The Bookworm Sez: Cadoux examines now to mix work and marriage

Your boss can be such a tyrant. He makes you labor extra hours; in fact, he thinks it’s natural that work has consumed your life. She’s a workaholic and believes you are, too. He’s obsessed with the biz, hopes you’re the same and by the way, he’s your spouse, so now what? How does one survive when half of a marriage embraces entrepreneurship but that half isn’t you? What do you do when you didn’t sign on for workaholism? Find out by reading “For Better or For Work” by Meg Cadoux Hirshberg. Your spouse has a dream of being his own boss. He’s filled out reams of paperwork, commandeered a corner of the basement and quit his “day job” to throw himself into the endeavor. This, of course, affects you, your family and your bank-book, not necessarily in that order. So when an “entrepreneurial business sucks the entire family into its vortex” and credit cards are maxed on something you fear may fail, how do you cope? How can you trust, remain supportive and keep the faith? First of all, says Hirshberg, expect challenges. Businesses, like babies, need constant nurturing (although probably for a longer time). Work and home will overlap (especially if you work for the biz, too) and you’ll have disagreements, but remember that there are no “don’t-go-to-bed-angry policies” in your new HR manual. Always, always communicate. Decide how much stress can you both tolerate and how much risk. Where will the money come from, and are you prepared to ask relatives (a whole ‘nother stress-source) for funds?  Be willing to set limits. While it’ll be impossible to avoid bringing work home, non-work activities are important, too. Continue to fairly divvy up childcare and household chores; know when to dumb down the smartphone; and if yours is a home-based business, remember that the kids live there, too. Finally, says Hirshberg, be prepared for surprises. Don’t hide resentments. Watch for fissures in the marriage and talk things out. Sketch out a dissolution plan, even if you’re not thinking along those lines, because it’s “easy to fall in love with” an entrepreneur and just as easy to fall out. If ever there’s been a must-read for starting a business, this one’s it – but if you’re the starter, “For Better or For Work” is not for you.  Using interviews and her own experiences as the wife of a business-builder, author Meg Cadoux Hirshberg shows a keen understanding of what a spouse goes through when married to an entrepreneur. What’s really great is that Hirshberg “tried to examine every major area where entrepreneurship and domestic life intersect…” and in doing so, she gives non-entrepreneurial spouses food for thought and ways to steel themselves for what’s surely to come. That’s beneficial beyond belief. This book is honest, it’s filled with examples, it has talking points at the end of each chapter, and if you’ve hitched your star to a future business star, then you absolutely need it. For richer and for poorer, “For Better or For Work” can only help.   Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

Film incentive program extended another decade

The state of Alaska has put a lot of effort into bringing Hollywood to the Last Frontier. Now those movie and TV shows may keep on coming after the House passed a revised Senate Bill to expand the state’s film tax incentive programs through 2023. SB 23 was revised to further incentivize local hires by tying those and Alaskan business utilizations directly to credits received for actor and crew salaries. “We directly link the credit for Hollywood producers to Alaska hires and using Alaska business so spending is no longer general for above the line costs,” said Rep. Mia Costello, who chaired the House Finance Subcommittee that worked on the bill. “So the philosophy is they earn their credits by hiring Alaskans and using our businesses and I think that’s what people want.” Several changes were made to the program, including lowering the base tax rate for “above the line” credits from 30 percent to 5 percent. Additional credits can be earned by using Alaskan personnel or businesses. The “below the line” incentives were raised from 10 percent to 20 percent. The $100,000 minimum that productions must spend to qualify for credits has also been reduced to $75,000 while the qualifying expenditure credit base rate was kept at 30 percent. Credits for shooting in rural areas as defined in the bill are tripled. The program itself was moved from the state Department of Commerce, Community and Economic Development to the Department of Revenue. A review commission also was established using commissioners from the state’s natural resources, commerce, labor and revenue departments. Among other changes, accountability has been tightened and a credit buy-back feature for the state for 75 cents on the dollar was added. Three House bills were attached to the bill: HB 289 incentivizes liquid natural gas facilities, HB 276 provides for credit against oil and gas production tax in the Nenana Basin, and HB 252 exempts certain small businesses from corporate income tax to incentivize investments. More than 70 productions have taken advantage of the tax credits since its inception in 2008, including major Hollywood features like “Big Miracle” and “The Frozen Ground.” Alaska has a few other major productions in the works that it owes to the incentive program. One is “Walking with Dinosaurs 3D.” Its production company, Evergreen Films, is based in Anchorage and certified by the Cameron Pace Group, co-founded by James Cameron. Another production, an action/thriller tentatively titled “Hunter Killer” has recently committed to shooting here, most likely in Whittier. The $100 million production will be Alaska’s biggest Hollywood feature film to date. It’s essentially three times the budget for “Big Miracle.” Producers have recently scouted the state for an untitled $10 million feature film. Carolyn K. Robinson owns the Anchorage production company Sprocketheads, which helps in everything from photography to casting, and has been involved in the majority of these projects. She’s spent her career in film and television, with Sprocketheads coming onto the scene in 1995. Robinson said the film scene here was almost nothing before the tax program. She could not think of any feature films that came here before the program. She said it took a while for knowledge of the program to reach Hollywood but the result has brought a whole new industry to the state. “People in Alaska are getting up to speed on how the feature film works and how to be involved in it,” Robinson said. “And after ‘Hunter Killer’ leaves, it’s just going to be a whole different landscape here in Alaska regarding the feature film industry.” Evergreen Films CEO Mike Devlin also feels the program has grown the industry and helped pave the way for him and his partners to make substantial investments into a local production house in 2009. He said film is a globally competitive market and incentivizing the production encourages more trained people to come here. He said this industry is also exciting for young people who want to go to film school and return to Alaska to work. “We’re really glad to build a stable business environment,” he said. Investments in the company are not covered by the credit program. Only the movie is. “Walking with Dinosaurs 3D” will be its debut feature film. It will use computer-generated models against live action plates shot on location in Alaska. NANA Development Corp., an Alaska Native corporation, has also developed an interest in Alaska’s film industry and has acquired a minority stake in Evergreen. The company also formed a film production and resource division called Piksik. In release from NANA, Vice President of Communications and Marketing Robin Kornfield said, “The answer that came from this work is clear, if Senate Bill 23 passes with a 10-year extension, we will see a new growth industry in our state that will provide significant economic benefit to residents.” The tax program has garnered strong support from the Legislature and local economy but it also has its opponents. Local filmmakers have even addressed the Legislature with their concerns. The majority of these issues revolved around local hires, saying that outside companies are given credits and do not promote local economy or job growth since most actors and crew who receive the credits come from outside. Robinson said the words these notions invoke are “misinformed” and “silly,” as the credits only go toward time spent in Alaska and these outside productions still help grow an industry. She said the films that have been through here have actually increased the local job base as people have trained and become able to fill the demands that productions call for when they’re here. She said that while they bring personnel in, they also turn to local businesses for help, especially when those businesses have already worked on films. For this reason, Sprocketheads has already landed on the radar for these companies scouting the state. She said these companies want to hire locally to save transportation and housing costs. The tax idea of getting more films here gives local personnel the experience thy need for such future productions. “They want to hire locals,” Robinson said. She gave an example of Karen Pearson, a Sprocketheads production manager, grew in her experience through working on “The Frozen Ground” and learned more about the intricacies of working on a feature film. So has cinematographer Steve Rychetnik, who Robinson said has worked on every feature film shot here and has already been asked to participate in “Hunter Killer.”   Jonathan Grass can be reached at [email protected]

Kodiak mourns

Two communications station employees were killed April 12 at the Coast Guard Station in Kodiak in what is being called a double homicide. The killer is still at large.    (Right) Coast Guard Capt. Karl Moore, Coast Guard Cmdr. Peter Van Ness, Kodiak Mayor Pat Branson, Kodiak city manager Aimee Kniaziowski and Kodiak police chief T.C. Kamai sit on stage April 16 during a town hall meeting in Kodiak.

Roundtable panel evaluates Anchorage airport

The Ted Stevens Anchorage International Airport is using a new tool in its master planning. A roundtable report by the Anchorage Economic Development Corp. let four groups of community members and business leaders render their opinion on how the airport is doing. This is the first time the airport has used this type of public input device. Eleven groups of various sizes answered the same basic questions designed to offer a better understanding of the community’s perspective on the airport’s mission, advantages and disadvantages. The participants indeed pointed out things they liked as well as things they didn’t, and the airport listened. “I think all in all, this was a good exercise for them to get a sense of what the community thinks about the airport and its operations and its value to the community,” said AEDC President and CEO Bill Popp. Popp said there have been such roundtables before at AEDC and the airport was taken by the honest and frank nature of the result so decided to try it out. The result was a better understanding of the community’s perceptions over things the airport does, lacks and has no control over. “I thought that it also demonstrated that there’s a very strong sense that the airport offers a great opportunity for economic growth in Anchorage from the minds of the business community and the community at large,” he said. Airport Manager John Parrott said this was a good opportunity to use a new tool to see how they stand in the community’s eyes. The normal community involvement comes from online inquiries from the community, legislators and committees. It also participates in surrounding council meetings at Turnagain, Sand Lake and Spenard. The roundtable offered a chance to branch out in a more casual setting to new members of the community and get input from different demographics. “Councils tend to have certain viewpoints that may not be shared,” he said. He said the results were very informative but not too surprising, as many confirmed issues that have come up before. Still, it will serve as valuable feedback while developing the airport’s Federal Aviation Administration-mandated master plan. This will help determine customer needs while minimizing negative impact. Parrott said the airport is still below its 2007 activity levels and looks forward to “growing back to the good old days.” The airport put a written response to the roundtable on its website, which Popp said is a great indication that the organization is taking these comments seriously. “Based on the attending public, I think the results were fairly representative of how the community feels about the airport,” Parrot said. “It’s an important economic engine and continues to have a good strong running economic impact.” The roundtables agreed the airport is overall very favorable with excellent leadership, public relations and maintenance. Visitors liked the look of the building and weather delays were minimal. Parking and prices were also good. The roundtables also found the location good for cargo opportunities, which is something Airports Council International – North America had commented on in a story regarding its recent national airport study. The survey participants did find areas for improvement though. Among these were long-term parking and transportation issues, including bad signage. Inadequate runway navigation issues, proper aircraft for cargo being bypassed and a grim north terminal. The report also sites problems with the railroad depot as being unnecessary. The participants also felt the airport needs better communication with the community and business planning, including for technological advances. However, the airport can’t address every fault that was found. The participants found negative Transportation Security Administration issues, namely that the area is too small and understaffed. Popp and Parrott both said that this is completely under TSA’s control and is not regulated by the airport. Comments have been submitted to TSA. As far as future investments and developments, the roundtable commented that they felt the long-term marketing and strategic plan should be more robust and proactive with route development, better planning using current assets and with less government interference and using stable funding sources. While the railroad depot is seen to be problematic, they suggested developing the railroad as a better part of the plan with possible transportation opportunities. For the flights, the report suggests more domestic carriers, international flight development, more carriers to Juneau besides Alaska Airlines and more competition for Hawaiian routes. The roundtables were asked to look at how they would like to see the airport in the future. Answers came back with better dealings with Kulis, the former Alaska Air National Guard base land, including using the space to support Alaska’s growing film industry. Also noted was another concourse in the north terminal, using the railroad to get downtown from the airport, better parking coverage, better capitalization on freight and increasing manufacturing interests. Investigation for freight development was also recommended. The airport responds that it is a self-sustaining enterprise that generates its own funds through rates, carriers, vendors and leaseholders and not by the state or general fund. Popp said this is a common misunderstanding. The airport uses a state-structured governance system. Most development will need to be met by private enterprise rather than the state, although the state may develop plans that affect airport users. The response states the airport plans to pursue a combination of state and private solutions to meet aviation needs. The response states the airport is attempting to operate in a more business-like manner within the constraints of state and aviation regulations. The airport agrees with many of the points brought up and has passed along information to the relevant parties, such as Alaska Airlines. Other points from the roundtable are not feasible or out of the airport’s control, such as carrier route decisions. Parrott pointed out other issues, like how Kulis’ tenants are decided more by the business community and aviation industry, the airport agrees that the North Terminal is underused and shouldn’t become wasted and that the airlines are responsible for determining air services. The airport is trying to be more community-minded through council meetings and open communication. The response states, “The airport will continue to try to improve the dialogue with the communities but does understand that while there are few limits on the communication potential, there are limits to the input the communities will have on airport operations and development.” Both the AEDC report and the response are at the airport’s website http://dot.alaska.gov/anc.   Jonathan Grass can be reached at [email protected]

Air Force general promises transparency on proposed F-16 move

In meetings with community leaders in Fairbanks and Anchorage April 10 to April 12, the Air Force general tasked with implementing the relocation of the F-16 squadron from Eielson Air Force Base to Joint Base Elmendorf-Richardson promised a transparent process that will incorporate the deep concerns raised so far about impacts and whether the projected cost savings will be realized. Brig. Gen. Mark McLeod, director of logistics for Pacific Air Forces based at Hickam Air Force Base in Hawaii, said he has “marching orders” to implement the F-16 move from Fairbanks to Anchorage as part of global cost-cutting in fiscal year 2013 under President Barack Obama’s budget. McLeod must submit his report on the move by May 31. Congressional hearings with the armed services chiefs are scheduled for the same time period. “I’ve asked all the community leaders to continue to bring their issues forward through what I call their chain of command — which is more the civilian side up to local representatives and elected officials,” McLeod said after the meeting. “That will allow us to bring this full discussion to light.” The move would eliminate 623 positions at Eielson Air Force Base in Fairbanks, with the projected cost savings of $32 million over five years based on cutting 81 military jobs in the move to Joint Base Elmendorf-Richardson, or JBER, in Anchorage. JBER would not have a net increase of 542 positions, though, as four C-130 aircraft there are also being retired in fiscal year 2013 along with 237 active duty personnel in Anchorage. The combination of the 21-plane, F-16 Aggressor Squadron moving to JBER and the loss of the C-130s results in a net increase of 125 positions. Under the president’s budget, the Air Force must find $8.7 billion in savings for fiscal year 2013, but community leaders in Fairbanks told McLeod on April 11 that assumptions about projected cost savings from the F-16 move were wrong, that the action would jeopardize missions for the Pacific-Asia region, and that the impacts on the Fairbanks-North Star Borough demanded a thorough environmental assessment that has not been done. In a meeting hosted by Anchorage Mayor Dan Sullivan on April 12, McLeod was also faced with questions of trust that date back to the Base Realignment and Closure, or BRAC, process in 2005, when the idea of moving the F-16 squadron from Eielson to Anchorage was stopped because the projected cost savings were shown to be erroneous. Alaska Sens. Lisa Murkowski and Mark Begich, who had representatives at both meetings with McLeod, have pointed to the BRAC commission decision in 2005 to overturn the Air Force recommendation to shift the F-16s from Eielson to JBER. The Alaska Congressional delegation has also sought, but not yet received, the underlying cost data being used to back up the proposed savings. Begich, who is on the Senate Armed Services Committee, said he plans to fight the move “every step of the way.” The two senators introduced legislation Feb. 8 that would bar the Air Force from executing the move, which Begich called an “end-run” around the formal BRAC process. “A decision to relocate the F-16s from Eielson was already rejected in 2005 … recognizing Eielson has the best airspace and range complexes, and the estimated cost savings were inaccurate,” Begich said. “Nothing has changed since 2005. Eielson Air Force Base is critical to the defense of the United States.” The latest proposal to move the F-16s isn’t taking place under a BRAC process, however, removing the ability for Fairbanks to appeal the action to the commission. A Site Activation Task Force, or SATAF, is currently working to implement the move. The mayors of Fairbanks, North Pole and the borough told McLeod a more appropriate process would be a Site Survey Team that would determine whether the move could or should be done, not how. McLeod assured community leaders at the Anchorage meeting that the SATAF process, while geared toward implementing the move, would allow for their concerns to be heard. “The physics of the SATAF process is we gather information, identify shortfalls, we seek to mitigate shortfalls, and when you can’t, you identify those issues going forward to work on to implement,” McLeod said after the meeting. “The process lends itself, maybe not naturally, but can lend itself to addressing all those concerns. I’m hopeful that it will.” Maintaining the capability of the Joint Pacific Alaska Range Complex was foremost in the comments from community leaders, and Anchorage Mayor Sullivan noted during the meeting that his takeaway from McLeod’s statements was that the Air Force must prove the F-16 move both maintains the mission while achieving the projected cost savings, and that JBER can absorb the forces and personnel from Eielson. The mayors from Fairbanks-North Star Borough pointed to potentially devastating impacts on their communities and to the morale of the families who are moved to JBER and those left behind. There are as many as 1,063 children associated with the F-16 move, which could force schools on Eielson to close due to low enrollment and send the remaining children to North Pole 20 miles away. Nor will it be easy to Anchorage school districts to absorb that many children, not to mention the tight housing and rental markets around JBER and in Eagle River, where many personnel live. McLeod was informed at the Anchorage meeting that the city as a 1 percent to 2 percent vacancy rate on rentals, which could force relocated personnel from Eielson to live as far as Wasilla with the long commute and additional cost from gas expenses. Further, Anchorage has an unemployment rate of 5.9 percent, and 300 or so military spouses seeking jobs would represent a substantial increase to the labor pool. Then there is the Fairbanks housing market, and the letter from the borough mayors told McLeod that putting 100 or more homes up for sale would drive down prices and decimate the investments of those who can’t sell their home and the value of those who remain. “These families will lose money and possibly force them into bankruptcy, which will result in the loss of security clearances that will jeopardize or even end many excellent military careers,” the letter from the Fairbanks-North Star Borough stated. Under a BRAC process, financial assistance may be provided to both communities who lose personnel and to the servicemen and women for relocation expenses that can include the government purchasing a home if it cannot be sold. McLeod noted the difference between the current proposed move of the F-16s to a BRAC move in that relocation expenses or financial support are not currently provided, and that legislation would be required to do so.  There is also an underlying assumption to the cost savings of the move that no additional infrastructure will be required at JBER to absorb the F-16s. Issues such as infrastructure construction or financial assistance to military personnel or communities would alter the cost savings calculations. The mayors from Fairbanks-North Star Borough told McLeod that the move to JBER would raise costs for the Air Force because fuel at Eielson is piped directly from the North Pole refinery. Moving the F-16 squadron to JBER would increase fuel needs in Anchorage, raising costs from either shipping fuel from North Pole or through increased imports to the state.   Andrew Jensen can be reached at [email protected]

Big bills pass, but special session called

  JUNEAU — It was a wild ride on the last day of the 2012 legislative session, and now Gov. Sean Parnell has called lawmakers back to take care of unfinished business: changes to the state’s oil and gas production tax. On its closing day the Senate attempted to insert language reducing taxes on new oil developed on the North Slope into other bills, but the House balked and senators ultimately backed off. What the Senate proposed was not the comprehensive change to the state tax that Parnell and the state House were seeking. The special session convened April 18 to consider the oil tax again as well as another bill that failed, Rep. Mike Chenault’s HB 9, which would give added flexibility for the state’s Alaska Gasline Development Corp. to pursue an in-state gas pipeline. Chenault’s bill passed the House but died in the Senate. Parnell says he wants HB 9 passed so the state has a viable backup plan in dealings with the large North Slope producers in their assessment of a large-diameter pipeline and large liquefied natural gas project.  Senate Rules Committee chair Sen. Johnny Ellis complained that the state House reneged at the end on commitments to move a handful of senate bills dealing with veterans’ issues and the military at the last minute. “There were a lot of politics at play and some self-serving on things. We could have done more, but it takes two to tango,” Ellis said, meaning that the House has to cooperate with the Senate. House Rules chairman Rep. Craig Johnson, R-Anchorage, took offense at Ellis’ remarks. Johnson said Ellis was just covering his tracks over the Senate’s failure to pass Parnell’s sex-trafficking bill (one bill the governor has included in the special session). There were bills pending on public safety and military and veterans’ benefits at the end. “The Senate chose to do nothing on these until the very last minute, and then, after their game of very high-stakes chicken, chose to lay the blame on us,” Johnson said. Senate President Gary Stevens took the high road in his own assessment of the session. Both the Senate and House did the best they could dealing with complex issues facing the state, he said. One important accomplishment on oil and gas that passed was a bill extending a generous set of investment tax credits and a reduced rate of tax for new oil and gas found in unexplored Interior and Western Alaska basins. It allows investment tax credits sufficient to fund 80 percent of the cost of drilling and 75 percent of the cost of seismic work up to a limit of $25 million for the well and a limit of $7.5 million or 75 percent of the seismic costs. There is also a preferential production tax rate of 4 percent of the gross value of the oil or gas, which is much lower than the tax on North Slope production. The bill contains deadlines in that drilling and seismic must be done by July 1, 2016, and any new discoveries must be in production by 2022. The bill for Interior basins, dubbed the “middle earth” incentive by legislators, was attached to a bill extending the state’s film tax credit program and another bill granting special tax treatment for new small business startups that emphasize new technologies. All of these are now in Senate Bill 23, which passed in the closing hours of the session April 15. To help Fairbanks address an urgent energy needs, lawmakers approved investment tax credits to help build liquefied natural gas storage facilities. Although intended to help Golden Valley Electric Association and Flint Hills Resources with their plan to build an LNG trucking project from the North Slope, the bill was written broadly so that small communities, not just Fairbanks, could build LNG storage facilities. These provisions were also rolled into SB 23 on the last day of the session, and passed. The state capital budget also contained $3.75 million in a grant to GVEA to pay for design and engineering of an LNG project that would serve the utility’s power plant and the refinery, and a separate $3 million appropriation to an undesignated entity, possibly the Fairbanks North Star Borough, to help fund a residential and commercial natural gas distribution system in the Interior community. Senate Bill 23 contains provisions for tax credits for the LNG project, allowing credits for $15 million or 50 percent of the cost of an LNG storage facility. The storage must be for at least 25,000 gallons of LNG, a level set low enough so that small communities could build facilities for LNG, not just Fairbanks. GVEA and Flint Hills now burn oil, which is very expensive, to generate power for the cooperative and to operate the refinery. The two have a joint study under way of a project that would build an LNG plant at Prudhoe Bay and truck LNG to Fairbanks on the Dalton Highway. Once established, the project could be expanded to serve residential and commercial customers in Fairbanks. There is now a small gas utility, Fairbanks Natural Gas, serving parts of Fairbanks with gas delivered as LNG from Southcentral Alaska. Another energy-related bill that passed was House Bill 250, extending the state’s renewable energy grant program for 10 years, until 2024. The current five-year program winds down in fiscal year 2013. Lawmakers also appropriated $25 million for new renewable energy projects in the fiscal 2013 budget, the last year of the current five-year program. So far the state has spent about $176.6 million to fund 210 projects, mostly small wind, biomass, small-scale hydro, heat recovery and geothermal projects. Most of the projects are still in development or in construction. The Alaska Energy Authority estimates that 44 renewable energy projects will be completed by the end of 2013, cutting about 10 million gallons of diesel use annually. Most of the projects serve small rural communities. Other bills pass Another bill that passed important to health care providers was House Bill 78, extending incentives to help recruit health care professionals in certain critical fields, including primary care physicians to the state. The bill provides for assistance in repayment of medical school loans and for grants to experienced professionals who agree to work in underserved communities, such as rural villages. A number of other bills of interest to business groups were enacted. One was HB 361, streamlining procedures for land and mineral disposals by the Department of Natural Resources. Legislators took out two parts of the bill that the DNR had pushed for: an exemption for small miners on state minerals royalty payments, and a change in the way temporary water-use authorizations are made. The bill generally gives the DNR more flexibility to negotiate leases of land, in the renewals of minerals and land leases, and in procedures for timber and materials sales, such as for rock and gravel. Another bill that passed related to sand and gravel was HB 298, which exempted sand and gravel operators from paying the state mining license tax. The mining license tax is primarily written for larger mine operators but now applies to operators of sand and gravel pits, as well. The accounting costs related to the tax filings are burdensome for small companies and the required auditing imposes more costs on the Department of Revenue than the sand and gravel tax revenue amounts to, as well as additional burdens on the taxpayers. Lawmakers also gave the Alaska Railroad Corp. authority to negotiate 95-year leases for its lands. This is important in attracting companies interested in long-term investment and development on railroad-owned land, particularly in Anchorage’s downtown Ship Creek area. Capital, operating budgets The state capital and operating budgets passed on the final day of the session, which is customary. There were few last-minute surprises in either bill. The House added a set of its priority projects to additions the Senate had made earlier to SB 160, both on top of the governor’s capital requests that were in the bill the originally introduced. Parnell said he had left “room” in the bill for legislators to add projects but said he wanted the overall cost of the bill to be similar to that for the current year, about $2.9 billion, including federal funds. If the total cost of the bill as passed by the Legislature exceeds that, Parnell may veto items to bring the price down. In the operating budget, House Bill 284, the only significant difference between the House and Senate versions was money for tourism promotion. In the end the budget conference committee opted for the higher amount as proposed by the House, $16 million for tourism marketing. Parnell also supports that amount for tourism promotion. The capital budget contains a wide range of new construction around the state, but two significant projects are two major new engineering buildings at the University of Alaska campuses in Anchorage and Fairbanks. Also in the capital budget is $25 million for Alaska Aerospace Corp. as the state’s contribution toward a project expanding the Kodiak Launch Facility owned and operated by the state space corporation. Contingent on the state funds, Lockheed Martin Corp. is raising about $100 million in financing for the project. The company wants to use Kodiak for launches of satellites with its Athena III rocket. At present the launch facility is too small to handle the Athena rocket. Construction is due to begin this summer on the expanded launch project.   Tim Bradner can be reached at [email protected]

Parnell submits opening proposal on oil taxes for special session

With the special session of the state Legislature under way at 1 p,m. Wednesday, Gov. Sean Parnell  transmitted legislation to  change Alaska's oil tax regime to foster new production and encourage further development of current sources to stem the decline in North Slope production. Parnell issued the call for a special session just as the regular session of the Legislature ended at midnight, April 15. Lawmakers have been waiting, however, to see just what Parnelll would propose for oil tax changes. The Legislature convened in a special session to address oil taxes, an Alaska gasline, and human trafficking legislation.  In a statement, Parnell said, “Alaskans are well aware that oil production is declining from our legacy fields. The cost of maintaining a declining field goes up year after year, and higher cost barrels of oil get left in the ground if they are not economic to produce. That is the risk: Without meaningful tax change for legacy fields as well as new fields, a larger percentage of Alaskans’ resources will remain locked in the ground.” “We can avoid this risk and ensure a more prosperous future for Alaskans if we are willing to continue working to increase oil production in all of Alaska’s fields.” For new North Slope fields, Parnell’s bill incentivizes new oil and gas production by providing a 30 percent exclusion, based on gross value at the point of production, from the production tax value used to calculate the base rate and the progressivity tax for the first 10 years of sustained production from new fields.  For currently producing North Slope fields, the bill establishes an exclusion of 40 percent of gross value at the point of production from the monthly production tax value used to calculate the progressivity tax. The bill caps progressivity by establishing a 60 percent maximum rate. Finally, the bill would extend tax incentives for well lease expenditures available elsewhere in the state through AS 43.55.023(l) to North Slope activities and would allow producers to apply tax credits in one year. These changes are designed both to encourage development of new, currently undeveloped leases or properties, and from known fields in the state, Parnell said in the statement.  

Special session called after legislature fails to pass oil tax changes

It was a wild ride on the last day of the 2012 legislative session, and now Gov. Sean Parnell has called lawmakers back to take care of unfinished business – changes to the state’s oil and gas production tax. On its closing day the Senate attempted to insert language reducing taxes on new oil developed on the North Slope into other bills, but the House balked and senators ultimately backed off. The Legislature did pass a bill extending a generous set of investment tax credits and a reduced rate of tax for new oil and gas found in unexplored Interior and western Alaska basins, but the kind of comprehensive change Parnell wanted was not accomplished. The bill for Interior basins, dubbed the “middle earth” incentive by legislators, was attached to a bill extending the state’s film tax credit program and another bill granting special tax treatment for new small business startups that emphasize new technologies. All of these are now in Senate Bill 23, which passed in the closing hours of the session on Sunday. Another bill that passed important to health care providers was House Bill 78, extending incentives to help recruit health care professionals in certain critical fields including primary care physicians to the state. The bill provides for assistance in repayment of medical school loans and for grants to experienced professionals who agree to work in underserved communities, such as rural villages. The state capital and operating budgets passed on the final day of the session, which is customary. There were few last-minute surprises in either bill. The House added a set of its priority projects to additions the Senate had made earlier to SB 160, both on top of the governor’s capital requests which were in the bill he originally introduced. Parnell said he had left “room” in the bill for legislators to add projects but said he wanted the overall cost of the bill to be similar to that for the current year, about $2.9 billion including federal funds. If the total cost of the bill as passed by the Legislature exceeds that Parnell may veto items to bring the pricetag down. The capital budget contains a wide range of new construction around the state, but two significant projects are two major new engineering buildings, one for University of Alaska Anchorage and the other for University of Alaska Fairbanks. Also in the capital budget is $25 million for Alaska Aerospace Corp. as the state’s contribution toward a project expanding the Kodiak Launch Facility owned and operated by the state space corporation. Contingent on the state funds, Lockheed Martin Corp. is raising about $100 million in financing for the project. The company wants to use Kodiak for launches of satellites with its Athena III rocket. At present the launch facility is too small to handle the Athena rocket. Construction is due to begin this summer on the expanded launch project.  In the operating budget, House Bill 284, the only significant difference between the House and Senate versions was money for tourism promotion. In the end the budget conference committee opted for the higher amount as proposed by the House, $16 million for tourism marketing. Parnell also supports that amount for tourism promotion. Another important bill that passed was House Bill 250, extending the state’s renewable energy grant program for 10 years, until 2024. The current five-year program winds down next fiscal year, FY 2013. Lawmakers also appropriated $25 million for new renewable energy projects in the Fiscal 2013 budget. So far the state has spent about $179 million to fund 310 projects, mostly small wind, biomass, small-scale hydro, heat recovery and geothermal projects. Most of the projects serve small rural communities.

Bills moving quickly as session nears close

The Senate Finance Committee ticked off a list of bills in rapid succession Friday morning. Included was House Bill 258, setting up procedures for contractors to use gravel containing naturally-occurring asbestos, which is now prohibited; HB 62, a bill that would facilitate the aquatic farming of geoduck clams near Gulf of Alaska communities, an activity now limited to Southeast Alaska; and HB 360, establishing an Interstate Mining Company so Alaska can work jointly with 34 other states on mining issues. By late morning the committee was working on SB 217, a bill establishing procedures for the auditing of pharmacy records. Audits of pharmacies are done now in a way that penalizes pharmacies in Alaska, the bill sponsor, Sen. Dennis Egan, D-Juneau, told the Senate Finance Committee. A bill important to the construction industry, HB 298, exempting sand and gravel mining from the state mining license tax, was also approved by the committee Friday morning. Several other bills are scheduled for action by the committee Friday. They include HB 252, a bill granting tax exemptions to small business startups with an emphasis on high-tech; House Bill 276, establishing new incentives for exploration drilling for oil and gas in the Nenana Basin near Fairbanks, Selawik Basin near Kotzebue, the Copper River Basin near Glennallen, and other unexplored regions of the state.  House Bill 286, authorizing $453.4 million in state general obligation bonds for ports and other transportation projects to appear on the November general election ballot, is also before the Senate Finance Committee for action Friday.

Pace picks up as Legislature enters last three days; deadlock over oil taxes continues

Legislators ratcheted up the tempo sharply Friday with three days left in the 2012 legislative session. The Senate Finance Committee had a full plate of House-passed bills on its agenda and was voting them out at a fast pace late Friday morning. On its agenda, the House Finance Committee had a long-delayed substitute proposal for a Senate-passed bill extending state tax incentives for film production. Senate Bill 23 has been on and off the committee’s schedule for days as legislators negotiated possible changes to the film incentive bill. The House committee is also scheduled to take up the state capital budget later today, Senate Bill 160. The bill has already passed the Senate with capital projects proposed by the governor and senators. House members will now add their projects to the bill. Meanwhile, a House-Senate conference committee continues to negotiate a compromise state operating budget bill. There are no significant differences in the operating budget bills passed by the House and Senate except for tourism promotion. A deadlock continues in the Senate over the biggest unresolved issue of the 2012 session, possible changes to the state oil production tax. Senate Bill 192 was scheduled to be considered on the floor of the Senate Thursday but was sent back to the Rules Committee when it became clear there were not enough votes to pass it, sources in Senate said. On Friday morning there were reports that senators may attempt to insert parts of the tax bill, measures that could lower taxes on new oil production, into another bill. There was more consensus on those parts of SB 192 on others. Attaching parts of bills to others is a common technique in the closing days of a legislative session. Whether that happens or not, Gov. Sean Parnell may call a special session over the oil tax bill when the Legislature adjourns at midnight Sunday. Parnell could call the session immediately or he could bring legislators back in June or July after a cooling-off period.    

Coast Guard: 2 dead in shooting at Alaska station

ANCHORAGE (AP) — Two Coast Guard members were fatally shot Thursday at a communications station on an island off Alaska in what officials said appeared to be a double homicide. They have yet to identify a suspect. The victims were found at their work areas inside the Kodiak Island station early Thursday by another Coast Guard member, spokeswoman Sara Francis said. Officials believe a third person was involved in the shooting, she said, adding the rest of the roughly 60 enlisted personnel and civilians working at the station have been accounted for. Capt. Jesse Moore, commanding officer of the Coast Guard base on Kodiak, said the shootings likely occurred sometime between 7 and 8 a.m., soon after the two victims arrived for work inside one of the communication station buildings. The captain said he was not aware of any threats or anything else that might have indicated problems at the station. The station is equipped with security cameras, but it was not yet known if they captured any evidence, he said. Moore said the base was "deeply saddened" by the loss of two shipmates. "This is a tragic event and we are going to do everything we can to look after the families of victims, to take care of them and to protect the residents and citizens and other Coast Guard employees in Kodiak," Moore said. After the shooting, security was increased at the base, about 8 miles from the island's largest city of Kodiak. Officials called on the city's 6,300 or so residents to remain calm and vigilant. Francis said added security was in place at the base and an adjacent school. The station listens for radio transmissions from mariners and aircraft, Petty Officer Charly Hengen said. The staff is responsible for relaying distress calls to other Coast Guard stations and offices. The station has "secure front doors," Hengen said, and requires staff and visitors to show identification. Francis said visitors and those not actually working at the station are usually provided escorts. The Coast Guard said the victims' identities would be released after family members were notified. The FBI said agents flew to Kodiak from Anchorage, about 250 miles away. Rear Adm. Thomas Ostebo, the commander of Coast Guard operations in Alaska, was in New London, Conn., for a conference at the Coast Guard Academy but left ahead of schedule. Ostebo could not be reached for comment, according to academy spokesman David Santos. The shooting occurred almost 11 years after another fatal shooting involving the Coast Guard on another Alaska island, St. Paul Island, which is about 660 miles west of the city of Kodiak. A man killed a Coast Guard officer whom he believed was having an affair with his estranged wife.  

Senate sends oil tax bill back to committee

The state Senate was to have voted on its oil tax bill Thursday but instead sent Senate Bill 192 back to the Rules Committee, a signal that there are insufficient votes in the Senate Majority to pass the bill. The majority organization is a coalition of Republicans and Democrats. The Senate has been working all session to develop its version of a bill that would reduce the state’s oil and gas production tax. The House passed its proposal, House Bill 110, last year. As currently written the SB 192 is substantially different than HB 110 through its incorporation of several mechanisms to lower taxes on new oil produced in addition to current production from North Slope fields. HB 110 would enact a general tax reduction but would retain the basic structure of the current tax. The financial effects of the two proposals differ significantly as well. HB 110 would lower taxes on industry by about $1.4 billion a year according to estimates by the Department of Revenue. Estimates have not been done yet on the newest version of SB 192, but earlier versions would reduce taxes by about $200 million.

Providers aim to grow pediatricians for Alaska

The “Alaska Grown” label may have to expand to pediatricians in a few years. This July, the first residency program to groom pediatricians for possible work in rural Alaska will begin. In conjunction with Seattle Children’s Hospital, the pediatric residency program is the latest product of the All-Alaska Pediatric Partnership that includes the Children’s Hospital at Providence Alaska Medial Center and the Alaska Native Medical Center. Students will spend eight months per year in Seattle and four in Alaska. The four months in Alaska will be divided equally between Anchorage and sites in either Fairbanks or Bethel, giving the residents a full year in the state during the three-year program. Dr. Matt Hirschfield, director of maternal child health at AMNC, said the goal is to match the retention rate for the family medicine residency program among the states of Washington, Wyoming, Alaska, Montana and Idaho known as WWAMI. Of the 20 Alaska students admitted to the program each year, Hirschfield said about 80 percent decide to practice in the state. “It’s been great interviewing,” Hirschfield said of the candidates for the inaugural program. “They’re young, they’re very idealistic. To them, Anchorage is just OK. The draw of the program is going to Fairbanks and Bethel. They’re really excited about doing rural medicine in Alaska with this great population we have up here.” Dr. Michael Acarregui, executive director of the Children’s Hospital at Providence, was equally effusive in his praise of the pediatric residency candidate pool. “The quality of applicants has been extremely high,” Acarregui said. “They’ve been very impressive. The people I’ve interviewed have just been top-notch. They’ve been to other parts of the world; they’ve trained at top institutions. It’s an impressive group of future physicians. It’s very exciting. It’s an opportunity to train pediatricians in Alaska. We know that will increase the likelihood that people want to come up here and practice.” Acarregui joined Providence last June from the University of Iowa Children’s Hospital, and one of his first observations was the heavy reliance on traveling physicians and nurses to meet Alaska’s healthcare needs. “We really do need to try and grow our own,” Acarregui said. The All-Alaska Pediatric Partnership, or AAPP, has been in place since 1995 and a consultant’s 2010 recommendations for Providence and ANMC to combine their resources to provide pediatric subspecialist care are steadily being implemented. “When I interviewed a year ago, I met with physicians of all stripes,” Acarregui said. “I asked them what my focus should be. Every one said it was to improve and strengthen relationship with the Native medical community, and ANMC in particular. Our joint vision is to meet the needs of all Alaska children, Native or otherwise, through combining our systems.” Alaska’s needs are tremendous, but a widely dispersed and small population makes the cost of providing some pediatric subspecialties beyond what any one hospital’s number of patients would support. “Especially when it comes to children, you can’t afford to divide up that pie, or the slices are too small,” Acarregui said. “You can’t afford to support infrastructure and specialists that are needed with that small number of kids. We recognize that.” Acarregui and Hirschfield meet regularly to figure out the best ways to combine their resources. A recent example of how those conversations pay off was ANMC helping to relieve the burden on Providence’s recently hired pediatric endocrinologist (hormone diseases). There are only two pediatric endocrinologists in the state, and while ANMC has enough pediatricians for its endocrinologist Dr. Rachel Lescher (hired last September) to not have to stay on-call, the Providence endocrinologist Dr. Matthew Benson was on-call 24/7. Now Lescher takes calls for Providence one week per month to provide some relief for Benson. “It’s a small step toward building a relationship between the hospitals around pediatric subspecialties,” Hirschfield said. Similarly, when Providence hired Dr. Maria Caimol, a pediatric nephrologist (kidney diseases), ANMC contracted for her services. Caimol is the only pediatric kidney specialist in the state, and bringing her to the ANMC campus regularly not only saves disruption for patients, it helps support her salary at Providence. Over the last year, Providence has hired several new subspecialists, including Caimol, who received her medical degree in the Philippines, and Benson, who received his in Israel. Others include Dr. Corinna Muller, one of only four maternal-fetal health specialists in the state, and Dr. Claire Wilson, a pediatric gastroenterologist.  ANMC is looking to add to its single pulmonologist (lung diseases), and both hospitals could use a neurodevelopmental pediatric specialist. “We have a lot of those kids up here, and we only have one person in town that does it,” Hirschfield said. “We have way more business than that one person can handle. We’re jointly recruiting for that position. They’re pretty rare doctors. Even places like Seattle, they’re not very frequent. Getting one up to Alaska is not very easy.” Recruiting physicians to Alaska does attract a certain personality, and as several recent hires illustrate, often brings worldwide flavor. “She been real excited about the outdoor activities,” Acarregui said of Caimol. “It helps. People who by nature are more adventurous are more likely to seek opportunity up here.” Providence and AMNC are also working to find ways to utilize the telehealth system that allows remote access to rural Alaska villages. The telehealth system has been bolstered by the recent activation of the TERRA-Southwest high-speed internet network built by General Communications Inc. The first video teleconference when the TERRA-Southwest was turned on was between Gov. Sean Parnell and Yukon-Kuskokwim Health Corp. CEO Gene Peltola, and the crystal clear quality of the feed shows the potential for increased consultations and follow-up care. Additional support staff on the ground in villages such as case managers and IT personnel will be needed, but achieving more regular contact with patients both child and adult could reduce costs of traveling to Anchorage or beyond, and also avoiding medevacs or emergency room visits. Hirschfield said patients with kidney or hormone ailments may be seen once a month or once per quarter in the Lower 48, but similar patients in Alaska may be seen only once or twice per year. “We could have all sorts of big benefits down the road,” he said. One of the main goals of the AAPP is to keep kids and their families in the state rather than sent Outside to Seattle or Oregon for care. From there, Hirschfield said, the goal is to keep them in their villages to avoid the cost and disruption that comes with travel to Anchorage. According to the state Medicaid office, travel costs alone run some $50 million annually to support patient care and families. “We’re going to need a little support out in the region, technological and case management support,” Hirschfield said. “If we can get those things cooking, this is potentially an unbelievable savings for state Medicaid.” Besides cost savings, better pediatric care will also save lives. “Our joint vision is to meet the needs of all Alaska children, Native or otherwise,” Acarregui said.   Andrew Jensen can be reached at [email protected]

Angoon residents petition for Southeast salmon closures

The U.S. secretaries of Interior and Agriculture are considering a petition from the Angoon village corporation to exert federal jurisdiction over state waters in Southeast to protect subsistence harvests of sockeye salmon. Following an unprecedented joint meeting of the Federal Subsistence Board and its Southeast Regional Advisory Council March 21 to March 23 in Juneau, the board forwarded its sealed recommendation to Interior Secretary Ken Salazar and Agriculture Secretary Tom Vilsack. The decision could come within weeks — possibly before the start of the season — on the extraterritorial jurisdiction petition filed in May 2010 by Kootznoowoo Inc. The petition includes a number of potential remedies for the secretaries to consider, including: closing state fishing districts in Chatham, Icy and Peril straits from June until mid-August; reducing the fishing area or shutting down the Hidden Falls Hatchery just southwest of Angoon across Chatham Strait on Baranof Island; and ending state enforcement of subsistence bag limits within the Admiralty Wilderness Monument Area “until the state is in compliance with federal law” for ensuring subsistence priority is met. The closures are intended to allow enough salmon escapement into several streams and lakes both on Admiralty Island and across Chatham Strait from Angoon, where subsistence harvests traditionally take place, as well as to provide up to 250 sockeye per household. The exercise of extraterritorial jurisdiction is allowed under the 1980 Alaska National Interest Lands Conservation Act, which sets out the priority for subsistence use on federal lands. Under ANILCA, the secretaries of Interior and Agriculture have authority to regulate activities not occurring on federal lands in order to protect the subsistence priority, including to “restrict or eliminate” fishing in state marine waters defined as seaward of the mean high tide line. Commercial users, particularly seiners, in Southeast are nervous about the petition because of its potential effects on fishing areas that produced a harvest of more than 25.3 million salmon in 2011, mostly pinks. The combined ex-vessel value of the 2011 purse seine harvest in Chatham Strait (District 12) and Icy Strait (District 14), was about $43.3 million based on Alaska Department of Fish and Game reports. The total northern Southeast management area produced a harvest of some 45.6 million pinks, an all-time record, in 2011. The pink salmon harvest was about four times the 10-year average, but in the mixed stock fishery there was also a near-record amount of sockeye taken (212,057). The board announced before the meeting that its recommendation to Vilsack and Salazar would not be made public, only adding to the suspense of what action may come. The Southeast Regional Advisory Council, or RAC, did make a public recommendation to the full Federal Subsistence Board to defer action on the petition for three years to allow the state, board and local residents and organizations to achieve a series of milestones and management actions to address the Kootznoowoo concerns. Regarding the three questions it was asked to address by the board, the RAC determined Angoon is a subsistence community under ANILCA, that it is “more likely than not,” that commercial salmon fishing is reducing sockeye salmon returning to federal lands and that the subsistence priority for Angoon residents is not being met. However, the RAC recommended to the board that a local solution should be developed, and laid out a series of actions that should be taken by the state Department of Fish and Game to provide more salmon for subsistence harvest. Those actions include: establishing regulatory closures for certain terminal areas important to subsistence harvest, developing proposals for the Board of Fisheries and escapement goals for the affected streams and lakes, and performing genetic stock identification studies to determine how much of the sockeye intercepted by salmon seiners is bound for Angoon subsistence areas. In a staff report provided to the board, the lack of genetic identification of sockeye stocks prevented a conclusive finding that the salmon purse seine fisheries are impacting subsistence use. The staff report did note, though, that sockeye escapements hit record numbers in 2008 and 2010 when the seine fishery was limited or closed because of poor pink salmon returns. In its presentation to the Federal Subsistence Board, the state of Alaska reported that it has taken steps to prioritize subsistence harvests for Angoon, including limiting commercial openings until after the majority of subsistence harvest has occurred, and using its emergency order authority to close four miles of waters at Basket Bay northwest of Angoon across Chatham Strait and the nine miles from Parker Point south to Angoon at Mitchell Bay. By regulation, the first seine opening may not occur until the third Sunday in June. The only open area then is a one-mile stretch of beach at Point Augusta where Icy Strait meets Chatham Strait, which serves as an index fishery to measure run strength. To protect early runs during June and July, ADFG monitors for widespread distribution of fish stocks throughout the inside waters, and doesn’t ramp up aggressive fishing effort until late July or early August when the pinks are running heavy. Subsistence surveys show that 80 percent or more of the harvest has typically been taken by mid-July. In 2011, the department’s conservative approach in July led to record pink salmon escapement numbers in addition to the record harvest taken by seiners. The Kootznoowoo petition is just the third petition seeking federal jurisdiction over state waters to reach the cabinet secretaries. The two prior petitions — one filed in 2004 regarding the Area M fishery at the end of the Alaska Peninsula and another in 2008 for the herring sac roe fishery — were both denied for not meeting the threshold for exerting extraterritorial jurisdiction, or ETJ. Angoon residents have been working to restrict the purse seine fishery in northern Southeast since at least 2001 when the sockeye return to Kanalku Lake crashed. Kanalku Bay and Lake is the closest subsistence area to Angoon, and just 229 sockeye were estimated to have reached the Kanalku spawning grounds in 2001. The following year, ADFG asked Angoon residents to voluntary close subsistence fishing at Kanalku, and for the next four seasons Angoon residents shifted their efforts to bays and lakes across Chatham Strait on Baranof and Chichagof Island. In the meantime, Kootznoowoo submitted proposals to the Board of Fisheries during the 2006 and 2009 cycles requesting changes in the purse seine management plan to protect sockeye for subsistence harvest. In the 2009 cycle, a proposal developed by the subsistence division of ADFG recommended creating a local area management plan for Angoon, but was denied by the Board of Fisheries. “The communities led the effort to rebuild it (Kanalku salmon run), and at the same time the state has allowed commercial effort to increase and encroach,” said Peter Naoroz, president of Kootznoowoo Inc. “People have chosen to focus on saying we’re absolutely looking to close the Falls (hatchery) and these seining areas. The more modest proposals we put in were rejected by the Board of Fish.” Things came to a head in 2009, when State Sen. Albert Kookesh and three others were arrested and charged with exceeding their bag limits for 15 sockeye while fishing a beach seine operation at Kanalku Bay. Four months after Kootznoowoo filed its original extraterritorial jurisdiction petition, a Superior Court judge in Sitka dismissed the charges against Kookesh and others in September 2010, finding that the state did not follow the Administrative Procedures Act when it established the subsistence bag limits. Naoroz said that one way or another, the state has recognized its responsibility and made public commitments to address the subsistence priority for Angoon. “This is an opportunity to work with state and federal managers whether the petition is voted up or down,” he said. “That’s going to happen no matter what.”   Andrew Jensen can be reached at [email protected]

State among employers trying to trim health care costs

Like all employers, state officials are grappling with how to control rapidly rising health care costs. Unlike the others, however, the sheer size of state medical care spending, through all its programs, gives it huge potential leverage in the market. State Health and Social Services Commissioner Bill Streur figures the state is directly responsible for about $2 billion a year in spending on health care, including the federal share of funding for Medicaid. That amounts to about 25 percent of all health care spending in the state, Streur said. If the state can figure out a way to bend the curve on rising costs, it may chart a path for private-sector employers as well. One idea being explored is to make it easier for Alaskans under state health programs to travel out of state for care, where costs are lower. Streur and Commissioner of Administration Becky Hultberg this spring have been briefing legislative committees on the scope of the state’s problem, and it isn’t a pretty picture. The state administers health care for 16,346 government employees and their dependents, spending $83.4 million in fiscal year 2011. The state also covers 63,034 retirees and dependents, with $413.5 million paid that year, and 135,246 lower-income Alaskans covered under Medicaid with spending reaching $1.2 billion. “Medicaid is now the largest single component of the state budget,” Streur told the House Health and Social Services Committee in one recent briefing. In addition, the state covers medical care costs for prison inmates, state employees who are members of union health trusts, and for state workers’ compensation claims, Streur and Hultberg told the House committee. Medical costs for the state have been rising an average of 9 percent a year between 2001 and 2010. The increase slowed in 2011, however, which dropped the average including that year to 7.9 percent annually, Hultberg said. The 2011 drop may be a blip. Breaking it down, Streur said there was a 4.3 percent drop in utilization of health services but also that payments to medical providers was up 10 percent. The drop in utilization brought the overall spending down for the year. In 2011 the average provider charge per event, in terms of unit pricing, was $362.52 compared to an average of $329.51 for 2010, according to data presented to legislators by Streur and Hultberg, Utilization in 2011 was 1.1 medical events per member-month compared to 1.15 in 2010, a 4.3 percent decrease. There’s no clear explanation for the utilization drop other than there seems to be cycles, Streur told the committee, with utilization of health care dropping for a few years and then rising for reasons not well understood. However, the 10 percent increase in providers’ costs is consistent with the long-term trend, the commissioner said. Unknown costs with reform Still, if the long-term trend holds, the state’s health care spending will increase to $4 billion a year by 2020, which seems unsustainable given declining oil production and the likely tightening of future state budgets, to say nothing of cuts in federal programs, Streur said. “That is just a straight-line projection. It does not include any Medicaid cost increase,” due to the predicted influx of new Medicaid enrollees in 2014 under the federal health care reform law, Streur said. Medicaid now covers certain low-income families and disabled Alaskans. Under the federal law, low-income single men and some others not currently insured will be covered. That poses a big unknown that could upset the cost calculation, Streur said. The 135,000 Alaskans now covered by Medicaid are expected to increase by about 35,000 in 2014 due to the federal health care requirement, he said. The additional medical costs will be totally covered by the federal government for a few years following the implementation of the bill, and for 90 percent into 2020. However, the state will incur costs for administration and management of the additional health care claims and payments, the commissioner said. What is unknown is the medical profile of the incoming Medicaid population. Having coverage may unleash a burst of utilization of services – some with serious medical issues – adding to the overall costs There are some health programs for which the state is on the tab for costs, but which there is no control, an example being a member of a public employee union where health care is provided by health care trusts administered by the unions, not the state. Also, the state has no influence over the management of health plans by municipalities and school districts, “although we inherit them as retirees,” under the largely state-funded public employee and teachers’ pension programs, Hultberg said. Thus, the state has limited or no ability to encourage these independently managed programs to adopt wellness or other programs. Medicaid reimbursements as a percentage of the health provider’s costs are higher in Alaska than in most other states but that is to encourage physicians and other providers to take on Medicaid patients. In many other states where reimbursements are low, people on Medicaid have trouble getting care. That’s true in Alaska for Medicare, the health program for senior citizens, but the federal government controls Medicare and sets the reimbursements. With Medicaid the state sets the rules and also pays for about half the costs. It’s important to keep providers happy with Medicaid for other reasons, Streur said. “Medicaid clients can be difficult. There are missed appointments and patients don’t always follow the doctors’ orders. But because the payments are higher, we can keep the docs on board,” Streur said. Treatments for increases? As to what can be done to dampen the cost increases, there are some options, Streur and Hultberg said. One change to be implemented soon is to cover more preventative measures and screenings for retirees, Hultberg said, the idea being that catching problems early will improve health outcomes and lower costs. Another idea is to promote wellness programs that are now common with private employers and other public institutions, but have not been done in the state system. Wellness programs at the most basic level encourage people to have regular checkups and in more advanced forms encourage exercise and awareness of healthy diets. Most such programs are voluntary, and some have special incentives. Hultberg said building such programs into retiree’s coverage can be tricky because public employee retirement benefits are constitutionally protected in Alaska. That means any change to the plans for retirees must be analyzed by the Department of Law as to how it could affect, either way, the benefits guaranteed to the retiree. “This is a special challenge. It can be difficult, and it can limit our options,” Hultberg told legislators. “Some other plans (other than the state) actually pay people to go to primary care. Even if health care is free, people often won’t go to see the doctor.” The options list for controlling health care cost growth is limited. Better use of technology, like electronic medical records, is on the list and has real potential, but it’s going to be a slow process, Streur said. Experience from other states is showing limited acceptance of new technology like electronic records among physicians with independent practices. “Technology is going to be a long slug, but there are great opportunities,” the commissioner said. Ideas that work What has more promise in the near term are innovations in how health care is delivered. In this, the Alaska Tribal Health Consortium and its partners are establishing systems that should be copied throughout the state, Streur said. Instead of every patient seeing a physician right away, the initial contact for patient is with a health aide, then a nurse and then up the chain as needs dictate. “Our system puts too much emphasis on seeing a physician. I see some of the best care being delivered by nurse practitioners,” and physician assistants, the commissioner said. Not having to see a physician if a good nurse will do is more important in a region with a chronic shortage of primary care physicians, which is the case in Alaska. However, it takes an effort to educate the community, Streur acknowledged. “Again, the tribal health consortiums have done a phenomenal job of education their clients that it’s OK to see a physicians assistant,” he said. “We’re not doing a good job with our own population that it’s OK to see a PA.” Rep. Charisse Millet, a member of the House committee, understands how this will make a cultural change. “It’s hard to tell a young mother with a newborn who has a 101-degree temperature to see a nurse, particularly when she has an insurance policy that entitles her to see a physician. The next step in innovation is a “medical home” system, where a patient’s care is coordinated by a physician on a regular basis in lieu of the current system of essentially uncoordinated care, where patients make appointments when they feel they need it, and too many rely on visits to hospital emergency rooms. Streur said the state Department of Health and Social Services will experiment with coordinated care later this year when requests for proposals for pilot programs will be issued. Not only will coordination result in better care but it will save money, particularly if emergency room visits are reduced. Rep. Paul Seaton, another committee member, expressed concerned that occupational licensing issues may be reducing the flexibility for providers, for example to have para-professionals perform certain duties rather than medical professionals. “Are we now the prisoner of the system we have created?” Seaton asked. Streur said something has to be done. “The status quo is not acceptable. We have to change the way we do business,” the commissioner said.

Workers' wellness can pay off for employers' bottom line, insurers say

Employers are rapidly expanding “wellness” programs for their workers as a strategy to reduce galloping cost health care cost increases. Large employers in the state, like major oil companies, have long embraced wellness, offering on-site exercise facilities and biometric screening, for example. It’s been a tougher sell for small employers. But there are now demonstrated cost savings, and more small employers becoming converts, said Jeff Davis, president of Premera Blue Cross of Alaska. With health care costs increasing at annual rates of 12 percent to 14 percent in recent years, there’s a lot of motivation to do something, Davis said. The latest evidence in support of wellness is a survey of 600 U.S. employers in 2011 by Towers Watson/National Business Group on Health, Davis said. It showed that a group of “high performing firms,” those which embrace health care cost control strategies, including wellness, reduced their rate of growth of health care costs over several years to about 1 percent annually in 2010 compared with an average of 10 percent rates of cost growth among “low performing” employers, or those which did not adopt such strategies. The report is Towers Watson’s “2011 Employer Survey on Purchasing Value in Health Care.” They survey also showed that employees at companies that embrace the strategies pay 20 percent less on average for their health benefits than employees at low-performing companies. “Apart from the obvious advantages of paying lower costs, affordable health care is key to providing a competitive reward package, and to attracting and retaining top talent,” the report said. Davis, of Premera, said large employers haven’t needed much persuasion on wellness programs, but the idea has tougher for small employers to accept because of worries about the extra administrative burdens as well as the costs. “People always asked what the return on investment would be for an investment in wellness initiatives. But when you can show a chief financial officer numbers like these (in the Towers Hill survey) they realize health cost management can be a business strategy. In a low-margin business it can be really important,” Davis said. Premera is a big supporter of wellness for its own employees as well as clients, and has been promoting programs with its small group employers in recent years, Davis said. For three years the company has offered a reduction on premiums for employers in its small group health plans who reach a certain percentage of employees enrolled in voluntary basic wellness programs, doing things like participating in a confidential health appraisal and doing their “numbers,” the biometric screenings for cholesterol, blood pressure, body-mass index and other basic health indicators. “The percentage is based on a sliding scale. However, in general most employers can get discounts when they have 60 percent of employees involved,” Premera spokeswoman Amy Carter said. About 40 percent of Premera’s small group customers now have enough employees enrolled in the voluntary screening to qualify for the premium discounts.  “A Health Risk Assessment is an online health survey that asks a series of lifestyle, physiological and medical history questions to help determine your current health and your risk for long-term disease or illness,” Carter said. The assessments are confidential. “A biometric screening is a brief exam, a drawing of blood draw, blood pressure, height and weight, to obtain biometric values, which are important indicators of current health status. When you participate in a screening, you will learn about your blood pressure, cholesterol, glucose and body mass index,” she said. Just a person’s knowledge of these numbers, particularly if the information gives early warning on a potential problem, is often enough to motivate people to act. The premium discount gets more substantial when more employees do the risk assessments and screenings. “If an employer has 100 percent participation (by their employees), they can receive as much as $210 per employee per year,” off an employer’s premium, Carter said, Premera is now taking this a step further. Davis said that in July the company will begin offering cash payments to employees in small group plans who participate in voluntary health questionnaires and biometrics screening. The employee incentive payments, in the form of a $150 debit card, won’t affect the employer’s discount on its premiums, Davis said. In fact, it will be available to the employee even if the employer doesn’t qualify for the premium discount, he said. The screenings are the first step in a wellness strategy. The next step is to encourage employees to exercise, watch their diets and keep weight within healthy ranges, and to continue to get regular health screenings. Another, more advanced part of a strategy is “case management” for employees with identified health problems like diabetes. Most commonly, case management takes the form of lining up a health “coach,” usually a nurse, to advise the employee, and to make it convenient for employees to visit a clinic. “This is to help people get to the right place at the right time,” in terms of help and advice, Davis said. Case management is important because it’s well established that chronic disease is major factor in rising health care costs, and helping people manage chronic conditions can help reduce costs, Davis said. “Seventy-five percent of what we spend on health care is on chronic conditions,” he said. “Unfortunately, one-third of these conditions are preventable.” Preventable in that those conditions generally are induced, or at least influenced, by lifestyle and behavioral causes, like smoking or being overweight, Davis said. People can change behavior, however, and a goal of many wellness programs is showing people how to do it. Davis said there are four elements, mainly: “Move more, watch what you eat, don’t smoke, and use seat belts,” he said. On a national level, companies are rapidly expanding wellness in various forms into health care cost-control strategies, the Towers Watson survey showed. Twenty-four percent of firms responding to the survey said that in 2012 they will include rewards for employees who show improvements on biometric indicators, up from 14 percent in 2011. Ten percent of firms surveyed in 2011 offered rewards for employees completing requirements for a “healthy lifestyle activity,” like enrolling in a fitness program. This increased to 16 percent in 2012, the survey response showed. There was a sharp increase in firms offering rewards, or imposing penalties — for smokers and users of tobacco — from 6 percent in 2011 to 14 percent who planned to do so in 2012, according to the survey results.

Alaska Job Centers Offer Help with Jobs, Training

While the Alaska Department of Labor and Workforce Development doesn’t have an “easy” button – our clients can walk out of a job center with the skills to build a life. Our dedicated staff in the Alaska Job Center Network connect job seekers with employers and provide training referrals for unemployed and underemployed workers. The one-stop job centers, part of a nationwide network, meet the majority of a customer’s needs by offering core, intensive and training services. We also provide supportive services that might include tools for training or safety gear for a job. Many of our job centers are regional hubs that offer federal and state-funded employment and training services to job seekers and businesses. They also offer youth services. Veterans receive priority through the job center system and federal job training programs. Support is available for people with disabilities. Through the Alaska Job Center Network, we support rural communities through itinerant services. Our “rapid response” teams, which assist workers who are being laid off, are deployed immediately when needed. Accessing Services through the Job Center Network: Job seekers looking for employment and training can receive three levels of one-stop services based on eligibility and assessed need. • Core services are basic services and available at no cost. These core services include employment related and job placement services, labor market information, referral to services offered by partner agencies such as the Division of Vocational Rehabilitation, Division of Public Assistance, and other local employment and social service resources, like child care providers. Core services also include a number of job preparation workshops for job search strategies, interview skills and resume preparation. Customers can use self-serve tools like copiers, fax machines, Internet capable computers, and gather information on upcoming job fairs and hiring events. Also available are employer services such as listing jobs on ALEXsys – Alaska’s online job bank – and referral to business resources. • Intensive services are services available at no cost for job seekers who are not able to access the job market through the use of core services. These services include development of a reemployment plan, referrals to address basic needs, and a detailed career inventory assessment of a client’s skills, vocational abilities, aptitude and suitability for training if needed. For example, this might mean helping increase math skills with a referral to adult basic education. • Training services are services available to persons who need training to access the job market. These services are provided after a case manager develops an individual employment plan that describes the training, costs, client contribution, timeframe to complete the program and the specific high growth job that the client is targeting after training. Each training entity is approved by the Department of Labor based on providing occupational training in high-demand and priority industries in Alaska. To learn more go online to www.jobs.alaska.gov. Paul Dick is director of the Alaska Department of Labor and Workforce Development’s Employment Security Division.

Alaska's health care industry continues to grow

Alaska’s population has grown to more than 710,000, an increase of about 13 percent since 2000 when we had about 627,000 residents. In addition to other needs, more people mean a greater need for health care as we are all potential customers. A greater number of Alaskans are over age 65 – currently about 55,000 – and that number is predicted to increase by an astounding 127 percent by 2034. In the last decade, the health care industry created 10,000 new jobs in Alaska, more than any other industry. Based on two factors — the increase in our population and the rise in the number who are 65-plus — we expect the number of health care jobs to grow 26 percent from 2008 to 2018, the current 10- year forecast period. The Alaska Department of Labor and Workforce Development is focusing on the human pipeline we’ll need to fill the jobs in this expanding industry. The department is holding a Healthcare and Human Services Job Fair in Anchorage on Friday, April 20 from 11 a.m. to 4 p.m. at the University Center Mall, with more than 70 employers and training representatives. The Alaska Health Workforce Planning Coalition developed the Alaska Health Workforce Plan, which is available at http://labor.alaska.gov/awib/forms/Healthcare_Workforce_Plan.pdf. The plan, the result of a year-long industry-led effort with involvement from education and government, is a consensus of the strategies necessary to meet Alaska’s need for more health care workers. The Alaska Workforce Investment Board is further developing the Health Workforce Plan under a planning grant from the U.S. Department of Health and Human Services’ Health Resources and Services Administration. The outcome will include support for career pathways for students and adults (including dislocated workers), industry skill standards for high schools, entry into postsecondary education, and various credentials and licensing. Health care provides jobs at every level of training and education, most with a clear path for advancement. For example, a certified nurse assistant can become a licensed practical nurse and then a registered nurse, with the appropriate education and training. Even in Alaska’s smallest rural communities, where jobs are often scarce, health care offers year-round employment opportunities. The University of Alaska system offers more than 90 health programs statewide in allied health, public health, nutrition and dietetics, behavioral health, health information and management, medical billing and coding, nursing, and nurse practitioner. Partnership programs with other universities include medicine, pharmacy, physician assistant, occupational therapy, and speech-language pathology. About half these programs use online or other technology-based learning. UA now awards more than 800 health-related degrees each year. AVTEC–Alaska’s Institute of Technology, part of the Alaska Department of Labor, offers health care related training at its Allied Health Campus in Anchorage, including certified nursing assistant and licensed practical nurse. The eight-week CNA program certifies 120 graduates each year, and the 10-month LPN program produces 20. Both programs have a 100 percent placement rate. Under a new partnership with Cook Inlet Tribal Council, AVTEC will provide training for careers in the health care industry, including medical coding and billing specialist, CNA, and LPN. To meet employer demand, the Alaska Department of Labor will continue to develop ways to help Alaskans pursue careers in this growing industry.

Alaskans want to know why Village Built Clinics are underfunded

Alaska Natives in rural communities often depend on local clinics as their only source for primary health care. However, many of these clinics are in trouble or already closed, and Alaskans want an answer as to why. Village Built Clinics are health facilities available to rural Alaska communities. They provide primary health care services and are usually staffed by mid-level providers or community health aides. “They are the only provider of care for remote communities,” said Carolyn Crowder, health department director for the Aleutian Pribilof Islands Association. “They are part of the essential infrastructure.” The Village Built Clinic program is a big part of this rural health care. Alaska has about 166 VBCs, which are typically leased by the Indian Health Service, a division of U.S. Department of Health and Human Services. Most of the clinics are owned by tribes, tribal health organizations, local governments or private entities, however. These clinics are part of the Community Health Aide Program, or CHAP, which depends on these clinics being built and maintained to stay active. The problem is these clinics have fallen on hard times. The funding, which is contracted through HIS, isn’t enough to keep up with renovations or staffing. She said some examples include cases of clinics running out of fuel or losing pipes and even medicine from freezing conditions. As a result, many have been deemed unsafe, and others have closed due to health and safety issues. Alaskans are pointing the finger at IHS. Crowder said underfunding has put these clinics in tough spot. She pointed out that, under the Indian Health Care Improvement Act, IHS is responsible for the CHAP program in Alaska and obligated to properly maintain the clinics and pay full costs for their leases. “Having a safe facility for people to work in is essential. Not having safe facilities hurts abilities to recruit and retain providers and staff,” she said. In March, Crowder testified on the matter before the House Natural Resources Subcommittee on Indian and Alaska Native Affairs and said stated that IHS is underfunding them by an estimated $6.6 million annually. She told the Journal this does not include major operations or repairs but only day-to-day operations. Crowder said that by fiscal year 2006, the lease payments to the villages covered only 55 percent of operating costs on average statewide and has shifted the financial responsibility to the villages. She said IHS has sufficient funds to meet the clinics’ needs. The Alaska Native Tribal Health Consortium reported in 2005 that a June 2000 study showed that 33 percent needed improvement or replacing. Alaska Sens. Lisa Murkowski and Mark Begich wrote to IHS Director Yvette Roubideaux asking for an explanation on the funding problems. An excerpt from the letter reads, “It has come to our attention that funding provided by the IHS through leases for the VBC has failed to keep pace with the costs of operating and maintaining the VBCs, and that such funding has also been insufficient to maintain the VBCs in a safe condition.” The senators ask for a written response why available appropriations have not been made for VBCs and why IHS has not entered into direct leases with these villages using IHS’s authority under the Indian Health Care Improvement Act. In a Facebook post dated March 16, Murkowski wrote, “Village Built Clinics are critical to healthcare of Alaska natives in villages, yet the facilities are in poor condition or have had to close due to health hazards, leaving some communities without a clinic at all. I want to know why the Indian Health Services hasn’t fully funded the program.” IHS did not respond to repeated attempts for comment by press time. The Journal inquired about the letter, a summary of the program, which communities it applies to and program costs. IHS spokeswoman Constance James could not provide any information. President Barack Obama has announced a proposed 2.7 percent increase for the IHS’s fiscal year 2013 budget, bringing to proposed budget authority to $4.42 billion. This budget proposes funds for essential health care services, administrative costs and construction for tribes unable to provide such health care services in their communities.   Jonathan Grass can be reached at [email protected]

Marathon sells its Alaska production assets

Another of Cook Inlet’s legacy petroleum companies will soon be gone from the scene. Marathon Oil Corp. will sell its Alaska producing properties in Southcentral Alaska to Hilcorp Alaska LLC, the Houston-based company announced April 9.  Hilcorp, a privately owned independent, recently acquired Cook Inlet production assets sold by Chevron Corp. The companies expect to close the transaction, subject to completion of the necessary government and regulatory approvals, by this fall, Marathon said in the statement. Marathon now has 62 employees in Alaska. “We expect Hilcorp will retain the vast majority of our employees but there will be a small group that will transfer to other Marathon assets,” said Wade Hutchings, Marathon’s Alaska manager. The sale includes 17 million barrels of oil equivalent of net proved reserves across 10 fields in the Cook Inlet, as well as natural gas storage, and interests in natural gas pipeline transmission systems, the statement said. In 2011 net production averaged about 93 million cubic feet of natural gas per day and 112 barrels of oil per day. Additionally, Marathon Oil had approximately 12.5 billion cubic feet of natural gas in storage at the end of 2011. The sale does not include Marathon Oil’s Alaska onshore drilling rig, which is being marketed separately and is being used by companies exploring for natural gas in the Cook Inlet region. Hutchings said Marathon’s mature producing assets in Alaska no longer fit the company’s long-term strategy, but that other companies have been interested in the properties. “There has been significant interest shown by several parties in our Alaska resources. We are continually evaluating our assets to determine how they fit our overall strategy.  At this point Marathon is interested in liquids-rich opportunities, and at this point our Alaska natural gas assets no longer fit that long-term strategy.” Hutchings said. Marathon has contracts to supply natural gas to three regional utilities, Enstar Natural Gas Co., Anchorage’s city-owned Municipal Light and Power and Chugach Electric Association. The two larger gas-producing assets managed by Marathon include the Kenai and Ninilchik fields on the Kenai Peninsula, but the company has a number of smaller assets as well in the region. Chevron, and now Hilcorp, had a minority interest in the Ninilchik field, and after the Marathon sale is closed Hilcorp will own all of the field. Marathon was one of the first companies to explore and develop oil and gas in Alaska in the 1950s. The company also worked with Phillips Petroleum to develop the first long-distance shipment of liquefied natural gas by sea, with development of the Kenai natural gas liquefaction plant in 1959. The plant has operated continuously since then, shipping LNG to customers in Japan and, recently, to China. Marathon recently sold its minority stake in the plant to ConocoPhillips.


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