Andrew Jensen

OPINION: Dunleavy passes budget ball to Legislature

After proposing a budget this past February that showed what Alaska can afford while paying out a statutorily-calculated Permanent Fund dividend, Gov. Mike Dunleavy’s second try reflects what many Alaskans say they want. At 6-foot-7, Dunleavy towers over the size of traditional point guards, but after a major shakeup of his team from the top down following a tumultuous first season he is now passing the ball on the budget to the Legislature that fought him tooth-and-nail over his initial plan to either cut or veto hundreds of millions in spending. The budget Dunleavy unveiled on Dec. 11 is essentially flat at the bottom line while absorbing an estimated $100 million-plus in formulaic increases to Medicaid and K-12 education, according to his staff. This time around, the governor is not proposing massive cuts to close the gap between paying the statutory PFD and the revenue from oil taxes and Permanent Fund earnings; rather he is sending the Legislature a budget that uses about three-quarters of the dwindling savings of the Constitutional Budget Reserve. In addition, the governor is proposing a supplemental budget to be drawn from the Earnings Reserve that includes an $815 million appropriation to fully pay the PFD for 2019, which was set at $1,606 by the Legislature and ultimately accepted by the governor who campaigned on following the formula in law as well as making Alaskans whole after three years of essentially arbitrary amounts chosen by his predecessor through a veto and then lawmakers through their budgeting process. The supplemental budget, which also includes additional spending for Medicaid, firefighting costs, the Alaska Psychiatric Institute and Pioneer Homes, would exceed the annual 5.25 percent cap on withdrawals from the Earnings Reserve established under Senate Bill 26 that passed in 2018. The CBR would also be emptied nearly entirely. While Dunleavy’s choice for the coming year to propose a budget funded from savings accounts rather than balanced through drastic cuts is 180 degrees away from his approach over the past year, the message to the public and the Legislature remains the same: current spending is unsustainable and lawmakers must finally reconcile the conflicts between SB 26 and the PFD formula that remains on the books. Also like last year, Dunleavy knows that his budget as presented will change dramatically once the Legislature is finished, whenever that may be although everyone hopes it will not drag into August once again. What is different, though, is that all the oxygen will not be sucked out of the debate over deep cuts the public and their representatives have been clear they refuse to accept. This budget should allow legislators to start the session working to resolve the PFD formula and on a spending cap that the leaders of both the House and Senate have said they support in principle. House Speaker Bryce Edgmon went as far as to say to the Alaska Chamber in October that he believes a spending cap must be placed in the constitution because the Legislature has demonstrated repeatedly over the past several years that it will ignore laws it determines to be inconvenient whether it be the statutory dividend formula or where a governor may call a special session. Such an admission can only be taken as a win for Dunleavy, who made a spending cap one of several constitutional amendments he proposed along with his first budget. Alaskans may be willing to accept a change to the dividend formula in exchange for the services the state provides, but it is difficult to imagine a scenario where the public will simply allow spending growth to erode the PFD’s share of the annual appropriation from the Earnings Reserve. The Legislature no doubt bought itself some time this past year by settling on a PFD of $1,606 that largely satisfied Alaskans (and also drained the Statutory Budget Reserve), but without their budget cuts and the governor’s vetoes the dividend could have been as little as $600. By putting the focus on spending rather than slashing, Dunleavy has given the Legislature room to work on solutions from the outset of the session. Lawmakers have the ball now, but Dunleavy will only get credit for an assist if they can hit the shot. Andrew Jensen can be reached at [email protected]

OPINION: Stowers’ ruling in Stevens recall sheds light on law

Considering the stakes and the players involved, inexplicably little attention has been given to a 2006 ruling by a judge who will ultimately hear the case to recall Gov. Michael J. Dunleavy when it reaches the Alaska Supreme Court. While nearly every press report regarding the recall notes the relative dearth of case law covering efforts to remove statewide officials, a Superior Court decision from 2006 cited by Attorney General Kevin Clarkson in his Nov. 4 opinion to reject the recall petition is noteworthy for multiple reasons: the target was the sitting Senate President, that legislator was Dunleavy’s current Chief of Staff Ben Stevens, and the judge was Craig Stowers. Stowers was appointed to the Supreme Court in 2009 and served as Chief Justice for three years from 2015-18. In 2006 as an Anchorage Superior Court judge, he rejected the recall petition against Stevens filed by citizen activist and former state Rep. Ray Metcalfe amid the burgeoning VECO scandal that ultimately resulted in multiple corruption convictions but no charges ever filed against Stevens. The transcript is worth a read for anyone who wants to know more about the legal thresholds for a recall application qualifying as “substantially in the required form” that was issued by a current Supreme Court justice. Clarkson’s opinion concluded that the Recall Dunleavy backers’ petition did not meet that legal threshold and kicked off the anticipated court fight that got underway Nov. 27 with a 55-page motion for summary judgment filed by a high-powered legal team led by Jahna Lindemuth and Scott Kendall, who were respectively Attorney General and Chief of Staff under former Gov. Bill Walker. The state’s response is due by Dec. 16 and oral arguments are currently scheduled for Jan. 10. Primary among the takeaways from reading Stowers’ opinion is that the petition — and only the petition — may be considered by the court. Under the recall statute, petitions are limited to no more than 200 words. An equal 200 words are given to the official subject to recall for a defense should it reach the ballot. What that means is attachments, affidavits, budget documents, veto statements, or 55-page motions that offer additional evidence to support the individual allegations, are irrelevant to the ultimate decision. “I have not reached my decision with reference to any of the extraneous information that’s been provided by any of the parties,” Stowers said in his ruling. Because of this statutory word limit, the law also requires that allegations be stated “in particular,” which according to Stowers is the basis for judicial review even under the intent for voter-driven initiatives to be construed liberally and the requirement of the court to accept allegations as factual. “If this statute has any meaning at all,” Stowers said, “the phrase ‘described in particular’ is something that the court is required to consider as it reviews the 200 words or less in any given petition.” For the purposes of judicial review, then, a judge or panel of judges must determine whether allegations — even when assumed to be true — actually meet one of the standards of lack of fitness, incompetence, neglect of duties or corruption. Stowers went further by addressing what he described as “mixed questions of facts and law.” In Stowers’ opinion, while the court cannot rule on whether an allegation is true or not, it must rule on questions of whether an allegation that claims a violation of the law is valid. “That’s appropriate for the court, and indeed it’s my duty,” he said, “to evaluate those and to determine whether or not those are true and accurate statements of law.” He went on, “To the extent that there are mixed questions of fact and law … then the validity of that statement in part turns on whether the statement of law is valid or not. And if it’s not, it gets stricken. And it also depends in part on whether the facts as alleged are specific enough or particular enough to create a statement that’s sufficient to go to the voters.” Three of the grounds for recall in the petition allege violations of the law or the constitution that would fall under Stowers’ “mixed questions” standard. Only one is highly specific. The first ground states that Dunleavy refused to appoint a judge to the Palmer Superior Court within the 45 days required under Alaska law. There is no dispute that Dunleavy did not appoint the judge within that period, although he eventually did and before the seat actually became vacant. Whether the courts will decide that rises to lack of fitness or neglect is unknown, although we already know the Supreme Court has determined that the constitution trumps statutes in the cases of the Permanent Fund dividend formula and the voter-approved 90-day legislative session, and there is no deadline in the constitution for appointing judges. The next two grounds are less specific. The second alleges that Dunleavy violated the law and the constitution by authorizing public funds for electronic ads and direct mailers for “partisan purposes” making “partisan statements about political opponents and supporters.” The third alleges that Dunleavy violated separation of powers by “improperly using the line-item veto to: (a) attack the judiciary and the rule of law; and (b) preclude the legislature from upholding its constitutional Health, Education and Welfare responsibilities.” In their motion for summary judgment, the recall backers assert the second and third grounds meet the legal threshold under the standard of deference to the truth of allegations. Clarkson wrote in his opinion that these allegations do not meet the “particularity” standard because they are too vague. Essentially, Clarkson is arguing that the claims fall short without specific allegations about what the “partisan statements” were or how exactly Dunleavy attacked the judiciary or precluded the Legislature from upholding its constitutional responsibilities. “A court is required to make at least a threshold determination as to whether what has been alleged is factually specific enough,” Stowers said in his 2006 decision in reference to petition language. In their 55-page motion, the recall backers lay out all their evidence to support their claims, but as noted above, the court cannot consider any of that. The general consensus of what little case law we have is that Alaska has chosen a “middle of the road” standard that is neither too far toward political recalls for any reason nor legal standards too strict to ever be met. Stowers referenced this “middle” way in his decision in the Stevens case. “Recall advocates must allege more than conclusory statements or arguments, otherwise our recall process drifts to the end of the spectrum where simple disagreement with an officeholder’s position on questions of policy becomes sufficient in and of themselves,” he said. Finally, the recall backers allege incompetence over Dunleavy’s Medicaid veto of the wrong amount of state funds. The state explains that as a simple mistake since remedied; the petitioners assert that the availability of a defense does not render the allegation insufficient for recall. In the end, the recall petitioners only need the courts to agree with them on one of the four allegations to move forward. If they are allowed, though, just don’t expect to see a campaign built around Palmer judges, mailers or Medicaid vetoes. This is a political effort to overturn an election, pure and simple, which is not what the constitutional framers intended. Vic Fischer, the campaign co-chair and the last living constitutional delegate, wanted recall for any reason back in 1956 but he lost that debate. We’ll see if he wins this time. Andrew Jensen can be reached at [email protected]

OPINION: The education of Bryce Edgmon

Alaska Chamber President Kati Capozzi’s phone started blowing up as Speaker of the House Bryce Edgmon delivered his closing remarks on Oct. 29 at the organization’s annual Fall Forum in Girdwood. Edgmon took part in an hour-long preview of the 2020 legislative session alongside Senate President Cathy Giessel and Gov. Michael J. Dunleavy’s Chief of Staff Ben Stevens that was alternately awkward, encouraging and surreal. Awkward was moderator Willis Lyford starting the panel by playing a clip from the climax of “The Perfect Storm” when the Andrea Gail flips and wrecks killing everyone on board; encouraging was all agreeing a serious look at a spending cap is forthcoming and the legislative leaders praising Stevens for opening lines of communication to the governor; surreal was Giessel calling her newly cultivated relationships with Democrats Edgmon and Senate Minority Leader Tom Begich her best achievements of the session. All in all it was an enlightening look behind the curtain of a dysfunctional, drawn-out session in the first year of the Dunleavy administration marked by massive failures to communicate and political combat unlike anything ever seen in Alaska history. But what set Capozzi’s phone buzzing was Edgmon’s attack on the Chamber’s response to Dunleavy’s initial budget released Feb. 13 that attempted to close the $1.2 billion budget deficit with huge spending cuts and local tax transfers to the state while paying out an estimated $3,000 Permanent Fund dividend according to the statutory formula. “I don’t know if it was too long afterwards that I had members of your organization in my office, you know, sort of championing all these budget cuts,” Edgmon said. “And I said, 'Well, do you have a clue what this budget even contains?’ And I said give me some details. What about the $500 million in transferred to local governments? The doing away of raw fish tax revenues $28 million? Something that would be a third of Unalaska’s annual budget and big chunk of what Petersburg gets and so forth; 41 percent cut to the university; 23 percent cut to K-12. Do you support that? “‘Oh yeah, our organization, we support that.’ Well, I’ll tell you this and I don’t mean this in any sort of a derogatory way, but my ask of you as an organization would be please carefully evaluate those priorities coming forward.” It is uncertain which members Edgmon was referring to. The Chamber conducts an annual Legislative Fly-In to Juneau and more than 80 members made the trek this year, but that event was Jan. 30-31, or two weeks before Dunleavy’s budget rolled out. The day the budget was released, the Chamber did issue a statement with the following headline: “Alaska Chamber agrees that it’s time for Alaska to live within its means.” The opening paragraph read as follows: “The Alaska Chamber applauds Governor Dunleavy for proposing a spending plan that matches current revenues. This action will surely prompt necessary and critical conversations that must occur across Alaska in order to achieve a durable and sustainable fiscal plan.” Next was a quote from former Chamber Vice President Albert Fogle, who was briefly with the group: “For many years, the Chamber has advocated that state government reduce its spending to sustainable levels. The Chamber also supports a meaningful spending cap on operating budget expenditures. Achieving a durable and sustainable fiscal plan that includes a spending cap will strengthen our economy and help Alaskan families by reducing uncertainty and promoting private sector investment. We encourage the Alaska Legislature, local communities, organizations, and all Alaskans to get involved and work together to solve the fiscal challenges plaguing our state.” Nothing in the headline, opening paragraph or Fogle’s quote supports any particular budget cut or comes close to approaching the way Edgmon characterized the Chamber’s position. The release goes on to note the Chamber’s long-standing legislative priority of a sustainable fiscal plan and a cap on operating expenditures that goes back for decades. (Full disclosure: I was also a guest of the Chamber at the forum and moderated a panel discussion that morning between economists Ed King and Mouhcine Guettabi.) Nevertheless, the hysteria over Dunleavy’s budget and the apparent inability of many to read past the word “applaud” in the opening paragraph made damage control the first order of business for Capozzi, who was hired as the Chamber president six weeks later in March and spent the next few months explaining the group’s position to its members, the media and the Legislature. Apparently that nuance never got back to Edgmon. “You know, I talked to some of your members who said ‘we had no idea our organization took that position,’” he went on. “But you did.” It got worse. “My ask of you as an organization, not only to you know, respectfully be more informed and sort of collectively in tune to what I think the public at large wants, but my ask would be that you do what you can to help us pivot because we need help,” he said. As you may imagine, Edgmon admonishing more than 100 of the most engaged and educated stakeholders in Alaska to “be more informed” while simultaneously distorting their collective position did not go over well. Immediately after the panel stepped down, Capozzi returned to the podium and firmly corrected Edgmon for stating “misinformation” about the Chamber’s position and told him that she and its members are always available to communicate with him if he needs further clarification. The Chamber’s legislative priorities are voted on every fall at the forum, and a sustainable fiscal plan as the top goal dates back years. Just consider the group’s press release in 2015 after former Gov. Bill Walker hosted a fiscal summit in Fairbanks that included a host of his proposals to cut spending, raise industry taxes, institute a personal income tax and cap the PFD. Here’s the headline: “Business community applauds Governor’s focus on fiscal sustainability, calls for solutions that reduce spending, keep the economy moving.” There’s that word “applauds” again. Here’s the opening paragraph: “Members of the Alaska business community today thanked Governor Bill Walker for taking initial steps toward putting the state on solid financial footing by asking Alaskans to take a hard look at government spending, as well as potential revenue enhancements.” Why, it’s almost as if the Chamber will encourage, thank, or even “applaud” any governor who is willing to put forth a plan that aligns with its own long-held priority of sustainable spending even when that plan includes tax increases. Edgmon should have known that already, but hopefully he does now. Andrew Jensen can be reached at [email protected]

OPINION: A little trouble in big China

Talk isn’t always cheap. The National Basketball Association has learned this the hard way over the past two weeks after a seven-word tweet supporting pro-democracy protesters in Hong Kong by the general manager of the Houston Rockets has torn a gash in a billion-dollar relationship. From severed broadcast and sponsorship deals to the canceling of events and the silencing of NBA Commissioner Adam Silver and the members of the Los Angeles Lakers and the Brooklyn Nets during their exhibition trip to their communist trade partner, a glaring spotlight was placed on a league that prides itself on its social awareness and progressive values. What we’ve discovered since the posting and deletion of GM Daryl Morey’s Hong Kong statement roiled the mainland — the Rockets have been China’s adopted “home” team since 7-foot-6 Yao Ming roamed the courts for that team for his entire career — is that the willingness to “speak truth to power” stops for many members of the NBA from its owners to its players where their bank accounts begin. For years, Hollywood has been altering movies and plots to avoid offending the communist censors of China in order to access the population of more than 1.3 billion and its growing middle class. The NBA’s relationship with China has certainly been a more benign one. Sports have long been a unifying force around the world where political differences can be set aside for the common love of a game. Unlike Google or Apple, the NBA’s relationship with China doesn’t contribute to the oppression of the people and a strengthening of the police state. But now that members of the NBA have been asked where they stand, statements have ranged from none at all to the more egregious examples of Golden State coach Steve Kerr using the question to attack gun ownership in the U.S. — nevermind China has the kind of gun control many on the progressive left are seeking — and superstar LeBron James criticizing the timing of Morey’s tweet and his apparent disregard for how it would impact the league financially. President Trump’s two-year trade war with China has had a wide-ranging impact on both nations’ economies, including right here in Alaska with our seafood industry seeing exports fall to what was the state’s No. 1 trade partner. While our Sens. Lisa Murkowski and Dan Sullivan have generally been supportive of Trump’s efforts to end decades of acquiesce to China’s rise, there have also been frequent calls to attempt to hold our industry harmless as this long overdue correction takes place. Even as many companies have begun pulling out of China to avoid tariffs, Alaska’s seafood industry partners — perhaps believing Trump would eventually cave — haven’t followed suit in shifting the reprocessing of state products to other nations. Wall Street rises and falls based on every development in this trade fight with no concern for China’s human rights record so long as global economic growth continues apace. Rebalancing this relationship, and weakening a communist rival who aims to supplant the U.S. and extend its control of free speech around the world through economic means, is vital to our interests. For a nation that has paid vast sums of blood and treasure since its founding to defend these values, temporary economic pain is a bill we must be willing to pay. Inexpensive labor, ticket sales and market access aren’t worth sacrificing the things that make us the freest nation on earth. Just because something is cheap doesn’t mean it won’t come with a huge price. Andrew Jensen can be reached at [email protected]

OPINION: Stop the shenanigans and seat Revak

We are truly through the looking glass in Alaska politics when it is more important to pledge allegiance to Senate President Cathy Giessel than to the laws as written. Gov. Michael J. Dunleavy nominated Rep. Josh Revak on Sept. 27 to fill the Senate seat vacated by the untimely passing of Sen. Chris Birch of District M after six Republican senators led by Giessel voted to reject Rep. Laddie Shaw on Sept. 20. Revak is the other elected Republican from the district and he quickly earned the strong and public endorsements of two-thirds of Alaska’s congressional delegation from his former bosses Rep. Don Young and Sen. Dan Sullivan. The fact that Young and Sullivan chose to weigh in at all on an internal state party matter should not go unnoticed by the Republican senators who shot down Shaw and in particular Giessel, who offered a backhanded slap at the representative who succeeded Birch in a Facebook newsletter video that told viewers in a pathetic defense of their actions their betters in Juneau knew things they don’t about Shaw. “Many times we know these individuals in a way that perhaps you don’t, and that is part of a decision-making process,” Giessel said in perhaps the best unintentional argument against the insularity of Juneau ever uttered. “This Senate Majority caucus is focused on being reasonable, responsible and rational,” Giessel went on, with the obvious implication being that Rep. Shaw was none of those things. Young’s and Sullivan’s statements in support of Revak, a decorated Army veteran who worked for both on veterans’ issues, could not have been more clear: Don’t you dare smear him the way you did to Shaw. Shaw’s great mistakes from the Geissel Six’s perspective were his answers to questions about whether he would follow the law on setting the Permanent Fund dividend and the location of a special session called by the governor. Whether or not Giessel and her gang of 5 choose to acknowledge it, they don’t have a monopoly over the party and the PFD formula and the special session statutes remain on the books. Giessel tried to muddy the waters by claiming that the Legislature was following the law when it set the PFD at $1,300 less than the statutory calculation by pointing to the passage of Senate Bill 26 in 2018 that allows a draw of 5.25 percent of the Permanent Fund’s value to pay for both government services and the dividend. “The law was changed,” she asserted, but then gave up the ghost. “We have competing statutes.” That’s it in a nutshell. SB 26 didn’t amend the PFD formula and she knows it. The Supreme Court has given the Legislature carte blance to ignore the laws they pass and she and her cohort of both Republicans and Democrats are taking full advantage of it. They don’t want to try to pass a law that changes the formula because they either don’t have the votes or they fear a public backlash. They didn’t want to seat Shaw because he believes until the law is changed it should be followed. Giessel’s curt statement acknowledging Revak’s appointment was a sign she’s not planning to give him any more due consideration than she gave Shaw, and that’s a shame. That men of character like Shaw and Revak don’t pass muster with Geissel and her minority of senators says more about her standards than it does about theirs. Andrew Jensen can be reached at [email protected]

OPINION: Attacks on Saudi Arabia highlight importance of Alaska

Oil markets have collectively yawned over the past few months as tensions in the Persian Gulf intensified with attacks on oil tankers and tit-for-tat drone shootdowns by the U.S. and Iran. Just a decade ago, before the U.S. became the No. 1 producer of oil and natural gas on the planet, such events would have sent oil prices soaring but it wasn’t until more than half of Saudi Arabia’s daily output was taken offline by the Sept. 14 attacks alleged to have been carried out with Iran’s backing that we saw the biggest one-day jump ever recorded on Sept. 16. Brent futures, the benchmark that Alaskan oil is priced to, shot up as much as $12 before settling at a one-day increase of $8.80 per barrel. The spike was short-lived as both Brent and West Texas prices dropped by about $5 each the following day. That short decade ago, some half of the U.S. imports of crude came from OPEC nations that largely surround the Persian Gulf. This past March, imports from those same countries fell to just 1.5 million barrels per day, or about 20 percent of our imports, to hit the lowest levels since 1986. In June, a bit more than half of U.S. imports from OPEC nations were delivered to West Coast refineries totaling about 850,000 barrels per day. Total imports to the West Coast were 1.37 million barrels per day. As is generally known, Alaskan North Slope crude oil almost exclusively travels to West Coast refineries, although this year has seen a few million-barrel tankers head to Korea and even China as sanctions waivers ended for seven of Iran’s biggest customers. The attacks on Saudi Arabia are a serious matter and nobody knows how this is going to play out militarily or economically, but we must pause for a moment and recognize the remarkable achievement of American energy dominance that has prevented oil prices from escalating along with the brewing conflict in the Persian Gulf. House Democrats are still trying in vain to stop the development of the Arctic National Wildlife Refuge coastal plain, and failing to do so will rely on their allies in the environmental activist movement to try to stop it through litigation. The hapless Sen. Ed Markey from Massachusetts suggested we should restore the ban on crude oil exports even though the repeal engineered by Sen. Lisa Murkowski in 2015 is a major factor mitigating the volatile price swings we’ve seen all too often in the past amid similar events. The only estimate we have of the potential oil resource in ANWR dates to the surveys conducted in the 1980s that settled on a mean total of more than 9 billion barrels, or roughly similar to the first guess at nearby Prudhoe Bay, which has now produced more than 13 billion barrels. A field that size could produce 1 million barrels per day. Combined with the projects in permitting at Pikka and Willow, the three fields alone could replace every barrel now being imported by the West Coast with ANWR itself having the ability to erase OPEC shipments entirely. From mocking “Drill, baby, drill” to declaring Alaska at the end of its run as an oil-based economy, Democrats have been wrong at every turn when it comes to energy policy and now is no different. Alaska could make the West Coast import independent and fill our pipeline at the same time. The only problem is that it makes too much sense. Andrew Jensen can be reached at [email protected]

OPINION: BP hands off Prudhoe Bay to a hungry wolf in Hilcorp

A hungry wolf runs faster, and that means Prudhoe Bay should be in good hands with Hilcorp. The long-rumored blockbuster deal finally announced on Aug. 27 marks a historic transition for the largest North American oil field ever discovered as pioneering Alaska producer BP is exiting the state in a $5.6 billion asset sale. BP leaves huge shoes to fill, not only from its 60-year presence on the North Slope where it has helped produce more than 13 billion barrels of oil to far exceed the original estimates of less than 10 billion, but also from its community presence of active employees and millions upon millions in charitable donations. Hilcorp was named No. 20 on Fortune’s Best Places to Work in 2015, one of many such lists it regularly appears upon (although one can wonder how a company that paid all of its 1,400 employees $100,000 bonuses that year could possibly not be No. 1). There will no doubt be transition and turmoil for BP’s employees and the thousands of jobs tied to contractors, suppliers and the indirect impacts of its payroll across Alaska. But ultimately it must be kept in mind that this was inevitable and despite the unraveled recent mantra from BP about “40 more years” in Alaska, the company is handing off an asset it has spent the past several years revitalizing from years of annual decline averaging around 5 percent or more. BP Alaska President Janet Weiss shaved her long locks in early 2018 after losing a friendly bet with her employees that they could hold production from Prudhoe Bay steady, which they did over three straight years from 2015-17 at about 280,000 barrels per day thanks to record amounts of drilling and well workovers even as prices sank to as little as $26 per barrel in early 2016. Whether in anticipation of this sale or not, BP conducted a 400-square mile seismic shoot over the entirety of the Prudhoe Bay field this past winter and the results must have been encouraging enough to cement Hilcorp’s and its financiers’ willingness to execute the biggest transaction in Alaska’s history. BP personnel have stated they believe there is another billion barrels of recoverable oil at Prudhoe Bay and they praised Hilcorp’s ability to squeeze more oil out of aging fields as demonstrated at assets the Houston-based company acquired from BP in 2014. That capability not only impressed BP, but it had to have earned the trust of fellow Prudhoe Bay working interest owners ConocoPhillips and ExxonMobil, who would have had to sign off on a transaction that makes Hilcorp the operator and guardian of their still large financial interests on the North Slope. Southcentral Alaska can also thank Hilcorp for turning around the aging and neglected assets of Marathon and Chevron after it entered the state with its first purchases back in 2012. That was not long after the Cook Inlet Recovery Act passed the Legislature unanimously in 2010 amid widespread fears of looming natural gas shortages, and should remind us that the tax credit incentive programs the state enacted with diminishing production both on the Slope and the Inlet worked despite the fact they came under fire and were ended during the recent budget deficits. Hilcorp drew unwanted attention for a natural gas leak in 2017 from an old Cook Inlet pipeline cracked by a rolling boulder, but it should have earned more praise for spending $90 million to build a new subsea oil transportation system long sought by environmental groups and the Regional Citizens’ Advisory Council to drastically reduce tanker traffic and mothball the oil storage farm in the shadow of the Mt. Redoubt volcano on the west side of the Inlet. The purchase of Prudhoe and the rest of BP’s assets brings Hilcorp’s total investment in the state to about $10 billion over the past seven years, and it stands to spend billions more to recoup those investments including building the offshore Liberty project that could add 70,000 barrels per day to the pipeline it now owns half of. With ConocoPhillips and Oil Search also in the midst of permitting massive projects with six-figure per day production estimates and multi-billion dollar price tags, this should also serve as a red flag to those who would like nothing more than to raise taxes by a billion or more per year. Now is not the time to shoot the wolves just as they are hunting the state’s dinner. Andrew Jensen can be reached at [email protected]

OPINION: Of ants and grasshoppers

Winter is coming, and the grasshoppers are knocking on the ants’ door once more. A two-page rewrite of the production tax code was filed as a voter initiative on Aug. 16 by the usual suspects made up of former Gov. Bill Walker’s anti-oil buddies Robin Brena and Merrick Peirce, Walker’s Tax Division director Ken Alper and one-note Democrat fiddle players Sen. Bill Wielechowski and former Sen. Joe Paskvan. Singing the tired old song of “Alaska’s Fair Share” that could be covered as Disney’s “The World Owes Me a Living,” the group is promising its measure would tax the producers by at least an extra $1 billion per year, or nearly a 40 percent increase over the approximately $2.6 billion they paid in the just completed 2019 fiscal year. To put that in context of North Slope operations, $1 billion is roughly what ConocoPhillips spent to build Greater Mooses Tooth-1, which started producing last fall, and another $1 billion is what it is spending right now to build the sister project GMT-2 scheduled to start producing this winter. According to ConocoPhillips’ most recent second quarter financial report, the company’s Alaska profits so far this year have been matched nearly dollar-for-dollar on what it is spending to bring GMT-2 online in addition to ongoing exploration work at the nearby Willow discovery that has the potential to produce 100,000 barrels per day or more and will cost several billion dollars to construct. Rather than work to get Alaska’s own financial house in order, this short-sighted grasshopper coalition is aiming to tax the stores of the North Slope ants and gorge itself on the future. Like Aesop’s fabled layabout, the state strummed away its savings over the past five years instead of reforming the budget. Inspired by Walker and his vetoes of tax credit payments and the Permanent Fund dividend, the Legislature followed suit time and again to solve its cash flow problems not through structural changes but by simply not paying the bills. Enabled by the Supreme Court decision that it could ignore the PFD formula, the Legislature’s failure to address the issue has poisoned the budget process as its members pick and choose which laws to follow. The failure to pay the tax credits forced Caelus Energy to sell out to the majors and helped send Furie Operating Alaska into bankruptcy. While the major producers were losing billions of dollars from their upstream operations, they did not come to the state asking for a cut in the gross minimum tax or relief from their royalty payments. Instead they worked to find efficiencies. ConocoPhillips slashed its dividend by two-thirds to save cash. They not only kept producing oil but increased throughput while at the bottom of the price trough. And, finally, they kept exploring, invested billions of dollars with scant available capital to bring new projects online and made major discoveries that promise to add hundreds of thousands of barrels to the pipeline in the near future. For all that foresight and prudence, their reward after absorbing years of losses is only to have the grasshoppers come calling with demands for another billion dollars per year. In the original version of Aesop’s fable, the ants tell the grasshopper to go dance the winter away. In Disney’s Silly Symphony adaptation, the ants take pity on the irresponsible grasshopper and after he is nursed back to health he changes his tune. After bailing out the state for years with no corresponding sign that any lessons have been learned, the ants have every right to tell Brena, Wielechowski and the rest of the grasshopper gang to grab their fiddles and get to steppin’. Andrew Jensen can be reached at [email protected]

OPINION: Sound and fury with no assembly required

About the only good thing to say about the ongoing effort to recall Gov. Michael J. Dunleavy is that at least it won’t cost as much as the Mueller Report. In the end, though, it will end up being just as effective at reversing the outcome of an election. The opponents of the governor launched their effort on Aug. 1 to much fanfare and media coverage highlighted by a rally at Cuddy Park in Anchorage where a couple hundred people gathered just steps away from homeless camps as Democrat Rep. Ivy Spohnholz egged on the crowd with her fist raised like John Carlos and Tommie Smith. Lost in the excitement was much, if any, of a critical look at not only the high legal hurdles to overcome but the more relevant length of time this pointless fight is going to take. First, the recall pushers have to gather some 28,000 legitimate signatures to even deliver the petition to Lt. Gov. Kevin Meyer, who oversees the Division of Elections and is required to make the call on whether it passes legal muster. Meyer will rely on the advice of Attorney General Kevin Clarkson in deciding whether to certify the petition, with the odds of a positive recommendation somewhere in the neighborhood of President Donald Trump appointing Rosie O’Donnell as chief of staff. Once Meyer denies the petition for lack of meeting the legal standard for recall, the battle will move on to Superior Court with the losing party in that venue sure to appeal to the state Supreme Court. Should the Superior Court ruling go in the recall petitioners’ favor, they will be allowed to begin gathering the more than 71,000 signatures needed for a special election while the appeal is pending. Should it not, they won’t be able to start unless they ultimately prevail at the Supreme Court. Recent history on two high-profile cases that reached the Supreme Court show that even in an expedited timeframe the entire process would take nearly a year if not more to be resolved. When Sen. Bill Wielechowski, D-Anchorage, sued former Gov. Bill Walker in September 2016 for vetoing half of the Permanent Fund dividend, it was not until August 2017 that the Supreme Court issued its decision in favor of Walker. After former Lt. Gov. Byron Mallott denied the Stand for Salmon initiative from the ballot in September 2017 and was subsequently challenged in court, it was not until August 2018 that the final ruling was made. To think a case as monumental as the recall of a governor would take any less time is wishful thinking. As the petitioners note in their legal analysis, no recall petition against a statewide official has ever been certified in Alaska. Presuming the petitioners gather enough signatures in the next month or so, and they said they got to 18,000 within the first week, it likely won’t be until the fall until Meyer makes his decision and kicks off the court fight. Further presuming at least a year to receive a ruling from the Supreme Court, the soonest a recall election could take place would be sometime in early or mid-2021 depending on whether they are allowed to gather signatures while the appeal is pending based on how the Superior Court decides. That would be just more than a year away from the regularly scheduled gubernatorial election in 2022. Now we have entered the be-careful-what-you-wish-for stage of the recall effort for the petitioners. Should everything somehow go their way, a recall election is held and they are successful in giving Dunleavy the boot, they will have only succeeded in elevating Meyer to the governor’s office. Giving him more than a year to govern, including a legislative session, would provide Meyer an opportunity to present himself as a reasonable and drama-free Republican alternative much in the way the low-key former Gov. Sean Parnell benefited from simply not being Gov. Sarah Palin after her abrupt resignation in summer 2009 and he easily won election in his own right in 2010. That isn’t going to help Democrats win a statewide office for the first time since Mark Begich squeaked out a win over the unjustly convicted late Sen. Ted Stevens in 2008. Legal process aside, the recall petition itself is as thin as the paper it’s printed on even as the authors throw as much spaghetti at the wall as possible hoping just one piece sticks. When the top arguments by their own admission are Dunleavy’s failure to appoint a judge to the Palmer Superior Court within 45 days (he eventually did) and their unproven allegations of campaign finance disclosure violations, even they know they are throwing a Hail Mary hoping for a judicial miracle. If failure to follow a statute (cough, PFD formula, cough) and APOC violations are grounds for recall, then there are a lot of legislators who should be sweating. Further, the allegation of “incompetence” for an admitted error in a Medicaid funding veto is laughable. While the habitual rake-stepping of this administration has been described in this space as incompetent, that is not the legal standard for a recall. The petitioners even acknowledge this in their legal memo with the admission that the legal standard is “lack of ability to perform the official’s required duties,” which refers to situations such as medical incapacity. The leaders of this effort likely know all of this and understand the real purpose is to gin up enthusiasm for the 2020 legislative races. Those who actually believe this is going to work may also be interested in buying a bridge to Gravina Island. Andrew Jensen can be reached at [email protected]

OPINION: The messianic arrogance of isolation

“Any Given Sunday” doesn’t seem like Gov. Michael J. Dunleavy’s kind of movie, but Oliver Stone’s outlandish take on pro football does have its moments of profundity. Late in the film after a game when his offensive line allowed him to take a beating over his bigshot attitude, quarterback “Steamin” Willie Beamen walks into the sauna occupied only by linebacker Luther “Shark” Lavay. “Yeah, you led,” Lavay says. “But did anybody follow?” The question, like most are when the answer is obvious, was purely rhetorical. Dunleavy’s support has shriveled in the Legislature to a handful of members mostly from the Valley while traditional Republican Party allies across the business community have either refused to defend him or have directly come out against his vetoes and the House minority holding the capital budget hostage in exchange for a statutory PFD. Dunleavy has led. But how many are still following as he stakes his office on a minority of legislators barely large enough to sustain his vetoes and the oftentimes hateful rhetoric of his PFD-or-bust base in the Valley? Rather than recognize the lack of support for his proposals as evidence of a need to change course, Dunleavy has chosen the path of Valley Rep. David Eastman, who also arrogantly takes his isolation as a badge of honor and proof of his messianic righteousness. Instead of attempting to be a governor for all of Alaska, Dunleavy has chosen to be the governor of District E. This outcome is what many who supported Dunleavy feared when he hired former Republican Party Chairman Tuckerman Babock as chief of staff cum wartime consigliere. And, not to belabor the references to movies starring Al Pacino, he has not governed like the cool-headed and savvy Michael Corleone but as a combination of Sonny and Fredo mixing vindictiveness with incompetence. Dunleavy’s single-minded focus on a $3,000 PFD has leveled the once high ground of sustainable budgeting and respect for the rule of law with his vetoes ranging from punitive to petty to preposterous. Not that the legislative leadership is blameless. Far from it. The aimless stewards of the House allowed the PFD issue to fester for months rather than addressing it or showing even a modicum of respect for the minority members whose votes they now need to fund the capital budget and overturn some or all of Dunleavy’s vetoes. The Senate is led by Cathy Giessel, who was perfectly willing to run on a full PFD with back payments when she faced a tough reelection battle in 2016. “There’s a difference between looking at options and grabbing someone else’s money,” Giessel told the camera in a video that is still live on her 2016 reelection Facebook page. “That’s what Gov. Walker did. He grabbed your money. That money grab didn’t solve anything. A money grab is not a solution. “Sen. Mike Dunleavy is proposing a solution that would give that money back to you. I support that solution and we’ll be working with him in January to see that done. You see, you deserve to have that money back. Alaska deserves a real solution to the budget crisis.” Alaska’s budget situation wasn’t any better in 2016 than it is now — in fact it was worse — but Giessel has done a complete 180 on what she successfully ran on just three years ago. In that regard, Dunleavy deserves credit for trying to deliver what he promised. But in reality the state is not with him as measured by the best possible indicator, which are the votes cast in the Legislature that he has been on the wrong side of all year. Dunleavy could have introduced a sensible four-year plan to gradually reduce government spending to sustainable levels but he blew his chance for real budget reform when he attempted it all in one bite and in such draconian fashion that he spawned the bipartisan majority in the House that has frustrated him at every turn. It’s been written in this space that the PFD is not a suicide pact, but right now Dunleavy and Babcock are mixing the punch with their Valley cohort and intending to force it down everyone’s throats if they don’t get what they want in spite of their lack of popular support. Time is running out for a compromise with the least fortunate among us being turned out to the streets and the University of Alaska declaring the equivalent of bankruptcy a month away from the fall semester. Dunleavy and his dwindling number of allies would do well to remember one more line from “Any Given Sunday” delivered by Pacino’s Coach Tony D’Amato to his players facing one last shot to keep their season alive: “Either we heal now, as a team, or we will die as individuals.” Andrew Jensen can be reached at [email protected]

OPINION: Ignoring session call latest offense for a scofflaw Legislature

The zombie legislative session that will not sine die staggers on aimlessly, consuming the brains of anyone trying to make sense of what’s going on and swallowing the souls of those still naïve enough to believe in following the laws as written. In the latest escalation of a race to the bottom, Senate President Cathy Giessel and House Speaker Bryce Edgmon have thumbed their noses at Gov. Michael J. Dunleavy’s call to a special session in Wasilla to decide the fate of the Permanent Fund dividend despite admittedly not having the votes to call themselves to Juneau. A great irony of the 31st Legislature will be going down in history as one that managed to pass a new tough-on-crime bill while simultaneously breaking as many laws as possible. The 90-day time limit on legislative sessions approved by voters? Pffft. The 35-year-old statutory formula for calculating the PFD? Yeah, right. No per diem without an operating budget? We didn’t really mean that. The law says the governor can choose the site of a special session? We. Don’t. Care. Most galling of all is that when the leaders of the Legislature decide to ignore a law they hide under the claim of constitutionality. Sometimes they don’t even bother going that far. “It’s a gray area,” Edgmon told James Brooks of the Anchorage Daily News about the leadership’s authority to ignore the governor’s call, but they plan to conduct some mutant combination of floor sessions in Juneau and committee hearings in Anchorage anyway. These leaders would be a lot more credible when it comes to defending their turf if they’d shown any competence at doing their jobs or a bare minimum respect for the laws they’ve passed. Instead, the scofflaws have only been emboldened over the past four years after escaping any repercussions for skipping out on their lease at the Downtown Anchorage Legislative Information Office under the guise of the “subject to appropriation” clause. The result of that decision is that the Legislature has spent $24 million on the Wells Fargo bank-turned-LIO but still has no place to actually conduct a special session in a single building on the road system. Many people cheered that decision to abscond from the Downtown office and leave the owners to face foreclosure on a $28 million loan taken out on the faith and credit of the Legislature, and likewise approved of the subsequent refusal of former Gov. Bill Walker to fully pay off the year’s balance of refundable oil tax credits without any warning to banks or the industry. The owners knew what they were doing, some argued. The companies knew the terms, some excused. Now some of these same folks are squealing about not following laws governing the PFD or per diem. Only now do they realize that just because something is legal doesn’t make it right. Only now may they realize that the decision to take the easy way out on the Anchorage LIO without really saving any money was the gateway drug to funding government by cutting the PFD. Once the Supreme Court enabled the Legislature to ignore its formula on the PFD, it has been a free-for-all on gimmicks and budget shortcuts and disregard for the law, even those that are barely a year old. Their “solution” to the tax credit liabilities ran afoul of constitutional questions and is headed for the Supreme Court. So is their claim about the legality of forward “funding” of education without actually funding it and their assertion that they don’t have to convene a session according to the governor’s call. Perhaps it’s only fitting that the Legislature keeps getting dragged into court. That’s where most scofflaws eventually end up. Andrew Jensen can be reached at [email protected]

A bull’s eye on Alaska

With more than $4.5 billion in assets under management from offices on the 11th floor of the JL Tower that feature panoramic views of spectacular Alaska scenery, staying focused on the big picture comes naturally to McKinley Capital Management CEO Rob Gillam. Taking the long view is also a family tradition. Gillam, 47, took over as CEO on Oct. 1, 2018, just a couple weeks after his father and firm founder Bob Gillam passed away on Sept. 12 after suffering a stroke at age 72. Gillam took a lot of advice from his father over the years, and the final piece he received over a lunch stands out. “He looked at me and said, ‘Remember, in life and in business when you sit in this chair: don’t fly too low. Get out of the weeds and look up,’” Gillam recalled during an April 26 interview. “That was his message and I think every Alaskan should remember that.” Gillam is a relatively rare breed in Alaska these days as the state is still climbing out of a three-year recession brought on by the 2015 crash in oil prices while the Legislature and Gov. Michael J. Dunleavy are locked in high-stakes battles over the Permanent Fund dividend, education funding and the size of government spending. Gillam is, unabashedly, a bull on Alaska. “People are depressed because they’re looking this far out,” he said, holding his hand near his face. “And don’t get me wrong, I get it. If it’s your job that’s at risk based on a budget, I’m not saying that’s not scary. What I’m saying is we live in a resilient place, and if you look this far out (extending his arm), it’s a very different picture. “We have the ingredients that most of the world wants. We have natural resources, beautiful scenery, infrastructure opportunities, business opportunities. Any time you’re from a place where more people come to visit, by a multiple, than the number of people who live there, you need to remember we have something here. I think as Alaskans we can get a little too provincial and we forget to look up.” That message is one Gillam wants to share as he leads what he has dubbed “McKinley 2.0,” building on his father’s work but also taking his own path. Just sitting down for an extended interview is a major departure from his father, who Gillam described as “notoriously press shy.” “I am really proud of what we’ve accomplished,” he said. “I’m proud to be Alaskan. When I travel around the world they don’t even remember my name. I’m just ‘Mr. Alaska.’ The guy who owns the hotel I stay at in Manhattan just calls me ‘Alaska,’ ‘hey, Alaska.’ “I want my people to feel that way. I want Alaska to feel that way. I want our customers to feel that way. They should be really proud. I am. The more places I can tell that story, I’ll tell that story.” The story of McKinley Capital Management — a homegrown entrepreneur who didn’t believe in “no” and overcame every disadvantage of time and space to build a powerhouse asset management firm — is pure pioneer Alaska. “When he founded McKinley there was no such thing as an asset management firm in Alaska,” Gillam said. “It didn’t exist, and it was hard to do from a technology standpoint. It was hard to do because it was remote. But he never let ‘no’ deter him.” For Gillam, who started working for his father in 1995 and led the creation of its international strategies arm after following in his footsteps at the prestigious Wharton School at the University of Pennsylvania, the story is also far from over. Driven by digital Nothing has changed the world more than technology in the nearly 30 years since Bob Gillam founded McKinley Capital Management in 1990, and the firm is no exception. In fact, Gillam’s team has become world leaders in harnessing the power of artificial intelligence in asset management. With offices in Anchorage, Chicago, New York and most recently Abu Dhabi, Gillam is captain of a team of about 45 that also includes a scientific advisory board headed by 1990 Nobel Prize winner in economics Dr. Harry Markowitz. Differences in time zones and limited computing power were once hurdles for McKinley. In a firm now firmly focused on a worldwide investing strategy, time and technology are its biggest strengths. “My dad founded an asset fund. Today I run a technology fund,” Gillam said. “My dad founded a firm in Alaska, from Alaska. I founded a firm that chooses to be in Alaska. Because I can do what I do anywhere.” Once solely invested in U.S. equities with individual clients, Gillam recounted how it used to take an entire weekend to perform the analytics on the 1,300 or so stocks McKinley covered. Now with the vast majority of its portfolio invested around the world and huge institutional clients that have included the Alaska Permanent Fund Corp. for 22 years, the firm is covering more than 50,000 stocks in 105 countries. “We never knew anything other than technology to do what we do,” Gillam said. “Traditionally money mangers would travel the world, meet with management teams, do that sort of old school analysis. That wasn’t our way. It couldn’t be our way. So we’re not in the disadvantaged position a lot of money managers are today in having to retool what they do. “We were plumbed that way from the start.” Utilizing incredible computing power and machine learning algorithms, McKinley vacuums up information from around the world from analyst calls, financial reports and other text sources using data scraping methods and a custom built platform that also have to account for different currencies, languages and accounting standards. “We make billions of calculations every day and we do it in tenths of a second,” Gillam said. “The scale is astronomical.” His team is made up of both the traditional financial analysts and computer scientists drawn from the U.S., the world and the University of Alaska Fairbanks and UA Anchorage. “We have code writers from Indonesia, from China, from all over the place, and from UAF,” Gillam said. “We are an equal opportunity skill set. You bring the skills, we don’t care if you’re from Mars. “The good news is that math doesn’t need translation.” Gillam is solidifying McKinley as an Alaska firm that is bullish on the state’s future with the May 23 announcement the company has formed an academic partnership with the University of Alaska Lab for Data Science and Artificial Intelligence. According to the announcement, the partnership will include students and interns, and McKinley is building out an area of its Anchorage headquarters where students will be able to study and work on AI and data science projects. “Our goal with students is to help develop their skills, oversee their senior projects where appropriate, and collaborate with staff on research across the spectrum of AI-related projects,” Gillam said. “We value the university and its dedication to student learning. As a company, we want to invest in our community’s most critical assets: the students and the youth of Alaska who are our future. This partnership allows us to provide UA students a place where they can apply their talent and create a future for themselves. It’s a really exciting partnership for us.” UA President Jim Johnsen called the McKinley partnership an “amazing opportunity.” “This agreement with McKinley Capital represents our commitment to solving the challenges of our private sector partners, and meeting the needs of our state,” Johnsen said. So while McKinley continues to scour the globe for growth opportunities, it hopes to find the future of the firm in its own backyard. “We have a lot of big dreams in Alaska and people who have the ability to turn them into reality should,” Gillam said. “We have a role to play in there and there’s other great players in the state we can do that alongside, and we’re happy to do it.” As for the growth in artificial intelligence as a tool, Gillam doesn’t believe it can ever replace the humans who create it. “One of the things I told the students over there (at UAA) was that ‘artificial intelligence is long on artificial and short on intelligence. Don’t think the bots are coming to take everybody’s job any time soon.’ “Having said that, we all know that when we get on a plane a computer does most of the flying. We also know none of us would get on if there wasn’t a pilot. That’s a good way to think about the interchange.” Gunning for growth The use of AI as a financial tool is critical for McKinley’s effort to find the best growth opportunities around the world. Its joint venture office in Abu Dhabi opened in December 2017 as the firm launched its “Middle East, Africa and South Asia” strategy in the second quarter of 2018. McKinley sees huge potential in the region that has 44 percent of the world’s population and 8 of the top 10 fastest-growing economies while accounting for just 5 percent of total global market capitalization. But just as investors seek a return, many McKinley clients also want their money to work for companies that are responsible citizens. The creation of its “Environmental, Social, Governance” strategy came in response to customer requests — its first ESG client was a large Dutch company that invested a half-billion dollars with McKinley — and now other factors than simply financial performance can be calculated. “It’s hard to find fast growing companies in Ghana from Alaska. It’s hard to find fast-growing companies in Kuwait from Alaska unless you have the computational power,” Gillam said. “Once we find those companies, we have to decide what companies we want to have in that fast growing set that don’t pollute the environment, ones that don’t lie, cheat and steal. We want ones that are good to the communities in which they live and work. It’s an over and above good characteristics. “We have a fiduciary responsibility to build a portfolio with the best return for the amount of risk that we can. That governs everything we do. If, on top of that, we can encourage good behavior, of course we’re going to do that.” Creating custom products such as the ESG strategy based not only on generating a return but aligning with the values of the client is the fastest-growing category at McKinley, Gillam said. “At the end of the day, we have to give people peace of mind,” he said. “That’s our job.” Generating consistent returns has given clients a lot of peace of mind. According to Gillam, the various portfolios dating back to 1990 have made both positive absolute returns and positive returns relative to benchmarks. “We remain focused on systematically searching the world for the best growth opportunities and are proud to work with clients from around the world that range from large global companies, cities and/or states, sovereign wealth funds, foundations and private clients,” he said. “While we have three other offices outside of Alaska, we are proud to play a role in helping our customers from our office right here in Alaska.” ‘Brand Alaska’ Gillam and his wife Stacia made an investment in the state just as the recession was taking hold back in 2015 with their purchase of Alaska Glacier Products, a bottled water sourced from the Eklutna Glacier just north of Anchorage that provides the city’s water supply. The company has since won several international taste awards and Stacia Gillam is still the chair of the company. “We call those ‘brand Alaska’ transactions,” Gillam said. “It turns out that a lot of people think we’re cool and have a really cool lifestyle. Turns out they are right. On top of that, we have really amazing quality. The reality is we have some of the best water in the world, right out here. “What we realized was here was an opportunity to invest in a company that is brand Alaska, which we believe in, that can create jobs, and when we bought the company when jobs were shrinking there weren’t a lot of manufacturing jobs in the state. Every ship that goes out of the Port of Alaska is empty; we could put something on it. The world wants what we want and lets give it to them. It was a neat deal and a good investment.” “Brand Alaska” encapsulates McKinley’s DNA, and Gillam’s thoughts on the Pebble mine, which his father was as well-known for vigorously opposing as he was for being named the richest man in the state by Forbes. Rob Gillam said it’s time for the leaders of the opposition aided by his father to take the lead in the fight, but his opinion is no different when it comes to Pebble. “I absolutely oppose the Pebble mine,” he said. “It’s not a good thing. But I have a little different perspective on it. It’s just a math question. You have one resource that is perpetual, that is already generating income for generations that goes on forever, and one that is finite. So do the math. It’s a net present value calculation. “To me it is pretty easy. Every person in Alaska should pay attention to this; 58 percent of our wild salmon comes from one place. How’s our branding going to be if we have an ‘oops’?” “The other thing that is important, is that there is nothing wrong with mining. Alaska has been built on that. There’s just some places you don’t want to do it, and that’s one of those places.” A passion for Alaska was the driving force behind Bob Gillam’s efforts to conserve Bristol Bay and to keep McKinley a quintessential Alaska-grown company; the same passion for the state is driving his son to leverage its success for the benefit of Alaska as a whole. “I hope McKinley, the new McKinley, can pave a little bit of the path to the opportunities in Alaska,” he said. “I think they’re pretty huge. “My family has been in Alaska for almost 100 years. The one thing that has never changed about Alaska is the DNA of the people here. You can call it the pioneer spirit, the frontier spirit. You have a lot of people who are creative, who are sturdy, who are ambitious, who are self-sufficient, who figured out how to make a whole lot of something out of where there was nothing. That personality still exists.” Spoken like a true Alaska bull. Andrew Jensen can be reached at [email protected]

OPINION: Legislature should drop pointless education fight

In a rare display of bipartisan and bicameral unity, the leadership of the Alaska House and Senate took a break from not accomplishing anything to hold a press conference on May 28 announcing their intent to sue Gov. Michael J. Dunleavy if he follows through on his belief that the Legislature has not properly funded K-12 education for the 2020 fiscal year that begins July 1. Dunleavy, backed by a legal opinion from Attorney General Kevin Clarkson, has asserted that the Legislature’s attempt to “forward fund” education in a bill passed in 2018 is unconstitutional as an improper dedication of funds and an end-run around his line-item veto authority. Having repeatedly failed to accomplish its One Job of passing a budget within the time constraints of a regular session and triggering layoff notices from school districts who require funding certainty, the Legislature passed House Bill 287 that paid for K-12 education in fiscal year 2019 and called for an equal appropriation to be made in the 2020 fiscal year. The problem with that, Dunleavy’s administration argues, is that the Legislature appropriated money it doesn’t yet have in the General Fund, and therefore it is a dedication of funds prohibited by the state Constitution, and by doing so it robs him of his authority to veto spending in the upcoming fiscal year. There is certainly no question that the Alaska constitution created a powerful executive branch, particularly in regards to spending. A two-thirds vote is required to override a veto on regular legislation, but a three-fourths majority is necessary to override a veto on spending. While Clarkson has released a nine-page memo defending the administration’s position, the Legislature has not offered any similar legal analysis backing up its assertion of power other than an argument that boils down to “we say we can.” Perhaps emboldened by the Supreme Court decision in the lawsuit over former Gov. Bill Walker’s 2016 veto of half of the Permanent Fund dividend appropriation that gave legislators carte blanche to ignore the laws they have passed, they may now similarly believe they can usurp the governor’s constitutional role in the budget process. Taking the Legislature’s assertion of forward funding power to a logical conclusion, they could have passed a 10- or 20- or 100-year education funding bill and as long as lawmakers never touch the bill they could put a billion-plus dollar budget item on autopilot and outside the reach of Dunleavy or any future governor. That’s going to be a tough argument to make at the Supreme Court, and despite their protestations to the contrary, this is not a settled legal issue. The administration’s position is not unreasonable, though if it comes to it and he follows the AG’s opinion and does not transfer funds after July 1 it will surely be portrayed that way. The Department of Law attorneys who testified told the Legislature had the money been called for to be appropriated in the current year on June 30 they would regard it as legal. Similarly, had the Legislature appropriated money from a fund that actually has money such as the Permanent Fund Earnings Reserve Account, the administration has stated that, too, would be legal. House Bill 287 did neither of those things. It appropriates money not yet in the Treasury and calls for it in a future fiscal year, which certainly raises the dedicated funds issue. Dunleavy has promised not to veto education funding if the Legislature puts language in the current budget; he would fail even if he tried as the House Minority Republicans already called for status quo K-12 funding that would be enough to override his red pen. The legislators who support HB 287 said they did it to ensure stability for school districts, but their decision to dig in over an untested power is only causing more disruption. With far bigger problems to address regarding unsustainable spending and the dividend, their refusal to abide Dunleavy on this issue and thus guarantee K-12 funding for the upcoming year shows they are actually more concerned with defending their turf than they are in preventing pink slips from going out. Andrew Jensen can be reached at [email protected]

OPINION: Anchorage digs into couch cushions for camp cleanup

“Budgets reflect values” is a popular axiom of those who believe in government solutions to society’s problems, but whether that is true or not, budgets certainly reflect priorities. In that respect, the Anchorage Assembly can hardly claim that addressing the city’s homeless crisis has been reflected in the budgets it has approved over the last several years. The 2016 budget, for example, listed as a goal to “Eradicate homelessness and improve the health of the community.” The main source of funding that year was a one-time federal grant of about $425,000 from Housing and Urban Development. In 2017, the “Eradicate homelessness” goal appeared again, this time funded by about $339,000 in HUD grants. The 2018 municipal budget for homelessness initiatives was $500,000 between grants and matching funds. For the 2019 budget, with the Assembly and Mayor Ethan Berkowitz lobbying hard for voters to approve a 5 percent alcohol tax, once again a mere half-million dollars was appropriated split between $350,000 for homeless initiatives and another $150,000 for illegal camp cleanups. After voters rejected the tax and its supporting campaign of singling out a group of people and one industry as the most politically-expedient target for generating revenue, the Assembly has dug into the couch cushions to find another $355,000 to put toward homeless initiatives with $185,000 for the overflow shelter and an extra $150,000 for illegal camp cleanup. With about $855,000 now earmarked this fiscal year for homeless initiatives and illegal camp abatement, that represents a whopping 0.16 percent of the municipal budget of some $526 million. The total budget for illegal camp removal represents five one-hundredths of a percent of the budget. A charitable view of the budget would be that the municipality simply lacks the resources to deal with the homeless crisis absent a new source of revenue. A cynical view would be that the municipal government is using its failure to deal with illegal campsites as leverage over the taxpayers to compel them into voting for higher taxes. Much like the deteriorating homeless situations in Seattle, San Francisco and Los Angeles, the Anchorage greenbelts did not turn into Sherwood Forest overnight. Busy intersections littered by trash and the occasional piece of furniture did not spring out of thin air. Rather, the cruelty of compassion and misguided tolerance over many years has allowed this takeover of our public spaces at the expense of safety and the rights of the law-abiding to freely enjoy a city with another stated goal to be the best place to live in America by 2025. Instead, we have resources being dedicated to creating a 106-page “climate action plan” that won’t make a speck of difference in global temperatures even if the municipality took its carbon footprint to zero. Also coming down the pike this fall is the implementation of the plastic bag ban in another all-time great example of virtue signaling with no discernable benefit. If the plastic crusaders were truly concerned about waste entering our oceans, they would make it a priority to address the mountains of trash along the greenbelts of Anchorage creeks that flow into Cook Inlet and eventually the Pacific Ocean. If the mayor and Assembly want money for a new shelter, they should put it on the ballot along with all their other capital projects like schools or fire stations. If they want people to trust them with up to $15 million per year in new revenue, they should put a sunset clause on it as an incentive — and a promise — to deliver results. But what they should stop doing is pretending they are doing everything they can when the budgets they approve say something far different. Andrew Jensen can be reached at [email protected]

OPINION: RIP, ‘Paid for by ConocoPhillips’

In a little-noticed post mortem to the Stand for Salmon initiative battle last fall, the Alaska Public Offices Commission issued a ruling that will serve to limit transparency in campaign financing for future ballot measures. APOC ruled Feb. 4 on a complaint filed last September by the initiative opponents, Stand for Alaska-Vote No on 1, against three entities supporting the measure: Yes for Salmon-Vote Yes on 1, The Alaska Center and Stand for Salmon. In addition to violations of naming regulations and rules for financial disclosures known as the “paid for by” statements, the opponents’ complaint alleged that the latter two initiative proponents should have registered as a group based on their close coordination and should have also been required to disclose the source of hundreds of thousands of dollars in campaign expenditures above and beyond what they reported in donations. If you’re interested in the more arcane legal arguments over what constitutes a “group” or an “individual” or the more common decisions on “paid for” statements and naming rules, the APOC complaint documents and final order are on its website (complaint 18-08). We’ll focus on how APOC’s ruling on financial disclosures figures to upend the state’s goal of transparency in campaign spending. For quick background, Stand for Salmon and The Alaska Center were formed in 2013 and 1990, respectively, while the Yes for Salmon group was formed and registered with APOC in 2017 for the specific purpose of backing Ballot Measure 1 in the 2018 general election. The Stand for Alaska complaint focused on its calculations that The Alaska Center reported making contributions to the campaign in excess of $500,000 while reporting donations of about $234,000. Similarly, Stand for Salmon reported spending more than $400,000 while receiving about $181,000 in contributions, according to the opponents’ calculations that were mostly undisputed other than the supporters claiming that they over-reported the amount of donations they received to back the initiative. All in all, about $730,000 of the $1.1 million in reported contributions to Yes for Salmon, the official group registered with APOC to support the initiative, were classified as “non-monetary” with the top donors being The Alaska Center at $357,000 and the Washington, D.C.-based New Venture Fund that paid the salary of campaign manager Ryan Schryver with a total “non-monetary” contribution of $227,000. Stand for Alaska objected to this arrangement, arguing that Yes for Salmon was nothing more than a shell organization and that the campaign was actually being run by Stand for Salmon and The Alaska Center who were clearly expending more than they were collecting without having to report the source of the money. As was previously written in this space, groups like The Alaska Center, Cook Inletkeeper, Trustees for Alaska, Salmon State, and others are heavily supported by nonprofit advocacy groups based outside of Alaska. There isn’t anything wrong with that, but these same groups regularly run their campaigns — and this one was no different — attacking “foreign” oil and mining companies as heartless ravagers of the resource whose arguments should be discounted as Outsiders despite having thousands of employees and billions of dollars invested over decades in Alaska. Whether it was the 2014 campaign to uphold the 2013 oil tax reform legislation or the most recent salmon habitat initiative, the resource companies have erred on the side of transparency no matter how self-serving it looked politically. In 2014, the end of every pro-SB 21 commercial was followed by the statement “Top three contributors are BP, ExxonMobil and ConocoPhillips” or some variation of that order. It was the same in 2018, with a combination of BP, ConocoPhillips, ExxonMobil, Donlin Gold or Teck usually holding down the top three positions in the disclosures opposing Ballot Measure 1. Taking the information provided through transparent financial reports as a weapon to slam their opponents while at the same time not being transparent about the source of their own Outside funding takes a particular brand of chutzpah, but politics ain’t beanbag, as they say. Ultimately, APOC sided with the initiative backers on the basis that Stand for Salmon and The Alaska Center, as entities, predated the campaign and are not specifically organized to support any particular ballot measure. For that reason, any money in their general funds that was not expressly solicited for the purpose of the campaign does not have to be reported even if it is used to support the campaign. You don’t have to be Kreskin to see where this goes. There is no shortage of pro-resource development organizations in Alaska, and all of them could be quite capable of running a campaign to defeat the next anti-development initiative that comes along. Under APOC’s ruling, all they have to do is form an organization such as “No to NIMBY” and then allow some other established entity, say, the Resource Support Association, to run the campaign out of their offices with their staffs and call it all a “non-monetary” contribution to the official “group.” Under APOC’s ruling, as long as they spend money from general funds not earmarked for or solicited for that election, they wouldn’t have to disclose a dollar of where it came from. Take resource issues out of it and there is still the potential for this game of hide the ball on every ballot measure going forward. APOC’s ruling may not go against the letter of the law, but it obviously goes against the spirit of transparency that our campaign disclosure rules are intended to demand. If we have seen the death of disclosure in ballot measure spending, it will be thanks to what may turn out to be a pyrrhic victory for the supposed opponents of “dark money” who turned to its side in 2018. Andrew Jensen can be reached at [email protected]

OPINION: Status quo isn’t sustainable

There’s been no shortage of sturm and drang over Gov. Michael J. Dunleavy’s proposal to radically overhaul the state budget with deep cuts to K-12 and university education, Medicaid and the state ferry system. What there has been very little of from the defenders of the status quo are alternatives to achieve better outcomes and reform the state’s unsustainable spending habits. After avoiding it for more than a decade thanks to triple-digit oil prices followed by spending down state savings and dipping into the Permanent Fund Earnings Reserve and dividend appropriations to cover the deficit since multi-billion dollar shortfalls hit four years ago when prices bottomed at $26 per barrel, the time of reckoning has finally arrived. Competing roadshows from the governor and the House Finance Committee are now traversing the state with diametrically opposed goals: one by the Republican governor that favors cutting services to match revenues, capturing local property taxes on oil properties and leaving the PFD untouched and the other that has been organized by the Democrat-led House in order to give vent to public outcry over the drastic proposed reductions and a venue for PFD cuts and new or increased taxes to fund government. Neither solution is achievable in the reality of a divided government in Juneau, but only one recognizes the old axiom known as Stein’s Law: “if something cannot go on forever, it will stop.” The simple fact is the state is spending more than it can afford, and until appropriations are brought in line with reality the PFD will continue to be reduced until it either goes away to fund the budget or a statewide tax regime will have to be imposed to balance the books. Raising taxes on the oil industry won’t do the trick, and driving out investment for the short-term objective of plucking the golden goose will only accelerate the revenue shortfall. Dunleavy has been accused of being heartless or amoral for his proposed budget, but is it any less heartless to continue to accept failure as the best we can do while spending our way into oblivion? The governor isn’t wrong to point to Alaska’s dead-last ranking in reading as a failure of our education system. That doesn’t mean he hates kids. The governor isn’t wrong to point out ferry ridership is falling as costs are rising. That doesn’t mean he hates Southeast Alaska. University of Alaska President Jim Johnsen can claim the UA system is “more vital than ever” but that doesn’t change the fact that its largest campus can’t graduate teachers after losing its accreditation. Hundreds of millions in “free” federal Medicaid dollars have no doubt boosted the health care sector of the economy during the three-year recession, but the governor is not wrong to point out that outcomes aren’t improving. The last thing a state should be proud of is having nearly 1 out of every 4 residents on Medicaid. The goal of state policy should be to get as many of these people to work and off assistance. There are no doubt flaws with the governor’s proposed budget, from the abrupt rollout that shocked many if not most observers around the state and the resulting failure to get any buy-in from stakeholders, not to mention falling far behind in the messaging battle, to the sheer scale of cuts this large in one year. Restoring a full PFD according to the statutory formula was the centerpiece of Dunleavy’s campaign and a sudden reversal of that pledge would be political suicide. That doesn’t mean, however, that $1.9 billion in dividends amid the biggest budget cuts in history is the wisest long-term plan, either. That means a compromise is going to have to be in order. But in order for there to be a compromise, both sides need a vision and a plan as starting points. So far only Dunleavy is checking those two boxes while the Legislature appears to be choosing the same can-kicking path of the past decade in a dangerous game of chicken with the veto pen. One way or another, that which can’t continue, won’t. What takes its place will decide our future and the great question of the day is whether our elected officials are up to the challenge. Andrew Jensen can be reached at [email protected]

OPINION: Democrats misleading public yet again on oil tax policy

Based on their latest effort to mislead the public about oil tax policy, Democrats should be cheering the fact that North Slope production will miss its forecast by about 20,000 barrels per day in the 2019 fiscal year. After all, according to former one-term Fairbanks state Sen. Joe Paskvan, the state is “paying” a credit of $8 per barrel for each one produced on the North Slope under Senate Bill 21, the production tax reform passed in 2013 that took effect and was upheld by voter referendum in 2014. According to their current talking point, the state should now “save” $42.6 million in credits thanks to 14,600 fewer taxable barrels flowing through the Trans-Alaska Pipeline System each day. The only problem with that is the most recent Spring Revenue Forecast released March 15 now projects that the miss on production for the fiscal year will actually reduce total unrestricted petroleum revenue by $75.6 million and require a larger draw on state savings to balance the budget. Math, how does it work? The reason for this disparity is because the state doesn’t actually “pay” the credit Paskvan is claiming. It is a reduction in tax liability, which is a vital distinction the Democrats are counting on the public not making. No legislative session would be complete without Democrats trying to jack up oil taxes, and this one is no different with Sen. Bill Wielechowski, D-Anchorage, banging his Twitter drum in an effort to raise rates on the oil industry by $1.2 billion per year by repealing the per-barrel credit and raising the production severance tax to one of the highest in the world at 35 percent of net income. Wielechowski’s bill will go nowhere in the Republican-controlled Senate and wouldn’t survive a veto by Gov. Michael J. Dunleavy even if it were to make it to his desk, but this latest campaign is yet another example of how Democrats appear to be fundamentally incapable of speaking honestly about how SB 21 works and the unquestionable success it has been in stemming the decline of Alaska oil production. Wielechowski loves pointing to the production forecast as proof that SB 21 hasn’t worked based on five and 10 years from now. Because he is so fond of forecasts to the point he quotes them as if they came down from a mountain on stone tablets, let’s rewind to the 2013 production forecast that was completed in the final year of his preferred policy known as ACES that was repealed under SB 21. The 2013 forecast for production in the current 2019 fiscal year was for just 429,100 barrels per day. Even with this year’s miss relative to forecast, production should still be about 511,000 barrels per day, or nearly 82,000 better than the 2013 forecast. In fact, when you add up the North Slope’s actual production since SB 21 took effect, the cumulative production greater than the 2013 forecast is almost 90 million more barrels of oil. Even more remarkable than that is to consider the price environment during the 2014-19 period when prices crashed from more than $100 per barrel in the summer of 2014 to a low of $26 per barrel in January 2016. (The price forecast in 2013 was for $121 oil in the current fiscal year.) The net effect of the majors maintaining production, and even growing it in two straight years from 2015 to 2016, is that while production tax revenue (a function of price) declined by 93 percent from 2014 to 2016, royalty income declined by only 50 percent in comparison. And we cannot forget that under Wielechowski’s beloved ACES, the state would have collected exactly $0 in production taxes at all prices less than $63 per barrel. Under SB 21, the state always collects a production tax thanks to the gross tax minimum. Wielechowski and Paskvan also continue to lie about former Gov. Sean Parnell by claiming he “promised” that 1 million barrels of oil could flow through TAPS in 10 years if SB 21 passed. The truth is that the 1 million barrels per day statement was a goal. Just look at the transcript from his 2012 State of the State address: “Let’s meet my goal of one million barrels a day.” Even still, by 2024 the state should be seeing production from Pikka, Willow and Mooses Tooth that could collectively add more than 300,000 barrels per day. In fact, ConocoPhillips has continued to invest more than $1 billion per year in capital projects in Alaska and its fellow owners at Prudhoe Bay are spending millions this year on seismic work to identify more pools of oil. While Wielechowski loves harping on distant forecasts and statements from seven years ago, he hates being brought face-to-face with his own touting of ACES in 2013 in which he exalted over its credit system that under his own talking points had the state covering more than 65 percent of dry holes and citing the benefits of major producers reducing their tax liability by buying those cashable credits from small explorers. When he was a member of the Senate majority in 2012 he voted for a budget that appropriated nearly a $1 billion in cashable credits — that were actually “paid” in the truest sense of the word — compared to just more than half of that amount in Permanent Fund dividends. ACES also contained provisions for 20 percent credits for capital expenditures that did nothing to increase production, which dropped by an average of 5 percent per year despite sky high prices while it was in place. SB 21 replaced that 20 percent credit with a credit that is only earned when a barrel of oil is produced. Based on production since 2014 — the thing that matters most when evaluating the policy — it worked. That leaves lying about it the only option the Democrats have, which just goes to show how little respect they have for the media who cover them and the people of Alaska in general. Andrew Jensen can be reached at [email protected]

OPINION: Drill, baby, drill beats the Green New Deal

Because we are relentlessly assured that there is no such thing as media bias, it is surely unnecessary to compare the treatment of Sarah Palin and Alexandria Ocasio-Cortez by the national press corps. But if an attempt was made to prove bias by the media against conservatives, and conservative women in particular, a better case study would be tough to find than the coverage of the former Alaska governor and 2008 vice presidential candidate versus the representative-from-the-block. Palin, like Ocasio-Cortez, hit the national stage out of nowhere with the former tapped by the late Sen. John McCain to attract the conservative base wary of his mavericky tendencies and the latter pulling a stunning upset of 10-term congressman Joe Crowley this past August. After McCain had treated the half-term senator Barack Obama with kid gloves throughout the campaign, Palin came out swinging and bloodied his nose in a rousing nomination speech that mocked his community organizer background and in later stump speeches drew attention to his history with domestic terrorist Bill Ayers. The McCain-Palin ticket briefly took the lead in national polling and sent panic through the press that already had their stories written for the election of the first African-American president of the United States. For that, Palin had to be destroyed. She was immediately and relentlessly mocked for her appearance, her folksy twang and even for her family that included a young special needs son. Dubbed “Caribou Barbie,” she was so effectively lampooned by Saturday Night Live’s Tina Fey that wide swaths of the American public believe to this day that Palin said, “I can see Russia from my house.” In particular, she was dunked on for her signature “drill, baby, drill” catchphrase that gained traction as gas prices had topped $4 per gallon across the country in 2008. Obama, for his part, threw shade at the idea of drilling our way into energy independence throughout his presidency even as the United States was marching in exactly that direction in spite of his best efforts to hamstring the industry with regulatory hurdles and slow-walking development of federal lands. “You had a lot of slogans and gimmicks and outraged politicians waving three-point-plans for two-dollar gas — when none of it would really do anything to solve the problem,” Obama said at Georgetown University in 2011. “You remember, ‘drill baby drill.’” In another speech, Obama described the GOP’s “three-point plan for $2 gas: Step one is drill, step two is drill, and step three is keeping drilling.” He went on to say that “the American people aren’t stupid. They know that’s not a plan.” According to AAA, the average price for a gallon of gas on Feb. 26 was $2.40. As of 2018, the United States is the world’s largest energy producer for oil and natural gas. Just recently, imports from Venezuela and Saudi Arabia that once topped one million barrels per day each hit record lows of just more than a half-million barrels between them. The ability of the OPEC cartel to set prices on a whim through production cuts is no more thanks to the U.S. shale drillers who have shown the innovation to cut costs and fill up the market share fruitlessly abandoned by the one-time leaders in global oil production from Riyadh and Moscow. In sum, that sledneck Wasillbilly was right, and virtually the entire Democrat Party from Obama on down and their press stenographers were wildly, incontrovertibly wrong. Now let’s turn to the coverage of Ocasio-Cortez, whose Willy Wonka-esque Green New Deal has already been championed by multiple Democrat candidates for president and attracted scores of co-sponsors in Congress despite its goals of ending fossil fuel use, air travel and “farting cows.” The same national press that attacked Palin with gusto is now filled with pieces from the likes of Vox, Salon and New York Magazine lamenting the disparate treatment of female politicians compared to men for silly things such as a consistent butchering of math and the truth. Even ran a 1,000-word piece explaining away Ocasio-Cortez’s use of the phrase “run train” that had attracted raised eyebrows from conservative commentators for its off-color meaning. There is no doubt that Palin was hardly a seasoned politician ready for the big-time when McCain swooped her out of Alaska in a vain attempt to rescue his flagging campaign, but as a former mayor and one of only 50 governors she was still far more qualified to hold office than the Democrat rock star who’s gone from mixologist to Marxologist in the blink of an eye. Yet while Palin was smeared, Ocasio-Cortez is cheered. While every Palin malapropism was noted and exploited with glee, no one seems to notice that Ocasio-Cortez constantly uses the word “like” as if it is a comma. But trust us, the media say, bias is a myth. Based on the above, this statement has been rated false.

OPINION: Knopp sides with his ego over voters

Rep. Gary Knopp’s fellow Republicans appealed to party loyalty and pragmatism as they attempted to convince him to break his month-long holdout that has prevented the state House from organizing. Democrats flattered his ego. Knopp sided with his ego. After telling Anchorage Daily News reporter James Brooks that he decided over this past weekend to end his pointless stunt of refusing to vote for Rep. Dave Talerico of Healy as Speaker of the House in a Quixotic quest to force the formation of a bipartisan coalition, Knopp reneged on his pledge a day later after Democrats put forth his name as their choice instead of former Speaker Rep. Bryce Edgmon of Dillingham. Knopp then voted for himself and against Talerico on Feb. 12, resulting in another set of 20-20 stalemates that leave the House unorganized and unable to even receive the 25 bills Gov. Michael J. Dunleavy said he intended to introduce the following day in tandem with his “ground up” budget to address a projected $1.6 billion shortfall for the fiscal year that starts July 1. In a ridiculous piece of semantics explaining his reversal, Knopp said he only pledged to vote for a Republican as Speaker and not which Republican that would be. Calling his statement disingenuous would be polite. Or, as Rep. Mark Neuman of Big Lake put it more accurately, it’s “bullshit.” Rather than dance with the people who brought him — his District 30 is so Republican that Democrats didn’t even field a candidate against him and its voters chose Dunleavy by a 68 percent to 27 percent margin of 3,214 — Knopp is determined to prove his original assertion that one person can blow up a caucus of 21. At the time, Knopp specifically was referring to notorious gadfly Rep. David Eastman of Wasilla, who is looking more and more sensible every day in comparison. Now, rather than organize with the Republicans as his voters intended for him to do, Knopp is single-handedly doing more damage to House business than Eastman could ever approach. With per diem of more than $200 multiplied by 40 House members, it’s is a safe estimate to say Knopp’s grandstanding has cost the state about a quarter-million dollars for nothing so far. Knopp can claim all he wants that he believes a bipartisan coalition is preferable, but in reality what he is doing is nothing more than the bidding of the Democrats who lost their majority in the last election. Oh sure, Democratic caucus members Reps. Louise Stutes of Kodiak and Gabrielle LeDoux of Anchorage have an “R” next to their name, but that doesn’t make them Republicans any more than donning a paper crown makes someone the Burger King. There is no understating how badly Knopp screwed up by siding with himself over the simple good of being able to organize and conduct business and then letting chips fall where they may as the session unfolds. Knopp broke a very public pledge and as such can’t be trusted by any of his fellow Republicans going forward even if he eventually comes around to voting for Talerico. He may well have further entrenched both sides, or it is possible his intransigence driven by his completely unjustified belief that he’s acting on principle will end up sending a couple wavering Republicans into the Democrat caucus to give them control that the people of Alaska — and especially those of his own district — clearly did not vote for. Knopp can say whatever he wants about Eastman, but Eastman says what he means and acts accordingly. Knopp has demonstrated that he values loyalty to himself first and that his word means nothing. There isn’t a soapbox big enough to look down on anybody from that perspective. Andrew Jensen can be reached at [email protected]

OPINION: Court cases give Legislature carte blanche

Few would envy the position the Legislature and former Gov. Bill Walker found themselves over the past four years dealing with crashing oil prices and the ensuing multi-billion-dollar budget deficits. Reducing the Permanent Fund dividend, virtually eliminating the capital budget and reversing past practice by not paying off oil and gas exploration tax credits in full each fiscal year easily lead the way on the least popular actions that have been taken. Even with those moves, some $14 billion from the state’s savings accounts was still necessary to close the budget gaps for the fiscal years since 2015 to the present. In the aftermath of Gov. Bill Walker’s veto of half the Permanent Fund dividend appropriation in 2016 — reducing it from a projected $2,044 per Alaskan to $1,022 — Sen. Bill Wielechowski, D-Anchorage, and a few former legislators took a lawsuit all the way to the Supreme Court challenging the action as contrary to the formula for paying the PFD currently in statute. By the time the Supreme Court ruled in Walker’s favor, the Legislature had followed his lead in the 2017 session — and the Superior Court judge that ruled against Wielechowski, et al, on the same day the case was argued the prior November — by arbitrarily setting the PFD at $1,100 rather than following the statutory formula. In a nutshell, the Supreme Court determined that the constitutional authority of the governor to veto appropriations and the similar vested authority of the Legislature to make appropriations took precedence over any law such as the one that calculates the annual amount of the dividend. It is a similar reasoning that allows the Legislature to stay in session for the 121 days written in the constitution rather than the 90-day limit approved by voters through an initiative in 2008. While legally sound, the PFD ruling gave the Legislature the ability to ignore its own laws so long as whatever action it takes as an alternative does not conflict with the Constitution. The anger over three straight years of Walker, and then the Legislature, disregarding the PFD formula was ridden by Mike Dunleavy all the way into the governor’s mansion with the central promise of his campaign being a pledge to follow the law. Then on Jan. 2 a Superior Court judge handed down another ruling that, unlike the Supreme Court decision that allows the Legislature and the governor to disregard the law, allows them to violate the spirit but not the letter of the Constitution. One year before Walker vetoed half the PFD appropriation in 2016, he without warning slashed $200 million from the budget earmarked to pay off earned oil and gas exploration credits. A year later, despite assuring the financial institutions lending to small companies working in Alaska he wouldn’t do it again, Walker vetoed $430 million worth of the payments. In the aftermath, those banks stopped lending money to the independent explorers and before the Legislature finally eliminated the programs on both the North Slope and Cook Inlet the total tab for tax credits owed swelled to more than $800 million. Business arrangements the state had with BlueCrest in Cook Inlet and Brooks Range Petroleum Corp. on the Slope had to be reworked, while Caelus Energy, which is owed some $100 million for its work, has been forced to sell off acreage and assets as it appears ready to exit the state after buying Pioneer Natural Resources properties for $550 million in 2013. With the state’s business reputation in tatters, Walker’s administration finally came up with a plan to pay off the credits without a lump sum appropriation from the Legislature by instead creating a state entity to sell up to $1 billion worth of bonds that would be paid for by the companies owed money taking a haircut of 10 percent in exchange for receiving most of what they’re due sooner rather than waiting years to be paid in full according to the statutory formula. The only problem with the plan is that the Constitution has strict limits on how the state may issue debt such as for emergencies or through a vote of the people to approve general obligation bonds. Walker and the Legislature worked around these limits by creating an “independent” entity that would sell the bonds and using “subject to appropriation” language that would not legally qualify as binding the State of Alaska to debt according to the Constitution. A lawsuit ensued, and the workaround language was deemed sufficient by a Superior Court judge to not create the legal definition of debt and therefore “passes constitutional muster.” To call this a troubling precedent would be an understatement, as it essentially gives the Legislature a blank check to get around putting debt issues to a vote of the citizens. Nothing would stop it from creating a “Transportation Bank” that could sell “subject to appropriation” bonds to pay for infrastructure projects without having to seek the approval of Alaskans. That’s not to say that Judge Pate erred in his legal reasoning, but it is to say that it should not be so easy to get around the very plain intent of the constitutional framers to limit the ability to take on debt without a vote of the people. The PFD ruling has allowed the Legislature to ignore the laws it has passed, and the bond ruling allows it to get around the intent and spirit of the Constitution through nothing more than a shell entity and the three words “subject to appropriation.” In this respect, the solutions to the budget deficits that were crafted by Walker and the Legislature may turn out to be worse than the problems they were trying to solve. Andrew Jensen can be reached at [email protected]


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