Opinion

AJOC EDITORIAL: Breaking LIO lease will signal state can’t be trusted

Legislators were rightly concerned when Gov. Bill Walker, without warning, vetoed $200 million in appropriations from the current fiscal year budget designated for the oil and gas tax credit program. Walker noted at the time — and his Revenue Commissioner Randall Hoffbeck had to spend a lot of time in the aftermath reiterating to the financial community — that the State of Alaska was not reneging on its obligation to pay the credits. The consequences of not honoring its debts would be terrible for a state trying to protect its top-notch AAA credit rating as it faces multi-billion deficits and now plans to finance its $13 billion share of the Alaska LNG Project. Yet here the Legislature is, through its Legislative Council that handles out-of-session affairs for the body, contemplating breaking a 10-year lease for its downtown Anchorage office building. Like all leases the state government enters, payment is “subject to appropriation,” meaning it can break the lease simply by refusing to pay the rent.  The Senate passed an operating budget last session that withheld the rent payment while the House passed a budget that did. That early April action by the Senate was so concerning that it spurred the Alaska Bankers Association to convene a meeting of its seven member institutions on Easter Sunday to craft a letter to the budget conference co-chairs Sen. Pete Kelly and Rep. Mark Neuman. The language was not ambiguous. ABA President Steve Lundgren of Denali State Bank wrote that, “We alert you that this action will likely impact the State’s credit worthiness and the cost of borrowing in the future.” Lundgren closed with this: “Alaska should not put itself in the position of having to react to a narrative that it will not live up to its commitments. How long creditors would remain accommodating is a great question to which we do not have the answer. What we do know is that some ideas have unintended consequences, and the current funding proposal would be as a good a bellwether as any signaling a risk aversion to the greater credit markets.” Thomas F. Klinker of the law firm Birch Horton Bittner & Cherot, was similarly blunt, citing Moody’s Investor Service guidance that states that “depending on the circumstances involved in a lessee’s decision to not appropriate, this risk could be reflected in that entity’s other debt ratings, including its general obligation and other tax-supported debt.” Klinker noted that while it is true the lease on the Legislative Information Office is not securitized, “a decision to not appropriate rent for the lease without a specific justification, such as the lessor’s failure to perform, could have a similar adverse effect.” He further stated that breaking the lease — which in this case is being contemplated for no reason other than public scrutiny, not because the state lacks the ability to pay — “could be considered material to investors in future state financings, and a required subject of disclosure to prospective investors in such financings under federal securities law, particularly financings based on a lease that is subject to annual appropriation.” Not only is the state considering financing its capital budget for the next two years with general obligation bonds, but Walker has also proposed issuing pension obligation bonds to help cover the 11-figure unfunded liabilities of the public employee and teachers retirement systems. Pension obligation bonds are also “subject to annual appropriation.” Hoffbeck said in a recent interview that while the Legislature has previously approved the issuance of such pension bonds in 2008, a new vote would reassure investors the state would make good on payment if the bonds are sold. “If the Legislature is not willing to voice support of it, we don’t want that kind of noise going into the market when we try to sell bonds,” Hoffbeck said. In other words, if the Legislature won’t pay what it owes on something as small as a $3.3 million annual appropriation, investors aren’t going to lend the state money to finance billions of dollars in bonds or they will do so at much greater interest rates. It is irrelevant at this point whether the decision to renovate and improve the downtown office space was right or not. The fact is the Legislature signed a contract and it should live up to it. If the Legislature can’t make what’s a difficult but necessary decision to pay its debts, how in the world will its members find the intestinal fortitude to do what needs to be done to put the state on a more sustainable fiscal path? A shortsighted action bowing to political pressure or just the optics of the whole thing will signal to private investors that the state can’t be trusted when times get tough, and they sure aren’t getting easier any time soon. Given the circumstances we find ourselves, that should be the last way the Legislature wants to ring in the new year. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Fish 2.0 touts Alaskan fish; Begich condemns GE salmon

Caught by Alaskans for Alaskans is a business concept that bested 170 others in a global fisheries business competition last month at Stanford University in California. The contest, sponsored by Fish 2.0, awards creative approaches that build demand for sustainable seafood, reduce waste and support fishing towns. The Alaska Community Seafood Hub model, presented by Kelly Harrell of Anchorage, won $5,000 in cash and is in the running for more money to be awarded this month. Fish 2.0 builds the knowledge and connections needed to increase investment in the sustainable seafood sector, according to its website. “We noticed that investors were having a hard time finding fisheries deals, and fishery business owners were frustrated that investors had no interest. We created Fish 2.0 to build connections between the groups,” said Monica Jain, Fish 2.0 Founder. “Our goal is to create the business growth needed to drive social and environmental change in the seafood supply chain.” Harrell, who is executive director of the non-profit Alaska Marine Conservation Council, or AMCC, said: “We told the story of the really unique assets we have in Alaska, which include thousands of small boat fishing families. We have a giant seafood economy that provides one of the largest and most sustainable seafood supplies in the world. But the way our seafood supply chain is structured, it is very difficult to get the seafood harvested locally to our communities here in Alaska, because we are set up to export such large volumes.” The Walton Family Foundation, a Fish 2.0 sponsor, wrote: “When Kelly Harrell started crafting the idea of the Alaska Community Seafood Hub, she knew that improving business, people’s lives and the environment go hand in hand. Kelly pitched her business model to a room full of investors, ocean and fishing industry experts and grant makers who shared her vision of a sustainable seafood market. She walked away with $5,000 and countless connections to help build a strong community-based fishery and bring high-quality seafood from Alaskan fishermen to local consumers.” “We often overlook Alaska thinking that people have access to catching their own and a lot do, but in places like Fairbanks and Anchorage, and even in coastal towns, many people don’t. And in the case of species like crab, it’s really not practical to get their own,” Harrell said. The Alaska Seafood Hub concept expanded upon the Catch of the Season program and the Kodiak Jig Seafoods brand for cod and rockfish that AMCC has operated for several years.  “We began by selling Tanner crab and cod to consumers in Alaska and through wholesale buyers in a way that tells the story of the fishermen, the species, the community where it come it comes from,” Harrell said. “It helps build connections between our fishermen and fishing communities and our seafood consumers and buyers, and generates a higher price for the fishermen. It’s a real win/win.” About 20 fishermen are involved in the program so far, and they fetch 60 percent more than the regular dock price. Along with individual buyers, regular customers include the Bear Tooth in Anchorage, Alyeska Resort in Girdwood and Princess Tours Lodges. Harrell said fish offerings are expanding to include Tanner crab from the Bering Sea, king crab from Norton Sound and sockeye salmon.  “This summer we sold salmon from Bristol Bay for the first time in Fairbanks and it was a huge hit,” Harrell said. “People were extremely eager to have seafood caught by Alaskans for Alaskans and we sold thousands of pounds right away to an eager consumer base.” AMCC’s ultimate goal is to spawn umbrella seafood hubs for local brands in other Alaska fishing towns, such as halibut from the Pribilof Islands.  “We want to tell the story of halibut bycatch in the Bering Sea and how that is potentially putting these small communities out of business in terms of their halibut fishery. People in the state really need to hear it through something they can support and put on their dinner plates,” Harrell said. In the four rigorous rounds of the competition, Harrell said the judges were most surprised that many Alaskans don’t have access to local seafood, and that Alaska politics and the economy are not more connected to the state’s fishing industry. Fishing fees Alaska fishermen who hold catch shares of halibut, sablefish and Bering Sea crab pay an annual fee to the federal government to cover management and enforcement costs for those fisheries. The fee, which is capped at 3 percent, is based on dock prices for the fish through September and averaged across the state. Bills went out in late November to 1,983 longliners for a total coverage cost of $5.6 million, said Kristie Balovich, Budget Officer for the National Oceanic and Atmospheric Administration, or NOAA, Alaska Region based in Juneau. The dockside value of the halibut fishery went up this year while the value of sablefish went down.  “The 2015 halibut landings had an increase in overall value to $107 million, compared to $100 million in 2014. Sablefish had a slight decrease going from $76.7 million to $76.6 million,” Balovich said, adding that dock prices, or ex-vessel prices, were higher for both. Halibut was at $6.42 per pound this year, and sablefish was at $3.78 per pound. That compares to an average halibut price of $6.36 per pound and $3.59 per pound for sablefish in 2014. The fee system is different for the Bering Sea crab fisheries.  “NOAA doesn’t track dock prices for crab, only the total value of the fisheries,” Balovich explained. That added up to $229 million for the 2014/2015 season, an increase of about $300,000 from the previous fishery. The crab catches yielded $3.4 million in coverage costs, which are collected and paid by Bering Sea processors (19 last season) by the end of July. The coverage fee for the crab fishery increased to 1.48 percent this year and to 3 percent for halibut and sablefish, due to adding more management and enforcement personnel.  “We were able to hire some people so there were some increases in labor for those fisheries,” Balovich said. Balovich added that Alaska longliners are “great about paying their bills” and that 99.9 percent pay by the Jan. 31 deadline. There’s one change for all bill payers this year: credit cards are no longer accepted over the phone due to security reasons. “Everyone has access to their online landings, and if they go into their eFish account, it switches them over to a site called www.pay.gov. “It is very secure and they can pay with a credit card there,” Balovich said. Begich talks fish fights Former Alaska Sen. Mark Begich is continuing his fight against genetically modified salmon after its approval last month for U.S. sales by the federal government. “I think it is a very bad decision,” he said in a phone conversation. “When I was in the Senate I was able to stop it from being moved forward and being approved. So I decided I am no different than any other concerned Alaskan, and I decided to write a letter to every store chain that serves food in major quantities to ask them not to sell that product.” While many major stores in Alaska, such as Safeway, have pledged to not carry so called Frankenfish, others have remained noncommittal. In his letter to Walmart president Doug McMillon, Begich wrote: “At a minimum, this product must be labeled so Alaskans can make an informed choice about what they are buying and serving to their families. Consumers have a right to know whether they are eating something from the waters of Bristol Bay, Southeast, Cordova or anywhere else in Alaska…or a test tube…I hope you will join me in continuing that effort without compromising the most sustainable fishing industry in the world that exists right here in Alaska.”  “If the people making this fake fish believe it’s such a good product, then label it,” he fumed on the phone. Begich broadened the discussion of fish threats to North Pacific waters, which are getting warmer and more acidic.  “You can’t have sustainable fisheries without sustainable waters,” he stressed. “If we don’t have sustainable ecosystems, everything that lives or thrives on it or uses it will be at risk.” Alaska’s current delegation has voted against every clean air, clean water and climate change measure that has come before Congress, and Begich said it’s time for them “to accept reality.”  “Climate change is real and those who continue to deny it live in a world that doesn’t exist. And the fact that Sen. (Dan) Sullivan, who ran against me, continues to deny it 100 percent is a mistake,” Begich said. “I support the oil and gas industry, but that doesn’t mean you can’t support solid, scientific-based regulations to ensure that our air and waters are protected.” The former senator criticized the “knee jerk reaction to just say no to everything because it makes a good bullet statement in a TV ad or a brochure.” “Always opting for the negative is no way to govern,” he continued. “There is so much we should be focused on in the Alaska resource arena, and just being a no voice is not good enough. It should be a yes voice in trying to figure out how to improve everything from fisheries, oil and gas, all of it for the betterment of Alaskans and this country. What’s happening in Washington is the race to the negative, and not a race to getting things done for the long term benefit of the people we represent.” Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: Every Student Succeeds Act fixes No Child Left Behind flaws

Fixing the flawed No Child Left Behind Act, or NCLB, has been years in the making. This past week, we’ve reached a major milestone. On (Dec. 10), the President signed into law the Every Student Succeeds Act, referred to as ESSA. Congress passed NCLB in 2001, the year before I came to the U.S. Senate. It was intended to help states identify and focus on the educational disparities among students and take steps to improve schools that did not serve students well. That was necessary. Despite its obvious flaws, NCLB had good intentions. It delivered both a level of understanding about which children were being left behind and a realization that our schools must be accountable for each and every child. What was wrong with NCLB was that it imposed one-size-fits-all solutions from over 4,000 miles away. NCLB brought us “Adequate Yearly Progress”, or AYP, that gave our schools 31 ways to fail and almost no chance to succeed. It gave us a definition of a “Highly Qualified Teacher” that could not measure whether a teacher effectively engaged our children in learning. It brought the mandate that the first solution to improve a school was to fire the principal. And while Alaska received the Secretary’s “waiver” from NCLB’s requirement that every child reach proficiency by 2014, that “waiver” came with more objectionable conditions and mandates. Essentially, NCLB and waivers brought us a “national school board”. Since coming to the United States Senate in 2002, I have met with school board members, parents, educators, and students from across Alaska who were discouraged and sometimes just plain fed up with NCLB’s mandates, and who shared their ideas for fixing it. Throughout the past year, I have received phenomenal input from so many around the state as I played my part in writing ESSA as a member of the Senate Health, Education, Labor, and Pensions Committee. My focus in this work was for Alaskans to have the ability to make the decisions that impact our schools, educators, students, and parents. So what will ESSA do? First, it will maintain the idea that we must identify which schools are doing a good job of serving our children and which ones need to improve. But it will eliminate unattainable AYP standards and empower Alaskans to decide how to help our struggling schools. As we move away from the “national school board” we also ensure that mandates for national standards like Common Core are prohibited. Under ESSA, states and communities will decide what standards our students and schools are expected to meet, the skills teachers need, and how to evaluate them. In so many ways, ESSA brings control of our schools back to where it belongs — to our communities, school districts, parents, and tribes — so that school accountability starts and ends right here at home. No more federal control, no more “waivers with strings”, no more “one-size-fits-all” education mandates that never fit here in Alaska. ESSA also includes a number of provisions I crafted that are important to Alaska, like the After School for America’s Children Act that I co-sponsored with Sen. Barbara Boxer, so that parents can remain at work after the school day ends, sure that their children are safe and engaged in enriching activities. ESSA also fixes a conflict between the Impact Aid program and the Alaska Native Claims Settlement Act to relieve our rural districts of burdensome paperwork. And I made sure Alaska’s small high schools can calculate their graduation rate appropriately. I was also proud to make sure that Alaska’s Native peoples will have more say in their children’s education and that ESSA will help to revitalize Native languages. This legislation is another example that Congress is working for the American people again. ESSA was crafted over the course of a year by members of the Senate Health, Education, Labor, and Pensions Committee through open negotiations. Senators were given multiple opportunities in committee and on the Senate floor to have their ideas heard and voted on. Finally, it went through conference with the U.S. House of Representatives, where more changes were adopted. Perhaps that is why the final bill passed both the House and Senate with an overwhelming bipartisan majority. The changes enacted by the Every Student Succeeds Act will not happen overnight. The law gives Alaska’s stakeholders time to craft our own plans, discuss them, and come to a consensus. It will be hard work, but it is a responsibility I believe each Alaskan should take seriously. What happens next in Alaska’s schools will be determined by the Alaskans who show up and who share their perspectives. Together, I believe we can do right by Alaska’s children. Murkowski is the senior U.S. senator from Alaska.

Eye on Wall Street: Markets move sideways in November

Last month proved to be quiet compared to the big October rebound in equities. The S&P 500 gained 0.3 percent and is up 3 percent year-to-date, or YTD. Foreign equities lost a bit of ground mainly due to a strong U.S. dollar, which was up 3 percent on FX markets. U.S. interest rates climbed anywhere from 5 to 20 basis points, or bps, across the yield curve. Investors expect the Federal Reserve to hike rates on Dec. 16. The two-year Treasury jumped the most; it was up 20 bps to yield 0.93 percent at month end. The Barclays Aggregate Bond Index lost 0.3 percent. Commodities continued to take it on the chin. Oil fell over 10 percent and finished under $42 a barrel. Gold had its worst month since 2007, declining 6.8 percent to $1,065 an ounce. The Bloomberg Commodity Index lost 7.3 percent and is down 22.3 percent YTD. We’ll have much more about the economic and financial market outlook next month when we review 2015 and peer ahead to 2016. Antiques Road Show My wife and I have been watching this PBS mainstay for years. From time to time you’ll hear us yelling at the TV, “How much? Sell it! Hit the bid! Don’t keep it at that inflated price!” My pet peeve is when someone reports buying something for say $1,000 20 years ago and it’s now worth $2,000. The appraiser often comments, “not a bad return.” Actually, using the Rule of 72 (i.e. divide 72 by the growth rate to estimate how many years before an investment would double) the annual rate of return would be 3.6 percent — not particularly attractive. Really though, how have collectibles faired as investments? A recent comment by an analyst at ISI Evergreen got me thinking. He said: “Coin prices are dropping again and antique furniture prices are some 18 percent below the 2006 peak. Auction prices of classic restored automobiles are down 11 percent from their 2007 peak. Silver set prices are slipping lower as silver prices fall. High-end art prices, however, are starting to rebound from robust overseas demand. But most collectible prices are down from the 2007 peak.” More analytically, a recent article in the Financial Analysts Journal takes a look at collectibles, noting that by some estimates the average high net worth individual has almost 10 percent of their wealth in artworks, antiques, jewelry, fine wines and other luxuries. The authors quote the annual returns from 1900 to 2012 for stocks (9.4 percent) and bonds (5.5 percent) compared to art (6.4 percent), stamps (6.9 percent) and violins (6.5 percent). However, they caution that these numbers exclude transaction costs. Dealer markups and fees for collectibles can be high. For example, auction houses typically charge a “premium” to the buyer and a “commission” to the seller, which together can be 25 percent of the asset’s price! So you better have a long holding period in mind before taking the plunge. Furthermore, collectibles are very illiquid and often require insurance and storage fees. There is the danger of forgery and fraud, not to mention fads and bubbles. The standard indices also underestimate the true volatility of collectible prices. The actual return volatility is probably closer to that of equities. The authors note that diversification within collectibles is important. Yet for a variety of reasons (the difficulty of day-to-day pricing for example) they can find few examples of successful collectible mutual funds. Bottom line? The authors conclude that the, “after-cost, risk adjusted financial returns are low, which can be seen as an indication that the ‘psychic return’ on holding unique and aesthetically pleasing objects must be substantial indeed.” My advice? As an investment, collectibles leave much to be desired. From that perspective it is probably better to get your satisfaction vicariously by tuning into the Antiques Road Show. I’ll bring the popcorn! Jeff Pantages, CFA, is the chief investment officer for Alaska Permanent Capital Management, a $3.5 billion investment management and advisory firm located Anchorage.

AJOC EDITORIAL: Tax credit program would benefit from transparency

When the Legislature finally adjourned after a second special session to pass a budget this past spring, about 20 percent of the approximately $3.5 billion deficit was related to payments from the state’s oil and gas tax credit program. Unlike deductions, which the large producers use on a per-barrel basis to reduce their tax liabilities, the credits are direct payments from the state to mostly independent companies exploring for oil and gas in Cook Inlet and the North Slope. Gov. Bill Walker roiled the industry and lending circles with his move in late June to use his line item veto authority to reduce a $700 million appropriation for the credits by $200 million, deferring the payments to future fiscal years. The short-term effect was a credit freeze between lenders and explorers that required damage control by the state Revenue Commissioner Randall Hoffbeck to assure financial institutions and private equity firms that Alaska would make good on the payments owed. That’s according to the report released Dec. 1 by the Senate Oil and Gas Tax Credit Working Group formed among members of the Senate Majority and Minority member Sen. Bill Wielechowski, D-Anchorage. The report was short on recommendations to actually reduce the annual outlays and focused more on going slow with any changes so as not to disrupt projects in the development stage, protecting the state’s interests should a company go into bankruptcy as Buccaneer Energy and Cook Inlet Energy have, and firming up the tax “floor” on production taxes so companies cannot use a net operating loss, or NOL, deduction to reduce their liability to less than 4 percent. Cementing the tax floor seems to be a no-brainer and should be an easy fix by requiring companies to spread the NOL out over multiple years if necessary to ensure a minimum production tax is received. Ultimately, though, there is no silver bullet to fix Alaska’s revenue problem at the current oil prices under any current or prior tax system. Without question the oil and gas credits, or rebates, require examination along with every expenditure the state is making. There is also no question that the state’s oil and gas credit system has major successes to tout. The Cook Inlet gas supply resurgence led by Hilcorp would not have happened absent the credit system, nor would the recent start of gas production by Furie Operating Alaska that is now delivering gas to Homer Electric Association at a lesser price than some of Hilcorp’s customers from the first new production platform seen in Cook Inlet in more than three decades.  Looking to the North Slope, the independent Caelus is currently developing the Nuna prospect it acquired from Pioneer Natural Resources in 2014, and is scheduled for production in 2017. Hilcorp has entered also the fray by purchasing some smaller BP assets and has now submitted a development plan for the Liberty offshore field that could produce 60,000 to 70,000 barrels per day by 2020. The majors are also spending money on the Slope despite the price crash. ConocoPhillips has spent $1.5 billion developing Drillsite 2S in Kuparuk and the CD-5 field in the National Petroleum Reserve-Alaska. It also just sanctioned a billion-dollar project at Greater Moose’s Tooth-1, also in the NPR-A. When companies continue to spend money in the current price environment and bid on acreage as many independents did at the recent state Slope lease sale, something is working. While we can piece together a rough picture of how credits may be benefitting the state economy, the credit program needs to be more transparent. The public has a right to know how much in credits is being paid out and for what projects. That is the only way to tell if the state is getting something back for what it is spending. The working group reached a rather strange conclusion in its recommendations to disclose the amount of credits paid by project, but not the recipient of the credits. It is hard to understand what difference it would make to withhold the recipient of the credit while disclosing the project for which it was paid. Under the since-discontinued film tax credit program, the public was able to see the project, the recipient, the amount of the credit and the qualifying expenditures that led to the credit. If the oil and gas industry really wants to see this program continue, they should be disclosing how much they’re spending, what they’re spending it on, and how many people in Alaska are being hired as a result. A simple return on investment analysis of credits relative to production taxes does not capture things like local wages, their multiplier effects or the economic impact of ratepayers in Homer or elsewhere benefitting from lower utility costs. The best way to ensure a stable credit system continues — and it must continue — is to make it more transparent.

The Bookworm Sez: Attracting, and keeping, customers

A lasso just won’t do it. Neither will a harness, a come-along, or a whole pack of sheepdogs. No, there are better ways to get customers to your door, but what are they? What’s the secret to snaring new clients?  Author Joe Calloway knows, and in his new book “Magnetic: The Art of Attracting Business,” he draws it out. A long line down the sidewalk. For a business owner, there’s nothing better than to see customers waiting to give you their money. It’s irresistible and, says Joe Calloway, it’s “what magnetic looks like.” Magnetic is a way of business that attracts customers old and new. It’s a method for pulling in new clients by tapping into “the greatest marketing program of all time,” also known as word of mouth. “The single most important factor in the future success of your business,” he says,” is this: what your customers tell people about their experience with you.” Making sure that it’s positive is “the single most important thing… to grow your business.” That’s done by determining the three things you want your customers to say about you, and the three things that you “must get right every time.” Those, says Calloway, are the “guiding elements of” a successful business. They can’t be general; they must be specific and “intentional” because you can’t, of course, control people but you can control your corporation and its culture. Don’t rest on being “different,” however; Calloway says that being better is the key to magnetism. It’s also important to know that the greatest threat is irrelevancy: remember that your customers are connected, most will research you online, they know about the next new thing (even if you don’t), they have other choices in purchasing, and they won’t settle for anything less than immediacy. Don’t, therefore, sit on an email or tweet from a customer; to do so is to lose out. Finally, remember that while you should work to “re-earn” customer loyalty every day, there will be times when “no” is the proper response to a client request. Cultivate a “filter” and don’t feel guilty when you listen to it. Common-sense stuff?  Yes, it is, and somewhat repetitive but be patient. Once you get to the nitty-gritty of what’s inside “Magnetic,” there’s plenty to learn. Using his own business as an example, boosted by a plethora of stories from colleagues, author Joe Calloway gives readers sure-fire ways of changing the inside of a business in order to affect its outside success. There are no accidents or incidentals in the teaching in this book; Calloway is deliberate and, as it seems, politely short with problem clients. He doesn’t apparently suffer fools gladly; readers might actually find a few surprises on that note, which may lead to real empowerment. The repetition here can be a distraction, but I have to say that I learned quite a bit from this book. If, in fact, you’re looking to gain clients with the right amount of efficiency, I think you’ll find “Magnetic” to be quite attractive. 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]

EDITORIAL: Alaska’s prison system is killing Alaskans

Joseph Murphy was having a bad morning. On Aug. 14, he woke up in jail. The night before, with a blood-alcohol level of 0.165 percent, he had been taken to Lemon Creek Correctional Center for his own protection and left alone in a cell under the supervision of a camera. When he woke up, he was sober and angry. He wanted out. He wanted to go home. He had been accused of no crime, and under state law, he should have been allowed to leave. He was not. He grew angrier. He banged his cell door and shouted to be let out. His chest started to hurt — he had heart problems and was taking medication. A corrections officer stopped by his cell and told him to knock off the banging and suck it up. He would be getting out soon. Murphy asked for his heart pills. Tempers flared. Murphy and the corrections officer started shouting at each other, swearing at each other. Murphy’s chest hurt worse. “I don’t care,” the corrections officer told Murphy. “You could die right now, and I don’t care.” They swore some more at each other, and the corrections officer left. Murphy, locked in his cell, paced back and forth. He was sweating. Six minutes after the corrections officer left, Murphy collapsed to his hands and knees. He got up again, and fell again. He did not get up. Twenty-nine minutes after the corrections officer left Murphy, another arrived to deliver breakfast. On the floor of the cell was Murphy, dead. He is not alone. Since Gov. Bill Walker took office in December, 15 people have died in Alaska’s prisons. Joseph Murphy’s last minutes are recounted in the report released Monday by a pair of special investigators appointed by Gov. Bill Walker. The investigators’ report is damning. It finds comprehensive problems and mistakes by the Alaska Department of Corrections. It finds that corrections officers, at times understaffed, undertrained and mismanaged, have violated the rights of guilty and innocent Alaskans alike. Simply listing the problems shows their extent: • Correctional officers repeatedly violated inmates’ legal due process rights; • Drunken and intoxicated people were held in protective custody for illegal lengths of time; • Investigations of inmate deaths were not conducted properly; • Several juveniles have been kept in solitary confinement for more than a year; • Newly hired corrections officers sometimes go months without attending the training academy; • Medical and mental health employees do not report to prison superintendents; • Many prison policies have not been updated since the 1980s; • Correctional officers were not adequately searched for contraband; • Misconduct by corrections officers and management was not always punished. We cannot help but think that all of these problems — every single one, including the death of Joseph Murphy — were avoidable. In the past few years, the Juneau Empire and the Alaska Dispatch News have repeatedly investigated the surge in prison deaths that has afflicted Alaska. Again and again, we have requested information about these deaths and about the practices of Department of Corrections. We have investigated the problems reported by inmates and we have covered the actions of the state ombudsman in responding to complaints about the prison system. Almost inevitably, our reporting has been met by a stone wall of silence from the Department of Corrections. The department has repeatedly denied our requests for information, for comments, for simple reports about what exactly happened. The Department of Corrections is a public agency. It is supposed to be answerable to all Alaskans. Instead, it concealed its actions with silence and denials, and now 15 people are dead because no one knew what was killing them. It was neglect — sheer neglect on the part of administrators past and present, those who cared more about protecting their jobs and concealing shame than fixing problems. Inadequate training and staffing, coupled with outdated policies and a culture of secrecy have allowed an infection of mistakes to turn septic. We fully expect criminal charges to be brought against some members of the Department of Corrections as a result of their negligence, and based on the reports we have read, those charges will be amply deserved. That’s not to say all corrections employees are to blame. Just as there were a few who didn’t follow the rules, there are many more who have served dutifully in their roles. It would be easy — and wrong — to simply say that these are inmates and that they should not have committed the crimes that landed them in jail. Joseph Murphy was no criminal. He had not committed a crime, and yet our prison system and its policies killed him just as surely as if he had been hanged on the steps of our capitol building. On Monday, Walker accepted the resignation of corrections commissioner Ron Taylor, a good-natured man whom Walker himself appointed to the job in January. Now comes Walt Monegan, a man whose integrity was shown during the Troopergate scandal of Gov. Sarah Palin. Monegan faces a mammoth task, but it is a necessary and urgent one. Alaskans are quite literally dying as a result of problems in the Department of Corrections.

EDITORIAL: Sturgeon case vital for Alaska’s sovereignty

The case of John Sturgeon versus the National Park Service and the Department of the Interior is strikingly important with regard to the sovereignty of the State of Alaska. The lawsuit brought by Mr. Sturgeon, an Anchorage resident, in September 2011 is a fairly straightforward one and at 21 pages can be considered brief. It is now in the hands of the U.S. Supreme Court. The lawsuit’s central contention is this: Mr. Sturgeon and his many supporters argue that the National Park Service does not have the authority to enforce its regulations on state waterways that pass through lands under control of the federal agency. The point of debate is a phrase in the Alaska National Interest Lands Conservation Act, approved by Congress in 1980. Section 103, subsection (c) of the act reads as follows: “Only those lands within the boundaries of any conservation system unit which are public lands (as such term is defined in this Act) shall be deemed to be included as a portion of such unit. No lands which, before, on, or after the date of enactment of this Act, are conveyed to the State, to any Native Corporation, or to any private party shall be subject to the regulations applicable solely to public lands within such units.” Mr. Sturgeon, in his lawsuit, alleges the National Park Service abided by that language for 15 years, limiting its authority on state lands — the term includes the submerged land of the waterways —within federal conservation units. But it was in July 1996, the lawsuit says, Park Service leaders chose to extend their authority to encompass navigable waters within conservation unit boundaries “without regard to whether these navigable waters were owned by the state of Alaska.” In doing so, the Park Service decision suddenly made numerous regulations applicable in Alaska. One of those regulations prohibits the use of hovercraft on public lands within boundaries of Park Service conservation units. Mr. Sturgeon at the time owned a hovercraft and had since 1990 regularly used it to access moose hunting grounds within the Yukon-Charley Rivers National Preserve and upriver of the preserve, traveling on the Yukon and Nation rivers. The genesis of his lawsuit came in September 2007, when on a moose hunting trip, Mr. Sturgeon needed to bring his hovercraft to a gravel bar to repair a steering cable. Three armed Park Service law enforcement employees approached him, according to the lawsuit, and told him it was illegal to operate a hovercraft within the Yukon-Charley’s boundaries. “When plaintiff advised the NPS employees that the hovercraft was being operated on a state-owned navigable river and thus the NPS water regulations did not apply, the NPS employees advised plaintiff that he was incorrect,” the lawsuit reads. Following that 2007 incident, Mr. Sturgeon met with Park Service personnel and, because of the Park Service personnel warnings, did not hunt in the area from 2008 to 2010. He sued in 2011, and Alaskans should be glad that he did. A federal judge in Anchorage ruled against him, though, as did the 9th U.S. Circuit Court of Appeals. In both instances, the language in Section 103 of ANILCA may have fallen subject to a version of understanding not in line with the intent of Congress. The state of Alaska submitted a brief in support of Mr. Sturgeon’s view during his appeal to the full 9th Circuit Court. In it, the state argues a ruling against Mr. Sturgeon “upsets ANILCA’s delicate balance between state and federal authority, but it also could be interpreted to impair the ability of Alaska Native corporations to utilize their vast inholdings to secure their economic and cultural well-being as Congress intended.” Further, the state’s filing details the intent of Congress, noting a Senate report accompanying the final version of ANILCA “plainly explains Congress’ intent to prohibit the Park Service from regulating non-federal land as if it were part of a national park and to not allow the Park Service to decide which of its regulations would apply where.” The position of Mr. Sturgeon, the state and others appears strong. Now the matter will be for the Supreme Court to decide. The outcome of the appeal will, regardless of which way the decision comes down, have a direct affect on Alaskans traveling on state waterways that transit units of the National Park System. Alaskans must hope the justices read the language as Congress intended. If not, the Last Frontier, with its promise of freedom and expanse, will lose a little more of itself to the multitudinous pages of a rulebook.

Walker thanks Legislature for pulling together to advance a gasline

This was an historic week for Alaska. Thanks to our state legislators, we took a significant step toward controlling our own destiny. The Legislature held about two weeks of hearings to examine my proposal to buy out TransCanada’s interest, then almost unanimously approved my request to exercise our option to take over Alaska’s share of the gas pipeline project. This is not just a financial or contractual arrangement. It’s so much more. For the first time in a long time, Alaska is stepping up and taking out the middleman between us and our future. Under a prior agreement, TransCanada held the State’s ownership interest in two components of the Alaska Liquefied Natural Gas (AK LNG) Project — the gas treatment plant on the North Slope and the gas pipeline itself. While TransCanada has been a valuable partner in the AK LNG project, taking over the company’s interest gives Alaskans greater control over our share of the gasline project. It ensures that we maximize the economic return on the production of our natural gas resources. To successfully build a gas pipeline transport system and market our gas, we must pull together as a team. The next step is to ensure North Slope gas is available for a gasline project. While some of our AK LNG partners are developing multiple LNG projects around the world, we have just this one. The united front shown by the Legislature’s approval of the TransCanada buyout goes a long way toward getting us a pipeline project that secures our economic future and benefits all Alaskans. The benefits of an LNG pipeline system include short-term construction jobs; long-term careers running the pipeline and developing oil and gas reserves; opportunities to help meet the state’s energy needs; and a long-term revenue source for public infrastructure and services. Long before construction begins, this project will jumpstart Alaska’s economy. It will create thousands of jobs. Billions of dollars will be spent and circulated throughout the state. Every project dollar has a multiplier effect—supporting local businesses, retailers and contractors who in turn support other businesses. To ensure those jobs go to Alaskans, we have already begun training local workers in preparation for the type of work that will come with the pipeline. As of 2014, more than 1,600 Alaskans have received training in pipeline construction and maintenance. Once the pipeline is built, we will see hundreds of long-term career opportunities in which Alaskans can run and maintain the pipeline system. And we can expect even more jobs and state revenue from reinvigorated oil and gas exploration on the North Slope. This economic activity boosts local economies and helps provide a base for economic diversification. There will be at least five pipeline off-take points, which means the potential of lower energy costs for Alaskans as natural gas is made available to communities throughout the state. This will enable communities to replace wood and oil with natural gas, which will reduce air pollution and carbon emissions. Approval of the TransCanada buyout is another stepping stone toward making the gas pipeline a reality. Standing united together, we can do this. I thank you, Alaska legislators, for pulling together to provide overwhelming support of this important project advancement.   

The Bookworm Sez: How to spell M-O-N-E-Y

There’s a little jingle in your pocket, and you can’t wait to spend it. So what will you buy? Will you purchase candy or a toy? Is there enough for a present for Mom or Grandma? Or, after you read “M is for Money” An Economics Alphabet” by Debbie & Michael Shoulders, illustrated by Marty Kelley and learn a little more, will you put the jingle in your bank? Why do we even have money? The answer starts with farmers… About 10,000 years ago, when humans decided to stay in one place and grow crops, someone eventually had an (A for) Abundance. In their little (C for) Civilization, then, they were able to trade crops for food and other items. Because it’s kind of hard to carry a bushel of grain in your pocket, money was created as a stand-in. This all has to do with (E for) Economics, which is “the study of how we get things we want and need,” how barter works, and how businesses operate. It’s “the way people obtain items that may be scarce or in-demand.” Let’s say you have (G for) Goods and Services, like lemonade and brownies to sell. The kid next door is selling milk and cookies. You can lower your price to attract customers but you’ll want (I for) Income from your lemonade and brownies, so you won’t want to sell too cheaply. On the other hand, you can raise prices if it’s a hot day and people are hungry. The kid next door can do the same, if she wants — which is a basic definition of a (F for) Free Market. So what do you do if you want more (M for) Money? You can ask your family, friends and neighbors to pay you for special chores, which makes you a (P for) Producer. You can cut your (S for) Spending, and put your money away for interest, which you get when your bank makes a (L for) Loan to someone. You could try making something at home out of the (R for) Resources you already have, and you’ll have (Z for) Zero Profit Condition. Or you could just ask for a bigger allowance. How easy is that? As a parent, that’s a question you have: how easy should it be to explain economics to a child who knows what money is? The answer is inside “M is for Money.” Starting at the earliest possible point, authors Debbie and Michael Shoulders give kids thorough lessons on supply and demand, housing markets, quotas, taxes, and other facets of economics in a way they’ll understand — particularly if you’re around to help fill in the blanks they may still have. It might fill in the blanks that you have, too. Though this book may seem like it’s meant for small children (and the illustrations by Marty Kelley support that), the concepts here could be quite advanced for them. No, “M is for Money” is best for 8-to-11-year-olds. Those are the kids who’ll want to spend time with it. 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]

Producers let Walker save face in pulling gas tax

Starting with Shell’s announcement Sept. 28 it would be suspending its Arctic exploration program indefinitely, it’s been a rough couple months for resource development in Alaska by any standard. Having regulated Shell’s effort into uneconomic status, the Interior Department then canceled Arctic Outer Continental Shelf lease sales for 2016 and 2017 and refused to stop the clock on Shell’s leases in the Chukchi and Beaufort seas despite the fact that Shell lost a full year in 2010 because of a federal drilling moratorium following the Deepwater Horizon disaster. In between, Repsol and Armstrong announced they were deferring planned work for this winter at their Colville Delta prospect where they’ve spent the past four years proving out a substantial discovery. The result is that some 500 contract employees won’t be working there this year. Unlike the situation with Shell — which has no silver lining and ripple effects now include the suspension of work studying a deepwater port at Nome — there was at least some positive in the statement from Repsol and Armstrong. The companies announced that when developed, the Colville Delta prospect could produce 120,000 barrels per day. That would be a much-needed, huge boost to throughput in the Trans-Alaska Pipeline System although current prices and the prospect of years of permitting makes the timing of production impossible to guess. Just look at ConocoPhillips’ CD-5 project — a notable bright spot as oil is now flowing for the first time from the National Petroleum Reserve-Alaska. It took 12 years between the environmental impact statement and the first oil at CD-5, a testament to federal obstacles and the anti-development cabal of NGOs that are often indistinguishable. ConocoPhillips did receive a key permit for its Greater Moose’s Tooth-1 project, although whether its board of directors will sanction development in the current climate of oil layoffs and capital expenditure pullback is also an open question. Amid federal roadblocks in the OCS and the natural price cycle that the state cannot control, Gov. Bill Walker decided to monkey around further with the Alaska LNG Project by calling the Legislature into a special session with instructions to consider his threat of a gas reserves tax against producers who decide against participating. Setting himself up for another fight with the Legislature he surely knew he was destined to lose, the producers threw Walker a lifeline for  a way out of his ill-conceived, undefined and probably legally indefensible idea. ConocoPhillips and BP sent Walker one-page letters stating they would provide the gas they own at the Prudhoe Bay and Point Thomson fields even if they choose not to participate in AK LNG. Walker touted the letters as “written assurances” that gas would go to the project as he abruptly removed the gas reserves tax from the special session (although it has to be questioned whether his office even managed to draft a bill to introduce given the seat-of-his-pants way the governor first pitched the idea on Sept. 24). The letters from ConocoPhillips and BP, of course, are hardly binding as they include the caveat that gas would be provided on a “mutually agreeable” and “commercially reasonable” terms. The ConocoPhillips letter also stipulates that any such arrangement would be “subject to management approval.” So once again, Walker caused a huge fuss over nothing, much the way he announced he would pursue a competing project to AK LNG this past March until the Legislature stopped him by taking his money away from the Alaska Gasline Development Corp. While constantly raising fears of a producer pullout from AK LNG, it’s hard to see how Walker can look at the North Slope today and believe that ConocoPhillips, BP and ExxonMobil are not committed to Alaska. In the past month, CD-5 and Drillsite 2S in the Kuparuk field have begun producing for ConocoPhillips and will add some 24,000 barrels of new oil to TAPS in this fiscal year, representing billions of investment. To the east at Point Thomson, ExxonMobil and BP have spent some $4 billion with a “B” actually constructing the first phase of AK LNG. Point Thomson will supply 25 percent of the gas to the project, but for now will supply 10,000 barrels per day of natural gas liquids to TAPS starting the first quarter of next year. It is also the big three producers who have been buying up land in Nikiski for the future site of the LNG processing plant and applying for and receiving the necessary export permits, triggering the scoping process for the environmental impact statement. The producers’ AK LNG spending and permitting in addition to the billions of dollars invested resulting in 34,000 new barrels of liquids for TAPS in this fiscal year calls to mind the truism that money talks and you-know-what walks. The producers’ money is talking, and it’s time for the governor to start listening.

Alaska, U.S. small businesses deserve better on Ex-Im Bank

We all know Washington, D.C., is far away from Alaska, but just because it is far away doesn’t mean that the dysfunction there doesn’t hurt our economy. It does! Since June, Congressional gridlock has sidelined the federal Export-Import Bank. This small agency helps Alaskan companies sell their goods overseas by offering loans and insurance products when no private sector alternative is available. Over the past few years, Ex-Im has helped Alaskan companies export over $171 million in goods. It has helped small businesses break into the export market, allowing them to reach new customers and hire new employees. It has helped larger businesses sell more products, which in turn means more businesses for their subcontractors and suppliers. It has allowed companies such as Salamatof Seafoods of Kenai sell their salmon and other seafood overseas. It has allowed Lynden Air Cargo of Anchorage to thrive. And it has allowed Gunderboom sell its Alaskan-made Subsurface Oil Control System around the globe. In short, Ex-Im has helped create jobs and boosted our economy. Over 65 percent of the Alaska Chamber’s members are small businesses and deserve a chance to compete globally. A small group in Congress has been blocking an up or down vote on this issue. They are trying to kill the bank just to score political points. They call the bank “crony capitalism” despite the fact that Ex-Im is open to all American companies that export goods. They say Ex-Im picks “winners and losers in the economy” but the truth is the only winners Ex-Im picks are American companies — the losers are foreign competitors. The critics claim the Bank only helps large companies, but ignore how 90 percent of the Bank’s transactions are with small businesses. And they say that the Bank hurts taxpayers despite the fact that it doesn’t cost taxpayers a dime and helps pay down the deficit. In fact, since the Bank charges the companies using its services interest and fees, the Bank often collects more than it costs to run. Over the past two years, Ex-Im has actually returned $1.7 billion to the U.S. Treasury. Thankfully on Monday (Oct. 26), Congressman Don Young will have the opportunity to stand up for our state. He has the opportunity to support Alaska’s economy and boost jobs here and across the nation. Recently, a bi-partisan majority in the House stood up to those who favor gridlock and dysfunction. They signed a “discharge petition,” which allows any member of Congress to force an up or down vote on the issue. For decades, Congressman Young has been a fighter for Alaska. For 42 years, he has represented us in Washington building a record as a fierce advocate for our state. He knows that it takes a special kind of person to thrive in Alaska. He understands that isn’t always easy to build a successful business in our state. Congressmen Young knows Alaskans want polices that ensure Alaska companies can compete across the globe. Thanks to the modest support Ex-Im provides, which helps level the playing field, businesses from Ketchikan to Barrow can do just that. So, on Oct. 26 we look forward to Congressman Young voting to reauthorize the Ex-Im Bank. Rachael Petro serves as the president and CEO of the Alaska Chamber. The Alaska Chamber’s mission is to improve Alaska’s business climate.

Local 71, DOT: Keeping roads clear and safe during winter

It’s 3 a.m. on a Tuesday in the middle of January, and you’re asleep in a warm bed. Outside, blinding snowfall is blanketing the landscape, there’s freezing rain, sleet, and blustering winds. Public Employee Local 71 crews, working for the Alaska Department of Transportation, have already been out in the 30 below weather for several hours, working to beat your 6 a.m. alarm. While you are at work or school, or driving to and from activities and home, the men and women of Local 71 continue to battle the elements to clear, de-ice, and plow our roads and airport runways. We do all in our power to assure that once your car pulls out of the driveway, you stay safe. Alaskans understand the importance of safe highways during winter and the mothers and fathers at Local 71 get it too. We are a part of our community and our state. However, in a time when oil prices have slid from about $110 a barrel to the $50 range, the Alaska State Legislature is doing its job: looking out for Alaska’s best interests in a time of fiscal concern. The bottom line is that there are over 5,000 miles of road to plow, and significantly less money to get the work done. Needless to say, there will be far less time spent clearing and maintaining Alaska’s transportation network this winter. This is not a complaint, we recognize the budget climate and understand some services will shrink. Yet, while there may be fewer dollars to spend, it will not change the Local 71 or DOT passion to keep our transportation network as clear as possible, and our friends and neighbors — all Alaskans — safe. During and after snow events, roads will still be plowed and bridges de-iced, but not as quickly or as frequently as drivers might expect from years past. Crew schedules will change to meet the increasing demand. Responsible budget cuts have eliminated 85 positions across DOT, including 34 in maintenance. Yet, it will not change the Local 71 or DOT passion to keep our transportation network as clear as possible, and our friends and neighbors — all Alaskans — safe. Meanwhile, the state has created a five-tier priority system for clearing roadways, based on their traffic volume, speeds, and uses. Level 1 roadways — those that experience high hourly traffic — include highways, expressways, and safety corridors of major urban and community routes. Level 1’s will get cleared within 24 hours of a storm event. These Level 1 roads are mostly located in cities with larger populations, including Anchorage, Fairbanks, and Juneau. The next type of road that the DOT recognizes is Level 2: major highways with a lesser priority based on traffic volume, which often connect to Level 1 roads. Level 2 roads will get cleared within 36 hours after a storm. The third level includes major local roads, or collector roads, in larger urban areas, and will wait as long as 48 hours before clearing occurs. Minor local roads are classified in Level 4, and can expect winter maintenance within 96 hours. Once you hit DOT’s Level 5 category, these are primarily summer use-only roads, which are not plowed. If you’re wondering about roads near you, check out The Department’s Winter Road Maintenance Priority Map online. Alaskans are tough, and we’re not afraid to tighten our belts or help each other out when there’s a need. When frigid rain coats roads with ice, and deep snow builds up, Local 71 will partner with municipalities around the state to share the load. We drive the same highways and streets as your family. Each one of our 2,500 members is proud to respond to the call to clear and maintain some of the state’s 5,619 miles of highway, 249 rural airports, or 720 public facilities throughout the state.  And at each job, safety is our number one priority. At Local 71 we are committed to keeping roads, parking lots, and runways clear, planes in the sky, and providing meals and maintenance to Pioneer Homes all over the state. We work hard and find great satisfaction in serving Alaska. Dennis Moen represents Public Employees Local 71.

The Bookworm Sez: Getting rich through grift

Your numbers weren’t picked last night. Ah, another worthless lottery ticket. No shopping spree or mortgage payoff for you. You’ll have to go to work and get your incredible wealth just like everybody else. Or, as you’ll read in “Prince of Darkness” by Shane White, you could become rich the old-fashioned way: through grift. Though he showed up in New York City in the wake of scandal, nobody knew for sure where Jeremiah G. Hamilton had come from. Some sources said he was born in the Caribbean — which he admitted to, but he also claimed Richmond, Va., as his first home. Nobody knew, though, because Hamilton, an African American man, spent most of his adult life hiding facts and creating fiction. Wherever he got his start, Hamilton launched himself early: in 1828, and “barely into his twenties,” he was involved in a counterfeit scam in Haiti that would’ve meant death, had he been caught. With the help of locals, however, he escaped and arrived in “Gotham,” but not without notice: newspapers of the day splashed the story, but Hamilton managed to keep mum on who’d helped him.  Almost immediately, he started borrowing money in a “frenetic, almost desperate” way, money he had no intention of paying back, which ultimately landed Hamilton in court: there were at least 10 lawsuits against him between 1830 and 1835, and there may’ve been more. Then came The Great Fire of 1835 in which “dozens of acres” of Manhattan were burned to the ground, along with the records of several businessmen who’d been convinced to invest with him. Hamilton denied the transactions, kept their $25,000, and gained the moniker of “Prince of Darkness.”   For the rest of his life — even after being forced to declare bankruptcy — Hamilton always landed on his feet, “shunned” other African Americans, and even invested in companies that overtly practiced racism. He died in 1875 in a “comfortable and elegant” residence he shared with his white wife and family. So why are history books silent on Hamilton’s story?  That’s a question author Shane White had, after he discovered Hamilton’s name and began digging. Could it have been due to the color of Hamilton’s skin? It’s possible, White says, but in “Prince of Darkness,” he also indicates that the lack of documentation may’ve been because Hamilton rankled white financiers and investors, and didn’t appear to care that he’d done so. That insouciance, in light of the racism that Hamilton surely endured, would be an interesting story itself but White embellishes the tale with an abundance of history and extensive biographies of other influential people of Hamilton’s time. That’s good — to a point — but it occasionally can also makes this book deadly dull. I found my mind wandering much more than I might’ve liked. So is this book worth reading?  I think so, but you may want to give it a rest now and then to regenerate yourself. Start it, take a break, repeat as necessary and you might find “Prince of Darkness” to be just the ticket. 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: A new — and improved — Northern Forum is necessary

The Northern Forum — a nonprofit, international association — was formally established in 1991 with eleven regional members from nine northern countries. Its intent upon forming was to improve the quality of life of northern peoples by providing northern regional governments a means to share their knowledge and experience in addressing common challenges.  As Gov. Bill Walker resumes talks with the Northern Forum, we wanted to remind Alaskans of what the Forum is, and more importantly, what it could be. All inaugural members agreed that the future held boundless potential for the Arctic and that together, the northern regions could overcome the challenges that each were facing. They hoped that the Forum would generate international awareness, respect and legitimacy for the issues northern communities face. While in its early years the Northern Forum certainly accomplished this, the reality is that the Forum’s efficacy has waned in the recent past. The creation of the Arctic Council in 1996 certainly had a lot to do with this, as eight nations came together to address sustainable development and environmental protection. The inclusion of Permanent Participants, who represent indigenous groups, in that body, as well as the increase in observer states and organizations over the years, resulted in the Arctic Council becoming the face of the Arctic in the public’s mind. Even as the Arctic Council has moved forward as the intergovernmental forum in the Arctic, so have increasing calls for more local input, regional participation, and inclusiveness. That said, the Arctic Council will remain the focal point for international cooperation into the future, even as the future of Arctic governance truly rests in the concerns and capabilities of local or regional collaboration, which is where the Northern Forum has a greater role to play. Without formal and active engagement between the Arctic Council and the Northern Forum, efforts by either to address the economic, living, cultural and environmental conditions of northern peoples will fall flat. In place of repeated calls for the Arctic Council to open its doors and for inclusion and transparency, we argue that that the current capabilities within the Northern Forum be harnessed to address this gap. The Northern Forum is already an “observer organization” to the Arctic Council and provides the means for regional inclusion and local investment in the Arctic Council. The challenge is to fully realize that potential. We hope that the states, territories and other regional governments of the North can come together in a “New Northern Forum.” A Northern Forum with full participation across the Arctic, with active leadership from northern governors and premiers, and with robust participation in the Arctic Council would bring the reality, richness and responsibility of the Arctic back to the peoples of the Arctic. It will take careful leadership from current and potential Northern Forum members to right the ship and steer it through this uncharted territory. It will take intentional collaboration between regional governments — each of which have pressing domestic concerns — but the long-term benefits will outweigh the costs as together northern peoples articulate very clearly shared and individual perspectives and priorities, and work to bring these and local assets into the outcomes of the Arctic Council. At the same time, there are best practices that the Northern Forum can apply in the short term that will resonate with a broader membership and make its actions more effective. These include: • Establishing a regional Secretariat in North America, the Nordic Arctic and Russia that can support a diverse membership • Lowering membership fees to better attract regional governments, even as increased outreach is conducted to bring in local governments and the business community • Developing and implementing a strategic plan that corresponds to the vision of northern governors, premiers and regional policymakers A New (and Improved) Northern Forum has the potential to fully represent northerners in the policy-relevant discussions taking place at the Arctic Council. This step will also help realize the Arctic Council as a “model of cooperation” even as it advances local governance, which will be a critical element of the future of the Arctic. Alaska’s Governor — and others — will need to act to fully leverage this opportunity. They can do this by working together within the Northern Forum structure, reinvigorating and investing in this body in a way not seen since Gov. Hickel. The founding members of Northern Forum included: Yukon; Heilongjiang Province; Lapland; Hokkaido; Dornod, Mongolia; Trondelag and Tromso, Norway; Chukotka Autonomous Okrug and Magadan Oblast, Russian Federation; the Republic of Korea; and Alaska. Alaska State Sen. Lesil McGuire is the current co-chair of the Senate Special Committee on the Arctic and the former co-chair of the Alaska Arctic Policy Commission.  During her tenure as president of the Pacific Northwest Economic Region she established the Arctic Caucus where she serves as co-chair. Nils Andreassen is the executive director of the Institute of the North, an independent nonprofit organization whose mission is to inform public policy and cultivate an engaged citizenry. The Institute has a legacy working on Arctic infrastructure priorities and policies that serve to strengthen and connect northern communities. 

The Bookworm Sez: Leading from the heart

If anybody asks, you’ll tell ‘em straight: you love your job. It’s perfect for you, and it takes advantages of your strengths. That’s plenty to love, although there are times when you wonder if it could be even better. According to author Tommy Spaulding, you might be surprised — and in his new book “The Heart Led Leader,” he explains. Changing your life and your organization, says Spaulding, is an 18-inch journey. That’s approximately how far it is from your brain to your heart. But by heart, he doesn’t mean the thing that pumps your blood, and he says he’s not being “touchy-feely.” Spaulding believes that love is at the very basis of every successful organization, and cultivating an unselfish desire to do good for others is integral to leadership. How many businesspeople do you know, for instance, who make it a point to know a little bit about each of their employees? Spaulding introduces readers to CEOs who do, and he explains how that genuine interest and compassion drives results in attainment, shareholder success, sustainability, and bottom lines. He tells stories about how love changed the cultures — and profitability — of formerly-failing companies. And he writes about one entrepreneur who forgave big, and the lives it changed. It’s all about relationships, he says, and one statement sums up everything: “do right.” It also helps to know who you are, who you serve, and who you love. That knowledge, says Spaulding, will make you a “Who Leader” and will further your path to become a Heart Led Leader. Other things to take with you: openness, which Spaulding claims works in places other than business; humility, which helps you think of others more; and emotional vulnerability, which allows others to be vulnerable, too. Have a keen passion for what you do and display it to your employees and customers. Practice selflessness by never losing sight of the overall team. Be someone who’s genuine. Have (and demonstrate) faith in yourself and those who work for you. Show empathy to employees by remembering that they have hard times, too.  Learn to forgive.  Offer encouragement. Be honest. Oh, I tried so hard to like this book. I really did. Instead, “The Heart Led Leader” kind of made me squirm: despite author Tommy Spaulding’s assurances that his method isn’t new-agey-touchy, I sure did feel like it was. Yes, I’ll admit that some of what Spaulding espouses is sound. Employees do appreciate caring bosses, and they’ll tend to emulate CEOs with passion. I can’t imagine having a workplace without dignity or authenticity, and every business owner in the world understands the importance of good relationships. But there are limits, I think, and this book tiptoed pretty close to there. The advice is good, in other words, but I question the open emotions-forward methods. I think what’s inside this book may certainly work in some places. In others, definitely not, and readers should be watchful of that. “The Heart Led Leader” may turn your business around — or you may not love it one bit. 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 bookwormse[email protected]

EDITORIAL: Feds should turn over forest lands to Alaska

Rep. Don Young, R-Alaska, made an interesting point about the U.S. Forest Service on Sept. 29 during a congressional hearing on federal timber policy. It came while Young was highlighting the differences between the timber programs managed on State of Alaska lands versus those on federal land controlled by the Forest Service, saying that the Forest Service takes five years on average to put up a timber sale while the state only takes two years — and the state puts up a much higher percentage of its available timber than does the Forest Service. “I look at this and the Forest Service is no longer the Forest Service, it’s the Park Service,” Young said. “They’re not trying to manage the timber.” The concept of national forests as being mostly off-limits to timber harvesting was noted also by Greater Ketchikan Chamber of Commerce Executive Director Chelsea Goucher, who told the House Natural Resources Committee’s Subcommittee on Federal Lands in Washington, D.C., that the 17 million-acre Tongass National Forest encompassed 90 percent of the land in Southeast Alaska, “91 percent of which is categorized as roadless and therefore functionally unavailable for any type of development.” This includes further development of hydropower generation, according to Goucher, who, in response to a question from Young, added that the Forest Service’s program for issuing special use permits for local businesses to provide services for cruise ship passengers in the Tongass is inadequate to meet the demand. The picture emerges of an agency that cannot or will not provide for timber harvesting as part of the multiple-use mandate for national forest lands, nor does it accommodate demand for recreational use of the national forest. Has it, as Young suggests, simply become a manager of off-limits parks? Not yet. But it might have few choices for anything but hands-off management soon. Later in the hearing, Rep. Niki Tsongas, D-Massachusetts, remarked about how $700 million had been transferred out of this year’s Forest Service budget for non-fire items and into efforts to fight wildfires. That’s $700 million moved out of things like timber sales programs and recreation nationwide, just this year. Now, it doesn’t sound like the wildfire situations in the Lower 48 are likely to improve anytime soon, although Young did assert that the current wildfires are the result of decades of inadequate forest management. Nor are there indications that future federal budgets will boost Forest Service funding in the near or long terms. What becomes of the Forest Service then? Some trends have begun to surface. Nationally, the agency’s ranks have thinned during the past decade. Young railed about the number of boats and kayaks visible in Forest Service lots, but even the agency’s frontline facilities appear to be operating with fewer staff. Local trail maintenance appears to be falling off. Some recreational cabins have been closed, and some Forest Service roads in southern Southeast Alaska have being taken out of service. On the timber side, constantly having to sort through legal actions over every sale involving old-growth forest must be a serious drain on Forest Service coffers. The agency also is torn between competing viewpoints on harvesting timber. At what point does the Forest Service become unable to actively manage national forests for multiple-uses — or any use? When will it be reduced to just patrolling the fence around a de-facto Tongass National Monument? This dim view of the agency’s present and future capabilities to provide for multiple-use development is a likely factor in Young’s legislation that would allow states to select and acquire federal national forest land for timber harvesting and other uses. Introduced Sept. 29, Young’s “State National Forest Management Act of 2015” would allow states to acquire up to 2 million acres of national forest service land. Goucher spoke in support of the concept Sept. 29, saying that it could result in 2,500 jobs in Alaska. “State managed lands are accountable to clear mandates and generate significant revenues for stakeholders, while federally managed lands often lose taxpayer money and frustrate local development and community growth,” she said. There’s logic to the proposal. If the feds can’t or won’t actively manage the land, why not give some of that land to the states? We look forward to seeing what Congress does with this concept. Meanwhile, Alaska should ensure that it’s capable of administering any lands received from the federal government. Gutting the state timber offices — something that the Alaska Legislature was poised to do earlier this year — isn’t the way to go.

Producers want gas by 2025. Does Walker?

When it comes to the Alaska LNG Project, it appears Gov. Bill Walker is more interested in negotiating the pre-nup than he is in planning the wedding. With his latest shot from the hip directed at the project so critical to the future of Alaska, Walker is pitching the idea of some kind of natural gas reserves tax levied against producers who decide against participating in AK LNG. Walker called the Legislature into a special session beginning Oct. 24 to review gas reserves tax legislation in addition to appropriating funds from the Constitutional Budget Reserve to buy out TransCanada’s interest in the project. However, Walker has no bill for the Legislature to consider yet on the gas reserves tax and he was unable to explain how it would work at his press conference Sept. 25. There is no bill to review because Walker decided to push for the gas reserves tax sometime between his meeting with House and Senate leadership on Sept. 21 and his call to a special session Sept. 24. Responding to legislators who said they were blindsided by his tax proposal after he did not mention it in their Sept. 21 meeting, Walker claimed that he told them he was “working on” something for project certainty, as if they should have interpreted that as him planning to ask for a gas reserves tax. Walker said he was “hoping” to hear something from his negotiating team on terms of a withdrawal agreement he has been seeking since taking over the effort last December. When no accord was reached, Walker decided to seek a gas reserves tax instead. “This is in place of the withdrawal agreement,” Walker said Sept. 25. Much like his announcement through a newspaper column in March that he wanted to pursue a state-owned, competing gas project to AK LNG, Walker doesn’t have a plan beyond getting in front of a microphone and repeating a bunch of populist pablum about “Alaska first” and justifying his actions by raising the unfounded specter of a producer pulling out of the project. One of Rep. Don Young’s favorite expressions about government regulation is “a solution in search of a problem,” and that certainly applies to Walker’s threat to use a gas reserves tax against producers who have shown no indication they are walking away from AK LNG. This is all likely a moot point, though, as Walker has a better chance of convincing President Obama to open ANWR than he does of selling the Legislature on a bill he can’t even describe yet. Walker also said Sept. 25 that he spoke with each of the three North Slope partners the day before and, “I have not received a strong outcry from the producers on this. It’s only a problem if they’re not going to allow the gas they control to be used in a project. That would be an admission to me that they have no intention of doing a project. So let’s find that out now rather than 10 years from now.” It didn’t take 10 years, but about 10 minutes, before both ExxonMobil and BP issued statements against the idea of a gas reserves tax. Exxon said it would “undermine” the project and BP said it would make it “more difficult.” By Walker’s reasoning, their objections must mean BP and Exxon “have no intention” of doing the project. Of course, no such thing is true, and it illustrates how Walker’s words routinely outrun decorum when he talks about the state’s project partners or the legislators he described as “un-Alaskan” back in March when they introduced a bill to stop his competing gas project. Walker complains that the state has no leverage with the producers to keep the project on track for a mid-2020s startup for gas sales. He should read the filing BP and Exxon made with the Alaska Oil and Gas Conservation Commission on Sept. 8 in support of their request for additional gas offtake at Prudhoe Bay to supply the AK LNG Project. In the document, the companies state unequivocally that a 2025 startup for a major gas sale project results in a four-fold increase in total hydrocarbon recovery from the Prudhoe Bay pool compared to oil alone, and every year of delay reduces potential gas sales as it would continue to be used to fuel operations supporting oil recovery. Without a gas project, it becomes less and less economic to maintain the North Slope oil infrastructure that will have been in place for nearly 50 years by 2025. From the filing: “A later MGS (major gas sale) start-up also increases the uncertainty that the project can deliver a full 30-year project life due to declining oil production and revenues which underpin the project, and due to increasing project risk from aging facilities which could reduce project life and thus ultimate recovery, reducing the potential incremental recovery relative to a 2025 start-up.” According to the BP-Exxon filing, a 2040 startup compared to 2025 would result in a reduction of about 1.5 trillion cubic feet in gas sales versus an increase in oil production of only about 100 million barrels. Considering the billions of dollars the three producers have invested on the Slope, that sounds like a whole lot of motivation to make AK LNG happen on schedule. Although it was bad enough, the gas reserves tax floated by Walker on Sept. 25 wasn’t the only discomforting thing he said at his press conference. He dismissed as “absurd” a question about how the state would finance a quarter of a $60 billion project if it buys out TransCanada, or how it could finance even more if a producer pulled out. Before the state could try to finance $15 billion, it will cost the state at least $108 million to buy out TransCanada, plus cash calls for the remaining pre-front end engineering and design, or pre-FEED, and another $500 million for its share of the $2 billion FEED process that is supposed to begin next year if all parties agree. And if there’s no real budget reform passed in the 2016 session, credit rating agencies intend to rapidly downgrade the state’s credit status, which will only drive up any financing costs. Walker went on to suggest that the state could sell part of its 25 percent share in the project to some of the Asian customers he recently met with in Japan as a means to finance the project. He cannot be serious. It is an irreconcilable position to demand Alaska be in the driver’s seat of this project and also contemplate selling off pieces of the state ownership to Japanese customers who do not have the state’s best interests at heart. Surely there are some over there who would be glad to spend a few billion up front that they can write off against cheap gas over 20 years, but does that sort of deal maximize the value of the resource for Alaska? Walker said he wants “project certainty” from the producers, but at the same press conference he said, “the market is going to determine if it’s going to happen. The financial markets are going to determine if it’s viable.” In other words, there is no way for the producers to give him a guarantee of project certainty at present when by his own admission the consumer and financial markets will determine whether AK LNG advances. Finally, Walker once again cited the multiple LNG projects under consideration by ExxonMobil as reasons for the state to be ready to go it alone or without one of the current partners. “I can’t control when we’re competing with eight other projects for one company, how we’re going to stack up in that queue,” he said. For the leader of an “owner state,” Walker has plenty of control for how AK LNG stacks up, and his latest idea doesn’t do anything to move it ahead in line. Andrew Jensen can be reached at [email protected]

It’s time for Alaska to drive its destiny as an owner state

Earlier this week (Sept. 21), Lieutenant Governor Byron Mallott and I enlisted the help of seventh-grader Shania Sommer from Palmer to announce the amount of this year’s permanent fund check. We wanted one of our promising youth to be the face of the dividend to highlight the importance of ensuring a bright future for the next generations of Alaskans. It is with those young Alaskans in mind that I write this. When Alaska became a state, Congress mandated that the new state could not sell its resources in the ground. Whereas other states have the right to transfer land so private citizens can own and develop mineral wealth, Alaska cannot. The intent was for Alaska to retain ownership of resources, like oil and gas, to fund our government. Thus, Alaska became an “owner state.” With the discovery of hydrocarbons first in Cook Inlet, and later at Prudhoe Bay, Alaska developed a state government that is largely funded by oil revenues from state and federal lands. Traditionally, states have taxed oil and gas either under a property tax or a tax on production volume. Since Alaska chose to tax based on production, we exempted the value of the assets in the ground from taxation. Instead, we only levy a property tax on improvements, like wells and pipelines. Our current tax structure assumes leaseholders would diligently develop our resources. That has proven unwise. The problem is compounded by the fact that royalty payments by those companies are also based on production.  The consequence is Alaska does not receive income from undeveloped natural gas on the North Slope, and because the leaseholders do not pay taxes or royalty on gas in the ground, there are no penalties for not developing. When I became governor, I inherited a gasline negotiation process which began in June of 2014 under Senate Bill 138. While the technical work is progressing fine, very little has been accomplished on the necessary commercial agreements. That is because the process assumes all parties are equally motivated to build this gasline. Unfortunately, that is not the case. Each producer has its own internal corporate priorities designed to maximize stockholders’ rate of return against all other global possibilities. Therefore, the negotiations only progress at the pace of the most reluctant partner. I am doubtful this process, as structured, will ever result in a project moving forward on a timeline, and with conditions, acceptable to Alaskans. That is why I am taking a significant step to ensure Alaska finally is able to monetize our vast North Slope natural gas. One piece of the legislation I will submit to the Legislature for the special session this month will reinstitute a reserve tax on gas that is not developed. Gov. Jay Hammond signed a similar piece of legislation in 1975 in order for Alaska to receive much needed oil revenue prior to construction of the Trans-Alaska Pipeline. Those taxes were treated as a prepayment of taxes once oil began to flow. Similarly, with my legislation, the taxes would only be paid if the gas is not shipped. Gov. Wally Hickel famously told those who then held leases on the North Slope, “You drill or I will!” They drilled, and because of that, we have Prudhoe Bay today. We have waited for nearly 40 years to see our gas moved to Alaskans and the world market. There have been many gasline efforts to date, but none have been successful — largely due to reluctance from some producers to allow the gas they control to go to market and because there is no financial repercussion for keeping our gas in the ground. A gasline is estimated to return several billion dollars of revenue to the state every year. As Alaska grapples with a multi-billion dollar deficit, the project has gone from a wish-list item to a must-have. As we watch dozens of competing LNG projects being advanced in other parts of the world — many by the same companies we are working with today on AK LNG — Alaska must take steps now to ensure we finally receive revenue and affordable energy for Alaskans from our natural gas. Some will criticize this bold step. But I say it is long past time for Alaska to stand up, work closely with our partners in AK LNG, but never again have Alaska’s future determined by others. If a producer chooses to advance one of its competing LNG projects rather than Alaska’s, then so be it. However, that producer must not be allowed to prevent the gas the company controls in Alaska from being sold or shipped in our gasline. If the company does, then it will have to pay to keep the gas in the ground. Think of it as Alaska’s insurance policy for the future. If nobody withholds gas from a gasline, then the tax is never used. However, without it, Alaska runs the risk of never monetizing our natural gas resources and worse, never controlling our own destiny.  With the passage of a reserves tax, the probability of an Alaska gasline being constructed will be vastly improved. It is time Alaskans step forth, in the great Alaskan spirit of Govs. Hickel and Hammond, to act like the owner state we are. If we insist our resources be developed, and create fair economic consequences if they are not, we will be successful — but only if we have the political will and courage to do so. Gov. Walker issued a proclamation for special session to begin Oct. 24.

GUEST COMMENTARY: Got an extra $2 grand? Tips on the best way to use your PFD

Come Oct. 1, most Alaskans will have an extra $2,072 in their pockets when they receive their Permanent Fund dividend checks from the state. When faced with that sum of money, it’s decision-making time. While a trip to Hawaii is tempting as winter approaches, there are other places to use this money that will have longer term benefits for your family’s budget — and happiness. De-stressing somewhere tropical sounds appealing, and, if you have the money budgeted for it, don’t have any debt, and have a good amount of savings for emergencies and retirement, go for it. But most people aren’t in that enviable position. So consider de-stressing at home instead. Studies show that one of the biggest causes of stress is money. The less control of your financial situation, the more stress you have. So, taking control of your finances is the best way to de-stress. Deal with your debt First, look at what kind of debt you have. Some debt is good debt — a mortgage, for instance — because the interest is tax deductible and the house is an investment. However, if you have any credit card debt, you need to tackle that first. It may not be as satisfying to put all (or most) of your dividend toward credit card debt, but there is no investment that will make more money than paying down your credit card debt to save that interest. If you don’t have credit card debt, but you do have college loans or car loans, look at paying those down. Can’t handle the thought of using your entire dividend towards debt? Make a plan to use 80 percent towards debt, put 10 percent into emergency savings and then use 10 percent on something fun. While you may not be able to go to the Hawaii with $200, you could enjoy a mini-vacation overnight in a luxury hotel. A penny saved is a penny earned Is your debt under control? Good for you! In that case, the dividend is an excellent opportunity to bump up your retirement savings. You could put your dividend into a Roth IRA, which would allow your money to grow tax-free — and you would be able to withdraw it when you’re ready and not pay any taxes on it when you withdraw. It’s an excellent complement to a regular IRA or 401(k) where you invest money pre-tax but then pay taxes when you take them out. If your retirement is well-funded and you have children, think about putting your tax dividend into a college savings plan. Financial planning can put a vacation within reach If you want help with your savings plan, it’s a great idea to meet with a financial planner. Most banks have them, including KeyBank. Financial planners help customers look at the entire financial picture — loans and mortgages, savings and investments — and create plans to make the most of family income. Maybe even save for that Hawaiian vacation — without incurring debt and the stress of paying it off. Brian Nerland is Market President of KeyBank in Alaska. He can be reached at [email protected] Need some inspiration? Here is how some Key bankers are using their checks: “I will make a gift to a charitable organization and put the remainder into savings.” — Brian Nerland, market president “I am splitting it between an emergency savings account and a surprise four wheeling trip for my son’s birthday.” — Tracey Thomas, business banker “I am setting some aside for my emergency savings account and then splurging on a weekend vacation.” — Ryan Wagner, area retail leader “My sons’ PFDs will go into their 529s for college, and then my husband and I will use ours for something fun for our family!” — Tracy Morris, commercial banker “I am saving for college and then enjoying a winter vacation.” — Joe Murry, commercial banker “It’s all going into the college fund!” — Lori McCaffrey, commercial banking team leader

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