will change things dramatically.” Boat owners with RSW also would like to be able to grab ice so they could shut down the systems at night “and not have to listen to it,” he added.  “It’s worth it to buy some ice and chill off the top of the fish and not have to buy fuel and put wear and tear on the RSW,” he explained. Kasprzak said there is another reason ice is even more important for a water faring community. “Our waters are warming. Right now temperatures are at 7 degrees over normal. Last summer the water at Prince William Sound reached 60 degrees. Our RSW systems aren’t built to handle those temperatures. The Kodiak processors didn’t have enough ice for boats last salmon season because it was so hot. There’s more of a need now for a community ice house than ever.” The Kodiak City Council will hear the issue on March 15. Weigh in on water The Alaska Department of Natural Resources is considering revising its water management practices and wants input from the public. It includes regulations on water rights in streams, lakes, wells and other bodies. A DNR announcement said: “The department is soliciting feedback and comments from the public on how they would change or improve the existing regulatory framework related to water management or for suggestions and proposals which would improve the regulations related to water management before the formal process of drafting any proposed changes begins.” Comments are accepted through March 18. Send via email to [email protected] Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

EYE ON WALL STREET: A volatile month for stocks; eying Fund earnings bills

After a rocky start to the year, the financial markets settled down mid-February with oil and U.S. equities rebounding in the latter half of the month. The foreign equity markets have rallied a bit, but are still in a funk. Bond yields remain at historic lows. The 10-year Treasury yields 1.8 percent, which looks positively mouthwatering compared to Japanese and German government bonds that are flirting with negative yields. Dipping into the Permanent Fund As everyone knows, Alaska is facing some difficult fiscal decisions as a result of plunging oil prices and declining production. Approximately 90 percent of general fund revenue is directly tied to oil. Oil is just over $30 a barrel and the Department of Revenue is assuming $60 a barrel for budgeting purposes. At the $60 level, the state faces a $3.5 billion budget deficit both this year and next. We are spending $5 billion and taking in $1.5 billion. At current spending levels it would take a price of $115 per barrel to balance the budget. What to do? Well, we can’t just cut out $3.5 billion. The state’s annual domestic product, or GSP, is around $50 billion so $3.5 billion is 7 percent. Reducing spending by 7 percent of GSP (even forgetting about multiplier effects) would be disastrous. The Great Recession of 2008 saw the U.S. economy fall just over 4 percent and that was pretty scary, pushing unemployment up to 10 percent. The state has saved a lot to help us get through this current crisis, something we didn’t do in front of the economic crisis in the late 1980s. But we’re burning through that savings quickly. At current rates it would be gone in several years. There are three plans for addressing the budget crisis that are currently being debated in Juneau. I won’t go into the details, but all three draw on the Permanent Fund. The Governor’s plan (SB 128) is a bit more complicated (and comprehensive) than the other two (SB 114 and HB 224). Let’s ignore that in the interest of simplicity. Callan Associates, the longtime consultant for the Permanent Fund, was in town a few weeks ago and analyzed what these three plans would mean for the Fund. The firm analyzed the impact on the Fund of drawing roughly 4 percent to 5 percent net out of the Fund (actually the Realized Earnings Reserve) each year, depending on the plan. The Fund’s expected return over the long run is 6.9 percent, so that seems doable and would leave enough room for the fund to grow, albeit slower than before. To get a handle on how market volatility would affect the analysis, Callan ran Monte Carlo simulations over several thousand future market scenarios to look at the dispersion of results over 10 years for each plan. (APCM uses this technique for modeling balanced accounts and the probabilities of reaching horizon goals. It’s standard operating procedure in the asset allocation business.) Guess what? It looks like all three plans are reasonable and leave the Permanent Fund with a median real value of just over $50 billion at the end of 10 years — about where it is today. Each plan can withdraw at least $2 billion per year from the get-go to help with the budget deficit. A combination of cuts and tax increases would need to be debated and adopted to close the remaining $1.5 billion deficit. While tapping the Permanent Fund is not a perfect solution, doing so would buy some time to consider other options. What about the Permanent Fund Dividend? The Governor’s plan provides for a $1,000 dividend this year, followed by modest declines as oil production decreases over time. The other two plans allow for the existing dividend formula to play out for a year or two and then it will probably be up to the Legislature to decide if future dividends are feasible. If it is decided that the Permanent Fund should be used to help close the budget deficit, using the current payout method for the annual dividend would likely prove unsustainable. Under current laws the Legislature can only distribute earnings from the Fund for any public purpose (including dividends). However if there are no earnings reserves it would require a constitutional amendment (and vote of the people) to make a principal distribution. There is no easy or perfect answer in this situation, but moving forward with a plan that balances the budget over time is best done sooner rather than later. Jeff Pantages, CFA, is the chief investment officer for Alaska Permanent Capital Management, a $3.5 billion investment management and advisory firm located Anchorage.

GUEST COMMENTARY: Higher taxes on oil industry won’t fix fiscal gap

It was just 18 months ago that Alaskans voted for more oil production when they soundly rejected Ballot Measure 1, which sought to repeal Senate Bill 21, the More Alaska Production Act. That vote has paid big dividends to Alaska, with forecasts projecting an additional 50,000 barrels of new oil per day through the Trans-Alaska pipeline System by 2020, and stabilizing the flow rate this year for the first time in many years. In 2015, some 185.6 million barrels flowed through the pipeline, a mere 1 percent decline from 2014, and a sharp reversal of historic decline rates of 7 percent or more. North Slope production averaged 508,446 barrels per day, just 1 percent less than the year before. These are encouraging numbers, especially for an industry that has suffered record losses due to plummeting oil prices. North Slope oil now sells for less than it costs to produce, leading to huge losses and negative cash flows. In spite of these losses, the industry continues to invest heavily in Alaska. We must be very careful not to punish this investment behavior by raising taxes during these difficult times. The risks to Alaska of discouraging investment through increased taxes are extreme. The oil and gas industry still supports one-third of the entire state economy and has provided 88 percent of all state revenues since statehood. Even in these times of mounting losses, Alaska will collect 67 percent of its revenues from the oil industry through property taxes, income taxes, production taxes and royalties. And it’s important to remember that the State is collecting more under SB 21 than it would under ACES. We are already witnessing the negative impacts of $30 per barrel oil — a price that, when adjusted for inflation, is the lowest since the crash of the 1980s. While Alaska is still attracting investment today, most oil provinces are not. We are very fortunate to be living and working in Alaska than in oil locations elsewhere. Despite these sobering times, the industry has upheld the commitment it made when the Legislature passed — and Gov. Sean Parnell signed — SB 21, the More Alaska Production Act. It pledged to increase investment, and it did, to the tune of $5 billion. Legislation recently introduced dramatically changes the tax system established by SB 21 by raising the minimum tax by at least 25 percent for some fields and imposing a new tax for others. It also repeals and alters tax credits, many of which provide an investment in Alaska’s future and encourage exactly the type of private spending that keeps our Alaska economy strong. This legislation was introduced despite the fact that it will do little to solve our fiscal crisis but will greatly harm an industry that’s already on its knees. The legislation ignores the fact that the voters spoke loud and clear, as did Gov. Bill Walker, who said, “I do not intend to offer changes to SB 21”. This legislation would mark the sixth major tax change in 11 years. Attracting investment requires a fair and stable tax structure. Tax credit policy should not be a whipsaw for filling the budget deficit; it should be a thoughtful approach to a stable and growing economy. As Caelus warned last year, “Every time there is a cough in Alaska about changing the oil tax structure, that cold goes all the way to Manhattan.” Caelus, a Texas-based independent, is one of the North Slope’s most active explorers. We all know that taxes on our resource industries are politically easier than taxes on our residents. But our resource industries are the last place we should look for tax revenue today, as they are swimming in an ocean of red ink and unable to continue investment if we raise taxes while they are losing money. Our state is facing a massive fiscal crisis unseen in more than 30 years. We applaud the governor and legislators who are willing to put Alaska’s long-term economic future ahead of short-term politics. There is nothing more important for our state than to solve our budget deficit and build a sustainable economic future for our state, but we can’t do it on the backs of an ailing industry that already pays most of Alaska’s bills. Fortunately, we have the financial resources to not only survive, but prosper. What we need now is the courage to responsibly continue to drive down the cost of state government and utilize the Permanent Fund as intended: to fund state services. We may eventually need to pay taxes ourselves; however, the last place we should look for new revenue is to unfairly tax the very industries that drive our economic future. If we push them away, our economic future will be hopeless. This is a time for Alaskans to support responsible fiscal policy. Marc Langland and Jim Jansen are co-chairs of KEEP Alaska Competitive, a coalition of businesses and individuals who support a fair and competitive resource tax policy to increase investment, production and jobs to secure Alaska’s economic future. Langland is the founder and former CEO of Northrim Bank, and Jansen is the CEO of Lynden Inc.

FISH FACTOR: Arrowtooth flounder study focused on food competition

Fish stomachs could help solve the mystery of why Alaska halibut are so small for their age. Halibut weights are about one-third of what they were 30 years ago, meaning a halibut weighing 120 pounds in the late 1980s is closer to 40 pounds nowadays. One culprit could be arrowtooth flounders, whose numbers have increased 500 percent over the same time to outnumber the most abundant species in the Gulf: pollock. Fishermen for decades have claimed the toothy flounders, which grow to about three feet in length, are blanketing the bottom of the Gulf, and many believe they are out-competing halibut for food. A study being done by researchers in Southeast Alaska aims to find out. “People think that potentially arrowtooth is competing with halibut for space and/or prey which is limiting the growth of Pacific halibut,” said Cheryl Barnes, a PhD student at the University of Alaska Fairbanks who is working out of the National Oceanic and Atmospheric Administration’s Auke Bay lab in Juneau. Since last summer, Barnes and her adviser Dr. Anne Beaudreau have been studying spatial and dietary overlaps between the two species. Along with analyzing Gulf of Alaska bottom trawl data, the team is doing field studies in fishing areas around Juneau where no trawling occurs. Barnes said they are looking at two things: space use and the composition of prey within their stomachs to try and get answers using a concept called “resource partitioning.”  “The thought is that if you see areas where halibut and arrowtooth are overlapping in space, you might expect to see that they are not eating the same things as a way to alleviate competitive effects. They are partitioning their resources in that way,” she explained. “Whereas if they are in an area where there is not much spatial overlap between the two, they might be eating roughly the same things because they are part of the same niche and the goal is to eat those prey items that are more optimal for their growth. And they are more able to do that if both species are not found in the same location.” Barnes is studying the contents of over 1,000 halibut and arrowtooth stomachs collected last year from sport anglers, and she hopes to collect at least that many through September. She said her diet study dovetails with other others being done that focus on environmental factors and impacts of fishing.  “Especially size selective fishing — the idea that we have been removing the larger, faster growing individuals, and it just kind of brings that average size at age down,” she said. If the project proves that the two species are competing for food, it will fall to managers to find creative solutions. That could prove problematic in terms of increasing arrowtooth catches to leave more food for halibut. “One of the problems is that arrowtooth aren’t really marketable because when you heat them up the flesh turns into a mushy fish smoothie. The other is that there is a lot of bycatch associated with arrowtooth catches since they share the same habitat,” Barnes explained. Meanwhile, Barnes wants to get more donated stomachs of both species, either fresh or frozen, along with information that includes fish length, body weight, and where it was caught. While the project, which is funded by the Pollock Conservation Cooperative Research Center, now centers on fishing areas around Juneau, it could expand to other regions. “We are considering it a pilot project,” Barnes said, “and if we find that we are able to find some answers on the potential for competition around Juneau, there is opportunity to expand it to other areas of the Gulf of Alaska.” Got stomachs? Contact Barnes can be at (907) 957-4893 or [email protected] Salmon sales slump Salmon sales data from last year show what everyone already knows: lower prices across the board. The Alaska Department of Revenue’s Tax Division tracks sales of six different salmon product forms by region, including frozen, fresh, roe and cans. The latest report shows data from the busy sales season from September through December. Here’s a sampler: By far, the bulk of Alaska’s salmon goes to market in frozen, headed and gutted form. The average wholesale price for sockeye was $2.40 per pound, compared to $3.13 last year. For cohos, the price was $2.20 compared to $2.53 per pound; pinks averaged $1.07, down 26 cents, chums sold at $1.25, down 23 cents, and frozen chinook salmon averaged $3.85 a pound, compared to $4.28 at the same time last year. Fresh and frozen sockeye fillets wholesaled for $5.73 on average, down from $6.19 a pound. Pink salmon roe averaged $4.16 per pound, down from $6.95; chum roe at $10.30 was a drop of $2.50 per pound from 2014. Cases of 48 tall cans of sockeye took a huge nose dive to $126.53 per case, a drop of nearly $70. Cases of canned pinks were wholesaling at $76.86, down $4. The market could get some relief from less salmon being available to buyers this year. A toxic algae bloom continues to kill millions of farmed salmon from Chile, where production is pegged to fall way below expectations. “The upshot is that Chile’s production may fall by 40,000 to 50,000 tons, or 13 percent below what was expected from the inventory of fish in the water taken at the end of December,” said market expert John Sackton. Salmon catches on the West Coast also are projected to be down by half at Puget Sound and on the Columbia River due to low coho numbers. Likewise, chinook salmon populations along the coast are in even worse shape, and fishing will be severely restricted this year. Officials blame the overall declines on record warm ocean temperatures and poor river conditions following years of drought. Lower salmon numbers also are projected for several Alaska fisheries – notably, for pink salmon in Southeast and at Prince William Sound. Bristol Bay’s sockeye forecast calls for a catch just under 30 million fish, well below harvests of the past two years. Fish watch March means a couple thousand Alaska fishermen will start gearing up for halibut, which opens a bit later this year on the March 19. For the first time in decades the total coastwide catch increased by 2.3 percent to just under 30 million pounds. Alaska gets the lion’s share at about 21.5 million pounds, a boost of 200,000 pounds from last year. The year’s first roe herring fishery at Sitka Sound could kick off around the same time. A quota of nearly 14,941 tons is a 70 percent increase. Last year the Sitka fishery opened on March 18 and managers planned to begin surveys this week. Fishing for cod, pollock, flounders and other groundfish continues in the Bering Sea and Gulf of Alaska. Likewise for crab: Bering Sea snow crabbers have taken 70 percent of the 36.5 million pound quota with less than 11 million pounds left to go. Less than 3 million pounds remain in the Tanner crab quota of nearly 18 million pounds.  A new law requiring life rafts for fishing boats has been delayed. The new rules would have applied to any vessel operating more than three miles from shore, even small hand trollers or halibut skiffs. Currently, only boats 36 feet or larger, or those carrying four or more people, are required to have so called ‘buoyant apparatus.’ Word came after the Feb. 26 deadline that Congress chose to repeal the requirement, and opted instead to go through the formal rule making process before implementation. That could take at least a year, said Steve Ramp, a Coast Guard Commercial Fishing Vessel Examiner in Sitka. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

EDITORIAL: University of Alaska isn’t to blame for state budget woes

Last week, the University of Alaska faced a barrage of skepticism from legislators unlike any the institution has seen in years. In hearings by the House Finance Committee’s subcommittee on the university budget, chairwoman Rep. Tammie Wilson put forth a mammoth cut that would have represented a loss of nearly a fifth of all state funding. She and other members of the majority told university officials to justify the state money being spent on all university functions outside of basic classroom instruction. Their explanation must not have been satisfactory, as the subcommittee voted to send forward a university budget with $50 million in cuts from last year’s funding level, an amount that would hit the institution like a sledgehammer as it enters its 100th year. In the hearings, Rep. Liz Vazquez said the university hadn’t done enough in its budgeting to prepare itself for the oil price collapse now hampering state revenues. But if legislators want an answer for why the university wasn’t better prepared for less funding, they need look no further than the nearest mirror. The governance of Alaska’s university has long been an arrangement causing friction in the halls of the Legislature. The Alaska Constitution established the Board of Regents as the governing body of the University of Alaska. But in practice, the Legislature holds considerable sway over the university’s direction, because it holds the purse strings for the state funding that makes up close to half the institution’s budget. What’s more, legislators have often included intent language in the university’s budget allocation in a bid to restrict or control how some funds can be used. The university has been forced to rely on state general funds far more than it should have in the decades since statehood, as legislative misadventures from 1959 onward resulted in the institution never receiving more than a fraction of the land grant that would help it be a self-sustaining organization. Even the land grant travesty and the Legislature’s control over a substantial chunk of the university budget would be far less problematic were it not for legislators’ tendency to micromanage the university’s mission. Certainly, oversight and direction can be beneficial. One example of this was the Legislature’s recognition in the mid-2000s that the state was in need of more nurses and engineers, when they directed the university to focus resources on producing more of each. Accordingly, the Fairbanks and Anchorage campuses expanded the pre-medical nursing program and engineering programs. The university was successful in attracting students to the programs, which — particularly in the case of engineering — highlighted the need for new and expanded facilities to provide a modern education. In pursuit of the goal of producing more engineering graduates, the Board of Regents planned for new engineering buildings in Fairbanks and Anchorage. The state’s burgeoning oil wealth and the concentration of legislators in Anchorage made the $78 million UAA engineering building a relatively easy sell — its construction began in 2013 and was finished two years later, complete with an enclosed skybridge to the adjacent Health Sciences building. The Fairbanks facility, however, was another matter. Legislators chose to allocate $109 million to an Anchorage sports center the Board of Regents didn’t see as needed or wanted — thanks to an existing deferred maintenance backlog of hundreds of millions of dollars, the regents were painfully aware of the ongoing operating costs a new building entailed. The Legislature opted for the sports arena anyway, fully funding it and providing piecemeal funding to the much-needed UAF engineering building. When the oil crash hit, construction of the half-finished engineering building stalled; the UAA arena was already complete. The Legislature has made no plan to provide funds to finish the engineering building, an asset that could help students immensely. Now, with budget pressure coming from all directions, some legislators are heaping scorn on the university for not being more prudent with its funds. The truth of the matter is that the Board of Regents’ priorities have been far more prudent than those of the legislators who now, in an ironic twist, are cutting university athletics funding, threatening to shutter the costly sports center that they so eagerly voted to fund only a few years prior. Legislators should know better than to give the university lectures on fiscal responsibility.

The Bookworm Sez: Simple steps to success for newbies

Your to-do list doubled overnight. That seems to happen once or twice a week, and it never gets any better. Tasks are finished and something else replaces them, which is what you’re told happens when you’re an entrepreneur — but if you read “The 100” by Tom Salonek, it might help you keep the list to a manageable status. If only your business grew as quickly as your to-do list, right? When you’re running a new company, there’s always something to remember, which is where Tom Salonek can help: since starting his Minneapolis business in 1991, he’s been keeping track of things that work to make a business operate successfully. At the top of the list is happiness. While you’re undoubtedly putting in a lot of hours now, it’s important to have a work-life balance that makes you happy. Step away occasionally to reassess yourself, and be sure to offer the same happiness opportunities to those who work for you. Learn the power of doing less, which is really just a method of time management. This book can help you have more effective meetings, and it can help you with employee retention. Two keys to the latter are knowing the difference between engagement and silly perqs, and giving employees a bit of scheduling autonomy. Use this book to know exactly how to get new hires up to speed faster. Then, show them the way to strong job satisfaction through encouragement, guidance, and praise for a job well done. Hire smart, hire slow, but fire fast when you need to. That goes for employees, as well as for vendors. Once you’ve got your best team, ask them for input on the important aspects of your business. Hold internal town-hall sessions, and determine your business’ core values, so you can help your employees to fully embrace them. Finally, relax. Use each point of this book individually, piecemeal, slowly. You’re in this for the long haul. Take your time to get there. “The 100,” I have to say, is a little rough around the edges. Author and Intertech owner Tom Salonek jumps into his list with no fanfare, save but a quick introduction that doesn’t really help set the tone of what’s to come and causing not just a little confusion. There’s a lot of repetition here, a lot of too-enthusiastic U-Rah-Rah-ing, plenty of commonsensical advice, and many things that will make established businesspeople roll their eyes. But that’s okay. This book doesn’t seem to be for them anyhow. The real appeal here, I think, is for business newbies who need bullet-points to guide them through the storminess of start-up. “The 100” is very methodical, it covers lots of steps in small bites, the final chapter consists of a list of helpful websites, and it’s relatively quick to read. That all adds up to a book that seasoned businesspeople will probably find redundant in their work lives, but that entrepreneurs may need to live by for awhile. And if you lean toward that second category, then put “The 100” on your growing to-do list. Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

GUEST COMMENTARY: Time for another approach on gasline fiscal certainty

Alaskans have just been told that gasline contract negotiations have not progressed satisfactorily and thus there is no time left to get a constitutional amendment allowing a vote on fiscal certainty on the 2016 ballot. The proposed constitutional amendment would provide the producers with the necessary assurances that the State would not arbitrarily increase the tax rate over the life of the LNG project. The producers have told the state for years that unless they had fiscal certainty on taxes they would not spend the large sums of many (around $4 billion) required for front- end engineering and design, or FEED. Putting off fiscal certainty until the 2018 elections and the resulting delay in beginning FEED should be unacceptable to all parties — both the state and the producers. To suggest that there may be another market for Alaska gas overlooks the fact that a good portion of Alaska gas has been leased to the producers. Any effort to take it back will result in extended litigation and more delay. A few months ago, I proposed a solution which I sent to each legislator and the Alaska media. I believe my proposal has merit and if adopted addresses the two major concerns of each of the parties. Certainly for the producers as well as neutralizing the risk to the state if the pipeline is never built. In 2005-2006 when my administration was negotiating with the producers on the natural gas line fiscal certainty was a major issue and a “must have” for the producers. We did not seek a constitutional amendment regarding Alaska’s tax alienation authority because we were not turning over Alaska’s taxing authority to someone else. We were simply entering into a good faith contract “fixing the tax rate for the life of the project (subject to certain escalation based on inflation) etc. We agreed that the state and the producers could rely on that part of the Alaska Constitution that protects the “sanctity of contracts” and each side would be bound by its terms. In order to avoid the threat of a constitutional challenge to such a contract the Legislature could require that any constitutional challenge would have to be brought directly in the Supreme Court within 90 days of the Legislature’s approval of the contract. Why not agree to similar contract terms and move on? It was satisfactory then, why not now? With the delicate state of the Alaskan economy, we must take advantage of every opportunity to market our resources in a sound and prudent manner in the best interest of all our citizens. It is not in the interest of the state or the producers to delay. Frank Murkowski served as Alaska’s governor from 2002-06, and as U.S. senator from 1981-2002.

GUEST COMMENTARY: Completing Port Mac rail extension will expand economy

I’m sure columnist Charles Wohlforth felt a genuine lump in his throat as he pedaled for miles on the Port MacKenzie Rail embankment, worried about the sinking Alaska economy and casting blame on an unfinished rail project in his Feb.1 column. On his bike seat, overlooking an arm of Cook Inlet, he retreated to the safety of income taxes as a solution for our fallen oil prices and state deficit, rather than to what needs to be done: diversifying the economy beyond oil. Resource development is going to return hundreds of millions annually to the state of Alaska. The quicker we are to develop the natural resources, the quicker we generate revenue. We share his earnest concern for our state’s future. But our views diverge there. Where Wolhforth saw a railroad ending in forest, consuming dollars, we see a rail embankment 75 percent complete, awaiting steel wheels on iron rail, the most efficient and affordable transportation for bulk materials since the Industrial Revolution. We see investment in transportation infrastructure — a fundamental requirement for resource development and economic growth — just as the building of the Parks Highway was an investment in the ‘70s. It connected Southcentral Alaska with Fairbanks and brought economic opportunity to towns and businesses along the corridor. Port MacKenzie Rail will shorten the trip of a 100-rail-car train between tidewater and the mineral wealth of the Interior. Each Alaska port has its valuable role to play in Alaska’s economy. Port Mackenzie — with rail — will be the least expensive path for exporting natural resources to tidewater. Here’s why: • When finished, Port Mac Rail is 32 rail miles closer to water from the Interior than the port of Anchorage, and 140.7 rail miles closer than the port of Seward. The dollars saved per ton-mile can be the tipping point to development for projects with narrow profit margins such as mineral development. Saving a million dollars per shipload can determine whether a company exports at all. • It has 14 square miles of staging grounds. There’re no constraints on space at Port MacKenzie. The laydown area for large projects is massive. • A 100-rail-car loop will provide the longest industrial loop in the State with efficient handling of bulk materials. Trains will offload materials and circle a mile around for the trip north. Trains do not have to be broken apart. • It connects to a port with deep waters, 60 feet at low tide, that accommodate the largest ocean-going vessels in the world. Bigger ships mean lower export costs for bulk materials. • It avoids costly and unsafe congestion of road crossings on the mainline. Longtime Alaska prospectors like Ed and Ann Ellis know the importance of cheaper transportation. Their company, Diamond Gold Corporation, just put Port Mac Rail in their operating plan with the Alaska Department of Natural Resources. For 19 years, they’ve been developing a gold-silver-copper deposit and gems in Yenlo Hills, 45 miles northwest of Willow. Ed Ellis plans to export super sacks of sand-like concentrate of precious metals to a smelter in Asia. Port Mac Rail’s role in Ellis’ profit margin is “huge,” he said. Exporting by truck costs three times as much. Will it pan out? We don’t know yet, but we do know that transportation is at the heart of success for this company and for larger ones. Columnist Wohlforth ignored how critical rail is to mineral development. In fact he made fun of rail, calling it a “white elephant.” If the builders of the Transcontinental Railroad had shared that opinion, the West would not have been opened up until long after the Civil War. Wolhlforth is the author of several books, so it’s strange that he saw no opportunity in transportation infrastructure when he wrote: “In 1915, the Alaska Railroad itself was expected to open vast new mineral and agricultural development, which never happened.” In his column, Wohlforth forgot about Fairbanks, a town built on mining and the railroad. He forgot about Fort Knox Gold Mine, which could not have happened at low gold prices if it weren’t built close to rail. The Interior has produced more than 18 million ounces of gold. Pogo Mine, alone, has yielded more than three million ounces of gold. Fort Knox has paid some $2 billion to the Fairbanks’ economy over 19 years. In 2014 alone, Kinross Gold, the owner of Fort Knox, paid $17.1 million in state taxes and fees. Both those companies—Kinross at Fort Knox and Pogo’s Sumitomo Metal—have written letters of support for Port MacKenzie Rail in previous years. Fort Knox spends some $5 million on transportation costs annually. Reducing the costs of importing materials, they say, will help them be more competitive and give better opportunities for expansion and longevity. Right now, there’s exciting news on two large mineral occurrences near Fairbanks, a promising copper, molybdenum, gold accumulation at Shorty Creek, some 70 miles northwest of Fairbanks. Recent drilling results cause UAF Geological Engineering Professor Paul Metz to think that this single mine could yield $385 million per year to the State in taxes, royalties, and fees because it’s potentially a high grade, large deposit. There’s also a large gold occurrence near Fort Knox Gold Mine, and a gold deposit, Money Knob, near Fairbanks. Port MacKenzie Rail would help those projects increase profit margins. The mines would need to haul in by rail hundreds of millions of dollars in freight. The low grade gold needs cheap transportation for operating materials. The copper mine would haul out copper concentrates, first by truck, then by rail to Port MacKenzie, where the sand-like material would be loaded onto large ships for smelting and refining overseas. Mining does take years to get off the ground, but so does the Alaska LNG Pipeline. Both are worthy investments critically linked to rail. In addition to mining, Port Mac Rail provides infrastructure for these large projects: •  Moving Cook Inlet gas to Fairbanks via rail. The Alaska Railroad recently became the first railroad in the nation allowed to transport LNG. Salix, Inc. is vying to be AIDEA’s pick for an LNG plant with expansion capability of up to 400,000 gallons of liquefied natural gas per day. If chosen, the company could connect to Port Mac Rail at Ayrshire Road. • Providing construction support to the Alaska LNG Project. Port Mac Rail would save the project $100 million over other ports by staging and transporting pipe north by rail through the closer Port MacKenzie. • Hauling low-sulfur diesel to Fairbanks by Central Alaska Energy, a company leasing property with completed pad, seeking funding for construction of a tank farm at Port MacKenzie • Moving supplies to support continued petroleum activity at Prudhoe Bay • Hauling limestone from Globe Creek’s 1.6 billion ton deposit near Livengood, as agriculture lime and for mines such as Red Dog or the proposed Donlin Creek Mine and ultimately cement exports • Exporting liquefied natural gas from Port MacKenzie to Japan. The natural resources development company, REI, is doing due diligence on a $1 billion liquefaction facility and power plant at Port MacKenzie. The Japanese company would export Cook Inlet gas to Japan. REI Vice President Mary Ann Pease calls Port MacKenzie “the best port in Upper Cook Inlet for LNG exports to Japan in a timely manner.” REI is still committed to a 2020 timeframe for exports to begin. The next year or more is going to be challenging. But now is not the time to let our entrepreneurial muscle atrophy as Wohlforth suggests. The returns on resource development and on infrastructure like Port MacKenzie Rail will be far more than the original investment. Let’s get to it. Vern Halter is Mayor of the Matanuska-Susitna Borough and a dog musher who took first in the 1,000-mile Yukon Quest International Sled Dog Race in 1990 from Fairbanks to Whitehorse, Yukon.

INSIDE REAL ESTATE: Anchorage’s mixed-use rules reflect mixed-up priorities

During the 10 years of negotiation and conflict over the new Title 21 land use regulations which finally became ordinance in January 2016, the Municipality of Anchorage planning department held firm on their vision of encouraging mixed-use development by creating new zoning categories as one avenue to solving Anchorage’s housing shortage. However, what works on paper and theory isn’t necessarily financially feasible in reality. In other words, mixed-use in Anchorage has yet to be “ground tested” on new, non-subsidized, vertically-integrated projects. Traditionally, mixed-use development has been developed as vertical construction with retail and offices on the ground and lower level floors and residences above. The best local example of this is the Petersen Towers that has retail on the first floor, several floors of offices above, and three top floors — each with six units — of luxury condos. At the time it was built in the early 1980s, Petersen Towers was a ground-breaking building with unobstructed inlet and mountain views. Since then, to my knowledge, there has been no vertical mixed-use development on that scale, although small, older buildings with grandfathered rights have seen some mixed-use conversions. Fire Island Bakery in South Addition shares space in a building with apartments and offices. Celestial Sweets on Spenard Road is located on a ground floor in a small building with apartments above it. Some older two-story buildings in the downtown corridor also have a handful of apartments above their retail space. New mixed-use developments include Cook Inlet Housing Authority’s projects in Mountain View and plans for a larger, mixed-use development on Spenard Road. The popular Rustic Goat restaurant on Northern Lights is considered a mixed-use project with detached apartments located on the back alley. These small mixed-use developments fit in well with local neighborhoods and contribute to economic and social diversity. However, higher density development as advocated by the MOA has many issues. According to Seth G. Weissman, a real estate attorney presenting to the Georgia Planning Association, “mixed-use works best in highly urbanized areas where the project (particularly the retail) can be woven into the fabric of an existing urban center. Mixed-use cannot survive without the density to support it.” Weissman goes on to explain that the residential housing component in mixed-use works best as a high quality rental product but still must be surrounded by density and local government contributions for alleyways, parks, and other destination amenities. Anchorage’s housing shortage is now a well-recognized and much-discussed fact. We are short hundreds of housing units. The solution, however, is not in high density vertical mixed-use where talk is cheap and construction is over $350 per square foot. Rather, the MOA should look at ways to encourage more affordable housing such as a small lot ordinance or low density neighborhood mixed-use through the use of variances and overlay districts. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]

GUEST COMMENTARY: Alaska’s second-hand economy funds itself and heals society

The new millennium has introduced many new ways of spending, saving, and earning money. We have the sharing economy, the gig-economy, the on-demand economy. The Salvation Army specializes in what is often referred to as the second-hand economy, an increasingly important part of the larger, mainstream economy. The second hand economy is just what it sounds like: the buying and selling — or donating — of durable goods and services. Craigslist, yard sales, thrift stores. Our Thrift Stores are one of the most visible functions of The Salvation Army. You can see the familiar red shield over storefronts all over the world and in 14 communities around Alaska. The second-hand economy is worth billions of dollars. A recent study in Canada found that it is currently responsible for contributing nearly $34 billion dollars to our neighbor nation’s GDP. This is about 15 percent of the value of new goods purchased. There are many benefits of the second-hand economy. For one thing it keeps local money in local pockets. Every dollar that a consumer uses to purchase an item from someone nearby on Craigslist or, say, from their local Salvation Army thrift store, is a dollar that doesn’t go to an Outside vendor. Similarly, every item that is purchased at a garage sale, or your local Salvation Army thrift shop, is an item that doesn’t need to be barged in. This again saves money and time for the consumer but has the added benefit of reducing the potential for environmentally harmful waste. Likewise, that which doesn’t have to be shipped in doesn’t need diesel oil to be burned on its way to purchase here. The potential for job creation is enormous. In Canada, some 300,000 jobs can be traced to the second-hand economy. Here in Alaska, hundreds of people work in thrift stores around the state including those operated by The Salvation Army. There is an extra economic value added when people shop for or donate goods at a Salvation Army thrift shop. In Anchorage, Salvation Army thrift store proceeds fund homeless and rehabilitation services. Alaska spent over $217 million in 2010 on drug- and alcohol-related criminal justice services. Every purchase and donation to a Salvation Army thrift store goes towards keeping someone away from a dangerous substance and defrays the direct cost to society of their rehabilitation. Outside of Anchorage and Wasilla, Salvation Army thrift store proceeds support the local Corps Community Centers in towns throughout Alaska. Services like food pantries, after-school programs, meal deliveries, senior services, and emergency disaster response are all made possible in communities throughout urban and rural Alaska through thrift store sales. So that ironic t-shirt you bought at your local Salvation Army thrift store helped provide someone in your town with a job, protect the environment, boost your local economy, lower state spending, and save someone’s life. Congratulations. And thank you. Thomas Brown is the Communications Manager for The Salvation Army Alaska Division. The Salvation Army has been in Alaska since 1898. More information about The Salvation Army in Alaska can be found at their website: http://www.salvationarmyalaska.org.

EDITORIAL: Liberal lockstep on Court will sink Obama’s nominee

The Wall Street Journal   With the death of Antonin Scalia, Democrats and the media are graciously offering Republicans an ultimatum: Give them control of the Supreme Court now, or they’ll use the vacancy as a political club to hold the White House and retake the Senate. False choices don’t get more false than that. The reality is that no one President Obama is likely to nominate for the Court this year has a chance to be confirmed in a GOP Senate. Republicans could vote for José Cabranes of the Second Circuit Court of Appeals, but he’s 75 years old and too independent-minded for Democrats. Conservatives would revolt if Republican Senators voted to confirm any other Obama appointee. And well they should. The stakes are simply too great with the high court now split 4-4 on so many legal issues. The most important aren’t even the social issues like abortion and gay marriage that preoccupy the media. Roe v. Wade isn’t going to be overturned by replacing Justice Scalia, so the disputes would be over laws that regulate abortion in late term or to protect the health of the mother. Same-sex marriage won’t be overturned either. The more consequential cases are over the Bill of Rights and the separation of powers that President Obama has so abused to serve his political goals. Take the First and Second Amendments. The Friedrichs case on coerced union dues that the Court is scheduled to rule on this year is probably now a 4-4 tie. That would let stand the mistaken Ninth Circuit ruling that denies workers their right not to support political causes they oppose. The Little Sisters of the Poor are also now likely to lose their religious-liberty challenge to ObamaCare’s coerced subsidies for abortion. A new 5-4 liberal majority would also take aim at the conservative precedents of recent years. These include the 5-4 rulings upholding individual gun rights in D.C. v. Heller and McDonald v. Chicago. Justice Ruth Bader Ginsburg, who read her Heller dissent from the bench, gave a speech saying she expected that a future Court would overturn Heller. Also in peril would be Citizens United and other rulings that struck down limits on financing political campaigns. The lawyer for the Obama Administration said during oral argument for Citizens United that even books could be banned as an independent campaign expenditure. Mr. Obama and Hillary Clinton say they want to rewrite the First Amendment to limit campaign donations, and it would take a brave liberal to buck that pressure. Justice Scalia’s death also means the Court lacks the votes to correct Mr. Obama’s illegal expansions of executive power. These include the House challenge to his rewriting of ObamaCare and the Texas case against his unilateral legalization of four million illegal immigrants. If the Court ties 4-4 on immigration, as it probably will, the Fifth Circuit’s stay on Mr. Obama’s order will continue until the courts rule on the merits. But a 5-4 liberal majority is all but certain to uphold anything a Democratic President does on so political a subject. We know this because this is how all Democratic Justices have voted for more than a generation. Not since Byron White retired has any Democratic appointee broken with the liberal lockstep on issues that truly matter to the left. Justice Stephen Breyer provided a rare sixth vote after the Sixth Circuit said the people of Michigan couldn’t ban racial preferences (Schuette, 2014), but the liberals had already lost that case. Otherwise the four current liberals are a solid bloc that never breaks. Among Mr. Obama’s appointees, Elena Kagan is a more nuanced thinker than Sonia Sotomayor, but on big cases they vote the same. By contrast, Republican appointees Harry Blackmun, John Paul Stevens, David Souter, Sandra Day O’Connor, Anthony Kennedy and John Roberts all broke with conservative political preferences on major legal issues. For that matter so did Justice Scalia, albeit for more principled legal reasons. The larger point is that progressives have made the Court so political that it’s understandable that Republicans want to let the next President fill Justice Scalia’s vacancy. A GOP Senator who voted to confirm an Obama nominee would demoralize his own supporters. Meanwhile, the outrage among Democrats over being denied a vote is entirely synthetic as they use the issue to mobilize their own partisans. (See Chuck Schumer nearby.) Majority Leader Mitch McConnell and Judiciary Chairman Chuck Grassley are right to say that the Senate should refuse to consider any nominee this year. An election-year hearing and vote would only politicize the Court more and be unfair to the nominee. So ignore any complaints you read about “unprecedented” GOP “obstruction.” As Justice Scalia warned (our Sunday editorial on his legacy can be found on wsj.com), legal progressives made the Court a partisan cause by making value judgments that are best left for voters to decide. One result is that Democrats will have to fight and win an election in 2016 to replace the greatest contemporary Justice.

FISH FACTOR: World market continues to squeeze Alaska sockeye

Early signs point to continuing headwinds in world markets for Alaska salmon. Global currencies remain in disarray, the ongoing Russian seafood embargo is diverting more farmed salmon to the U.S., and tons of product remains in freezers from back-to-back bumper sockeye runs. (The majority of Alaska’s salmon goes to market in frozen, headed and gutted, or H&G, form.) One plus: aggressive market promotions have kept reds moving briskly at retail outlets at home and abroad and removed some of the back log.  “What the Alaska industry really needs is to move that product through the supply chain — clear the decks — so we are not continuing to deal with that overhang in the following year. Whether we are there yet or not, is hard to say,” said Andy Wink, a fisheries economist with the Juneau-based McDowell Group.  “When the supply increases as much as it has over the last few years, especially from Bristol Bay, it has a big impact on what the distributors, secondary wholesalers and retailers are willing to pay to processors who are buying from the fishermen,” he said. And in the case of salmon, size does matter. In the past two years at Bristol Bay, most of the fish have been on the smaller, two- to four-pound size, meaning they are worth dramatically less than larger fish. Luckily, sales of smaller sockeyes to Japan have moved well, primarily because of the lower prices, and their use of cut-up fish in various dishes makes it less of an issue. “We have seen good sales volume through the supply chain in the past year,” Wink said, adding that Alaska sellers were surprised at the amounts that went to Japan and Europe, due to the global currency situation. The continued strong value of the dollar means it is more expensive for overseas customers to buy U.S. seafood. “We’ve seen things move a lot faster, and while the currency situation is still terrible, at least it’s been terrible now for a while,” he added. “People are more adjusted and markets have a better grip on where it’s at. Hopefully, they can figure out what everyone needs to operate at these currency levels.” Alaska salmon also will face even more competition from farmed fish. Russia’s ongoing seafood embargo against several countries has displaced record amounts of Norwegian salmon and imports to the U.S. have doubled. “It’s been a big shift and the whole supply chain is adjusting to that. But there is reason to think that we are getting to a more stable environment where there is not so much uncertainty,” Wink said. Alaska processors will get a good sense of demand when they meet with their customers next month at Seafood Expo North America in Boston and Seafood Expo Global in Brussels in April. “They’ll get a very good sense of how hungry those customers are for product. If they haven’t done very well moving these large sockeye volumes, they won’t be as aggressive. If they have been having good luck with their sales promotions they’ll likely come back eager for more,” Wink said. All combined, early signs don’t point to any big price boosts this year for Alaska salmon. “There’s still a lot of headwinds, a lot of unknowns. It’s just kind of hard to see how the price takes any significant jump,” Wink said. “We’ve got a lower forecast so we’ll see how the market responds to that. But so much depends on how much product has moved through the system, and how well inventories have been absorbed.” Marine debris redux Money from the Japanese government is continuing to fund marine debris removal from Alaska coastlines. An influx of debris, especially polystyrene foam, continues to wash ashore from the tsunami that devastated parts of Japan in 2011. The Alaska Department of Environmental Conservation, or DEC, recently received $950,000 from Japan for tsunami marine debris collection, removal, and disposal projects for the 2016 field season. Specifically, this funding is intended to support a single large-scale project covering Kayak and Montague Islands, which have some of the highest debris densities Since 2012, Alaska has received the majority of a $5 million dollar gift from the Japan to the United States for aerial surveys and coastal cleanups in the Gulf of Alaska, Southeast Alaska, and the Kodiak Island area. Last July, a large scale, three-week project used 1,176 helicopter airlifts to sling 3,397 “super sacks” and 717 bundles of marine debris on to a 300-foot barge from 11 locations. The debris was transported to the Lower 48 for disposal and recycling. To date, over one million pounds of marine debris have been collected and removed from Alaska using the funds provided by the Japan and administered through DEC. The agency plans this month to issue a Request for Proposal (RFP) for the 2016 field work. Qualified contractors should monitor the Alaska Online Public Notice website for updates. Find more information on marine debris cleanup efforts in Alaska at dec.alaska.gov/eh/marine-debris/ Climate comments National Oceanic and Atmospheric Administration Fisheries has just released a draft climate science action plan for the southeastern Bering Sea that will assess the vulnerability of 18 commercially important fish species. The plan identifies key information needs and actions that the agency will take over the next three to five years to implement the NOAA Fisheries Climate Science Strategy, released in August of 2015. The plan will look first at the southeastern Bering Sea because it supports large marine mammal and bird populations and some of the most profitable and sustainable commercial fisheries in the nation. The plan builds on work the Center has been doing for more than 20 years as part of a Bering Sea Fisheries Ecosystem Plan, said AFSC program leader Mike Sigler. The center has completed a number of studies on the potential effects of climate change on three fish species — pollock, red king crab and northern rock sole. “We expect climate change to lead to smaller populations of walleye pollock and red king crab, but have little effect on northern rock sole,” Sigler said. NOAA is asking the public to provide feedback on the draft plan, to be finalized this fall. See more www.st.nmfs.noaa.gov/ecosystems/climate/national-climate-strategy Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected]alaskan.com for information.

AJOC EDITORIAL: No news is bad news for AK LNG Project

It was the Seinfeld of press conferences. One might think that a gathering of the five most influential figures in the massive Alaska LNG Project would have had more news to share, but in the end it was a press conference about nothing. And that’s bad news for everyone involved. Standing shoulder-to-shoulder with the state’s project partners whose taxes he’s proposing to raise dramatically at a time when their costs are nearly double the price per barrel, Gov. Bill Walker had no answers for where AK LNG is headed. As the Journal first reported Feb. 10, the project is now officially off schedule and most likely delayed from undertaking the more advanced work for at least two years. The state and its producer partners will finish the preliminary-front-end engineering and design, or pre-FEED, this year as planned but there will be no vote on a constitutional amendment in November because there will be no fiscal contracts to present to the Legislature for approval. The next time the state’s residents could vote on an amendment to set tax policy for the project will be 2018. Ostensibly, the delay in the project is related to the failure among the three North Slope producers who own differing shares of the gas at Prudhoe Bay and Point Thomson to reach the lynchpin gas balancing agreement governing offtake from the two fields once the project goes into production. But the “elephant in the room,” as Walker put it, is the price per barrel that has hovered in the mid-$20s or low $30s since the start of the year. As anyone who’s been following along knows, the oil companies on the Slope and around the world are hemorrhaging cash in the current price environment. Contemplating a spend of $2 billion or more among the state and its three partners for the full front end engineering design, or FEED, stage is simply not a viable option. ConocoPhillips, for example, burned through $2.7 billion of its $5 billion in cash during 2015 and was compelled to slash its dividend by two-thirds from 74 cents per share to 25 cents per share. From this vantage, then, the best way to slow-walk the project without obviously slow-walking the project is to hold off on sealing the deals that would force the companies to make the FEED decision sooner than is fiscally responsible to their shareholders. That is certainly disappointing to Alaskans who have seen the concept of commercializing North Slope gas advance further than it ever has, but with the state in deficit spending with a budget hole approaching $4 billion it doesn’t exactly have a lot of cash to throw around either. Between the Alaska Gasline Inducement Act subsidies to TransCanada, the subsequent buyout of that company’s interest in AK LNG this past November, and the state’s obligations for its share of pre-FEED spending, Alaska is blowing past a half-billion dollars spent on its last two efforts to monetize North Slope gas. The state does have more to show for its money in the current effort, with export permits in hand and a refined cost estimate to result from pre-FEED, but anything would look good compared to what Alaska got out of AGIA. With a desperate need to hold this project together through a brutal price cycle nobody saw coming, Walker must rethink his proposals to hike taxes on our project partners. Walker wants to raise the tax floor from 4 percent to 5 percent, and restructure the system so that producers are always paying taxes even when they are losing money. Walker cannot have it both ways. He cannot endlessly repeat that Alaska should act like an owner state while expecting to be insulated from depressed markets. It has always been well known that such a capital-intensive project with much thinner margins would require a healthy oil business to support it, yet Walker is proposing to drain the Slope producers’ cash at a time when they have none to spare. With or without AK LNG, the state and the Slope producers are in this boat together. We shouldn’t be the ones trying to sink it by weighing our partners down with more taxes.

COMMENTARY: Alaska transboundary fisheries deserve strongest protections

A catastrophic failure at the Mt. Polley mine in central British Columbia on Aug. 4, 2014, resulted in one of the worst mining disasters in Canadian history. The breach dumped over 6 billion gallons of toxic water and sludge into a tributary of the Fraser River, threatening subsistence and other fishing opportunities that the economies of nearby communities depend upon.   That spill was all over the news for weeks but what happened more quietly was when B.C.’s Chief Inspector of Mines blamed the disaster on poor mining practices but made no recommendations that any penalties or even claims of wrongdoing or non-compliance should be levied against the mine owner, Imperial Metals, according to an Investigation Report released Nov. 30, 2015. It defies common sense that B.C. lets mining companies like Imperial Metals off the hook in the face of major disasters. What’s more, it leaves Alaskans downstream anxiously asking ourselves what is next and when will this impact us. In Alaska and the North Pacific, the Alaska Department of Fish and Game and National Marine Fishing Service take commercial fishing regulations and enforcement very seriously. In Alaska, most fisheries are monitored on a regular, almost daily basis. If violations are observed, citations are issued to the skipper, who can be slapped with a fine, or worse. Over the years we have seen violations result in the loss of fishing privileges, catch and vessel confiscation, fines of hundreds of thousands of dollars and even jail time. Although commercial fishing violations can be extremely serious, they never come close to causing the devastating habitat destruction and pollution that result from a mining disaster, or even seemingly smaller mining impacts that build slowly over time and are not regulated. Given this, we can’t help but demand B.C. provide the same level of regulation, oversight, and penalties for their mining industry as we do for the commercial fishing industry in Alaska since the Transboundary Rivers (Taku, Stikine and Unuk) that our billion-dollar fishing industry depends upon, begin within their borders. As with any resource extraction industry, if you can’t do it right, you shouldn’t do it at all. However, they know the impacts are miles downstream and across an international border. They are shielded from the risks and damages — at least for now. Southeast Alaskans find no comfort in hollow pronouncements of B.C. politicians about their formidable mine safety standards when the reality is quite the opposite. Mine safety standards need to protect our water and prevent large-scale disasters like Mount Polley, plain and simple. As B.C.’s sole downstream neighbor, Alaska must not settle for anything less. Although this seems simple, the State of Alaska has appeared trusting of its working relationship with B.C. by signing onto a Memorandum of Understanding and proposing a Statement of Cooperation that provide no enforceable protections or binding recourse for clean up or financial compensation if and when something goes wrong. Knowing that our fisheries are too important to risk, I find this to be woefully inadequate. Admittedly, the State of Alaska does not have the authority to enter into a binding agreement with British Columbia as the international border and the Boundary Waters Treaty makes this an issue between U.S. and Canadian federal governments. That is why the majority of Southeast Alaska communities, Tribal and commercial fishing organizations, and thousands of Southeast Alaska residents are pursuing the U.S. Department of State and International Joint Commission involvement on this issue, and the clock is ticking. Alaskans must continue to demand the highest level of input and a seat at the table with B.C. to ensure we have enforceable protections against Canadian mines impacting our fisheries, jobs and way of life in Southeast. I call on the State of Alaska and congressional delegation to represent Alaskans and move forward to fully protect the priceless resources of our transboundary rivers of Southeast Alaska.   Brian Lynch lives in Petersburg and is a retired commercial fisheries management biologist with 30 years experience with Alaska Department of Fish and Game in southeast Alaska.  

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