Opinion

Sit, Hollis! Bad senator!

A recent campaign ad run by state Sen. Hollis French comparing oil companies to his dog pretty much sums up everything that’s been wrong with the discussion over reforming Alaska’s oil taxes for the last two years. “One thing I’ve learned is that you don’t give treats before she sits or stays,” French says. “Tax breaks for oil companies should be the same way.” French continues, “They should invest in jobs and new production first, then they can have a reward.” Forget the insulting nature of the ad and the fundamental unseriousness of it. Not to put too fine a point on it, but French’s argument is just plain ignorant. The Senate majority and its frontmen French and Sen. Bill Wielechowski are fond of putting out press releases touting the supposedly business friendly tax climate of Alaska, without, it seems, any awareness of the fact that oil tax revenue is the reason tax burdens on every other type of business are so low. They also seem not to be aware, or choose to conveniently ignore, the annual Fraser Institute oil tax rankings based on industry surveys that consistently place Alaska’s onshore regime at the bottom of North America jurisdictions. Perhaps they also missed the Oct. 23 story by the Associated Press reporting that the United States is on track to become the world’s No. 1 oil and gas producer before the end of this decade. What was conspicuously absent from the article? In 1,200 words, the word “Alaska” was nowhere to be found. The word “Alaskan” was present a single time, referring to booming production years from the Prudhoe Bay fields in the mid-1980s when the U.S. was producing about 11.2 million barrels of oil and gas liquids per day. Here is the key paragraph from the article: “A long period of high oil prices has given drillers the cash and the motivation to spend the large sums required to develop new techniques and search new places for oil. Over the past decade, oil has averaged $69 a barrel. During the previous decade, it averaged $21.” There is a simple and regrettable fact to be taken from the AP report. Since enacting ACES in 2007, Alaska has missed out on more than a half-decade of the capital investment boom in oil production. While oil companies are investing billions upon billions in the U.S. and around the world, throughput in the Trans-Alaska Pipeline System has continued to decline despite oil producers having — theoretically — the price incentive to do more. Unfortunately, the producers also have an incredible disincentive to produce more thanks to a ridiculously uncompetitive tax structure and a legislature that thinks of them as a pet to be commanded to beg and roll over. It’s a shame that this attitude has even trickled into the campaign of Bob Roses, the Republican running against Wielechowski. In his latest radio spot, Roses, too, asserts that he won’t support tax reform until production increases first. As French begs for his “treats” in the form of votes, perhaps he should first perform a trick by oh, I don’t know, actually doing something other than making silly arguments and defending the unsustainable status quo caused by declining production and burgeoning budgets. What the state is doing to the oil companies is actually no different than overfishing, a practice Alaskans understand well as one of the catalyzing forces behind statehood. When a resource is in decline, as North Slope production is today, you don’t take as much of it as you can before it runs out. That’s exactly what ACES does. Rather than encouraging companies to sustain and grow production, the state is greedily taking as much as possible while it can and robbing the companies of the capital they need to invest in increased production. As the owner of two dogs, I can sympathize with French’s effort to conflate human behavior with that of his cute black lab Allie. Also like most pet owners, that sort of feeling usually ends right about the time my dogs start sniffing the same kind of stuff that French is shoveling. Andrew Jensen can be reached at [email protected]

Cuts, tax reform, investments needed to tackle deficit

Over the last two weeks, I have met with Alaskans from all over the state. Whether it’s at a town hall meeting or the grocery store, Alaskans often come around to the same two questions: How did we as a country get into this trillion-dollar deficit mess? How do we get out of it? The first answer is easy. The second is difficult, but not impossible. Both political parties are to blame. Beltway “group think” got us here and Democrats and Republicans alike played along. Turns out it’s not free to wage two wars halfway around the world, launch a massive new prescription drug plan and give major tax breaks to everyone millionaires. You just can’t balance a budget that way. How we fix it starts with Congress My colleagues must recognize we are truly out of time and that this is the time to come together because the consequences of inaction are so dire. We’re facing the so-called fiscal cliff because we’ve put off tough decisions for too long. It’s like crashing your mom’s car – telling her will be painful either way but the pain worsens the longer you wait. It’s time to tackle the government’s bottom line with an understanding of your family’s bottom line. If Congress doesn’t pass a responsible plan after the elections, this country faces a grim forecast. Taxes will go up for everyone. And because last year’s deficit talks stalled out, the first round of $1.2 trillion in automatic budget cuts begins. To some, that might sound good. But because this fallback plan involves no new tax revenue, the cuts will be deep and severe: Major reductions in defense spending, fisheries management, schools, oil and gas permitting, heating assistance – the list is long. Resolving this will take sacrifice. Even a moderate deficit-reduction plan must include cuts to important services, and also some new taxes for those who can best afford them. We’ll still face a smaller cliff, but through bipartisan compromise we can make the landing smoother. Along with budget cuts the package must include tax reform and smart investments to build the economy. All federal agencies will have to be part of the solution – no free passes. Here are some of my ideas for budget cuts: A continued pay freeze for members of Congress; taking back unspent “orphaned” earmarks; ending a wasteful $400 million mobile missile-defense system the military doesn’t want; winding down the $700 million program that bailed out major banks. You can see more of my ideas at begich.senate.gov. On tax reform, we need to protect the middle class while asking the wealthiest Americans to pay their fair share. I am working on a bipartisan bill with Senators Wyden and Coats to simplify the tax code, hold down rates for families and provide tax relief for businesses to invest and grow. Our bill creates a single corporate tax rate, lowering it from 35 percent to 24 percent. For families and individuals, it lowers and replaces six tax brackets with just three. It protects mortgage, retirement and other tax incentives to give families financial security, and also encourages investment by protecting capital gains. Under our bill, American families can file their taxes on a simple one-page form. The final piece of deficit reduction involves smart investments to grow our economy – in education, infrastructure and energy. This will make us competitive worldwide, create new jobs, and bring back jobs from overseas. We can do all of this because the economy is slowly coming back. When I came into office the economy was hemorrhaging over 700,000 jobs a month. Today, the stock market is above 13,000; unemployment is below 8 percent for first time since the recession; housing starts are up and consumer confidence is improving. If we’re smart about deficit-reduction we can keep building on these positive trends. A steadily strengthening American economy is the best answer of all. We can get out of this trillion-dollar mess by working together to build a responsible budget, a fair tax system and a platform of investments to spur continued economic growth. Mark Begich is the junior U.S senator from Alaska.

Commentary: Alaska's Eye on Wall Street: Climbing the wall of worry?

The equity markets have been on a roll. U.S. stocks gained 6.4 percent in the third quarter and are up 16.4 percent year-to-date. The broader EAFE index of non-U.S. international stock markets did slightly better, up 6.9 percent in Q3 but only 10.1 percent year-to-date. Meanwhile bond yields in the U.S. seem stuck in a narrow trading range around 1.6 percent on the 10-year Treasury. The announcement that the European Central Bank would make unlimited purchases of troubled sovereign debt on the secondary market to reduce yields (with some fiscal strings attached) was greeted with a sigh of relief in Europe. Many believe this takes the “tail risk” of a really bad event off the table. Combine that with progress on the ESM (the permanent euro bailout fund) and the likelihood of a European banking union and you have the makings of an equity rally. That’s especially true given the depressed valuations in Europe. The Federal Reserve joined the party by announcing a QE3 bond-buying program with no definite end date. They also said that the economy remains weak, that inflation is well contained (it’s up 1.7 percent year-over-year) and offered to keep short rates close to zero through 2015. They expect the “wealth effect” from a rising stock market to save the day. Tell that to savers who are stuck with rock bottom interest rates when rolling their CDs. The question is how long can these easy monetary machinations continue to substitute for sound fiscal policies? No sooner had the ECB eased than we started to hear about Greece and Spain crawfishing on austerity measures. This seems too happen over and over again. Wash. Rinse. Repeat. Even in the U.S. you have to wonder if the Fed is just enabling the politicians to avoid making tough decisions with respect to the fiscal cliff. QE1. QE2. QE3. Wash. Rinse. Repeat. All this money printing has gold soaring to recent highs near $1,800 an ounce and commodities perking up despite slow economic growth. These facts — including general economic malaise, election year uncertainty, and the rapid rise in equity prices (in the face of a potential stall in earnings) — led us to reduce exposure to U.S. equities in September. We still like them longer term but think we will get a better opportunity to buy over the next several months at lower prices. It’s a tweak, not a signal that stocks are overvalued in the long run, especially compared to bonds. Muddle along, nothing to see here. Global economic growth remains subpar. In the U.S., continuing good news on the housing front is helping but other headwinds have kept growth in the 2 percent neighborhood and unemployment above 8 percent. Our fiscal cliff challenges are well known. Businesses remain wary and confidence is low. The most widespread drought since 1956 hasn’t helped. In an environment with lots of unused capacity in the labor and product markets it’s hard to see inflation kicking up, although we are in uncharted waters with respect to monetary policy. The eurozone is in recession. The unemployment rate is 11.4 percent, the highest on record. It’s at depression levels in Spain (25.1 percent) and Greece (23.1 percent). Recently we have seen more riots in the streets. Policymakers have several bazookas including a $625 billion bailout fund and an ECB that says it will do “whatever it takes” to save the euro. How this all ends is anyone’s guess. Asia is slowing. China has moved from a consistent 10 percent growth to 7 percent and that may be the norm going forward. We still don’t believe the hard landing stories out there. The Shanghai stock market is down this year and trading around the 2,000 mark, it has not closed below that level since January 2009. Japan has been described as a bug looking for a windshield. Poor demographics (population there has actually started to decline) combined with the largest debt burden in the world suggest a slow economy at best. ISI forecasts 1 percent growth in 2013. Other than that Mrs. Lincoln, how was the play? So the economic outlook remains challenging. What does this mean for the markets? Generally, the equity and bond markets reflect these difficult times. That is they are “priced into” the markets – that’s why risky stock markets are trading at lower valuations and safe haven bond prices are at record highs – interest rates at record lows. It’s because investors are worried. Contrary to what many investors might think, there isn’t a great correlation between economic growth and stock market returns. (Notice that the stock market has been strong recently while the economic recovery has been one of the slowest and weakest ever.) We believe that valuation is very important. In other words discounted cash flows, P/E ratios, earnings and dividend yields vs. bond yields, etc. really influence our decision making. Frankly we don’t see many asset classes that are jumping out as dramatically over- or under-valued. There aren’t many “fat pitches.” We do believe that emerging market equities are attractive and that bonds are unattractive. But both observations hold for the long term as short term trends and a very easy Federal Reserve may keep rates lower longer than we expect.   Jeff Pantages, CFA, is the chief investment officer for Alaska Permanent Capital Management, a $2 billion investment management and advisory firm located Anchorage.

Editorial: Romney gets in Obama's face over lies on energy

Back in September 2008 during the good ol’ days of Hopenchange, then-candidate Barack Obama gave the following instructions to one of his adoring crowds in Nevada: “I need you to go out and talk to your friends and talk to your neighbors. I want you to talk to them whether they are independent or whether they are Republican. I want you to argue with them and get in their face.” When it came to the issue of federal permitting for oil and gas development, Republican nominee Mitt Romney took that advice during the second presidential debate on Oct. 16 and produced one of the most compelling moments in the history of such events when he stepped across the town hall stage and peppered Obama with the facts of his disastrous energy policy. In the town hall format, Obama was at his best. Unfortunately, Obama’s best means he’s at his most demagogic and dishonest. Throughout this campaign, about the only accurate thing that has come out of this president’s mouth is: “I’m Barack Obama and I approve this message.” Other than that, it’s been an avalanche of lies and distortions about Romney that have unraveled in the space of just two 90-minute debates. One of his bigger whoppers has been exposed in both of them. Obama repeated his assertion that oil and gas production has increased in the U.S. under his watch. Romney, just as he debunked that claim in the first debate, again refused to let Obama get away with it and pointed out that the increase in domestic production is entirely attributable to development on private lands, not public. Romney correctly cited the U.S. Energy Department’s own numbers that oil production on federal lands was down 14 percent and gas production was down 11 percent in 2011. Romney also claimed that federal permits for oil and gas on and offshore have been cut in half. “Not true, Governor,” said Obama with a typically flippant gesture. “So how much did you cut it by?” Romney asked. Five times, Romney asked Obama by how much he’s cut back on issuing drilling permits and leases. Finally cornered, Obama went into some nonsensical answer about “use it or lose it” that bore no resemblance to an answer. It’s not surprising that President You Didn’t Build That would have a hard time distinguishing the difference between public and private lands, or that he would have no shame about taking credit for energy successes he had nothing to do with. According to a CNN fact check, federal leases are down 42 percent from President George W. Bush and drilling permits are down 37 percent. But that’s not “half,” so those objective fact checkers at CNN rated the claim as “off the mark.” In the world of fast-and-loose political statements, I’d call Romney’s attack on Obama “close enough.” After all, it was the Obama administration that issued illegal offshore drilling moratoriums in the Gulf of Mexico and the Alaska outercontinental shelf following the Deepwater Horizon disaster in 2010. It is the Obama administration that refused to approve the Keystone XL pipeline, which would have created 20,000 construction jobs in the U.S. and provided hundreds of thousands of barrels of oil from a friendly and stable source. It is the Obama administration that just withdrew half the area from the National Petroleum Reserve-Alaska and chose a plan that could prevent a pipeline from being built across the Slope from the Chukchi Sea to TAPS. It is the Obama administration’s U.S. Army Corps of Engineers that has blown off issuing a record of decision for Point Thomson, costing the state about 1,000 construction jobs this winter. The same Obama administration, though, from the same Interior Department that is closing off half of NPR-A, just announced a streamlined process for approving solar farms on public lands. The day of the second debate, another one of Obama’s green energy project companies, A123, filed for bankruptcy. As Romney has pointed out more than once, you can’t run a car on wind. Obama is proving that you can run a campaign on it though.

Commentary: Crab season under way Oct. 15; grant awarded for fishing energy audit

October is National Seafood Month – and it also marks the start of one of the busiest months for Alaska’s fishing industry. The state’s biggest crab fisheries get under way in the Bering Sea on Oct. 15. The Bristol Bay red king crab catch will hold steady at 7.8 million pounds, while the snow crab harvest has taken a dip to 66.3 million pounds, down from about 89 million pounds last season. The St. Matthew Island blue king crab fishery is also down a bit to 1.6 million pounds. Hundreds of divers in Southeast Alaska are plying the depths for 1.5 million pounds of sea cucumbers, 3.2 million pounds of sea urchins and more than a half million pounds of giant geoduck clams. A few dozen divers also target sea cucumbers and urchins in smaller fisheries at Kodiak, Chignik, the Alaska Peninsula and the Bering Sea (175,000 pounds total for cukes and 80,000 pounds of urchins). Fishing for big spot shrimp also opens in October throughout Southeast with a catch of just over a half million pounds. Also in Southeast: the Dungeness crab fishery reopened on Oct. 1, and trollers will be back out on the water fishing for king salmon starting on Oct. 11. Elsewhere, fishermen in the Gulf and Bering Sea continue fishing for pollock, cod, halibut, sablefish and various other groundfish. The halibut and sablefish fisheries close on Nov. 7 this year and will reopen in early March.   Fishing for fuel savings Diesel fuel is $5.27 per gallon in Kodiak and fishing boats elsewhere face similar or even higher fill up costs. Fishermen could soon find some relief from a state backed project that aims to find ways to reduce fuel needs for fishing vessels. “Fuel costs can really affect the bottom line for a fisherman when you’re skimming off 30-40 percent of your annual income for diesel fuel,” said Jim Browning, director of the Alaska Fisheries Development Foundation, which received $250,000 from the state to launch a three-year energy audit pilot project to begin next spring. AFDF will partner with Sea Grant marine advisory agent Terry Johnson in Homer to design and implement the project. The program will begin by obtaining baseline information on fuel usage by vessels of all sizes. It will then test various fuel additives, hydrogen generators and other new technologies aimed at saving fuel and increasing efficiency by up to 20 percent. AFDF is currently seeking industry stakeholders to serve on a steering committee, as well as vessel owners who would like to have an energy audit on their boats. Anyone interested can contact AFDF in Anchorage 907-276-7315. (see more at www.afdf.org)   Expo shift Football has forced a big change in dates this year for Pacific Marine Expo to after Thanksgiving. “The show dates rely on the Seattle Seahawks football schedule at Centurylink Field,” explained Expo director Bob Callahan. “This year there was a bit of a wild card – the Washington State Huskies are renovating their football stadium so they took up a few weekends in November at the Field. So between the Seahawks and the Huskies we had to move our dates.” The new Expo dates are set for Tuesday through Thursday, Nov. 27, and response has been “surprisingly positive,” Callahan said. Early registrations are up by more than 600 people compared to this time last year and the trade show continues to grow. “The show has been growing each year by about 10 percent and we are 4,000 square feet and 40 booths ahead of last year. We are actually in the running for one of the fastest growing shows in the country for its size,” he said. Expo is the West Coast’s largest marine industry trade event for 46 years and attracts over 400 companies and nearly 9,000 visitors. “Any trade show mirrors the success of the industry, so obviously, the industry is doing well and it is reflected in the growth Expo,” Callahan added. See the complete lineup at www.pacificmarineexpo.com.   Chinook salmon meetings Alaska Department of Fish and Game has scheduled a scientific symposium on Oct. 22 and 23 from 8:00 a.m. to 6:00 p.m at the Egan Center in Anchorage. The Department said, “The symposium will feature scientific presentations and panel discussions from a wide variety of experts from private, state, federal, and academic backgrounds. The goal is to discuss gaps in knowledge of Chinook salmon abundance and productivity, and assemble a targeted list of research priorities to fill these gaps. More details about this event will be forthcoming in the first weeks of October.”   BOF begins   The state Board of Fisheries had its annual work session on October 9 and 10 at the Egan Center in Anchorage. Its meeting cycle this session focuses on Bristol Bay, Arctic-Yukon-Kuskokwim and Alaska Peninsula/Aleutian Islands fisheries starting in December.   Laine Welch lives in Kodiak. Visit www.alaskafishfactor.com or contact [email protected] for information.

The bait-and-switch on Alaskan energy

An alliance of environmental activists and Democratic politicians has spent decades blocking the efforts of Alaskans to access the rich energy resources of our state. When Alaskans wanted to open the 1002 area of ANWR (Arctic National Wildlife Refuge) to exploration and production, opponents of progress stymied our efforts with fear-mongering and obstructionism. In so doing, they frequently pointed to the National Petroleum Reserve-Alaska in the northwest corner of the state as a preferable location for drilling. This, they argued, would protect the coastal plain of ANWR. But now that the focus has actually swung to the NPR-A, this same obstructionist alliance is supporting a plan to greatly restrict oil and gas exploration in the petroleum reserve. This is a classic bait-and-switch. If opponents simply don’t want Alaska to produce any energy, they should be honest enough to say so. A land management plan billed by the Interior Department as “opening” half of NPR-A would actually close oil and gas activity in half the Reserve. It would also make it very difficult to construct the pipelines and other infrastructure necessary to get oil from the Chukchi and Beaufort seas to the trans-Alaska oil pipeline. The environmental community is even trying to rename the petroleum reserve as the “Western Arctic Reserve.” The name itself declares their intention to wage war against responsible resource development in Alaska. If there is one thing that should offend us all, it is America’s dependence on the Organization of Petroleum Exporting Countries (OPEC). We import 4.5 million barrels of oil from OPEC each and every day. Our own continent, however, has been blessed with vast oil and natural gas resources that if responsibly developed could free ourselves from relying on imports from countries such as Saudi Arabia, Venezuela, Libya, Iraq and other familiar hotspots. According to the Energy Information Agency, the United States has 220 billion barrels of technically recoverable oil and condensates. Other estimates range far higher. The Mexican government estimates its own technically recoverable resources to be 31 billion barrels, while Canada boasts some 175 billion barrels in proven reserves alone. Alaska will necessarily play a large role in this energy revolution. NPR-A holds nearly 900 million barrels of oil, along with over 50 trillion cubic feet of natural gas, according to the U.S. Geological Survey. The Chukchi and Beaufort seas may hold an additional 23 billion barrels of oil. Unfortunately, much of the state’s resource bounty is locked up by its federal overseers. The benefits of permitting Alaska to access its potential should be obvious. North Dakota, for instance, boasts an unemployment rate of just 3 percent. Wyoming’s is just 5.7 percent. The budget situations in these states, which have benefited from the energy boom, is good. North Dakota actually has a $1 billion surplus. Oil and gas production creates thousands of jobs and fuels economic growth. Progress in the energy sector spills over into other areas of the economy as well. This is because equipment must be purchased, shipments must be transported, and workers must be fed. The result is a powerful multiplier effect. The World Economic Forum estimates up to four additional jobs can be created for every position in the deepwater or unconventional oil sectors. Oil and gas production also provides a revenue stream for both state and federal treasuries that can be used to help address budget deficits. The failure of the federal government to pursue a truly “all-of-the-above” approach to energy policy, however, is hindering the nation’s ability to climb out of this recession. Over the last four years, while permitting for oil and gas has been dramatically restricted, the national debt has risen by more than $5.4 trillion and high unemployment rates persist around the country. In the meantime, our reliance on imports persists. There is nothing noble about forcing oil production overseas where the environmental standards are weaker while blocking it here at home. Self-sufficiency is an integral part of the American pioneering spirit. It is certainly central to the Alaskan character. A durable, realistic form of energy independence is within our grasp if only we approach it with common sense. But too often decisions by the current administration, like the proposed management plan for the National Petroleum Reserve-Alaska, hobble American energy production and stop progress. Alaskans don’t need the federal government to protect them from themselves. We need reasonable access to the resources of our state to support a vibrant and growing economy that can support future generations. The bait-and-switch is wrong for Alaska and wrong for America. Lisa Murkowski is the senior U.S. senator from Alaska.

Editorial: Board must take up kings, take no more from setnetters

The — now official —disaster in Cook Inlet during the 2012 salmon season is back in front of the Board of Fisheries at its upcoming annual work session Oct. 9 to 11 in Anchorage. Issues between the sport and commercial users that are contentious in the best of times will be front and center against the backdrop of a record-low return of Kenai kings in 2012 with the Kenai River Sportfishing Association, or KRSA, pushing for a full evaluation of king salmon management while Peninsula setnetters and the statewide United Fishermen of Alaska are opposing the KRSA agenda change request. The issue upon which the two sides agree is the need to formally adopt new escapement goals for the Kenai and Kasilof river kings based on the new DIDSON fish counters deployed fully in 2012 after three years of side-by-side testing against previous sonar counters. The Alaska Department of Fish and Game, which originally planned to present new DIDSON-based escapement goals for the regularly scheduled 2014 Upper Cook Inlet meeting, now says it has the capability to present goals in time for 2013. The discussion around the new goals developed by ADFG, what current counts reveal about the status of the Kenai River king salmon stocks, and how ADFG will use existing authorities under the current management to achieve the goals should be a productive step toward achieving a more orderly 2013 season. In 2012, near total closures of the sport and commercial setnet fisheries were required to meet Kenai River king salmon escapement goals. The setnet fishermen lost out on 95 percent of their typical annual harvest while the tourism sector suffered from cancelations and lost visitor traffic. Both commercial and sport fishing industries recognize the need to conserve king salmon and achieve a sustainable fishery. It is certainly not in the setnetters’ interest — especially after a total loss in 2012 — for diminishing returns of king salmon and the restrictions to their sector that go along with it. However, the setnetters also believe that when KRSA is pushing for a change in management it is typically going to cost them money. At the 2011 Upper Cook Inlet meeting of the Board of Fisheries, setnetters were helpless as the four-member majority took measure after measure proposed by KRSA that included a new mandated closures on Tuesdays in addition to the current “weekend window” closures on Fridays, the decoupling of their sector from the drift fleet and a provision for a more expedient closure to their season after Aug. 1. The allocative shifts away from the setnetters were worth millions during the first season under the new rules in 2011, and with low forecasts for Kenai River kings in the near future they can anticipate even more of their historical catch going up the river or into the drift fleet’s pockets. It is important for the board to remember that when it comes to allocations, a bedrock principle of management is history in the fishery. For setnetters who have, in some cases, fished the same sites for generations, it is no easy thing to swallow to see their allocations consistently eroded by a relatively new user group as is the sport guide industry. A setnetter shouldn’t lose fishing opportunity merely by the nature of someone starting a guide business or building a fancy cabin along the Kenai River. They also shouldn’t be told that a dollar they earn to feed their families and support the local communities is less valuable than a dollar earned by a guide or a B&B. For the value of the Cook Inlet commercial fishery to the state economy goes far beyond the $50 million in ex-vessel value it is usually pegged at by the sport industry. Only considering ex-vessel value ignores the impacts of fuel and supply purchases, processing jobs, crew wages spent throughout the community, the transportation and logistics infrastructure necessary to move 25 million pounds of salmon to domestic and international markets, and the end-user spending at retail and fine restaurants where Alaska salmon is served. The setnetters have more than borne their fair share of conservation for Kenai River kings. As the board considers changes in management, they should not weigh them down any more.

Commentary: Alaskans shouldn't forget Permanent Fund's purpose

The Alaska Permanent Fund Corp. transferred $605 million to the state this summer to cover the cost of paying dividends to every eligible Alaskan. In 2011, it transferred $801 million. Everyone can see the result: The 2012 dividend amount, to be announced at 11 a.m. today, will be much smaller than last year’s. This might be a trend with which we should get comfortable. This year’s pay-out, scheduled for early October, will move a vast amount of money into the hands of individual Alaskans. For many people, the money will be a rescue bonus, allowing them to fill fuel tanks or buy some decent tires just in time for winter. Others will use it as a treat to pay for things they wouldn’t or couldn’t otherwise buy. This conversion of the state’s oil wealth into cash for individuals is a reversal of the usual flow. The state has no income tax, and, for many families, dividend checks more than cover whatever local taxes they pay. So, as individuals, most Alaskans in essence receive non-federal government services at no direct cost to themselves. It’s a nice situation for the moment, but Alaskans should understand that this annual pay-out is not the reason for the Alaska Permanent Fund’s existence. The people who designed the fund and the Alaskans who approved the 1976 constitutional amendment allowing the dedication of state money to it were not confused about its purpose. The fund is a savings account for some of the oil wealth so the state and its communities will have a source of income if the crude runs dry. The dividend came along several years later, with various justifications. Many people have the misimpression that the earnings of the fund can only be used for dividends. In fact, the Legislature can treat the fund’s earnings like any other state income. In the fiscal year that closed June 30, those earnings totaled $1.6 billion. Only the principal of the fund, which is now greater than $40 billion, is off limits to appropriation by the Legislature. For the moment, the Legislature has approved a formula that roughly averages the most recent five years of earnings and then divides by two to arrive at the amount it will spend on dividends annually. But there’s nothing sacrosanct about that formula. Alaskans will have many arguments about the precise moment when it makes more sense to use the earnings of the Permanent Fund to support their governments than it makes to put the money in our personal pocketbooks. It’s not a topic that politicians like to discuss. However, that day could be approaching if things don’t turn around in the oil patch. The state’s budget is already on the edge of imbalance and many local governments are struggling to make ends meet. As we marvel at the fact that the government pays us to live here today, we should keep in mind that things are looking different tomorrow.

Commentary: Markets perk up in August, but storm clouds still loom

After a very rainy July we have had a better August here in Anchorage. The markets also perked up this past month as stocks gained 2.3 percent in the U.S. That puts the S&P 500 up 13.5 percent year to date. Overseas the EAFE index of developed countries gained 2.7 percent and emerging equity markets lost 0.3 percent in August. European equities have snapped back on hopes of an ECB bond buying rescue package for Spain and others. Greece still looks like a goner to us. Bonds lost a bit of their luster. The 10-year Treasury jumped 10 basis points to yield 1.55 percent. Still, the Federal Reserve is more worried about unemployment (8.1 percent) than inflation (1.4 percent year-over-year). Other central bankers tend to agree. We are in the midst of a global easing cycle to combat subpar global economic growth. Interest rates remain close to all time lows. In so far as the outlook for the rest of the year; think cloudy with a chance of showers. The macro and political environment is quite uncertain. Despite this, stocks have been on a roll climbing the proverbial “wall of worry” so far in 2012. We expect the markets to be more challenging in Q4. The death of equities? The PIMCO bond king, Bill Gross, noted last month that “the cult of equities was dying” and that stocks would be poor performers going forward. Was he just “talking his position” (bonds) or is he on to something? It’s probably the former. GMO, an asset allocation firm par excellent, expects real returns to equities to be about 3.5 percent over inflation over the next 7 years which is down from their historical 5.5 percent average. They believe that nothing has fundamentally changed about the return generating ability of equities, but rather they are a bit overvalued now owing to very high, and unsustainable, profit margins. Still, stocks will beat bonds and cash by a long shot. There’s nothing certain in life except for death and taxes. Taxes are scheduled to rise in 2013. Investors might consider thinking about 2012 tax planning (sell appreciated investments now or later?) in light of this. We should get more clarity after the November election. Here is a summary of some key considerations from Barron’s: If the Bush era tax cuts expire, this would bring a spike in tax rates for most investors and those in higher income brackets. The ordinary income tax rate for the top earners would rise to 39.6 percent from 35 percent. That ordinary income tax rate will once again be applied to dividend income, eliminating the current rate of 15 percent. The tax on dividends would be equivalent to your ordinary income rate, anywhere from 15 percent to 39.6 percent. The rate for long-term capital gains is scheduled to rise from 15 percent to 20 percent. On top of those increases, a new 3.8 percent Medicare contribution tax will take effect in 2013 to help pay for Obamacare. That tax is imposed on investment income for individuals earning more than $200,000 a year or households earning more than $250,000. While a return to Clinton era tax rates would affect most investors, there are plenty of cases in which there are no tax benefits to selling. Owners of tax-deferred accounts such as IRAs, workplace retirement accounts, and annuities aren’t immediately affected by the tax increases, since investments in those accounts aren’t taxed at all until the money is withdrawn. If Congress takes no action in the coming months, the maximum estate and gift tax exemption will fall from $5.1 million to $1 million and estate and gift tax rates will jump from 35 percent to 55 percent. Our 70,000 page tax code is complex. Perhaps the best advice is to see your friendly local neighborhood tax expert and financial planner well before year end.   Jeff Pantages, CFA, is the chief investment officer for Alaska Permanent Capital Management, a $2 billion investment management and advisory firm located Anchorage.

Editorial: Obama, media friends are an embarrassment after 9/11 attacks

It has been a difficult week for those of us deeply concerned about our national security and the safety of our fellow Americans risking their lives as soldiers and diplomats around the world. And for those of us who still believe our chosen profession of journalism demands holding those in power accountable, it has been downright discouraging. As an al-Qaeda flag flew over our Egyptian embassy in Cairo and an affiliated group of terrorists attacked and murdered our Libyan ambassador along with three other Americans on the 11th anniversary of 9/11, President Barack Obama’s lapdog media were in a quandary. Blaming former President George W. Bush — as Obama and the mainstream media do for pretty much everything — wasn’t an option. Even Obama’s acolytes in the press couldn’t spin it that way given the situations in Libya and Egypt are wholly owned by the current administration that toppled those governments in 2011 and handed them over to roving bands of militias and the Muslim Brotherhood. Inspired by the ease with which American outposts had fallen on Sept. 11 — the real video that sparked the mayhem — violence spread to more than 20 countries from Algeria to Indonesia while Obama skipped his intelligence briefing on Sept. 12 to head off to yet another fundraiser, this one in Las Vegas. So with blaming Bush out, and blaming Obama forever out of the question despite mounting evidence of his incompetence, inattention to his duties and foreign policy failures, the dutiful media settled on the next best thing: Blame Mitt Romney. Romney, you see, had the temerity to issue a statement blasting the weak-kneed statements of the U.S. Embassy in Cairo, whose Twitter feed had issued and then stood by its condemnation of some film mocking Mohammed even as the American flag was being torn to shreds by a Muslim mob. The embassy did issue a perfunctory statement against the violation of our sovereignty, but that came alongside a full-throated denunciation of an American exercising his First Amendment rights that equated the actions of a mob to the act of free speech. Rather than ask the most basic questions on Sept. 12 — such as why our Libyan consulate and ambassador lacked even basic security despite coming under repeated attacks over the last several months, or why it had not been ensured the Cairo embassy would be protected by Egyptian forces with advance warnings of the impending attack — the vast majority of the media spent the entire day attacking Romney. You’d have thought Romney was actually the president the way his response to the 9/11 attacks was dissected by the press, who were caught on an open mic coordinating their questions to the GOP nominee but still asked the same question at least five times. Of course, they couldn’t ask anything of Obama, who issued a half-hearted statement about the attacks from the Rose Garden Sept. 12 and took no questions before jetting off to Vegas. Politicians can be expected to be politicians, and now, sadly, the media can be expected to do whatever they think is necessary to get Obama reelected. Sure, the media can be expected to carry water for liberals on their favorite social issues like gay marriage, but now we’ve learned that even American deaths overseas cannot shake the media’s infatuation with this president and their desire to protect him at all cost. With few exceptions, the media has been an embarrassment since the 9/11/12 attacks. They have continued to assert the violence is all the result of the Mohammed video — echoing the central talking point from a White House that can’t afford to be seen as weak on foreign policy less than two months from an election, and after spending its entire Democratic National Convention spiking the football over killing Osama bin Laden. U.N. Ambassador Susan Rice also beclowned herself on all four Sunday morning talk shows on Sept. 16, continuing to claim against all available evidence that the murder of our Libyan ambassador was part of a spontaneous uprising over the film. The mainstream, leftwing press has also stood idly by with barely a murmur of dissent as the White House admitted it asked YouTube to review the Mohammed video to see if it violated the terms of use, and federal agents began investigating the filmmaker for potential probation violations. In fact, rather than simply stand by, as contemptible as that is, the press has eagerly jumped into the fray by publishing the filmmaker’s name, his address and photos of his home. Local law enforcement arrived en masse for a midnight knock on the filmmaker’s door and took him in for questioning while covering his face because the White House and its media accomplices have now put this man and his neighbors’ lives in jeopardy. Dutch filmmaker Theo van Gogh was shot eight times, nearly decapitated and stabbed in the chest in broad daylight in Amsterdam in 2004 for the “crime” of offending Muslims. That doesn’t seem to matter to the media doing the White House bidding. But hey, did you hear the story about Romney’s dog?

Focusing on business big and small during August recess

The August congressional recess is an excellent opportunity for me to head home for the month and talk to Alaskans about their needs, concerns, and what they want to see from Washington and Congress. I spent my time seeing familiar faces over the long summer days, meeting with local community and business leaders, barbequing with family and friends, and discussing the issues most important to our unique state. It made for an informative and warm homecoming. My staff and I also set out on our “Growing Alaska” tour where we sent both Alaska and Washington-based staff to hold mobile office hours and meet with local businesses and community leaders from Ambler to Kodiak. As a team, we visited more than 60 communities and met with hundreds of people. One of my first trips in August was to Cold Bay on the Coast Guard cutter Bertholf. The Bertholf is a critical piece of the Coast Guard’s Arctic Shield mission which will increase its presence in the Arctic, an indication that Alaska’s northernmost shores are seeing more traffic and more development. Sen. Murkowski and I were pleased to join Coast Guard Commandant Admiral Robert Papp, Sen. Mary Landrieu, D-La., and Homeland Security Secretary Janet Napolitano on the Bertholf for an overview of the Coast Guard’s critical role in our state. Alaskans everywhere tell me they want to see Alaska’s vast resources developed and developed responsibly. As I write, Shell’s rigs are preparing to begin drilling operations in the Beaufort and Chukchi seas, and I am confident we will see that responsible development Alaska is known for moving forward in the Arctic. In Anchorage, I held a roundtable discussion with local business leaders and job creators to discuss potential markets, particularly Hawaii and Japan, for Alaska’s rich supply of natural gas. I was joined by representatives from the governments of both Japan and Hawaii, as well as local leaders from industry. While still in its early stages, I am eager to further discuss this idea. Hawaii understands, like Alaska, that as non-contiguous states, the cost of energy and the cost of bringing resources to our communities is greater and more complicated than in the Lower 48. Exploring future uses of Alaska LNG is important as we look for ways to reduce costs and use more domestic energy supplies. The Growing Alaska tour was successful as my staff and I talked to small business owners and operators across the state about what’s working and not working when it comes to growing, expanding and hiring more workers. We saw some amazing success stories in every community, and in many areas the importance of getting broadband Internet to our schools and towns was a hot topic. To explore solutions to these challenges, I invited Federal Communications Commission Commissioner Jessica Rosenworcel to Alaska to meet with educators, Alaska Native leaders, and state and local officials. One point became clear: when it comes to Alaska, a one-size-fits-all approach from the federal government just won’t do. I thank Commissioner Rosenworcel for her in-depth understanding of the various telecommunication obstacles in our state, like lack of roads and infrastructure. I’m looking forward to working with her and the FCC to expand telecom services to every corner of Alaska. The rich, unrivaled culture and kindness of Alaska was apparent everywhere the Growing Alaska tour stopped. Alaskans welcomed my staff with open arms and proudly showed them their towns. From community libraries to student art projects made of marine debris, Alaskans prove their resourcefulness and creativity again and again. In Nome, there are thriving small businesses and impressive progress being made on the new hospital (which kindly housed my staff during flight cancellations). In other communities we saw the unique and creative ways that Alaskans have found to deliver health care. At the Glennallen chiropractic clinic, which functions as an overall wellness center with classes for disabled children, Sheila Hay also runs a successful smoothie and organic food shop. Its success highlights the importance of preventative care and the vital role our small businesses play in our state. We also saw progress in the way the state receives energy. In Cantwell, my staff saw firsthand the windmills financed by the Recovery Act which now power Cantwell’s tribal hall. Similar efforts to diversify our energy sources are being seen on Fire Island, where Cook Inlet Region Inc. is putting in a wind farm, just outside Anchorage. To highlight Alaska’s commitment to energy independence, I invited Sen. Ron Wyden of Oregon, a top member on the Energy and Natural Resources Committee in the U.S. Senate, on a tour of Fire Island’s new wind turbines. This was followed by an in-depth discussion on our Bipartisan Tax Fairness and Simplification bill. The bill will reduce tax rates for individuals and families and keep it simple and fair for Americans. A highlight of the bill is the use of one, easy tax form which is clean and simple, whether you’re a billionaire or a middle class American. It was a busy and productive month. I look forward to seeing you on another trip home soon. Mark Begich is the junior U.S. Senator from Alaska.

EDITORIAL: Alaskans do their part to help economic climate

Although some candidates no doubt disagree, Alaskan voters got it right Aug. 28. Only 24 percent of the electorate turned out to vote on one of the last beautiful days of summer, but those who made it to the ballot box did their part to prevent negative impacts on the state business climate. By a resounding margin of nearly 2-to-1, voters rejected Ballot Measure 2, a 15-page initiative to create a new coastal zone management program to replace the prior regime that expired in 2011 when the legislature failed to renew it. Better than residents of any other state, Alaskans understand the obstacles thrown in our path from the federal government. To cite just a few fresh examples: The Environmental Protection Agency has slapped expensive new fuel standards on the transport companies and cruise ships that play a critical role in our economy, threatening to raise the cost of everything we consume and the cost for tourists visiting our state. The Interior Department has just withdrawn half of the National Petroleum Reserve-Alaska from development and chosen an alternative that may make construction of a pipeline from the Chukchi Sea to the Trans-Alaska Pipeline System extremely difficult. Most recently, the U.S. Army Corps of Engineers decision to delay a final record of decision on the environmental impact statement for Point Thomson will cost the state as many as 1,000 construction jobs this winter alone if the agency does not stick to its previously promised late September deadline. Nevertheless, Alaskan voters weren’t buying the argument that by failing to pass Ballot Measure 2 we were ceding our destiny to the federal government. Passing the measure would have only given a host of new tools to the litigious green groups to challenge permitting decisions or whether the eventual regulations comply with the intent of the initiative. We can’t blame backers of the measure for being frustrated with the legislature’s failure to extend the coastal zone management program, and we commend their effort to put the measure before voters, but if they want to effect real change in Juneau they’ll have their opportunity Nov. 6. The ballots still aren’t fully counted, but we were heartened to see the narrow margin in the decision over Ballot Measure 1, an initiative to allow cities and boroughs to raise the property tax exemption from the current $20,000 to $50,000. As of the most recent count Sept. 4, the “yes” votes were ahead by a mere 284 votes out of 115,774 ballots counted with absentee votes still being tallied. The result of local governments raising the property tax exemption would shift budget burdens on to businesses and renters, impacting job creators and those of lesser means who are typically pinched by high costs in low vacancy areas already. While it would certainly seem to serve self-interest to vote to lower taxes on yourself and higher taxes for others, no matter what the final tally eventually is we were glad to see so many Alaskans choose the greater good over their own. It’s a lesson our elected officials would do well to take to heart.  

After August in Alaska — A full mind and a happy heart

I can’t decide whether I am the luckiest woman in Alaska or the luckiest person in America. I have just had the best 30 days anybody could have in any place ever. I have been home. Home in Ketchikan where people know my family well. In Metlakatla where when the planes don’t fly and you just deal with it, or ask somebody to take you to the airport in Ketchikan in their boat and they don’t think twice about doing it. And they call ahead to the airport to tell Alaska Airlines to hold the plane because they know the guy who works the gate. In Barrow when the sun is up so high in the sky at 11 p.m. that you feel like bedtime is a catnap in the afternoon sun. In Kaktovik, where you buzz the coastline looking for polar bears but the only one you see doesn’t move cause he’s so satiated from gorging on a ring seal that he ate for lunch (taken from a fish camp that we just visited) that he can’t move. Flying over the North Slope in a helicopter, a land that is more water than terrain, walking on the tundra that is like a magnificent sponge filled with color and water and delicate flowers. Talking with whaling captains about their ice cellars that are thawing and worrying about their food security yet anxious for more development in the Arctic as it means job security. Then down to Kodiak with the Coast Guard — everyday heroes who are there for Alaskans day in and day out. We flew out to the brown bear refuge on the island and stalked a stream to come upon a sow and her cub relaxing in the sun. We were the intruders in her world and kept a respectful distance. Kodiak is indeed the Emerald Isle. Cold Bay was the next outpost, made even more so since the only fuel source (the truck from Frosty Fuel) was out of commission. We flew out to a national security cutter in the Bering Sea and all I could think of was that these were the waters that my boys fish in. I was proud of them and afraid for them at the same time. These are big waters. I visited big bears the following day in Katmai National Park. An old boar nicknamed “Ugly” showed us how real bears fish. In Kenai I spent the day with 80 kids from military families and shared their delight as they caught humpies and silvers in the Kenai River. For many, it was their first fish ever. Verne and I flew out to Healy Lake for a celebration of life for a WWII vet and trapper who’s lived in the Interior since the 40s. A beautiful tribute to a wonderful man, complete with 21-gun salute, military flag ceremony and bowling balls shot from the canon into the stratosphere. He would have loved it. The quiet at Healy Lake in the morning was amazing — your ears absolutely rang because the quiet was so intense. Intense and beautiful is the best way to describe the Aleutians trip. Flying in a C-130 for almost 6 hours from Anchorage to Shemya. A true outpost. Flat, 2 miles by 4 miles, old buildings from WWII next to buildings housing missile defense assets. Brave souls made the “double dip” — swimming in the Pacific and then running around the cove to jump into the Bering Sea. Not me. We took the helicopter 30 minutes out to Attu — the end of the chain, directly under Russia and on its own time zone. No inhabitants on the island since 2009.  Amazingly beautiful with mountains straight up into the sky, lovely harbors and beaches and streams with fish so thick you could walk across. We helped erect a monument to the Natives who had been captured by the Japanese during the war and later interned, never to return to Attu. For an island that gets rain almost every day of the year, we had blue sky and calm winds as we ate lunch on the mossy, pillowy tundra. Adak almost seemed like civilization after Attu. Buildings and people (just over 100) were outnumbered by caribou (3,500). These three Aleutian communities are like a forgotten world, left over from the war. Amazing history. Verne and I spent our 25th anniversary at Winterlake Lodge on the back side of Mt. Susitna. The floatplane trip out was like a science class as our pilot told about the land formations and topography. Chena Hot Springs was yet another reminder to pay attention to science.  Bernie’s place is the land of possibilities and big ideas. Next year he will have bananas growing in his greenhouse! I felt like a Japanese monkey floating in the mist of the hot springs, alone on a Sunday morning before the crowds came to talk about geothermal, hydrogen and methane. In Kenai I ate graham crackers soaked in liquified natural gas to demonstrate how safe it is and then went offshore on an oil/gas platform in Cook Inlet to see where the stuff comes from. Instead of going to Tampa for the convention, I went to the Yukon River where the air is clear and the people there are focused on energy and food. Pretty basic stuff. In Beaver, a village of 70, the students danced and were shy and proud. The tables were filled with food that people had brought to share. It was obvious that those who had the least brought the most to share. Stevens Village was equally small, with big ideas about governance. Tanana is proud of their innovation with biomass and how they have brought down energy costs and created jobs. Yet, they have a new cafeteria at the school that has never been used as they wait for funding for a cook and lunch program. Our pilot (the best I’ve ever flown with) flew at about 400 feet throughout the region following the Yukon as he navigated weather. What a way to see the country. Ruby was nestled in the high bank of the river, lovely even in the rain. Tales of domestic violence and suicide marred the natural beauty of the area. In Galena we were greeted at the airport by my old friend Sidney Huntington, now 97. He’s still driving and conceded to go live in the elders facility because his wife told him she was done cooking for him. He has only made it through the third grade and is passionate about education. He has spoken at every graduation in Galena since 1973 and attends every basketball practice and game at the school. His sister is 93 and looks about 65. Good genes. Downriver we were in Kaltag, Grayling and Holy Cross. At each village the sun came out when we landed and as we were leaving the rain started to fall. After the third village it almost seemed beyond coincidental. The history of early Alaska was still present, from the mining in Ruby and sawmill in Kaltag to the old missionary church in Holy Cross. Pictures of horses and cows in Holy Cross was a reminder of how little outsiders understood the area at the time. Now it’s moose and fish again. The kids are learning their Native languages and dancing while taking pictures on their cell phones. I spent Friday evening at home in Anchorage by myself making rhubarb chutney from my plant that came from our old house.  It was good to make something from something that I grew. As I cut and stirred I reflected on all the places and people I had visited over the past 3 weeks. I am truly overwhelmed by the generosity, the warmth and support that I find. I have never received so many hugs from total strangers who greet me like a sister. And oh, the places I’ve been! Majestic, awesome, breathtaking. There are no adjectives to sufficiently describe a wilderness like Attu, Teshekpuk, the Yukon tributaries. My mind is full and my heart is happy. The only sadness I have is that in order to experience this amazing place I call home, I have to leave it. From back to D.C. and then to a conference in Iceland before it’s back to work here where people call me by my title rather than my first name and we exchange handshakes rather than hugs and talk politics rather than things that really matter, like family and food. I’m blessed in so many ways, but it’s times like this when I realize that I walk in several different worlds. Glad to have you all anchoring me to the world that really matters.

Small businesses are the backbone of Alaska's economy

When many people think of Alaska’s economy, they envision big players such as oil and gas companies, mining and seafood operators, multinational tourism businesses, and government. These employers are a critical part of the engine that runs Alaska’s economy. Without them, Alaska would not be what it is today. But there is another vital part of the economy that is often overlooked and crucial to building a better future for Alaskans: small businesses. As big businesses, banking and housing took a big hit when the recession rippled through the U.S. over the last few years, small businesses were the stabilizing force in the economy. Entrepreneurs proved to be the backbone of creativity and production. Small business stimulated and maintained economic growth. The same is true here in Alaska. At the beginning of this year, the federal Small Business Administration Office of Advocacy put together a state-by-state profile of small businesses in America. Alaska’s profile included the most recent data on the state’s small business employment numbers, how many small businesses opened and closed, the number of bank loans, as well as a break-down of business ownership by minorities, women and veterans. According to the profile, nearly 67,000 small businesses operated in Alaska in 2009. Of these, 15,838 were employers and they accounted for 52 percent of private sector jobs in the state. In the big picture, that means small businesses provided more than half of all non-government jobs in Alaska. That also means small businesses provided employment and support for more than 130,000 Alaskans and their families. It’s not just the sheer number of jobs that is important to consider. Small businesses in Alaska represented almost 40 percent of newly created private-sector jobs from 2005 to 2008. That’s an important trend that we must support in our quest to diversify Alaska’s economy. But there are warning signs that growth may be slowing. Throughout 2010, more small businesses closed down than started up. That’s why I am teaming up with the Alaska Small Business Development Center and the Anchorage Economic Development Corp. to sponsor two workshops in September aimed at helping Alaskans start their own businesses and helping current small business owners overcome the unique challenges faced in the 49th state. The first workshop was held Sept. 5 and focused on how Alaskans can launch their own businesses with guidance on how new business owners can calculate their start-up, variable and fixed costs, how to find a unique market niche, how to write a business plan, and where to get start-up money. But starting a new business is only half the battle. According to federal data, Alaska’s small businesses are very small as three quarters of all businesses do not have employees and most employers have fewer than 20 employees. That’s why it is also important for us to find ways to help existing small businesses to grow and expand their operations. The second workshop will be held on Sept. 20 and will consist of a roundtable for existing East Anchorage businesses, during which they will have the opportunity to discuss their common challenges and opportunities and brainstorm business strategies with experts from the Small Business Administration, the Anchorage Economic Development Corp. and other leading professionals. This workshop is also free and open to the public. It will be held at the Begich Middle School from 5:30 p.m. to 7 p.m. in room B104. If you’ve always dreamed of starting your own business, or are a current business owner who would like to expand, I encourage you to come join me at these workshops as we continue to build a stronger future for Alaska. Sen. Bill Wielechowski has represented East Anchorage since 2007.  

Commentary: Congress has real work to do in September

When Congress returns to Washington in September, it needs to do more than hold a few political posturing votes before going home to campaign. Even if a continuing resolution to fund government is passed as expected, there are still serious unresolved issues that should not be left for an unaccountable lame-duck session. Not only should Congress act to avert the toxic brew of tax hikes coming at the end of the year, but it should also act to check lame-duck regulatory abuses by the Obama administration. A massive $494 billion tax hike is coming on Jan. 1. Reversing the Bush tax cuts amounts to a $166 billion tax hike including higher income tax rates, smaller child credits, and the return of the marriage tax penalty. The end of Obama’s payroll tax holiday will pile another $125 billion on everyone who works. The Alternative Minimum Tax will slam millions of middle-class families to the tune of another $119 billion. The death tax will jump from 35 percent of everything above $5 million to a whopping 55 percent of everything above $1 million at a cost of $13 billion. Other expiring tax cuts will total about $50 billion, and new tax hikes from Obama’s health care law will add another $22 billion. These are not the usual 10-year estimates used in policy debates. These are one-year, immediate 2013 tax hikes that total an astonishing $494 billion. More than enough to tip the U.S. economy back into recession, perhaps sharply so. Economist Don Luskin projects that the dividend tax hike alone — slated to go from 15 percent to 43.4 percent with the expiration of the Bush tax cuts and the new Obama health care surtax — could knock 30 percent off the stock market. Seniors who rely on dividend income will be hit especially hard. Tax hikes of such a frightening size are never a good idea, but are especially foolish in what’s now widely recognized as the weakest economic recovery in the post-war period. Democrats should drop their class-warfare stance that insists on holding the U.S. economy hostage over tax hikes for upper income earners and business owners and agree to stop all of these tax hikes for at least one year. The regulatory threats in a lame duck period are similarly frightening, starting with a pending greenhouse gas regulation that would effectively prohibit new coal-fired power plants and create the predicate for litigation that would shut down existing coal plants, cementing as Obama’s legacy his promise to bankrupt coal and make electricity prices skyrocket. There are also several onerous financial rules pending pursuant to Dodd-Frank. The Labor Department has been working on a rule that would significantly increase the cost of retirement planning. The Department of Transportation has a rule pending to require rear-view cameras in all cars and trucks that would cost billions, and another to require airplane-like “black boxes” that would potentially make available to the government every detail of Americans’ driving habits. The FCC just announced a pending rule, called “special access,” to impose price regulation on a part of business broadband delivery. Those are a small sample of the known regulatory threats. There are also many unknown regulations that could be pushed out the door by a frantic outgoing Obama administration. This is, after all, a president who has elevated bypassing Congress to a virtue, bragging about how he won’t wait for Congress on everything from global warming to immigration. Rep. Reid Ribble and Sen. Ron Johnson, both of Wisconsin, have introduced legislation that would prohibit economically significant lame-duck regulations absent a national emergency. Rules that have been delayed to avoid having to defend them on the campaign trail should not be allowed to take effect after the election. Their Midnight Rule Relief Act should be passed by both chambers in September to protect the economy from looming regulatory threats. With our economy continue to suffer, it would be wonderful if Congress could come together on positive pro-growth reforms to get people back to work. Unfortunately, the best we can probably hope for is for Congress to continue current policies by rejecting big new spending bills, canceling all the tax hikes, and blocking regulatory threats to economic growth. And Congress should address these issues in September, under the watchful eyes of voters, not in an unaccountable lame duck session after the election.   Mr. Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected]

Editorial: Against Props 1 and 2, for Vazquez in District J

Alaskans go to the polls Aug. 28 to decide primary races and two ballot initiatives. Here are some final thoughts: Against Prop 1: This measure would allow municipalities to raise the property tax exemption from the first $20,000 in value to as much as $50,000. It’s been advanced by some folks in Fairbanks including former Borough Mayor Jim Whitaker, who told the Anchorage Daily News that he understands this will raise property taxes on businesses. It’s not surprising that Whitaker would want to relieve the cost of living for his former constituents in one of the most expensive places to reside in Alaska, but it is somewhat surprising that he doesn’t understand that increased costs for business are either deducted from wages or passed on to consumers. Lowering taxes for some won’t lessen the overall need for revenue, and as Anchorage Mayor Dan Sullivan noted, raising the taxes on rental property owners is going to increase rents in a city that already has steep costs and a 2 percent vacancy rate. The best way to lower the cost of living for Alaskans is to reduce energy costs, not through shifting tax burdens on to others. Against Prop 2: This measure would reestablish a coastal zone management program, and it has drawn fierce opposition from the oil and gas industry, miners, labor unions and the Anchorage Chamber of Commerce, among others. Backers of the initiative have tried to cast this measure as a battle between Outside interests and Alaskans, but that’s hard to square with the opposition coming from local labor unions who depend on both the resource development sector and the capital budget funded by royalties for high-paying jobs. The Sea Party, which got the measure on the ballot, has also tried to portray the initiative as simply restoring coastal zone management that allowed for all the oil, gas and mining projects developments throughout the state over the past 30 years. However, the 15-page initiative is far from equivalent to the previous program that lapsed on June 30, 2011, when the state Senate couldn’t come up with a coastal management reauthorization and wouldn’t even take a vote or offer amendments on a measure that passed the House by a 40-0 vote. If the Sea Party had simply wanted to restore the previous program, the ballot measure would have been one sentence long instead of 15 pages. A measure to restore the program that expired would have been something we could support, but Prop 2 is a disaster in the making. The legislature needs to come up with a coastal zone management program, that much is clear. While we appreciate the sentiment of citizens attempting to do the work the Senate failed to do, Prop 2 is not the solution. For Liz Vazquez in District J: We’ll save the rest of our candidate endorsements for the November election, but we didn’t want to let the primary pass without showing some support for the candidacy of Liz Vazquez in Senate District J for West Anchorage. Vazquez is facing Bob Bell in the Republican primary, with the winner to face incumbent Sen. Hollis French. It’s nothing against Bell — although we have no doubt the abrasive French would make an issue of Bell’s connection to disgraced and convicted former Habitat Division head Cory Rossi over what the Alaska Dispatch reported was an attempt at an illegal musk ox hunt in Nome while Bell was a member of the state Board of Game. No, we are for Vazquez because she is exactly the kind of person we always wish would get into politics but all too seldom do. The daughter of Puerto Rican immigrants, not only was she the first in her family to graduate high school, she went on to earn a law degree and two master’s degrees. (She’s also likely the first Alaskan candidate to conduct a door-to-door campaign on a Segway.) Vazquez is a former prosecutor, assistant state Attorney General, administrative law judge, and attorney for the U.S. Department of the Treasury. She’ll hardly be a shrinking violet in a Senate currently distinguished by the go-along, get-along gang. Unlike French, who seems to believe oil producers are the enemy, Vazquez sees them — correctly — as partners. If the citizens of West Anchorage want someone who can be both a productive legislator while not rolling over for the oil industry, we think they’d be wise to send Vazquez on from the Aug. 28 primary and defeat French in November.

Editorial: Attacks on 'Outside' companies wrong, undemocratic

Here we go again. An initiative governing resource development is on the Aug. 28 primary ballot and it was only a matter of time before the backers of Proposition 2 to reinstate a coastal zone management program played the “Outsider” card. After finance disclosures were filed with the state for June and July, the Alaska Sea Party put out a press release decrying the fact the group has been outraised 10-1 by their opponents who were characterized as “foreign” and “Outside” companies. Notably, while accusing these companies of a nefarious scheme to buy an election and silence Alaskans, the Sea Party did not attempt to refute the main argument against Prop 2 — that it will inject a tremendous amount of new uncertainties into a permitting process already fraught with them. Those favoring Prop 2 also continue to imply that they are simply restoring the previous coastal zone management program when that is hardly the case. Instead, the only counter to the Vote No on 2 group by the Sea Party appears to be that the their position is illegitimate because of the location of their company headquarters. These attacks on “foreign” or “Outside” companies participating in the political process in a state where they have invested billions of dollars and employ tens of thousands of Alaskans aren’t just wrong. They are undemocratic, and, in the end, stunningly hypocritical. We’ve seen this argument about “foreigners” deployed repeatedly against the developers of the proposed Pebble mine project, Anglo American of London and Northern Dynasty Minerals of Vancouver. The constant use of “foreign” as a pejorative to cast these companies in an unfavorable light is farcical while bordering on xenophobic. No one believes the opposition to Pebble would somehow melt away or diminish if Anglo American and Northern Dynasty were headquartered in Alaska. We’re not surprised to see this volley fired against the opponents of Prop 2. The Sea Party has only raised about $63,000, but at least a third of that came in two donations from opponents of the Pebble mine. While the anti-Pebble forces have no problem with a consortium of Japanese-owned fish processors coming out against the project, we are supposed to believe there is something wrong with a Japanese mining company, Pogo owner Sumitomo, contributing to the “Vote No on 2” effort. Our courts, our airwaves and our ballot boxes are open to all sides and viewpoints. Yet the Prop 2 and the anti-Pebble forces act like these venues should only be available to those they agree with. Such double standards are unfortunately ubiquitous in Alaska. When Lake and Peninsula Borough passed a residency requirement stricter than state standards and rejected some ballots in the 2010 and 2011 elections, a lawsuit was filed and the ordinance was overturned to great cheers from the anti-Pebble forces. Yet when the Pebble Partnership uses the courts to challenge an equally constitutionally dubious Lake and Pen ordinance that would supersede the state role in permitting, the same folks cry foul. Similarly, environmental groups will sue, sue and sue again to contest permitting documents and decisions, yet they have rushed to embrace a scientifically indefensible assessment of mining impacts on the Bristol Bay watershed. Environmental activists would never stand for a document as incomplete as the EPA assessment to be used to allow resource development, yet they have no problem looking the other way in this case because they think it can help them short-circuit the permitting process to shut Pebble down. In December 2010, a coalition of fishing groups and the State of Alaska sued the federal government, and eventually won, on the grounds that National Marine Fisheries Service didn’t follow the law when it imposed wide-ranging cod and mackerel closures in the western Aleutians based on a theory the action would protect food sources for endangered Steller sea lions. A federal judge agreed with the state and fishermen, and noted the resulting economic harm in ordering NMFS to prepare a full environmental impact statement to support the action. Like free speech, the rule of law is not a one-way street, and stakeholders who decry the feds cutting corners when it works against them cannot credibly argue that the same government should do an end-run around the process when it suits them. There are plenty of arguments in favor of Prop 2 or against the Pebble mine, but the location of corporate headquarters is hardly one of them.

Commentary: UAF study reveals the ups and downs of fishing in Kodiak

Kodiak fishermen are a happy lot, but they are also anxious about the future of their industry. Those are some of the early findings of an ongoing survey that focuses on the social and cultural perceptions of the fishing life in Kodiak and how things have changed over two decades. The survey is part of a multi-year project titled Social Transitions and Wellbeing in Kodiak Fisheries and Communities by Courtney Carothers, an assistant professor UAF’s School of Fisheries and Ocean Sciences. Carothers lived for more than a year in Kodiak villages to research peoples’ experiences and perceptions; extensive interviews and the survey are helping to flesh out more findings. “In terms of fisheries policy, when there is an analysis of some social or human component it’s often just the economics. It all boils down to how much money people are making and what are the costs, that sort of thing,” Carothers said. “I think the social and cultural connections people have to fishing, to communities, to shared ways of living are really important.” In June, about 1,000 surveys were sent to a random sample of Kodiak fishermen in all gear groups and fisheries. It asked them to rank questions that asked how happy or satisfied they are with fishing and various aspects of it today compared to 20 years ago. Carothers has compiled responses from the first 150 returns by fishermen having an average of 26 years experience out on the water. “It’s really great that folks who have had a ton of fishing experience, mostly out of Kodiak, are sharing their insights,” she said in an interview that revealed some of her findings. Overall, commercial fishermen said if they had their lives to live over again, they would be fishermen, with most responding “yes” or “strongly yes.” Most also agreed that Kodiak is a healthy fishing community. “Very few strongly agreed, though,” Carothers said. “Most were sort of in the middle or neutral. So I think that suggests people have some concerns about certain aspects of Kodiak compared to 15 to 20 years ago.” The survey asked what people see as major threats to the sustainability of Kodiak as a fishing community and got back a wide range of perspectives. Unforeseen environmental challenges, such as ocean acidification made the list of worries. Another is friction among local fishermen. “People often mentioned the disharmony among the different gear groups in town. They feel like that has gotten a bit more pronounced and they recognize that everyone in Kodiak needs the fish to be healthy and everyone needs to get along,” Carothers said. The cost of entry into fisheries was cited as a major stressor, as was fear that spiraling costs will prevent young people from entering fisheries. Not surprisingly, the impact of catch share programs was mentioned as a major cause of change and concern for Kodiak fishermen. “Haves and have nots – that’s the way people say fishing is characterized now as compared to the past. Certain programs have been put in place and they have been great for certain people but others feel they have been left out of those programs. I think that has affected some people’s sense of wellbeing,” Carothers said. “For example, some of the crewmembers say they have less power than 20 years ago when they were able to command a good job and wage relative to other skippers and captains.” As for earnings, most said earnings are much better, others said they are worse. “I think it depends on the fishery, gear group and whether you are a crew member, a skipper or an owner,” Carothers said. About 60 percent of the fishermen said they would recommend a fishing career to young people, but worry they won’t be able to afford to buy in. Above all, Kodiak fishermen said they love the fishing lifestyle. “I think that’s another key finding,” Carothers said. “They love the livelihood of fishing, being able to make your living based in a coastal community, to be out on the water and in control of your own operation, to be your own boss, to get away from all the bureaucratic goings on in town, the teaching and learning that goes on when you bring your kids out on the boat, learning hard work and not to complain — it’s highly valued and people see that as something they always want young people to be able to access.” Carothers said her hope is that her research will help “inform regulators and others whose policies very much affect how and when people can fish.” Fish watch Alaska’s statewide salmon harvest has neared the halfway point of the 132 million fish forecast. From here on out, hitting that target will depend on how well those hard to predict pinks come in. State managers predict a catch of 70.2 million pinks, down 40 percent from last year. Pinks were moving into the major producing regions of Kodiak, Southeast and Prince William Sound, where the catch had topped 10 million. The PWS humpies are hefty, averaging 4.3 pounds, one pound heavier than last summer. At Bristol Bay, most of the fleet was heading home after catching nearly 21 million sockeye salmon. A couple hundred boats and over 50 setnetters were still fishing however – targeting pinks. Two years ago Bristol Bay had the first pink salmon fishery since 1984 with a catch of 1.3 million humpies, 800 percent higher than the past two decades. You can track Alaska’s weekly salmon catches by species and region at the “Blue Sheet” on the Alaska Department of Fish and Game website. Lots more ‘sides salmon Halibut fishermen have landed 56 percent of their 24 million pound quota with less than 10.5 million pounds to go. For sablefish (black cod), 64 percent of the 29 million pound quota has been caught. Both fisheries remain open till mid November. Weathervane scallops are still being harvested in some regions of the Gulf and Bering Sea. Trawling for pollock and various flatfish is ongoing in the Bering Sea, along with jigging for cod. The small boat red king crab season continues in Norton Sound, to be followed on Aug. 15 by the Aleutians golden king crab fishery. In the Gulf of Alaska, fishermen are still going after Dungeness crab around Kodiak and throughout the Panhandle. Gulf of Alaska pollock reopens Aug. 25 and also trawling for cod on Sept. 1. A lingcod fishery at Prince William Sound could last through the end of the year. Salmon smells Research shows that the tiniest traces of copper affect a salmon’s sense of smell, and that results in a change in their behavior. A study three years ago by Oregon State University and federal scientists revealed that copper deposited on roads from vehicle brake pads and exhaust runs off into streams and rivers. Copper levels as low as two parts per billion adversely affected the sense of smell in juvenile salmon, which they use to avoid predators. “In the environment that has some serious implications,” said Jason Sandahl, co-author of the Oregon copper study. “If there are predators around and the fish are not able to response to these danger signals in the water, I guess they would be the next snack for these larger predators in the water.” Sandahl said at higher levels, a salmon’s avoidance ability was almost nonexistent. Now another study at the University of Washington has confirmed that finding. Researcher Jenifer McIntyre, also working with NOAA scientists, found that a copper exposed fish is not getting the information it needs to protect itself. McIntyre exposed juvenile coho salmon to between 5 and 20 parts per billion of copper and placed them in tanks with a common predator, cutthroat trout. The results were striking. “A copper-exposed fish is not getting the information it needs to make good decisions,” said McIntyre, a postdoctoral research associate at WSU’s Puyallup Research and Extension Center. Salmon that were not exposed to copper would stop moving when they sensed a predator, making it harder to detect them. McIntyre called it “going into lockdown mode.” But salmon in water with just five parts of copper per billion failed to detect the predator, kept swimming and were attacked in a matter of seconds. The exposed fish were killed 30 percent of the time in the first strike; the salmon not exposed to copper managed to escape nine times out of 10 because they were poised to take evasive action. The behavior of the predator fish was the same whether or not they had been exposed to copper. Testimony by McIntyre and her team has prompted the Washington State legislature to start phasing out brake pads and linings over the next 15 to 20 years.   Laine Welch lives in Kodiak. Visit www.alaskafishfactor.com or contact [email protected] for information.

Commentary: Proof will be in the pricing for EPA deal with TOTE

The Environmental Protection Agency and a major ocean shipper to Alaska reached an agreement this week that could save Alaskans money and reduce pollution. But several questions about the deal remain. Alaska’s congressional delegation and the state administration raised a warning late last month about the impending cost of new pollution rules for ships hauling goods to Alaska. The EPA, they said, would require ships to start burning low-sulfur fuel Aug. 1 because the agency had extended the North American Emissions Control Area, under an international maritime treaty, to waters off Alaska. The state of Alaska sued to block the action. It said one shipping company reported the more expensive fuel would add 8 percent to the cost of hauling goods to Alaska, a cost that presumably would be passed on to Alaskans. That shipper, Totem Ocean Trailer Express, reached an agreement with the EPA on Aug. 3. The company has obtained a waiver that will allow it to continue burning high-sulfur fuel while it converts its two ships in the Alaska trade to cheap, clean-burning liquefied natural gas within four years. In the long run, that sounds like a fine solution, but it raises several short-term concerns. First, what will happen to shipping rates? Converting a ship to LNG sounds like an expensive operation. Will Fairbanks residents take a financial hit from this “solution”? Second, is this option available to other shippers? If only TOTE is able to swing the deal, other shippers still will have to burn the more expensive fuel. That likely would mean shipping prices would increase, regardless of whether TOTE starts saving money on its new fuel. Sen. Mark Begich, D-Alaska, who said he helped bring the EPA, U.S. Coast Guard and TOTE together to come up with the waiver, was optimistic in a news release. “The permit will help protect Alaskans from increased shipping costs, expand the market for natural gas, and ultimately lead to even cleaner air than ECA requires,” he said. “TOTE’s project will be the first major use of LNG as a ship fuel in the United States, and others in the maritime industry are sure to follow the path that TOTE will be blazing. “This means the effects of expanded natural gas use, more economical shipping and cleaner air will be multiplied many times over.” Sen. Lisa Murkowski, R-Alaska, was less encouraged. “While this deal helps one company, it does not address who will pay for the additional investments and costs required for TOTE and others to meet the new fuel standards, a total that could run into the hundreds of millions of dollars,” she said. “My fear is that the total costs of compliance will simply be passed on to Alaskans.” The waiver appears to have potential, but the proof will be in the pricing.

Family feud at Bokan forces Ucore to consider legal options

JUNEAU — A letter, originating from an ongoing and bitter family feud, to several U.S. and state government officials raising vague “concerns” over ownership rights and operations of Ucore Rare Metals, Inc.’s Bokan Mountain project in Southeast Alaska has prompted the company to begin legal action to end what it says are completely false allegations that could harm its efforts to attract investors. “I have no doubt now, based on this letter that she’s sent out, that we have to go legal,” said Jim McKenzie, CEO of Ucore, on July 24. Ucore, a publicly traded company based in Nova Scotia, is preparing to release its preliminary economic assessment on the Bokan project in August and planning to begin mine operations in 2013. Bokan Mountain, on Prince of Wales Island about 550 miles northwest of Vancouver, B.C., is a 19 square-mile project containing uranium and what may be the highest concentration of several rare earth elements in North America. McKenzie said Ucore, which has spent $30 million on the project to date, has not suffered any direct financial costs from the letter but cannot risk the uncertainty it raises as it prepares to seek development investors. “Whenever we raise money this issue of Mary has come up ... We’ve not gone legal before because she’s never been on record until she wrote the letter ... We just have to take this to court to shut her down,” he said. “She” is Mary Dotson Anderson, a daughter of Bob Dotson, the Alaskan prospector who staked the original claims in 1955. In a July 9 letter to US Sen. Mark Begich, Anderson wrote, “I have great concerns of Ucore overstepping bounds and mining and or removing ore from our claims.” The letter also alleges “possible misrepresentation and or using fraudulent information as to the 100% Bokan-Dotson property to obtain and receive government issued grant monies or public money,” and asks Begich to, “verify funds have not been dispersed without documentation that my claims are not included in their project.” The letter was copied to Alaska’s other U.S. Sen. Lisa Murkowski, Gov. Sean Parnell, the U.S. Bureau of Land Management, the U.S. Forest Service, which owns the Bokan property, and media outlets including a Platts reporter. Sharon Leighow, press secretary to Parnell, said his office has no record of receipt of the letter and would not be likely to respond. “The state does not resolve property disputes between private owners,” Leighow wrote in a July 25 email. A spokesman for the U.S. Forest Service offered a similar view. “It’s mutually understood with the Forest Service and the BLM that claimants have to settle their own disputes. We do not sep off into that process,” said Ray Massey July 25. Begich’s office did not respond to requests for comment. Anderson wrote that ownership of 25 claims that are part of the project remain in dispute between herself and her sons Raymond and David. McKenzie called the letter “a stunt to put us under duress.” He rejected its charges categorically and said options agreements signed in 2006 with four parties, including Bob Dotson, Mary other members of the family and other claims owners have been legally confirmed and accepted without complaint by all parties other than Dotson Anderson. McKenzie also said Dotson Anderson’s claims have shown low mineralization, that Ucore has no plans to mine them and, despite its legal control, will bypass them in road construction and other development work. Bob Dotson, who serves as a consultant to Ucore, said Mary owns 10 claims among several that she and other family members received for their work on the property but also rejected her complaints. “Mary Dotson Anderson will do anything that she can possibly do to harm us ... I don’t think Mary has a leg to stand on,” Bob Dotson said July 25. Mary Dotson Anderson could not be reached for comment. Sandra Everett, her sister, said July 25, that Dotson Anderson is incommunicado at Bokan Mountain working her claim as required by U.S. law to retain ownership and could be there for several weeks.

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