Opinion

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

The Bookworm Sez: Best advice is try, try again

If at first you don’t succeed … Was there ever a more irritating thing to say to a kid who cried, “I can’t”? Try, try again. Give it another whirl. Quitters never win and anything worth doing is worth doing well: all advice you hated hearing as a child but that you took with you to adulthood. And, as you’ll see in the new book “Gold Standard,” so did Kym Gold. As the third in a set of triplets born to parents who were expecting just one baby, Kym Gold fought for everything she got from the moment she entered the world. When her parents split, moved on and started new families, she felt lost. She hated creating a scene, but she longed to be seen as an individual, rather than a triplet or one of what seemed like too many kids. Though she was close to her sisters as teenagers, Gold said the girls were often at odds as they tried to find their own niches. Each of them had strengths that the others didn’t have; Gold, the organizer of the trio, realized that she had a flair for design and fashion, and she hated hearing “no.”  Those personality assets served her well when, as a teen, she discovered that certain clothing designers near her Malibu home would sell to her their damaged-and-defective t-shirts for a pittance. Gold mended and personalized the shirts, then sold them for a tidy profit at a small booth on the beach. She named her new business and set about learning how to run it, then entered design school, and tasted other careers.  During this time, Gold also got married, but she’d lost sight of a rule she’d learned from male family members in her childhood: never rely on a man. Gold’s husband cheated on her so she divorced him and she married someone else not long afterward. From there, Gold’s road to fame and True Religion jeans was a rocky one: she started and lost several clothing labels over the years, but she learned from each experience. She raised a family, and capital for more endeavors. And in the aftermath of losing her second husband and her business in the same day, Gold found her resolve… So what? Those were two words that came to my mind over and over. So author Kym Gold started a series of businesses. So she flitted from idea to idea. So she made and lost scads of money. Stand in line. So what? And then it hit me: try, try again. “Gold Standard” is the epitomical story of that old saying and Gold has the tenacity of a terrier. Her life, as depicted in this book, is like one of those bop-bags from childhood: she just kept bouncing back up. So what? So motivational. Keep in mind that this book is rough. It’s choppy, rambling, filled with childhood pity-partying and name-dropping, and it begs for a bit more formality — but overlook it, and you’ll find inspiration. For that alone, “Gold Standard” is worth a try. Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

AJOC EDITORIAL: GOP should, but won't, nuke filibuster on Iran deal

The symbol of the Republican Party is an elephant, but at this point it might as well be a flatworm. Both are weak and spineless, most of them are parasites, and they eat and excrete through the same opening. The latter may sound harsh, but nothing better describes the qualities of what comes out of their mouths lately. The blogger Ace of Spades who coined the term “Failure Theater” should earn an entry into the Oxford English Dictionary for perfectly describing the series of orchestrated Republican defeats spun into campaign pitches for just a few more dollars and congressional seats. As it turns out, the only thing that can motivate the Republican leadership in Washington, D.C., to act like a real opposition party is to go after the voters who handed them back-to-back midterm landslides in 2010 and 2014. But when it comes to actually opposing the party of Harry Reid, Nancy Pelosi and President Barack Obama that gleefully ran roughshod over Republican minorities for six years, the GOP “leaders” Mitch McConnell and John Boehner shrug and tell the people who gave them power that there’s nothing they can do and just give us a break, will ya. “We don’t have the votes,” they whine. “Obama will veto it anyway,” they sniffle. “Now c’mon and help us pass TTIP and reauthorize the Ex-Im Bank so we can make the Chamber of Commerce happy,” they plead credulously. With that absence of awareness it is no wonder they are still dumbfounded by the rise of Donald Trump and the corresponding raising of the middle finger of the people toward the Potomac. Reid and the Democrats’ threats to prevent an up-or-down vote on the Iran deal through a filibuster is a perfect opportunity for McConnell to show he possesses the intestinal fortitude that would differentiate himself from the flatworm that lacks any guts whatsoever. McConnell does have the votes to change the Senate rules to eliminate the filibuster on this vote — or, frankly, any other vote — but baby steps toward walking like an upright humanoid instead of something for Obama to scrape off his shoe would count as progress. When Reid began to realize that 2014 would flip control of the Senate, he nuked the filibuster for the nakedly partisan purpose of stacking the D.C. Circuit Court with liberal Obama appointees. Based on that action alone — and the grave geopolitical consequences of the Iran deal that will be dealt with for generations rising to a far greater significance than the justification for Reid’s power grab — McConnell could easily stand on principle and see to it that a vote is held and Obama is required to issue a veto. It would be a fight that would be lost, but at least it would be a fight instead of a preemptive surrender. That scenario is about as likely as the GOP ever presenting that alternative to Obamacare they’ve been promising since March 2010. Seriously, is five years not enough time to actually put a bill up for consideration? Why, it all seems as if the GOP campaigns of the past three election cycles have been nothing but a fundraising scam. Instead, Republican voters had the leaders they elected to repeal Obamacare planning a legislative fix to preserve the subsidies those same voters were arguing to be illegal based in no small part on the numerous unvarnished accounts of the bill’s architect Jonathan Gruber. Yet these same people have the nerve to question Trump’s credibility or conservative credentials, as if they have any themselves. Another quality of flatworms is that they are bilaterally symmetrical: each side is identical to the other, much the way Republicans and Democrats are today. Trump’s supporters have figured that out. The flatworms never will. Andrew Jensen can be reached at [email protected]

Alaskans embrace executive 'overreach' on Denali

On the eve of President Barack Obama’s visit to Alaska, state residents and members of its congressional delegation finally found a bit of executive action they could support. Obama’s announcement Aug. 30 that Mt. McKinley would be officially renamed Denali drew cheers from Alaskans who have long used the Native Athabascan word meaning “the high one” or “the great one” rather than the name assigned by Congress to North America’s tallest peak in 1917. The reaction in President William McKinley’s home state of Ohio was predictable outrage with Republican presidential candidate Gov. John Kasich and House Speaker John Boehner assailing the act as yet another example of executive “overreach” by Obama. Taking out the subject matter, the assaults on overreach could have been issued by any member of Alaska’s all-Republican delegation whether it is new Environmental Protection Agency regulations or Obama’s unilateral decision earlier this year to begin managing the Arctic National Wildlife Refuge coastal plain under a wilderness designation. Changing the coastal plain to a wilderness designation requires an act of Congress, but then again, so does changing the immigration status of millions of illegal aliens, administratively amending the Affordable Care Act to ameliorate some of its most onerous features, or renaming a peak that was designated Mt. McKinley by law. Alaskan congressional efforts to change the name to Denali have been routinely stymied by the Ohio delegation ever since former Gov. Jay Hammond first petitioned to rename the mountain in 1975. Citing a 1947 law giving the Interior Secretary the power to resolve geographic naming disputes, Sally Jewell signed the paperwork making it official on Aug. 28. Lost in all the celebration, however, is the fact that the reason Mt. McKinley survived as the name for so long was because it was dubbed as such by Congress. Obama’s executive decision has no such durability, and the likes of Kasich and Donald Trump vowed to change it back should they win the Oval Office. It doesn’t seem likely that Kasich or Trump or whoever would find a one-day dustup over a mountain’s name more than a year before the 2016 election worth revisiting, but that doesn’t mean it’s impossible. The only good thing about most of Obama’s executive orders is that they can be rescinded by the next president, so it is more than a little strange to see some of his most vociferous critics enjoying this one simply because they agree with the outcome. And speaking of executive overreach justified by popular support, it would have been fun to be a fly on the cabin walls of Air Force One listening to the conversation between Obama and Gov. Bill Walker. “So, Gov. Walker, how were you able to expand Medicaid?” “I couldn’t get Republicans to do what I wanted, so I just did it anyway!” “That’s awesome! It’s what I do all the time. Stupid checks and balances.” On a more serious note, Obama’s trip was all about climate change as expected, and he found some useful backdrops of glaciers and coastal erosion to make his point. He certainly wasn’t going to be photographed anywhere near an oil rig or a producing mine even though he would have had a chance to visit Red Dog on his trip to Kotzebue and it would have been very educational for him to see how Prudhoe Bay operates in its delicate environment. That being said, amid a global economic slowdown and a collapse in oil prices, Obama’s record in Alaska isn’t all bad. Shell is drilling in the Chukchi Sea, ConocoPhillips is drilling in the National Petroleum Reserve-Alaska and will start new production there later this year, and the Federal Energy Regulatory Commission has approved export permits for the Alaska LNG Project to both free trade and non-free trade countries. Alaska is one of the few places on Earth where this level of investment and actual drilling is currently happening. Obama’s administration hasn’t necessarily made it easy, but it hasn’t stopped it, either. That’s an executive inaction worth appreciating. Andrew Jensen can be reached at [email protected]

Why local fishermen protested the Kenai River Classic

Many people are asking why the Kenai Area Fisherman’s Coalition, or KAFC, supported demonstrations against the Kenai River Sportfishing Association, or KRSA, and the Kenai River Classic fund raising event. Here is a press release KAFC issued to media outlets regarding our participation in the demonstrations against KRSA and the Kenai River Classic that took place last week: “The Kenai Area Fisherman’s Coalition was formed over ten years ago by a group of local concerned citizens including business owners, ex-guides and retired fishery professionals who believed there was a need in our community for all user groups to work together for sustainable fishery resource management. “We recognize the value of diversity in our community and support a fair allocation of resources for all user groups (commercial fishermen, guided anglers, non-guided anglers, personal use fishermen and subsistence users). This resource sustains us physically, spiritually and economically: “Abundant fishery resources are a driving force in why we live here. We also like to consider ourselves a “Joe Fisherman” organization (no gender bias intended) since we have no commercial interests. “We recognize that outside corporate interests, through the Kenai Classic, have funded one politically dominant organization affecting Kenai River resource issues. KAFC believes this has left the general public, municipalities and other organizations marginalized. “We believe the Kenai River as well as community resources have been negatively impacted. We believe that sound biological principles, not politics, should be the driving force behind resource management. It is time to return to biological management in the best interests of all Alaskans as directed by the Alaska Constitution. “KAFC is demonstrating against the Kenai Classic and KRSA in order to make the participants and donors more aware of how this money is often times spent to spread divisiveness and conflict throughout our community and the fisheries management process. KRSA’s business model seems to be that of power politics rather than cooperative actions to achieve their goals. This endeavor is not well received in our community. “They have demonstrated this time and again with their lobbying efforts to keep the Board of Fisheries meetings away from the Kenai/Soldotna area so that they have a better chance at controlling the outcomes in their favor. Additionally, their unethical treatment of respected local resident, Robert Ruffner, at the BOF confirmation hearings in Juneau last year were reprehensible. They relied on a tactic of untrue character assassination and false allegations to unseat Robert from a position on the BOF. “There are many other examples of unethical behavior from KRSA that lead us to believe that they are not good neighbors or the type of organization we desire in our community. They have been rejected by all municipalities, the Borough, and the Chamber’s of Commerce in both Kenai and Soldotna as not good business partners. Our goal is that the Kenai Classic participants and donors will get the message. Dwight Kramer is a KAFC board member and describes himself as a “Joe Fisherman” private angler dedicated to the well being of the Kenai River fisheries resources.

The time has come for Medicaid expansion

Earlier this week (July 14), I sent a letter to the Legislative Budget & Audit (LB&A) Committee, giving members the required 45-day notice of my intention to accept additional federal and Mental Health Trust Fund Authority funds to expand Medicaid. Before signing the letter, I met with the LB&A chair to explain my intentions. Alaska statute provides that the governor give 45 days’ notice to this committee before accepting money that has not been budgeted if the fund source is not state general funds. Procedurally, the governor notifies the LB&A committee of the funding opportunity. After 45 days, the governor may accept the money, regardless of LB&A action. Governors and legislatures in 29 states plus the District of Columbia have already made the common-sense decision to accept Medicaid expansion. Ten Republican governors have approved Medicaid expansion. Republican legislatures in five states have approved Medicaid expansion. Why? Because it helps their residents, their economies, and their budgets.  A recent report by the Robert Wood Johnson Foundation on eight Medicaid expansion states — Arkansas, Colorado, Kentucky, Michigan, New Mexico, Oregon, Washington and West Virginia — concluded those states will save a total of $1.8 billion by the end of 2015 as a result of accepting Medicaid expansion. I want to bring those same benefits to Alaska. If Alaska had accepted Medicaid expansion on Jan. 1, 2014, we would already have received an estimated $220 million in additional federal revenue. If we act now, we can expect to bring in $1 billion in new federal health care dollars over the next six years, and save more than $100 million in state general funds. Medicaid expansion also means up to 4,000 new jobs. In the first year that we expand Medicaid, the state will save $6.6 million. This will provide a much-needed boost to our economy and relief to our budget. We can’t afford not to expand Medicaid. This is an opportunity to help our friends and neighbors who may be forced to choose between life-saving medical treatment and bankruptcy. This is a chance to do something for those who cannot work because they’re sick — and can’t afford to see a doctor because they can’t work. By helping people escape these terrible binds, this is an opportunity to strengthen the fabric of our communities. Some argue that taking federal money is somehow wrong. Alaska businesses and families pay federal taxes to support many federal programs. These are Alaskans’ tax dollars, and I’m determined to bring it back to Alaska for the good of our people and our economy. Alaska hospitals absorb more than $100 million in uncompensated care each year. Those costs get spread to the rest of us — and threaten the viability of our community hospitals. Based on the experience in states that have expanded Medicaid, Alaska hospitals anticipate a reduction of $20 to $30 million in unpaid bills. Unfortunately, inaccurate information has been circulating about Medicaid expansion. Let’s correct the record. Medicaid is working. In the first three months of this year, Medicaid helped 4,065 Alaskans manage their diabetes; 284 Alaskans received life-saving dialysis services; 628 women had mammograms for early detection of breast cancer, and nearly 4,000 Alaskans received health services at home, keeping them out of more expensive institutions. These services improve lives and save money. The payment system is working. When the new service went live under the previous administration, in October 2013, there were widespread problems. Very few claims were paid correctly. However, the system has improved tremendously since December 2014. Today, over 90 percent of the new claims processed are being paid accurately and on time. Reform is under way. Changes to the personal care attendant program, for example, are saving about $20 million annually. Through a care management program, we are reducing the number of Medicaid recipients over-using costly emergency room services. We anticipate $240 million in savings over the next six years as a result of initiatives to improve and streamline the program, and my administration is working with a consultant to identify further opportunities. It’s necessary for Alaskans. Some people have said low-income Alaskans can get health care at community health centers and similar facilities. That’s just not practical. These facilities offer only limited services — because without Medicaid, they lack reliable funding. Moreover, these facilities can’t provide specialized care such as cancer treatment or cardiology services. During the legislative session, we provided testimony in more than 30 hearings. We addressed every concern and answered every question. Alaskans across the state have cheered when I said I would accept the federal funds to expand Medicaid. Many approached me personally to share their struggle to access medical care. Over the past several months, I have received hundreds of emails of support; many with poignant personal stories of a loved one unable to receive care. We have received more than 150 resolutions of support for Medicaid expansion — from Petersburg to Barrow, chambers of commerce, church organizations, local governments, health care providers and the list goes on. A majority of Alaskans understand that Medicaid expansion makes sense for Alaska. I agree. It’s time.

Reform unsustainable Medicaid program before expanding

Total Medicaid spending exceeded $1.6 billion in fiscal year 2015 and will grow to $2.8 billion by 2025 — even without expansion. Medicaid in its current form is unsustainable and is the biggest cost driver in state government. The governor should work for real reform instead of instituting Alaska’s version of “Walkercare” which has the potential to sink the system we already have. Good intentions aside, those who insist on expanding Medicaid willfully ignore the fatal flaws that make expansion an irrational decision at this time. 1) The Medicaid system at current levels is so very broken it simply cannot deliver anything that resembles quality healthcare to an expanded population. 2) There is no workforce development plan that describes where all the doctors, nurses, phlebotomists and techs to handle all these new people will come from. Dumping more people into the system does not create the healthcare workers to handle them and wait times to see doctors will necessarily increase. 3) We cannot afford this. We are facing billions in shortfalls for the next several years. The legislature is deeply cutting the budget in an attempt to keep up with these multi-year, multi-billion dollar deficits and it is ludicrous to expand when we are sinking in red ink. 4) Contrary to expansionist rhetoric, the feds are not going to pay for this. They say they will, but they can’t — they’re broke. There is no principle of economics at play here, nor is there any federal mandate that will create savings. Expansion will, by design, increase prices because it will increase demand without any corresponding increase of supply i.e. doctors, nurses, clinics etc. That means higher prices for everyone except the able-bodied, childless recipients who are the beneficiaries of expansion. Oh you weren’t aware that’s who the expansion population is? Alaska already provides the most extravagant healthcare plan in the United States for the most needy, the elderly, families with dependent children, pregnant women, and the disabled. The expansion population is mainly, but not entirely, made up of able-bodied, childless adults. What? You thought it was for the most vulnerable among us? Think again. There are many other reasons not to expand Medicaid, but let’s just talk about the most obvious. This is a public policy debate that needs to be debated, not decreed, and the debate needs to include reform.  The legislature is committed to sound Medicaid reforms. That is why our Legislative Budget & Audit committee went out to procure experts to provide the critical information we’ll need to have a reasoned discussion on the topic. These experts will pull from the best reform policies around the country to help us fix our Medicaid program so it is affordable, efficient, and most importantly, sustainable for our most vulnerable citizens. Then, when Medicaid is no longer a mess, we can think about expanding it. To be honest, we may not expand it even then, but it is clearly irresponsible to do it now. We in the Senate Majority began the process to reform Medicaid in the last legislative session. I, with the consent of my colleagues, sponsored a sweeping Medicaid reform bill (Senate Bill 74) and it has worked its way through most of the Senate process. It includes provisions to reduce unnecessary emergency room visits, absurd travel expenses and costly self-referrals to specialists. It puts recipients on a health management plan, incorporates telemedicine and initiates privatization to create a much higher level of accountability. Expanding the mess of Medicaid without fixing it first is irresponsible. The governor’s bill has been given a fair shot in the legislature. In fact, his bill has been given deference over our own bill and sits in Senate Finance awaiting continued action when the session reconvenes. Unfortunately, Walker prefers to end run the legislative process and like Obama, act by fiat. That should not surprise us. Obamacare was inflicted on this country by sidestepping the democratic process. Remember the passage by proclamation nonsense in the U.S. Senate? Or, the now famous remark by House Speaker Nancy Pelosi, referring to the Obamacare bill: “You have to pass it to find out what’s in it.” Medicaid expansion is simply another piece of Obamacare and as such it should be no surprise that it is inflicted on the people of Alaska in the same way. If Walker truly cares about the people of Alaska, and I have no reason to doubt he does, he should work to reform the system we have. Sen. Pete Kelly, R-Fairbanks, is co-chair of the Senate Finance Committee.

Expanding a broken system

Now that Gov. Bill Walker has done an end-run around the legislative branch to expand Medicaid, it’s worth a look at how growing the program is going in other states. Here’s a roundup of Associated Press headlines from the last week: “Surge in Medicaid enrollment will squeeze Michigan budget” “Maryland Medicaid expansion much higher than forecast” “New Hampshire among states with surging Medicaid enrollment” “ND Medicaid expansion costs higher than previously forecast” “California’s Medicaid enrollment surpasses projections” “In Illinois, Medicaid expansion sign-ups double predictions” “New Mexico among states where Medicaid enrollment surges” “Nevada expects to spend more on Medicaid than planned” “Oregon underestimated Medicaid expansion price tag” As part of a special report, the AP found that more than a dozen states — nearly half of the 30 who have expanded Medicaid — have seen enrollment and costs swell beyond their original projections. To be sure, the idea of insuring those of lesser means is a noble one. The hard question that hasn’t been answered is how the state is going to pay for it. To hear Walker tell it, there is no downside. The experience of other states so far tells a different story. For a state facing billions in deficits that stand to erase our savings account within the next few fiscal years, it’s a heck of a coin flip to grow the largest cost in the budget without any reform outside of hiring a consultant or any spending offsets such as a provider tax as in Utah’s current Medicaid expansion proposal. Walker recently vetoed $200 million in oil exploration tax credits, capping this year’s expenditures at $500 million, declaring the current system “unsustainable” and vowing to start a discussion about reforming the program. The state Medicaid program — to say nothing of the total U.S. population on Medicaid that now encompasses 1 in 5 Americans, or about 70 million people, at a cost of some $450 billion per year — is the very definition of unsustainable. Just this year, Walker’s own budget proposal included a $20 million cut in Medicaid spending for existing enrollees; the Legislature added another $30 million in cuts. Those cuts generated a corresponding loss of federal matching funds for a total reduction of $100 million. In short, the state is already cutting a program that Walker has now expanded. Those cuts led the state to eliminate inflation-adjusted increases in Medicaid reimbursements to providers who have already been hammered by the malfunctioning payment system administered by Xerox. There is also an existing enrollment backlog of people eligible under the old criteria who will not be 100 percent paid for by the federal government. Well aware of the existing criticism about adding people to a broken payment system, Walker and his Health and Social Services Commissioner Valerie Davidson said Xerox is making improvements and now paying about 90 percent of claims correctly. Nine out of 10 may sound good, but in fact it’s pretty terrible for a system that pays out $1.5 billion per year. According an affidavit detailing the state’s complaint against Xerox filed by Director of Health Care Services Margaret Brodie in February, the error rate under the legacy Medicaid payment system was 0.47 percent in 2008 compared to a national average of 2.62 percent. In February, Brodie wrote that the state estimate for the Xerox error rate was somewhere between 6 percent and 12.4 percent. If the top end of the error rate was 12.4 percent, getting it to less than 10 is a somewhat marginal improvement at best. This matters because the state has to reimburse the federal government for erroneous Medicaid payments. Take 10 percent of $1.5 billion and we’re not talking chump change here. One thing in particular that stood out at Walker’s pep rally July 16 was the appearance of the Department of Corrections commissioner touting the savings to the system from Medicaid expansion. According to the University of Alaska Anchorage, the state prison population grew by 30 percent from 2004 to 2013 and now stands at more than 5,000 people. That’s compared to the state’s population growth of about 12 percent in the same time. As of 2013, only a tiny fraction of those under correctional supervision — just 295, or less than 6 percent — were on some form of electronic monitoring. Reducing the prison population and reforming sentencing to reduce recidivism and get more people out of the system and into the workforce would be a far better path than simply finding someone else to foot the bill. Frankly, this aspect of expansion is the most troubling in that it exemplifies the fundamental failure to choose reforms instead of more federal dollars. Andrew Jensen can be reached at [email protected]

An about face on exploration tax credits

Can you guess who said this? “We need to incentivize. We need to do on the North Slope what we did in Cook Inlet. We incentivized specifically for more companies to come in on the front end and created the credit program. “I worry about heavy oil. I worry that the biggest known resource on the North Slope is heavy oil. We have to incentivize that. I want to see 50 or 60 companies on the North Slope, as they do in Norway. “They have a much higher tax structure in Norway but they have 50 or 60 companies because they help on the front end, on the exploration credits. We need to level the playing field so smaller companies can come to Alaska. It’s very expensive to do business on the North Slope. “We’re fortunate to have the large companies we do have, but we need to look for ways we can reduce the costs so it’s more economic for the smaller companies to come to Alaska, create jobs, create opportunity and drill for oil. We need more wells drilled outside the legacy fields to get more oil for the pipe.” Followers of Alaska politics will recognize the reference to the idyllic oil regime of Norway is a giveaway that the speaker is Gov. Bill Walker, who is always pining for the fjords when it comes to measuring our tax policy against other resource states. Walker made those comments in one of the last debates against former Gov. Sean Parnell hosted by the Anchorage Rotary last Oct. 28. The answer was in response to a specific question asked of Walker about what he would do to increase production in the face of falling oil prices that at the time were $82 per barrel for North Slope crude and have since declined to less than $60. While the price picture has gotten uglier, the state budget situation was clear at the time with several years of multi-billion dollar deficits facing the next governor. In this issue we carry Walker’s defense of his $200 million veto of the exploration tax credit appropriation to cap this fiscal year’s spending on the program at $500 million. Walker asserts his move — which came with no warning to explorers who have earned the credits and made investment decisions based on them — is in response to Alaska’s “new” fiscal reality. Either Walker hasn’t been paying attention — which we know isn’t the case — or he’s hoping the public hasn’t. There’s nothing about Alaska’s fiscal situation that wasn’t known last October when he made his comments to the Rotary. Or when Walker submitted his budget to the Legislature in January. Or when Democrats were pitching this exact move in May while the first and second special legislative sessions were ongoing. Once again, Walker is winging it and in this instance his mouth is writing postdated checks that can’t be cashed. As he concedes in his column, the veto does nothing to change Alaska’s “new” fiscal picture, it simply kicks a $200 million can down the road one fiscal year. The about face on exploration tax credits that incentivize production is particularly ironic given Walker’s opposition to Senate Bill 21, passed in 2013 and upheld by voter referendum in 2014, which repealed the far more generous tax credits under the previous system known as ACES. Under ACES, which had a 20 percent capital expense credit, the state would have been on the hook to ExxonMobil for $800 million in credits based on the estimated $4-billion cost of the Point Thomson project set to begin production in 2016. That’s leaving out the fact the state took in more revenue under SB 21 than it would have under ACES at these depressed prices. If Walker had his way on SB 21, the state budget situation would be worse than it is today. Now that he has gotten his way with his veto pen, next year’s budget situation is worsened by his deferral of $200 million in tax credit payments that will have to be paid sooner or later. In exchange for these non-existent savings and weakening industry confidence in the state’s word, Walker gets to start another “discussion.” What a deal. Myopic doesn’t begin to describe it. Andrew Jensen can be reached at [email protected]

Delaying tax credit payments reflects new fiscal reality

July marks the beginning of fiscal year 2016: a chance for a new beginning and a fresh start for addressing Alaska’s economic future. On June 29, I signed into law the budget bills passed by the Legislature. For fiscal year 2016, we will spend $1 billion less than we spent last year. This is a 19 percent overall reduction with an average 13.5 percent cut to executive branch agencies, and cuts of over 30 percent in the Department of Commerce and the governor’s office. Even with these reductions, we still have to draw $2.7 billion from savings to make up for state revenue losses caused by low oil prices. Writing a budget to meet our changing circumstances required a team effort. The budget I introduced to the Legislature in January reduced spending by approximately 8 percent. It included some painful cuts to education, along with other reductions across state government. As oil prices continued to drop, the Legislature wrestled with how to address falling revenues. In the end, they reduced the budget I submitted by an additional $250 million. We’ll be seeing still more cuts as my administration works to find $30 million to fund the contractually negotiated cost of living allowance increase for state workers. Alaskans are starting to feel the effects of these spending cuts. From Southeast communities that will see reduced ferry service this winter to reduced firefighting and search and rescue capacity in the Interior. You, a family member, or a neighbor may have been laid off recently. Public services are being cut back statewide. We’ve even had to reduce the number of state troopers. This is Alaska’s new reality. I was aware of this new reality when I made the decision to limit a $700 million appropriation to repurchase oil company tax credits to $500 million. Though the $200 million veto only defers our obligations, and does not change the state’s bottom line, it was clear to me that something needed to be done to ensure this issue is part of our discussion about Alaska’s fiscal situation. Under Alaska’s oil and gas production tax system, an oil and gas company may receive a credit for a portion of each dollar they spend exploring for or developing our oil and gas resources. The credit is used to reduce the company’s production tax liability to the state. The idea is that a company will have more of an incentive to invest in the state if their investments will result in a lower tax obligation. For small producers and explorers, the benefit from tax credits is limited because they do not produce enough to have a tax liability against which to apply the credit. To address this problem, the state established a program to repurchase credits issued to companies with little to no oil and gas production. Since 2007, the state has repurchased approximately $3 billion worth of tax credits with the amount of credits increasing rapidly over the past several years. Last year, we paid out $625 million to repurchase credits from new explorers and producers, with around $700 million expected to be applied for this year. The bulk of the repurchased credits are for operating losses with less than 20 percent going toward exploration. Money for the repurchase of credits comes from an oil and gas tax credit fund. A formula establishes how much money is appropriated to the fund each year. This year, that amount would be $91 million, far less than the $700 million estimated to be needed as well as the $500 million still in the budget. I reduced the amount to $500 million because that is sufficient to pay all of the tax credit applications currently in process. As in past years, the Legislature opted to appropriate an open-ended amount that would cover all repurchase requests. This open-ended purchase of oil and gas company tax credits was on a path to becoming the largest expenditure in future state budgets. If the projections hold and companies earn credits in excess of $500 million, the companies with pending credits will be the first ones reimbursed at the beginning of fiscal year 2017. Alternatively, some of those companies may choose to sell their credits to other companies with a tax liability. There are other tax credits under the current oil and gas production tax system that lower taxpayers’ obligations. Combined with the repurchase program, we anticipate credits to total nearly $1.1 billion this year. Unlike most other countries’ oil tax systems, Alaska does not have a pre-approval process or criteria for a company to take advantage of the tax credit incentive programs. With our new fiscal reality, we can no longer afford these extremely generous incentives. Something has to change. In recent discussions with oil and gas exploration company representatives in Alaska prior to making my decision on the reduction, I was pleased to find them respectful of the gravity of Alaska’s fiscal situation and the difficult spending reductions we are experiencing. I am committed to and have been meeting with each company individually to discuss their exploration plans for the coming year and to work together towards a mutually beneficial solution to the significant cost of the repurchase program. It is important to note that the affected oil companies are not alone in experiencing the impacts of our declining revenues. Every Alaskan is affected in one way or another. For a healthy economy, we must continue the conversation we started in Fairbanks last month. While my administration will continue to make budget reductions by looking for efficiencies and opportunities to streamline services, we must also talk about diversifying our revenue. We cannot hope and wait for oil prices to go back up. It is time we all come to the table to discuss our way forward financially in this great state. Please join us in this journey as together we maximize Alaska’s potential. Bill Walker is the governor of Alaska.

Alaska National Guard committed to necessary reforms

On June 15, the Department of Law released retired Superior Court Judge Patricia Collins’ independent investigation of the Alaska National Guard to the public. Like many Alaskans, I greet its release with a sense of anger and frustration that over several years some members of the Guard mistreated people and misused public funds. Also like many Alaskans, I am relieved the report contains no new examples of improper behavior. As the Adjutant General of the Alaska National Guard, it’s up to me, my leadership team, and all the members of the Alaska Army and Air National Guard to ensure this doesn’t happen again. Moving forward, we will be the force Alaskans want us to be, executing critical federal missions, ready to deploy abroad to defend our nation, and well-trained to respond to emergencies here at home. Through this past legislative session we made important progress toward updating an Alaska Code of Military Justice that gives commanders the tools to maintain a disciplined military force. We owe thanks to Representatives Gabrielle LeDoux and Chris Tuck in particular for their help so far, and look forward to passage of legislation next year that will enable the regulations and processes to keep our house in order. We also have installed the first Provost Marshal of the Alaska National Guard, Major Brian Fuchs, who is on military leave from the Anchorage Police Department. His job is not to investigate crime but to ensure criminal activity within the Guard isn’t hidden behind the cloth of uniform or the armory door. Instead, it will be handled by the appropriate Alaska law enforcement agency. On Monday (June 15) Gov. Bill Walker personally gave Major Fuchs his special commission from the state to further this seamless communication.  These are important practical steps, but the real transformation will happen operationally. I commit to you that we will rely on a few basic principals in everything we do. Using the core values of professionalism, commitment and teamwork, we will: • Adhere to doctrine. Every action we take will be grounded in law, regulation and policy. If it’s not, we won’t do it. • Employ sound and transparent processes for everything we do. Guardsmen and women will know why they are doing something and can expect the outcome to be consistent and appropriate. • Focus on our customers, the people of Alaska. Alaskans will know our actions are moral, legal, and ethical. My first few months on the job have confirmed my faith in the character of the men and women of the Alaska National Guard. When they see leadership live these values and commit to these principles for doing business, they will respond. While it only takes a few bad actors to tarnish the reputation of a large agency, making the Alaska National Guard whole again will be the work of many, not just a few. Real transformation is possible even in large organizations such as the Alaska National Guard, but it takes commitment and effort. We can do it; I have seen firsthand the early results of the reforms put in place last fall, and additional positive changes have been made since then. With the findings from Judge Collins’ report in hand, Governor Walker’s unqualified and continuing support, and the leadership team in place today, we will move beyond these serious problems. While Judge Collins’ report covers a period of time prior to my appointment, Alaskans deserve an apology for what was allowed to happen. On behalf of the Guard, let me apologize to a number of individuals, and Alaskans more broadly, for this organization’s mishandling of complaints about serious offenses and for betraying the confidence of people who sought help and justice. While going forward the Guard will care for those individuals, we must continue to take serious and broad sweeping steps to be a better force for Alaska. We were wrong, we can do better, and we’re on the path to making things right. The history of the Alaska National Guard is not that long, but it is unique and noteworthy. With its roots in the men of the Alaska Territorial Guard who provided practical, Alaskan “know how” to defend our nation’s coastline in World War II, the Alaska National Guard has a host of skills and talents to offer our nation and state. As we prepare ourselves to face the challenges ahead, we will build on our history and engagement with all Alaska communities, increase our emergency management capacity, and prepare for a changing Arctic. I commit to you that the Alaska National Guard will once again be a source of pride for Alaskans. Brigadier General (AK) Laurie Hummel is the Adjutant General of the Alaska National Guard and the Commissioner of the Alaska Department of Military and Veterans Affairs. A third generation soldier and 30 year veteran of the U.S. Army, she was formerly a military intelligence officer.

Walker might have two more fish seats to fill

For those who follow fish politics, Gov. Bill Walker has had a rough time filling a single seat on the Alaska Board of Fisheries. Now he may have to start thinking about new names for the North Pacific Fishery Management Council. First, he told previous Board of Fisheries Chair Karl Johnstone in January that he would not be reappointed after his term ends this June 30; Johnstone resigned in response. Walker then made a snap decision to replace Johnstone with Roland Maw, who Johnstone and all his fellow board members had denied an interview for the Alaska Department of Fish and Game commissioner job. Maw withdrew Feb. 20 when it was about to come to light that he was under criminal investigation in Montana for illegally obtaining resident hunting and fishing privileges in that state while receiving the same in Alaska. That led Walker to nominate Soldota conservationist Robert Ruffner to replace Maw, and Ruffner was narrowly defeated in the Legislature 30-29 after sportfishing groups rallied against him based on his support from the commercial fishing industry. As if it couldn’t get more bizarre, Walker’s Boards and Commissions Director Karen Gillis resigned in protest May 13 when she was told the governor intended to nominate Roberta “Bobbi” Quintavell to replace Ruffner. Rumors of Quintavell’s selection began to spread before the official announcement, and commercial fishing groups protested to the governor’s office based on her being the preferred choice of the Kenai River Sportfishing Association that led the fight to sink Ruffner’s nomination. Walker changed his mind again, apparently, and picked outgoing Board of Game member Robert “Bob” Mumford on May 18. Now, as this issue of the Journal goes to press, the North Pacific council that governs Alaska’s federal fisheries 3 to 200 miles offshore is meeting in Sitka with more than half the agenda dedicated to a single action: cutting the amount of halibut bycatch allowed in the Bering Sea groundfish fisheries that include pollock, Pacific cod and flatfish. However, the council will take its final action without two members from Alaska who are being recused based on their interests in those same Bering Sea fisheries. Among the 11 members, this decision by the heads of the Department of Commerce legal division removes Alaska’s majority voting block on the council and essentially makes the federal designated rep from National Marine Fisheries Service the swing vote on any decision. By law, the appointees to the council must be drawn from industry stakeholders, putting them under a different set of conflict of interest guidelines than other federal bodies. However, no member may have greater than a 10 percent stake in the fisheries affected by his or her vote. This brings us to the Alaska members being recused: Simon Kinneen of the Norton Sound Economic Development Corp. and David Long of Glacier Fish Co. Commerce Department attorneys determined that NSEDC, which is the Community Development Quota group for the area, and its subsidiaries harvest more 13 percent of the nearly 2 million metric tons of fish allocated in the Bering Sea. Glacier Fish Co. is tied to NSEDC, and Long was also recused from voting based on a greater than 10 percent interest in the fisheries. On the one hand, the fact that NSEDC and its subsidiaries alone now harvest more than 10 percent of Bering Sea fish is a success for the CDQ program that began in 1992 and allocates 10 percent of the total Bering Sea harvest among 65 Western Alaska villages divided among six CDQ groups. On the other, it means that NSEDC has grown too big to have an employee on the council. Former Trident Seafoods executive Dave Benson tried to get around the 10 percent threshold in 2008 first by changing jobs to work for a Trident subsidiary, which led him to being recused from a vote in 2009; he subsequently formed a consulting company that allowed him to avoid the 10 percent rule and continue voting on Bering Sea issues. New financial disclosure rules and greater attention to the clients of consultants who work for their former employers means the Benson loophole is effectively closed, as it should be. Kinneen was also recused from a crucial vote in April related to lowering chinook salmon bycatch limits for the pollock fleet in the Bering Sea, based on NSEDC’s stakes in that fishery. Taken to a logical conclusion, if Kinneen and Long can’t vote on halibut bycatch based on the 10 percent threshold, they shouldn’t even be allowed to vote on the annual Bering Sea harvest quotas. If a council member from Alaska cannot vote on monumental issues such as salmon and halibut bycatch, they must step down to give the state its full voice on the federal level on issues of grave importance to our state. Walker has enough headaches right now and doesn’t need another one, but this is the job he asked for. Andrew Jensen can be reached at andrew.je[email protected]

Dramatic cut in halibut bycatch will cost Alaskan jobs

I have been an Alaskan since 1996. I live and work in Dutch Harbor and have built a labor and equipment company providing services to the Amendment 80 vessels. The North Pacific Fishery Management Council is meeting in June to decide whether to adjust the Amendment 80 fleet’s allowable halibut bycatch. The council’s decision is likely to cost Alaskan jobs. We have been providing longshore services either directly or indirectly since 1998. Our company has grown from a few hard working Alaskans to a little over 120 employees. We provide these services in Dutch Harbor and Adak. I can say without any reservation that any dramatic cut in the Amendment 80 vessels ability to deliver fish to Dutch Harbor will have a devastating impact on our labor force and their families. These employees depend on the steady work of the Amendment 80 fleet that fish year round providing steady income that helps keep the employees working, unlike many of the other fisheries that are very seasonal and as a result make it difficult to keep a year round qualified labor force. In 2014 Pacific Stevedoring received $4,414,870 in stevedore revenue from Amendment 80 vessels. Even modest cuts to this revenue will potentially cost up to a dozen jobs. But dramatic cuts could very well eliminate all the jobs. Employees cannot maintain residency and employment in Dutch Harbor if standing by for large parts of the year waiting for work. Equally important is the secondary effects on the rest of the fishing industry and community as a whole. We all watched many jobs disappear in Dutch Harbor as the rationalization of the many fisheries reduced the demand for third-party vendors. The Amendment 80 vessels support a large part of the Dutch Harbor community and reductions in their deliveries will have far reaching effects. From possible elimination of the shipping companies that support them, which will reduce fish companies options to get product out driving up the cost of shipping, to significant cuts in city tax revenue, forcing the city to raise taxes on the other sectors to make up the difference and numerous other effects in between. I can say without hesitation if the Amendment 80 vessels were to see dramatic cuts in deliveries resulting from halibut by-catch cuts, Pacific Stevedoring will have to eliminate approximately 50 good-paying jobs while the City of Unalaska will endure many other hardships as well. Andrew Murphy is CEO of Pacific Stevedoring Inc.

Shell, Foss are right to stand up to Seattle socialists

We’re all going to die. The human race will go extinct. This will destroy us. That’s just a smattering of the hysterical Chicken Littling that fell on the ears of the Seattle Port Commission on May 12 as a parade of Arctic drilling opponents and avowed socialists urged the members to revoke the port’s contract with Foss Maritime and thereby prohibit Shell from parking the Polar Pioneer drill rig at Terminal 5 before it is towed to the Chukchi Sea this summer. Foss is appealing an interpretation by the Seattle Department of Planning and Development that declared the mooring of the Polar Pioneer and two associated tugs at Terminal 5 did not meet the criteria of a cargo use. The Port Commission voted to join Foss’ appeal, but also voted to urge the company not to move the Polar Pioneer from Port Angeles to Terminal 5 until the legal wrangling is resolved. To their credit, Shell and Foss have told the City of Seattle and the port that they will proceed with moving the rig and performing the scheduled work as planned. It’s a refreshing act of political will being shown by Shell and Foss in the face of a shrieking horde of opposition led by Seattle Mayor Ed Murray that is pursuing every means both legal and illegal to disrupt Shell’s efforts to conduct oil exploration in the Arctic. Timing is everything, and as this edition of the Journal goes to press an amazing flotilla of some 29 vessels is converging on the Pacific Northwest from around the globe in a remarkable feat of logistics years in the making. Murray, the “kayaktavists,” the “Shell no” socialists, Raging Grannies and the lawless bunch at Greenpeace that were recently ordered by a federal judge to stay away from Shell’s vessels all know that if they can slow down any part of Shell’s plans they can disrupt the entire summer exploration plan. Murray and the planning department are attempting to find a legal ground to stop Shell’s plans, but their effort is rendered incredible when the mayor has linked the legality of the port permit with his political views on Arctic drilling. Political grandstanding is not a legal strategy, and Shell and Foss at least for now won’t be bullied into going along with it. As the mayor’s office threatens possible fines, hopefully the legal teams at Shell and Foss are readying a case to enjoin the City of Seattle from enforcing its nakedly biased interpretation of the port’s land use permit. Calling the mayor’s bluff and transporting the Polar Pioneer to Terminal 5 is a bold move, but it is also the only choice for two companies who are being backed into a corner by a bunch of self-righteous zealots. Andrew Jensen can be reached at [email protected]

Bering Sea halibut bycatch cuts critical for conservation

This time of year I split my days between my computer and the harbor, trying not to bring too much of the bait smell back to the office with me. Herring oil or not, it’s been my great fortune to find work in my hometown that allows me to always be talking about, writing about or looking for fish. I’ll be on the grounds this time next week, hauling in Pacific halibut, finding rhythm again for another season on the water. I’ll also be considering what’s coming up after I return to homeport — the June convening of the North Pacific Fishery Management Council in Sitka. There the Council will take final action on the proposed reduction of halibut bycatch caps in the Bering Sea/Aleutian Islands, or BSAI, region. This decision point comes after a decade of steady stock decline, during which time the directed halibut fishery quota in the BSAI has dropped by 63 percent. Halibut fishermen in the hardest hit region — the Central Bering Sea — are facing closure if meaningful change doesn’t come out of the June meeting. Their crisis point has arrived. In the meantime, halibut bycatch caps in the BSAI stand the same as they were set during peak abundance decades ago. In 2014, BSAI groundfish fisheries caught and discarded seven times more halibut (number of fish) than the directed fishery landed. In a state that celebrates its commitment to sustainable fisheries, we have created through inaction an epic inequity in the Bering Sea, allowing a management system that prioritizes bycatch over directed fisheries. But it’s more than that. There are some that would tell you that a reduction of bycatch in favor of returning quota to the directed fishery is solely an allocation decision. While in some ways it is — under well-defined legal and ethical standards that say one fishery should not carry on unchanged at the cost of another collapsing — it is also a serious conservation issue.  At an average weight of just under 5 pounds, the vast majority of the 1 million halibut caught as bycatch in the BSAI last year were juvenile fish. Tagging studies conducted by the International Pacific Halibut Commission show that 70 percent to 90 percent of juvenile halibut can and do migrate out of the BSAI to all other areas of the North Pacific. So when we talk about halibut bycatch in the Bering Sea, we’re talking about high volume removals of a stock that supplies every halibut fishery from Nome to California. We’re talking about a reduction in numbers and essential genetic biodiversity. This is a conservation issue. A 5-pound halibut is well under the size that commercial halibut fishermen are allowed to keep. Regardless of the harvester, higher yield is achieved by harvesting larger fish. At the current rate and average size of bycatch, fishing pressure in the BSAI is diminishing juvenile cohorts before the stock is able to grow into collective maturity — an essential standard for sustainable fishing practices. This scenario shows us that we cannot directly compare the harvest impact of halibut bycatch and directed halibut harvest. They are harvesting from different populations, and one is removing significantly more animals from the ecosystem than the other. This is a conservation issue. Finally, the entire situation of a declining halibut stock is a conservation issue. Our regulations have simply failed to require halibut bycatch harvesters to participate in it. The Bering Sea halibut fleet has done everything but sell their boats in an effort to conserve the halibut stock. It’s time that other groups share the burden of that conservation. As someone who makes her living off the ocean, I know what I’m asking for, and it’s significant. A 50 percent cut in bycatch will mean change for the groundfish fleet in the BSAI. Not impossible change, not crippling change, but it will mean change. However, the alternative is the demise of one fishery, and the continued risk of coast-wide stock health. While I respect the voluntary reductions in bycatch the groundfish fleet has achieved, a meaningful regulatory conservation effort is long overdue. Please advocate for a meaningful reduction of halibut bycatch caps in the Bering Sea. Email comments to [email protected] The deadline to comment is 5 p.m. on Tuesday, May 26. Hannah Heimbuch is a commercial halibut and salmon fisherman, and a Community Fisheries Organizer for the Alaska Marine Conservation Council. She lives in Homer.

Legislature votes for factions over fish

The mantra “Fish come first” has been exposed as nothing more than a fish tale. Gov. Bill Walker’s second crack at a Board of Fisheries nominee was defeated April 19 in the Legislature by a 30-29 vote when Robert Ruffner of Soldotna became the latest trophy — though likely not the last — mounted by the Kenai River Sportfishing Association. Just as it did two years ago to oust board member Vince Webster by an identical 30-29 vote, KRSA engaged in a heavy-handed lobbying effort of distortions and character assassination, this time against a candidate who has devoted his professional career to conservation as the executive director of the Kenai Watershed Forum. While KRSA claims “Fish come first” in its slick propaganda to mask its true purpose as a guided fishing lobbying group, Ruffner has actually lived that motto. By engaging in a campaign to smear a man who does the work KRSA claims to believe in, the group revealed itself as representing a faction first — not the fish. For an organization that downplays the linkages between its members and the Alaska Fisheries Conservation Alliance trying to ban setnets in Cook Inlet via a ballot initiative, the guilt by association aspect of its attacks on Ruffner was particularly brazen. Because they had nothing to pin on Ruffner himself, KRSA cherry-picked the most controversial board proposals from anyone who supported Ruffner as if their own membership isn’t advocating for the most radical change in Cook Inlet by banning a gear group that has coexisted with sustainable salmon runs for more than a century. Then there was the laughable claim that Ruffner should be rejected because he doesn’t live in Anchorage. What a pile of fish guts. In its letter to legislators, KRSA argued that Ruffner would be less accessible to residents of Anchorage because he lives in Soldotna. It’s funny  they didn’t have that concern when the last board chairman spent half of every year living in Arizona more than 3,600 miles away from Anchorage and only came back to the state in the winter for board meetings. Nor should anybody believe KRSA would have made the residency argument about Anchorage had Walker nominated Joe Sportfishing Guide from Kenai for the seat. This residency argument against Ruffner — beyond the sheer hypocrisy of it given KRSA’s unequivocal past support for having a snowbird serve as chairman of the board — is ridiculous on its face. If Anchorage and Valley residents who enjoy dipnetting or angling on the Kenai River want to enjoy sustainable salmon harvests now and in the future, it is difficult to think of a better person to have on the board than someone who has dedicated his life to preserving the health of that river. Ultimately, Ruffner’s work to preserve and protect the Kenai River habitat from human impacts is what really scared KRSA. Commercial fishermen have long argued that in-river impacts must be considered to ensure sustainable salmon runs, and the last thing KRSA wanted on the board was someone who wouldn’t blithely dismiss such concerns about protecting spawning grounds and tearing up river banks with outboard motors. The KRSA and Mat-Su narrative is that commercial fishermen are to blame for anybody who strikes out with a dipnet or a pole and to hell with anyone who doesn’t toe that line no matter how many piscis pretzels they have to make out of twisting the truth. In the end, though, KRSA is just an advocacy group and the real blame lies with the legislators who bought into its cynical campaign that counts on a bipartisan group of bumblesticks to go along with it every time. Walker shouldn’t cave to the special interests or these selfish and short-sighted legislators in his next pick for the board, but who, after watching what has happened to the likes of good people like Webster and Ruffner, would subject themselves to such unfair attacks if they don’t fall into lackey lockstep with KRSA? The board process is broken, and what just happened to Ruffner is a perfect example why. Until the Legislature stops putting factions over fish it won’t be fixed anytime soon. Andrew Jensen can be reached at [email protected]

Short-term cuts may cause long-term damage

In what are well-intentioned efforts to do everything possible to narrow a $4-billion budget gap, the appropriators in the Alaska Legislature may end up doing more harm than good. There is simply no way to cut a way out of this deficit, which should have put the emphasis from the jump on structural reforms rather than nickel-and-dime reductions in the budget. So far, the only such attempts are the effort to reform Medicaid from its unsustainable path and an operating budget that rejects 2.5 percent pay raises for unionized state employees in the next fiscal year. Union officials may be grumbling about this, and Gov. Bill Walker expressed his concern over it to the Associated Press, but a pay freeze for state workers is hardly an unwarranted action, and is one they should still prefer over outright job cuts. Other than that, the Legislature has spent time on sideshows such as daylight savings time and resolutions to demand all federal land be transferred to the state along with budget cuts that add up to little more than a duck passing gas in the wind. The cuts won’t solve anything, but like the proverbial butterfly flapping its wings they threaten to cause damaging ripple effects. Consider the proposed $11 million in cuts to the state ferry system. That amounts to to 0.27 percent of the deficit. The effect of the cut, however, could displace more than 9,000 people who have already purchased tickets for travel this summer. More than two-thirds of them are tourists, which is the third-largest industry in Alaska. Is it worth saving $11 million to cause this much disruption to ferry customers and tour operators who rely on the system? The potential for souring people on their trip to Alaska, displacing state residents who have booked travel, creating a picture of unreliability for the ferry system and sticking tour operators with the problem is hardly worth the savings. Then there is Walker’s elimination of $5 million in funding for the Chinook Salmon Research Initiative, a multi-year effort to better understand the iconic state fish upon which an eons-old subsistence lifestyle is based and whose health — or lack of it — impacts every sector of the commercial and sport fishing industries. Given the stakes of achieving sustained and strong king salmon runs, refusing to fund this vital research is not a better outcome for the state compared to the good it can accomplish. Similarly, the slashing of the funding for Alaska Public Media from $5 million to $2.5 million to zero is also pointless and will disproportionately impact rural Alaskans who don’t have as many information sources. Walker’s decision to cut $8 million in funding for the Ambler Road environmental impact statement and ordering a halt to all work on the project also achieves nothing while setting back a vital long-term effort to open up a resource-rich area that will create hundreds if not thousands of well-paying jobs and help lower the cost of living in the area. The real pineapple on this upside-down cake of ill-conceived and ineffective cuts, though, is the effort to screw around with the Interior Energy Project by stripping $45 million in previously appropriated funds for the effort. While the Alaska Industrial Development and Export Authority explores the possibility of sourcing gas from Cook Inlet in an attempt to achieve the goal of first gas to Fairbanks by the end of 2016, Rep. Mike Hawker of Anchorage is throwing up amendments that will ensure it won’t happen. Interior stakeholders are right to compare the expense for the IEP to the cost of tax credits totaling $700 million in the last several years to subsidize the Cook Inlet gas resurgence. That’s more than a fair point; it is a convincing argument. Interior residents don’t deserve another year without a plan to lower their energy costs and improve air quality. Times like these are why we have savings accounts. It’s also the time when we need our legislators and governor to step up to the plate and deliver. As the session nears its close, we’ve seen a lot of small ball instead of home runs. Andrew Jensen can be reached at [email protected]

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