James Brooks

Dunleavy calls for 80% of Railbelt power to be renewable by 2040

JUNEAU — Alaska Gov. Mike Dunleavy has introduced new legislation that would require 80% of the Railbelt’s electricity to come from renewable sources by 2040, with penalties for electric companies that fail to meet the requirement. An analysis ordered by the governor and published by the National Renewable Energy Laboratory in December says meeting the goal would require millions of dollars of investment in hydroelectric, solar, wind, tidal and geothermal power, as well as transmission lines and batteries. Reaching the 80% standard could save $500 million per year in fuel costs, the report said. The governor’s plan calls for a gradual implementation: Utilities would be required to generate 20% of their power from renewable sources by by December 31, 2025, 55% by the end of 2035, and 80% by the end of 2040. In the governor’s state of the state address last month, he said he envisions “an Alaska that is energy independent and a leader in renewable energy, whether it be hydro, tidal, geothermal, wind, solar, or other.” “We have abundant renewable resource potential, and we can turn that potential into a reality that will lower costs for all Alaskans, and invite industries to invest in our great state as well,” he said at the time. Chris Rose is the executive director of the Renewable Energy Alaska Project, a nonprofit that worked for months to draft a plan that formed the basis for the governor’s legislation. Electricity prices in the Railbelt are about 50% higher than they are in the Lower 48, in large part because of the cost of Cook Inlet natural gas, he said, and that makes it difficult to attract business investment. Jenny-Marie Stryker is the political director of the Alaska Center, a nonprofit that regularly criticizes the governor for inaction on environmental and social issues, but Dunleavy’s new legislation is undeniably good, she said. “I think it’s achievable. I think it’s necessary. And I totally think it’s realistic,” she said. It’s an election year, and Dunleavy is campaigning for reelection, but Stryker said she doesn’t think Dunleavy introduced the bill simply to win votes. “I think that the governor is serious about this. We see this introduced in good faith, we’re taking it in good faith,” she said. The law would be stronger than legislation passed under the administration of former Gov. Sarah Palin that set an unenforced goal of 50% renewable power statewide by 2025. The state is almost certain to miss that goal. Under existing law, the Railbelt utilities are required to work together in an organization that sets standards for reliability and long-term planning. If passed by the House, Senate and signed into law, the governor’s legislation would put that organization in charge of implementing the new standard, with fines for utilities that fail to comply. The state’s utility regulator would be allowed to waive the fines in case of extenuating circumstances, like a disaster. The National Renewable Energy Laboratory suggested five ways that Alaska could meet the 80% standard by 2040: • The state could build the vast Susitna-Watana hydroelectric project and bring the Bradley Lake hydroelectric dam to full capacity; • It could expand Bradley Lake, build dams at Grant Lake near Moose Pass and Snow River north of Seward, then add some wind and solar power; • It could expand Bradley Lake but add additional wind and solar; • It could use geothermal power and tidal power, as well as wind, solar and a Bradley Lake expansion; • Or it could do a smaller Bradley Lake expansion with bigger investments in geothermal, tidal, wind and solar power. All five scenarios also require the installation of battery banks to balance the ebb and flow of wind power, upgrades to the electrical intertie between Fairbanks and Anchorage, and a small new hydroelectric plant somewhere in Southcentral Alaska. The report doesn’t suggest where the initial funding for these projects would come from, but it does say that building them would save hundreds of millions of dollars in fuel costs. Stryker said she’s hopeful that the legislation doesn’t encounter significant opposition and that it has the potential to create large numbers of high-paying, unionized jobs. Rose agreed, saying that it would also encourage independent power-plant operators to come to Alaska and build projects, because they know there will be a market for their power. He thinks existing utilities may have the most concerns. “I think several of the utilities were not interested in seeing this introduced in the first place and were interested in watering down the proposal,” he said. A Chugach Electric spokesperson said she was unable to provide comment on the governor’s proposal but provided a copy of a letter signed by its CEO and the leaders of four other Railbelt electrical cooperatives. The letter, written before the governor’s legislation was introduced, didn’t reference the 80% target but said the companies are “aligned in our support around the concept of a sensible and carefully constructed renewable or carbon reduction standard for the Railbelt system.” Rep. Calvin Schrage, I-Anchorage, is the chair of the House Energy Committee, which is slated to hear the governor’s proposal. “I think the question is going to be, can the governor move this forward and be able to maintain support from both the utilities and other stakeholder groups? Because this is going to affect a lot of people. So some concerns there, but I’m really excited about it,” he said.

As oil prices rise, Alaska projects $1 billion-plus in extra state revenue

JUNEAU — High oil prices may deliver more than $1 billion in unexpected revenue to the state of Alaska in the current fiscal year, and both the Alaska Legislature and Gov. Mike Dunleavy are beginning to debate whether they should save that money or spend it. “Based on current oil prices, there is the potential for a little bit of extra money for fiscal year 2022 and 2023,” said Dan Stickel, chief economist for the Alaska Department of Revenue. Last spring, the Department of Revenue expected Alaska oil prices to average $61 per barrel and the state to produce an average of 471,300 barrels per day, enough for Alaska to earn $1.29 billion in oil revenue between July 1, 2021 and June 30, 2022, what the state calls Fiscal Year 2022. The Alaska Legislature built its budget around those amounts, but through the first six months of the fiscal year, oil has been worth significantly more. From July 1 through Jan. 18, oil averaged $77.47 per barrel and production averaged 469,469 barrels per day. Instead of $1.29 billion, the state is now expecting about twice that amount. Speaking to the House and Senate finance committees this week, Stickel cautioned that COVID-19 could change that forecast. If the virus surges again, dampening international travel demand, that would deflate crude oil prices. But this week, the International Energy Agency said oil demand was on track to reach pre-pandemic levels, and prices have hit their highest level since 2014. Oil isn’t the state’s leading source of revenue — an annual transfer from the Alaska Permanent Fund is larger — but the extra money promises to make a big difference. In June last year, the Legislature approved — and Gov. Mike Dunleavy signed, after vetoes — a budget that spends $5.3 billion but only has $4.7 billion in reliable revenue to pay for it. That left a $571.8 million deficit, according to figures published by the nonpartisan Legislative Finance Division. In their budget, lawmakers closed that gap with money from a state savings account and with federal COVID-19 economic aid. Now, the expectation is $6 billion in revenue, and the state would have more than enough normal revenue to fill the deficit. It would be the first time in 10 years that the state has not had a deficit, according to the finance division. But there are other options. In December, Gov. Mike Dunleavy proposed spending $930.7 million in new spending, absorbing almost all of the extra oil revenue expected at that point. The biggest chunk, about $796 million, would pay for a bonus Permanent Fund dividend of more than $1,200 to everyone who received a 2021 dividend. The governor is scheduled to release a revised supplemental budget in February and could update or change that plan. Lawmakers, too, will be debating what to do. The Legislature convened Tuesday, and finance committees in both the House and Senate have begun meeting. In a series of interviews and in committee meetings, lawmakers said it’s too early to make decisions on spending, particularly given the volatility of oil. “What happens if the bottom falls out?” said Rep. Bryce Edgmon, I-Dillingham.

Alaska Permanent Fund board chairman declines to talk to lawmakers in detail about reasons for director’s firing

JUNEAU — Under questioning from a bipartisan legislative committee on Monday, the chairman of the Alaska Permanent Fund’s board of trustees defended the board’s decision to fire former executive director Angela Rodell but declined to answer substantive questions about the board’s reasons for the action. Chairman Craig Richards said Rodell was an “at-will” employee and the board had years of “trust problems” with her. Citing the confidentiality of board discussions and the possibility of a lawsuit by Rodell, he refused to answer questions asking about the source of those problems, and he declined to say whether he or other trustees have been in communication with Gov. Mike Dunleavy about the firing. “We’re not here, prepared today to go into an in-depth, detailed analysis of here’s everything she did right and everything she did wrong,” Richards told the Legislature’s budget and audit committee. “That’s most unfortunate, because you had a month to prepare,” said Sen. Natasha Von Imhof, an Anchorage Republican and the committee’s chair. Alaska legislators have been concerned that Rodell’s removal on Dec. 9 was the result of political pressure from the governor, who has appointed or reappointed five of the board’s six trustees. All five voted to fire Rodell; the sixth did not. Richards said the board needs no excuse to fire Rodell. State law gives the board the right to hire and fire the fund’s executive director for any reason. “Ms. Rodell was a highly compensated executive-level employee, and at the end of the day it is the board’s prerogative,” he said. “Just because you can doesn’t mean you should — and that’s what we’d like to find out, is whether you should,” said Rep. Chris Tuck, D-Anchorage and vice chair of the budget and audit committee. The Permanent Fund’s earnings provide two-thirds of Alaska’s general-purpose state revenue, and under Rodell’s tenure, the fund outperformed similar funds in other places. Rodell herself gained international renown as the chair of the International Forum of Sovereign Wealth Funds, and days after her firing, the Permanent Fund was named by a trade magazine as one of the top places to work in finance. The board has a fiduciary responsibility to deliver maximum returns, said Senate President Peter Micciche, R-Soldotna. “A lot of this sort of reeks of something else,” he said. At points during his testimony, Richards pushed back against legislators, saying that they themselves are politicizing the firing by holding a committee hearing on it. “What is best for the fund is to move on,” he said. In 2018, the Alaska Legislature passed a law limiting annual withdrawals from the Permanent Fund. Dunleavy previously proposed temporarily breaking that limit during the transition to a new formula for Permanent Fund dividends. Rodell, following resolutions passed by the Permanent Fund board, frequently testified against breaking the limit, saying that legislators should follow a “rules-based approach” when spending from the fund. Rodell herself has said her firing was “political retribution” by the governor’s appointees, though she said she does not have proof of that assertion. She did not respond to a text or phone call seeking comment Monday. Dunleavy has repeatedly said he had no role in the firing and reiterated that before Richards’ testimony. “I was not involved in this issue,” the governor said Monday. Richards told lawmakers that Rodell’s argument doesn’t make sense because the board has passed resolutions in support of the 2018 limit and against overspending. Current board members reviewed those resolutions in November and did not repeal them. “I will unequivocally say that for me and all the other trustees that I’m aware of, that we still do believe these resolutions and support them,” he said. In June, Revenue Commissioner Lucinda Mahoney advocated the Dunleavy plan and an overdraw to the Sitka Chamber of Commerce, according to reporting by the local public radio station. Mahoney is the vice chair of the fund’s board of trustees and was in charge of Rodell’s performance review this year. She did not immediately respond to a question asking whether Richards’ testimony was accurate in her case. Testifying Monday, Richards described long-term tensions between the board and executive director. At a meeting this fall, Rodell and Mahoney argued over a proposed bonus program for Permanent Fund employees. There was “visible tension” during that meeting, Richards said. Rodell’s 296-page personnel file, released last week after a public records request filed by the Daily News, includes several years of performance reviews, and from 2018 through 2021, those evaluations show board members losing trust in Rodell. “It often feels as if the board is being managed to the (executive director)’s agenda, as opposed to the ED trying to internalize and achieve the board’s agenda,” a board member wrote in 2018, before Dunleavy came into office. “In my opinion, the (executive director)’s relationship with the board of trustees is broken,” said a board member’s comment in 2019. “Does not embrace the vision of the board but instead tries to control the board to achieve her own vision and points of view,” one board member wrote in December. It isn’t clear from the personnel file whether specific actions drove these and similar comments. No board member’s name is attached to them, and Rodell still received raises — her latest coming at the start of 2021. Richards declined to answer questions from legislators about the source of the comments but did say that the evaluations formed only part of the basis for the board’s decision to fire Rodell. As Monday’s meeting concluded, Von Imhof and other legislators said they intend to hold further meetings on the issue. Rep. Andy Josephson, D-Anchorage and a member of the budget and audit committee, has also proposed legislation that proposes to change the makeup and the appointment process for the board of trustees. That legislation will be formally introduced Tuesday, when the Legislature convenes its 2022 session.

As oil and investments earn more for Alaska, the state could see its first deficit-free budget in 10 years

Using higher estimates for oil revenue, millions of dollars in aid from the federal government and a lower amount for the Permanent Fund dividend, Alaska Gov. Mike Dunleavy proposed a state budget on Wednesday that could be the first in a decade to be balanced without spending from savings. The governor’s proposal includes $6.3 billion for state services, construction and dividends in fiscal year 2023, which begins July 1 and ends June 30, 2023. That’s an increase of about $1 billion from the current spending plan, with the additional funding going to the Permanent Fund dividend. Spending on services is held flat. The proposed budget calls for the increase to be covered by federal aid and revenue increases from oil and the Alaska Permanent Fund. “We do have good news. Our fiscals are looking good,” Dunleavy said. In a written statement, House Speaker Louise Stutes, R-Kodiak, said the governor’s proposal needs to be reviewed carefully. “It is important to remember that a slight rise in the price of oil, changes in the stock market, and one-time funding from Washington do not fundamentally change Alaska’s fiscal reality. We need to make the tough decisions on a fiscal plan in order to provide sustainability in budgeting and the PFD,” she said. Under the governor’s proposal, the 2022 dividend would be $2,564, the product of a new distribution formula proposed by the governor but as yet unapproved by the Legislature. It’s the first time since entering office that the governor has not proposed a dividend that follows the traditional — and since 2016, ignored — formula in state law. The governor is also proposing an additional $1,250 spring dividend (funded by money from higher-than-expected oil prices), the split of the Department of Health and Social Services into two separate agencies, and a $309 million borrowing plan for new construction. The governor’s ideas are subject to revision and approval by the Alaska Legislature, and Dunleavy’s prior proposed budgets have been extensively revised. Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee, said he wants to better understand whether the governor is using one-time federal money to cover recurring costs. Budget documents published by the Office of Management and Budget indicate the governor’s proposal would use $375 million in federal aid in that way, an act that could create a budget hole in future years. “We’ll dissect it and start with budget clarity like we did the last couple years,” Stedman said. Higher oil prices and investment returns boost available cash Wednesday’s budget proposal relies on a new revenue forecast from the Alaska Department of Revenue that predicts oil prices will average $71 per barrel between July 1 and June 30, 2023. Since July 1 this year, prices have averaged $76.81 per barrel. The new FY23 forecast is less than forecasters had projected earlier this fall but much more than they predicted in the spring. The new estimate raises projected oil revenue by $675 million when compared to the spring. “Petroleum revenue increases for the next two years are largely a function of a higher oil price forecast, as well as an increased outlook for Alaska oil production,” they wrote. Since 2014, hopes of long-term higher oil prices have been short-lived. In 2018, shortly before he left office, former Gov. Bill Walker proposed a “balanced” budget that relied upon higher oil prices. Those estimates were obsolete within weeks, and Dunleavy was confronted with a continued deficit. This year’s estimate, unlike the one in 2018, is based on global markets that buy and sell future oil production. Rep. DeLena Johnson, R-Palmer and a member of the House Finance Committee, said she thinks the revenue estimate is reasonable, and her initial impression of the budget is positive. “I thought it was straightforward. It looked like a realistic and straightforward, honest budget, I thought,” she said. Revenue forecasters also raised their estimate for the amount of money that will be available under the annual transfer from the Alaska Permanent Fund. State law calls for that transfer to be limited to a sustainable limit, and the governor’s proposal stays within the limit. Earlier this year, Dunleavy had called for temporarily breaking the limit in order to pay for a larger dividend. Higher investment returns by the state’s pension funds have also allowed the state to reduce the amount it must contribute to those funds. Federal aid bolsters budget Dunleavy’s proposed budget keeps overall state spending on services flat when compared to what was approved this spring. Federal aid, provided through a variety of programs approved by Congress over the past year, replaces state money in some places. The Alaska Marine Highway System is a prime example. Dunleavy’s budget proposes funding it entirely with federal money, freeing about $60 million in state dollars for other uses. The governor’s budget also proposes using $375 million in other federal money to replace state dollars. That allows the governor to propose spending more state money in targeted areas without changing the bottom line: • The University of Alaska would receive $4 million in extra state funding, ending years of Dunleavy-endorsed budget cuts; • The state would fully fund school bond debt reimbursement payments to local governments, an increase from the 50% reimbursement previously endorsed by Dunleavy; • $10 million more for legal action against federal restrictions on mining, drilling and land use; • The Department of Public Safety would receive a $24 million funding increase, allowing the department to hire more state troopers and implement a public safety program he proposed earlier this week. “I applaud the governor for his focus on public safety, especially for the victims of domestic violence,” said Rep. Sara Rasmussen, R-Anchorage, a member of the House Finance Committee. “I think we have a good starting point, and I know this is just the first step as it works its way through the legislative process,” she said. Proposal includes a $309 million borrowing plan Speaking to the Alaska Federation of Natives annual conference earlier this week, Stutes said members of the coalition House majority want to see a budget that uses federal money for additional infrastructure work, not just to replace state dollars. Other states have used federal aid to install broadband infrastructure and reconstruct roads and bridges, among other projects. Dunleavy’s budget calls for some of that work. Included in the governor’s capital budget — used for construction and renovation — is $200 million for rural airports and $670 million for road construction, as well as millions to replace the ferry Tustumena. The governor is also proposing to borrow $308.6 million for construction projects across the state, including $22 million for the controversial U-Med road and $175 million for either the Port of Alaska or Port Mackenzie. The governor proposed a similar borrowing plan last year, but the Legislature rejected it, citing the possibility of federal infrastructure aid. “I’m looking forward to seeing the general obligation bond package that was put together this year. The administration said they worked hard to make it better and more traditional,” said Rep. Kelly Merrick, R-Eagle River and co-chair of the House Finance Committee. DHSS split intended The governor again intends to propose splitting the Alaska Department of Health and Social Services into a state Health department and a state Department of Family and Community Services. That split was proposed in late 2020 but was withdrawn this spring after legislators uncovered technical problems with the executive order creating the split. Dunleavy is expected to issue a new executive order once the legislative session begins in January, and the split would take place automatically unless lawmakers specifically vote it down. Under the health budget, the state will spend $46 million more on Medicaid, while funding for public health and public assistance is held flat. Budget documents show a significant decrease in the federally funded line items for emergency programs, such as the state’s pandemic response.

Fourth special session begins without budget, PFD fixes in sight

JUNEAU — The Alaska Legislature began its fourth special session on Oct. 4 with low expectations and little hope that legislators will be able to end their annual struggle over the Permanent Fund dividend. For the past six years, lawmakers have debated the size of payments from Alaska’s trust fund, turning the issue into an annual battle that has consumed legislative attention and repeatedly brought Alaska to the brink of a government shutdown. Gov. Mike Dunleavy convened this session, asking legislators to pass a constitutional amendment that would guarantee future dividends and pay them according to a new formula. “In the end, if there was ever a time to settle this issue, it’s now,” Dunleavy said. But that seems unlikely. “I don’t think the session is going to be very productive,” said Senate Minority Leader Tom Begich, D-Anchorage. It takes 27 votes in the House and 14 in the Senate to send a constitutional amendment to voters in the November 2022 election. Right now, legislators say there aren’t enough votes to pass the governor’s proposal or any of the alternative amendments proposed by legislators themselves. That’s because most of those amendments call for larger dividends and require additional money. Lawmakers could overspend from the Alaska Permanent Fund, breaking a limit installed in 2018. They could cut state services, freeing more revenue for the dividend. They could pass tax increases or install new taxes that generate additional revenue for the dividend. Senate President Peter Micciche, R-Soldotna, is among a group of legislators who has promoted an “all-in” idea that uses multiple options simultaneously. He frequently analogizes the situation to a machine with a variety of control levers, each representing a different option. When it comes to a constitutional amendment, he said, there isn’t a way to move the levers in such a way that gets 14 votes in the Senate. In the state House, Rep. Andy Josephson, D-Anchorage, said the “politics are nearly insurmountable.” A bipartisan, bicameral working group made some progress this summer. It agreed on what the state should expect for revenue and expenses in the next several years, what a proposed dividend would cost, and on the available options to pay for it. But because the House and Senate are divided about which options are best, no one idea has the needed votes. “I really don’t think anything is going to come out of this session because we’ve had a lot of this stuff with us here for the past seven months,” said Rep. Mike Cronk, R-Tok. Any constitutional amendment wouldn’t be put into place until after next year’s election, so the governor has proposed to increase this year’s dividend to what it would be under his proposal. If Dunleavy’s proposed formula were in place this year, it would result in a $2,350 dividend instead of the $1,114 Alaskans will receive starting this month. That increase would cost roughly $791 million. New taxes would take at least a year to implement, Department of Revenue officials have previously testified, and budget cuts would also take time to implement. That leaves overspending from the Permanent Fund. The earnings of the Alaska Permanent Fund are now the largest source of revenue for state services, accounting for roughly two-thirds of the state’s budget. Spending more from the fund today means less money invested and lower returns in the future, which has caused lawmakers to reject overspending. Dunleavy argues the fund gained a record $16 billion in value during the last fiscal year. He says larger dividends will aid the state’s economy, which is continuing to suffer from the COVID-19 pandemic. ”You never hear that when it comes to taking the PFD and cutting it severely out of the hands of children and elders, that has a detrimental effect, especially in the environment that we’re experiencing today, with supply chain disruptions, inflation, uncertainty, people whose hours were cut,” Dunleavy said. When it comes to the budget, he said legislators should see that holding a “no-overspend” position has political consequences. ”If they can’t see that, maybe to some extent, that’s at the root cause of the inability to come up with a decision,” Dunleavy said. Democratic legislators say Dunleavy’s reluctance to consider new revenue without a statewide vote is contributing to the problem. ”You know, then the Legislature would really love to have him engaged in robust conversation during this fourth special session,” said Rep. Ivy Spohnholz, D-Anchorage. Dunleavy said that if a revenue bill were included in a package of legislation to deal with the dividend issue, he will reserve judgment until he sees it. “I would take a look at the components within the framework of a full solution. And if there is a viable, coherent, sustainable long-term solution, I would take a look at that package very seriously. But again, it’s not sitting in front of me right now. So I need to see what that looks like,” he said. As an alternative to a constitutional amendment, lawmakers could pass a new law. Doing so would require 21 votes in the House and 11 in the Senate, but there’s no guarantee that future legislators would follow that new formula. In 2017, the Alaska Supreme Court ruled that the formula in place at the time — one used since the 1980s — was “subject to normal appropriation and veto budgetary processes.” In other words, the governor and Legislature could choose to follow it or not. A new formula in state law would face the same problems. “I can tell you, that a statute is not going to engender the confidence of Alaskans. They won’t buy it,” Dunleavy said. In the state Senate, lawmakers proposed a formula change at the end of the third special session. That bill proposed to gradually raise the dividend over several years, reaching Dunleavy’s preferred level if the state raises $700 million in additional revenue. That bill was debated but failed to pass the Senate before the end of the third special session. Micciche said that with adjustments, it could be a first step toward an eventual solution. “I think once people are comfortable with (the bill), then I think you have a higher probability of the level of support it would take for a constitutional amendment,” he said. “Right now, I don’t know if you have 11 votes to get the PFD under the constitution. Once people are comfortable with the new calculation, that becomes a lot more likely,” Micciche said.

Senate infrastructure bill passes with billions for Alaska

The $1 trillion infrastructure bill passed Aug. 10 by the Senate is being called a historic effort to invest in the nation’s roads, broadband and utilities. The bill must still pass the House, and there’s no specific timeline for when that will happen. The measure includes specific items for Alaska across a variety of categories, according to the bill’s language and details from Republican Alaska Sen. Lisa Murkowski, who was part of a bipartisan group of senators who helped create it. Road construction and repair • About $3.5 billion would be provided over five years to build, repair and maintain Alaska roads and highways. • Alaska should receive $225 million to address more than 140 bridges that are labeled “structurally deficient.” • Alaska should receive $362 million over five years for a mix of transit formula grants available under the Federal Transit Administration, which support public transportation systems. • Funding is available to help improve a portion of the Alaska Highway in Canada, between the Alaska border and Haines Junction, Yukon, and the Haines Cutoff that goes from Haines Junction to Haines in Alaska. Mining, oil and gas • The bill provides more than $4.7 billion to clean up old oil wells, such as those drilled by the federal government on the North Slope. About $150 million will be available to tribes involved in such clean-up, Murkowski said. • Projects to mine and develop critical minerals in Alaska, such as graphite used in lithium-ion batteries, will be eligible for federal loan guarantees to help them secure financing. • Some $6 billion will be available for battery processing and manufacturing, including grants for processing facilities, which could help firms looking to produce and refine battery materials such as graphite and rare earth elements in Alaska. • $18 billion in loan guarantees is available for the Alaska LNG project that seeks to tap long-stored natural gas from the North Slope for delivery in Asia. The guarantees could help the $38 billion project access funding. Water and wastewater system repair • The bill contains over $180 million for the state, an amount that will be spread across five years. • It approves $230 million for the EPA’s Alaska Native villages grant program, which supports new and improved wastewater and drinking water systems. About 245 communities in Alaska are eligible. The bill also increases the federal cost share from 50 percent to 75 percent. • The measure contains $3.5 billion for Indian Health Services sanitation facilities, with a portion available for Alaska villages without access to running water and sewer. • About $10 billion is available to states to address PFAS contamination through Clean Water and Drinking Water programs. The funding will focus on small and disadvantaged communities, such as those in Alaska. PFAS are manmade chemicals that have been widely used, including in foam to help fight fires, and have been found in the ground in some Alaska locations. They can damage the liver and immune system and cause birth defects. Ferry service • The bill creates a five-year, nationwide subsidy for ferry service in rural areas. The subsidy is about $200 million per year. A portion of that money will go to the Alaska Marine Highway System. • It changes federal law so the Alaska Marine Highway System can use federal highway-aid money to pay for operations and repairs. The exact amount of ferry funding will still be set by the governor and Alaska Legislature. • It allocates $250 million for a test program to build electric or “low-emitting” ferries that pollute less than a traditional ferryboat. The bill says at least one grant under the test program must be distributed in Alaska. • Alaska should receive $73 million under the Construction of Ferry Boats and Ferry Terminal Facilities Program, which includes support for operating costs. Alaska operators that have previously benefited under the program include the Alaska Marine Highway System, Ketchikan Gateway Borough, Inter-Island Ferry Authority, and Seldovia Village Tribe. Ports • $2.25 billion for the Port Infrastructure Development Program, which will provide funding for ports throughout Alaska. • Provides $250 million for remote and subsistence harbor construction, important in rural Alaska for delivery of supplies like diesel fuel to run power plants. • Provides $429 million on the Coast Guard’s unfunded priority list and for child care development centers. The money will support Coast Guard operations in Kodiak, Sitka and Ketchikan. Broadband • Alaska will get at least $100 million to improve internet access, part of $42 billion being provided nationally. • Alaska Native tribes will receive a share of $2 billion given to the national Tribal Broadband Connectivity Grant program, and another $1 billion is available for middle-mile broadband infrastructure grants. Railroads and airports • Alaska will get a share of three big nationwide grant programs. In the bill, those programs receive $25 billion, collectively. The state owned and operated 237 airports as of 2019, most in rural Alaska, according to state figures. Municipal airports, such as those owned by Juneau and Kenai, also stand to benefit. • Nationally, railroads will receive $5 billion through the Consolidated Rail Infrastructure and Safety Improvement Program; the Alaska Railroad will receive a share of that money. Other • About $215 million will be available over five years to help tribes adapt to climate issues. Of that, $130 million is for community relocation, which can help Alaska villages where land is eroding. • The Denali Commission, a federal agency created to develop rural Alaska infrastructure, receives $75 million in the bill. Some federal internet-infrastructure improvement programs require local communities to pitch in financially; the bill allows the Denali Commission to pay that local share. • Provides $146 million for hydropower and marine energy research, which will help support the the Alaska Hydrokinetic Energy Research Center at the University of Alaska Fairbanks. • Includes $264 million in funding for geothermal, wind, and solar energy projects, which will help support renewable energy projects in Alaska. • Provides over $34 billion for programs that support carbon capture and storage, hydropower, and other technologies that could benefit Alaska. • Provides more than $6 billion for energy efficiency measures such as the Weatherization Assistance Program that can help Alaskans reduce energy costs. • More than $3.3 billion is available for thinning and controlled burns to help create fuel breaks and reduce wildfire risk on Department of the Interior and Forest Service lands, including in Alaska. • More than $2 billion will go to the Department of the Interior and the Forest Service to restore the ecological health of lands and waters, including in Alaska. • Provides $20 million build, upgrade and operate public-use recreational cabins.

East Coast firm buys Alaska Communications for $343M

Alaska Communications, one of the state’s largest internet providers, has been sold to an East Coast telecommunications communications company and an investment firm. The sale was announced at the start of the year, and ATN International Inc. said July 22 in a written statement and filings with the Securities and Exchange Commission that the $343 million arrangement is now complete. Through a holding company, ATN will own 52 percent of Alaska Communications. An investment firm called Freedom 3 Investments IV will own 48 percent through another holding company. “Our brand, company name and commitment to Alaska remain the same,” said Heather Cavanaugh, a spokeswoman for Alaska Communications. She said there are no current plans to change prices. The company was delisted from the Nasdaq stock exchange on July 22, with shareholders paid $3.40 per share as part of the deal. Alaska Communications principally sells internet and phone service to businesses, but it’s also the second-largest provider of home internet service. Alaska Communications said in filings with the Securities and Exchange Commission that it has “less than 25 percent” of the state’s market share. Its larger competitor, GCI, was sold to a Colorado firm in 2017. As of March 31, Alaska Communications had 555 full-time employees, and slightly over half were union-represented by the IBEW. State and federal regulators approved the sale earlier this month. In its application to the Federal Communications Commission, ATN said it has previously provided internet access to “insular and underserved markets in the United States and the Caribbean region, and Bermuda.” Approving the purchase on July 16, federal regulators said the sale “is likely to benefit the public interest” in part because ATN is a larger company and will increase Alaska Communications’ access to money needed to expand its broadband network in Alaska. The approval notice said regulators expect the company to provide broadband access to more than 6,000 currently unserved locations — generally homes and businesses — in addition to an expansion planned under a federally funded program. Another planned project could provide more than 60,000 locations in Anchorage, Fairbanks and Juneau with high-speed wireless internet service, the FCC noted. Alaska regulators approved the sale on July 19, noting that “nothing suggests the transaction will meet opposition.” The approval notice said state regulators “have received several informal complaints” from customers on a variety of issues, and that the Regulatory Commission of Alaska has instructed regulatory staff “to monitor ACS going forward.” Brittany Loper, a spokeswoman for the commission, said that language is not unusual and the commission “will continue to monitor and process complaints as usual with the utility.”

Veto error preserves $4B Permanent Fund transfer

JUNEAU — Alaska Gov. Mike Dunleavy will not seek to block a $4 billion transfer of Alaska Permanent Fund earnings into the fund’s constitutionally protected principal. Dunleavy attempted to veto the transfer last week, but because of a mistake in the veto process, the item was not crossed out in the final version of Alaska’s state budget. Dunleavy’s office had said it was an error that should be corrected, but members of the Alaska House’s majority coalition decided against accepting his correction and sought a legal opinion to back their position. That opinion was expected July 6. Corey Allen Young, a spokesperson for Dunleavy, told The Associated Press by email that the transfer would not “adversely affect” Dunleavy’s proposal to restructure the fund and place a dividend formula in the constitution calling for a 50/50 split between what is drawn for dividends and government. In a response to a Daily News reporter’s questions about the Permanent Fund transfer, a Dunleavy spokesman did not answer those questions and instead referred to statements the governor’s office made to the Associated Press. After being informed by the Daily News of Dunleavy’s decision, House Speaker Louise Stutes, R-Kodiak, said she thinks the governor’s decision was “a wise move.” “That was part of the budget process. It ended up going through, even though it wasn’t intended,” she said. Stutes believes the governor’s decision will improve relations with legislators who have been skeptical of the governor’s approach to handling the Permanent Fund. “I think this will make things easier going forward,” she said. The $81 billion Permanent Fund has two main branches: a $61 billion, constitutionally protected principal, and a $20 billion earnings account that may be spent with a simple majority vote of the Alaska Legislature and the assent of the governor. Paulyn Swanson, a spokeswoman for the Alaska Permanent Fund Corp., said both the earnings reserve and principal “are fully invested together under the same asset allocation.” For fund managers, she said, the transfer involves only a change to accounting entries. The main effect of the transfer is on the politics of the fund. Moving money from the earnings account into the principal protects it from easy spending. An annual transfer from the Permanent Fund to the state treasury now accounts for two-thirds of the revenue that funds state services. In the current fiscal year, that transfer is about $3.1 billion. Unrestricted oil revenue was estimated earlier this year at $1.3 billion, and other taxes are estimated at $355 million. Dunleavy has proposed splitting the annual transfer in half, then using half for a constitutionally guaranteed Permanent Fund dividend while reserving the other half for state services. Such a plan would create a significant deficit unless oil revenue and investment revenue rise significantly, or unless state lawmakers and the governor significantly cut spending or raise taxes. Dunleavy has asked lawmakers to consider temporarily increasing the annual transfer, breaking a limit imposed in 2018, in order to pay for the larger dividend while legislators work out the other pieces of a long-term fiscal plan. The Fund has increased significantly in value this year, and it has enough to pay for Dunleavy’s proposed dividend. But lawmakers have thus far been unwilling to withdraw that extra money because spending from the fund now reduces the amount of money that can be invested for future earnings. Stutes leads the coalition majority in charge of the House of Representatives, and in a July 3 meeting, the coalition’s members decided against accepting the correction. Those who attended the meeting said the Legislature’s attorneys are drafting a legal opinion on the issue. “We are going to let it stand,” said Rep. Ivy Spohnholz, D-Anchorage. Many lawmakers are skeptical of Dunleavy’s approach, citing the way the state spent more than $16 billion from other savings accounts and failed to create a sustainable long-term fiscal plan. The House majority coalition has supported efforts to limit the Legislature’s ability to spend from the Permanent Fund. “Someone screwed up, and I believe it’s for the benefit of Alaskans,” said Rep. Andy Josephson, D-Anchorage.

Shutdown averted with two days to spare

JUNEAU — The Alaska House of Representatives has approved a state budget that will avert a government shutdown, and Gov. Mike Dunleavy said he will sign it. In a 28-10 vote on June 28, the House approved the “effective date clause,” which allows the budget to take effect July 1, the start of the state’s fiscal year. “Once I receive the budget, and review individual items, I will make a decision on possible line item vetoes and prepare the budget for implementation on July 1,” Dunleavy said in a brief written statement. “This action will avert a government shutdown.” The vote ended almost two weeks of uncertainty caused when House Republicans voted against the clause. Other legislators urged Dunleavy to sign the budget without the start date, but Dunleavy said doing so would be unconstitutional. The Alaska Department of Law said that without the clause, Alaska would have no budget until September. That would have caused a government shutdown starting July 1. Thousands of state workers would have been laid off, many state services would have been suspended and many state-paid contractors would have been forced to stop work. “We’ve got a lot of Alaskans that are probably jumping for joy about now thinking that their paychecks are going to continue on coming,” said Speaker of the House Louise Stutes, R-Kodiak. The House and Senate adjourned an ongoing special session immediately after the House approved the effective date clause. That clause required two-thirds of the House and two-thirds of the Senate to agree. Fully funding the budget as written requires three-quarters of the 40-member House and three-quarters of the 20-member Senate. Neither the House nor Senate have passed the budget by the needed margin. As a result, the Permanent Fund dividend in the budget is cut to $525, and there will not be enough money for programs that subsidize the cost of rural home electricity and pay college scholarships to Alaska high school students. Some construction projects in the Matanuska-Susitna Borough are also defunded. But lawmakers believe those issues will be resolved later this summer or in the fall, during an upcoming special session of the Legislature. Dunleavy could intensify the need for a fix by vetoing affected items. Those problems have been secondary to the prospect of a total government shutdown. “We’ve been so focused on not shutting down this state that I haven’t taken that next step,” Stutes said. Failed leverage led Alaska to the brink of a shutdown Alaska’s House of Representatives is divided between an 18-member Republican minority and a 21-member majority coalition that includes Democrats, Republicans and independents. Rep. Sara Rasmussen, R-Anchorage, is not a member of either group. For weeks, members of the minority have asked for action on a long-term state fiscal plan. The specific requests have varied. Kenai Republican Rep. Ron Gillham asked for a lengthy list of things including changes to the state’s constitutional spending cap and “a 15 percent cut across the board from all departments.” One of his requests — and one repeated by many minority Republicans — is a constitutional amendment proposed by Dunleavy. That amendment would increase the dividend to about $2,350 per person if approved by voters next year. But the proposal has been opposed by legislators in the House and Senate who say it is unaffordable without major new taxes. The Dunleavy administration’s projections call for $500 million in new taxes or spending cuts, plus spending from the Permanent Fund beyond a limit set by the Legislature in 2018. Republicans sought to use the vote on the effective date — and the vote on fully funding the budget — as levers to move the majority, but neither side was willing to budge. That led the state to the brink of a shutdown. Members of the majority suggested Dunleavy could sign the budget without the effective date clause, but the governor said he believes that would be an unconstitutional act. Attorney General Treg Taylor has sued a legislative agency in an attempt to force a legal decision on the matter. Taylor said June 28 that he intends to continue with the lawsuit. Courtroom arguments were scheduled for June 29, with an initial verdict afterward. In addition to the legal maneuvering, the House majority and minority had been talking behind closed doors for days about a deal to end the deadlock in the House. The details of that deal were revealed June 28: The House and Senate will create a “bicameral nonpartisan working group” that will try to create a comprehensive state fiscal plan before the Legislature’s next special session. The Republican minority will appoint its own members to the working group, as will the House’s coalition majority, the Senate’s Republican majority and the Senate’s Democratic minority. Miscommunications cause a tense final day After a weekend of offers and counteroffers, Stutes and Tilton had one final meeting about the deal early June 28. Because of miscommunications, Stutes said she left that meeting thinking the minority was unwilling to make a deal. Tilton said she believed negotiations were continuing and that a tentative schedule was in place. “There was definitely some communication challenges there,” Tilton said. Despite believing there was no deal, Stutes called for a vote anyway. ”I felt it was time that people knew where they stood, whether there was an effective date or there wasn’t,” Stutes said. Three votes, each requiring approval from 27 House members, were necessary. After two of the three votes, members of the minority asked for a break in order to vote on a “sense of the House,” a nonbinding statement that called for the creation of the budget working group. The House took an extended break to finalize the wording of that document, allow legislators to read it, then vote upon it. ”It was a very, very heated discussion on how we were going to move forward,” Tilton said. After legislators approved the creation of the working group, they voted to avert the shutdown. Republican Reps. James Kaufman of Anchorage, Ken McCarty of Eagle River, Tom McKay of Anchorage, Laddie Shaw of Anchorage and Cathy Tilton of Wasilla switched and voted in favor of the effective date clause and against the shutdown. Also voting yes was Rep. Sara Rasmussen, R-Anchorage, who was absent from the first vote and is not a member of either the majority or minority. All members of the majority voted in favor of the clause. Voting no were Republican Reps. Ben Carpenter of Nikiski; Mike Cronk of Tok; David Eastman of Wasilla; Ron Gillham of Kenai; DeLena Johnson of Palmer; Christopher Kurka of Wasilla; Kevin McCabe of Big Lake; Mike Prax of North Pole; George Rauscher of Sutton; and Sarah Vance of Homer. Excused absent from the votes were Reps. Tiffany Zulkosky, D-Bethel, and David Nelson, R-Anchorage. Nelson said he was at National Guard training that had been postponed from April. Zulkosky did not respond to a text message asking why she was absent. Tilton said she isn’t completely satisfied with the outcome, though she voted against the shutdown. Members of the minority disagree with the idea of funding the dividend and some Mat-Su construction projects from special accounts, and that didn’t change in the final budget. They also didn’t get a firm commitment on fiscal action in the next special session. Two years ago, the House and Senate created a similar working group to advise the Legislature on the future of the Permanent Fund. That group’s recommendations were never implemented. ”That is a cause for concern,” Tilton said, “and especially — I think our members have said it on record — what does it take to make change happen?”

Governor’s office seeks court ruling over budget bill

JUNEAU — Alaska attorney general Treg Taylor filed a lawsuit on June 21 against a nonpartisan legislative agency in an attempt to resolve a dispute that is contributing to the state’s slide toward a government shutdown July 1. Gov. Mike Dunleavy declared a proposed state budget “defective” on June 17, and the suit asks an Anchorage Superior Court judge to decide whether the governor may legally sign a budget that lacks a clause setting its start date. Members of the Alaska Legislature have argued that he may do so, but the governor disagrees. Taylor is requesting a speedy hearing and a decision no later than June 30, the date before the shutdown. “What we’re trying to do is get an answer to a question that everybody has, and since the Legislature and executive branch disagree, we’re looking to the courts to get an answer,” said assistant attorney general Grace Lee, a spokeswoman for the Alaska Department of Law. Alaska’s fiscal year starts July 1, and in order for state services to operate past that date, the state needs to have a budget determining how much money is available to spend on those services. Last week, Alaska’s House and Senate passed a budget, but opposition from minority Republicans in the House caused the failure of a key clause that dictates when the budget takes effect. That clause, known as the “effective date clause,” needs 27 votes in the 40-member House. It received only 23 — 21 from members of the House’s coalition majority, and two from Republicans who sit in the minority. Without the clause, the budget takes effect in September. Members of the coalition majority say the budget is written in such a way that if Dunleavy signs it without the effective date clause, a shutdown will be averted. The governor said last week that he believes their interpretation is wrong and that it is unconstitutional to sign it without the clause in place. Members of the majority have accused the governor of withholding his signature in order to support the House minority. Members of the minority have asked the majority for prompt action on a fiscal plan that may have at its heart a constitutional amendment proposed by Dunleavy. The governor has denied the majority’s claims. House Speaker Louise Stutes, R-Kodiak, declined to comment on the lawsuit June 21, and Senate President Peter Micciche, R-Soldotna, did not answer a phone call seeking comment. Rep. Sara Hannan, D-Juneau, chairs the Legislative Council, which oversees the agency being sued. She said she has not yet had time to talk to attorneys. Alaska’s constitution prohibits a sitting governor from suing the Legislature. THe suit was filed by the attorney general, not the governor, as a “public interest case,” Lee said. But in a June 18 letter to the chief justice of the Alaska Supreme Court, Dunleavy said he has “asked my attorney general to seek a determination of the issue through the Alaska Court System.” The letter goes on to request that the courts take up the issue “in the most expedited way possible.” Chief Justice Joel Bolger responded June 21 by saying that it is inappropriate for the chief justice to talk to someone about pending litigation. “I’m sure the attorney general’s office is familiar with the proper procedures to bring your concerns to the attention of the appropriate forum,” the chief justice wrote in a letter copied to Stutes and Senate President Peter Micciche, R-Soldotna. Dunleavy has called the Alaska Legislature into special session beginning June 23 in Juneau to address the effective date clause and other outstanding issues. Stutes, talking before the lawsuit was filed, said it is theoretically possible for legislators to deal with the issue in a single hour, but it may take until June 25 or even after the July 1 shutdown.

Biden administration moves to restore ‘Roadless Rule’

The Biden administration said June 11 it has begun a process to restore part or all of a rule that limits development in Southeast Alaska’s Tongass National Forest. The “Roadless Rule,” which deters logging, mining and development in most of the nation’s largest national forest, has been opposed by the state government since its inception almost 20 years ago and aspects affecting Alaska were eliminated under President Donald Trump. In a public notice, the U.S. Department of Agriculture said it will “repeal or replace” the Trump administration’s action. The notice said the decision is part of a broader environmental push by the administration of President Biden. The U.S. Department of Agriculture, which oversees national forests, will publish a new version of the rule in August, the notice said. Tourism, environmental and fishing organizations generally support the roadless rule, as do several of Southeast Alaska’s Native tribes; they sued last year to preserve it. Other business interests generally oppose the roadless rule. In a social-media message, Gov. Mike Dunleavy said he is disappointed that the Biden administration will restore it. “From tourism to timber, Alaska’s great Tongass National Forest holds much opportunity for Alaskans but the federal government wishes to see Alaskans suffer at the lack of jobs and prosperity,” he said. The new rule is the latest in a series of major Alaska environmental actions taken by the Biden administration in its first six months: • On his first day in office, the president froze oil and gas leasing on federal lands; • In April, the administration paused public lands orders that would have opened 11 million acres to mining; • At the start of this month, it suspended oil and gas leases in the Arctic National Wildlife Refuge. The administration has also taken some legal actions that have upset environmentalists. It has filed legal briefs in support of the King Cove road, through the Izembek National Wildlife Refuge, and in favor of a major oil drilling prospect in the National Petroleum Reserve on the North Slope. But Alaska Republicans have generally been critical of the Biden administration’s approach to Alaska. In his annual address to the Alaska Legislature this year, U.S. Sen. Dan Sullivan said the new president has an “anti-Alaska agenda” and that “Alaska is always the gift that national Democratic administrations give their extreme, radical environmental supporters.” The Juneau-based Southeast Alaska Conservation Council has been fighting legal battles for two decades to preserve the Roadless Rule. “If Biden were to give us some kind of sweetheart deal, we’d go a lot bigger,” said Meredith Trainor, the group’s executive director, dismissing Sullivan’s comment from earlier this year. She said the announcement is a “really big deal,” but it’s too soon to tell whether the Forest Service will seek to restore the Roadless Rule over the entire forest or over only part. The agency considered but rejected a partial rule last year. Under the federal process, the Department of Agriculture will publish a preliminary Roadless Rule in August, then take public comment. In a process that could take months or years, the department will work toward a final rule. “We very much hope and put our trust in the Biden administration that they will repeal the rule and not replace it. We don’t want to see some phony compromise option, but we don’t think that’s their intention,” she said. The past two decades have been marked by repeated lawsuits over the Roadless Rule. When the rule is in place, the State of Alaska, companies and pro-development groups sue to overturn it. When the rule suffers a defeat in court or is repealed, fishing, tourism, environmental and Native organizations sue to preserve it. Dunleavy said the state “will use every tool available to push back on the latest imposition,” implying legal action that would fight the new rule. Earlier this year, he asked the Alaska Legislature for several million dollars in legal-defense funds to be used in anti-federal lawsuits, and lawmakers are considering that request. Jim Clark, a Juneau attorney who served as chief of staff to former Gov. Frank Murkowski, is representing a group of business interests, the city of Wrangell and the Ketchikan Gateway Borough, which have sought to eliminate the roadless rule. He said it’s too early to determine the impact of Friday’s action. “We have no idea what that really is going to mean in terms of how they’re going to go about it,” he said. He said there is a misconception that removing the Roadless Rule means “a clear cut from Dixon Entrance to Yakutat and all the animals would die.” He has argued that mostly exempting the Tongass from the rule “will lift barriers to responsible development of an area the size of West Virginia.” Special permits are still required to build in the Tongass, and he’s not aware of any new projects since the Roadless Rule was repealed last year. The Organized Village of Kake is the lead plaintiff in last year’s lawsuit to preserve the Roadless Rule. Its president, Joel Jackson, said the forest is more valuable as it currently stands. It takes hundreds of years to grow old-growth timber, and Southeast Alaska is home to the last large stands in the world. It benefits wild salmon and other wildlife and encourages tourism, in addition to its environmental benefits, he said. “It is the last, largest temperate rainforest in the world, and it’s basically the lungs of the world. In that regard, it is very important to everyone, and it’s in our best interests to leave it be and let it continue to do what it’s been doing for thousands of years,” he said.

Alaska Senate GOP organizes; House deadlocked at 20-20

JUNEAU — The Alaska Senate’s 13 Republicans have ended a two-month leadership dispute and confirmed their control of the Senate as the 32nd Alaska State Legislature opened on Jan. 19 in Juneau. The 40 lawmakers of the Alaska House of Representatives are still divided 20-20 and unable to work on legislation. Separate disputes had threatened to leave both the House and Senate unable to work on most of the state’s pressing issues, but in a closed-door meeting Jan. 19, the Republicans named Sen. Peter Micciche, R-Soldotna, the new Senate president. The decision was confirmed with a unanimous vote on the Senate floor. “It looks like we have been successful on a Senate Republican majority,” Micciche said. “And today, on the first day of session, we are in fact ready to go to work,” he said. Eleven votes are needed to elect a Senate president, but the Senate’s 13 elected Republicans have been divided for months by disputes over the Permanent Fund dividend and state budget. Sen. Tom Begich, D-Anchorage, will be the Senate minority leader. As Republicans announced their organization, he said he was disappointed that the Senate failed to create a coalition that includes both Democrats and Republicans as leaders. “I think you could have put together an all-Alaska coalition that would have been great, but I think we will work well together,” he said. Micciche said Republicans hope to grow their group by adding Democrats. The Senate convened just after 10:30 a.m., with Lt. Gov. Kevin Meyer issuing oaths of office. Each senator wore a mask and, as they took their oaths, eschewed the typical closely spaced line and instead spread themselves throughout the Senate chamber. COVID-19 precautions Late last week, the nonpartisan Legislative Affairs Agency sent an email to legislators and staff warning them that one Capitol worker has already tested positive for COVID-19. Though the public remains banned from the state Capitol, the session has brought dozens of legislators and staff together from all parts of Alaska. To keep the pandemic from spreading, those in the Capitol are being tested for COVID-19 twice per week and are screened daily for fever and symptoms. Masks are mandated for legislators in the House and Senate chambers, and violators can be punished with steep fines; $250 for a first offense, and $500 for subsequent offenses. The mask policy has holes, however: Legislators can set the rules for their own offices, and many don’t require masks there. On Jan. 19, legislators also were allowed to remove their masks as they took their oaths of office. One member of the media at a time is being allowed to observe proceedings in the House and Senate chambers, a change from earlier restrictions that banned all outside observers. The chambers do contain microphones and robotic cameras, but access is controlled by the Legislature. House convenes into deadlock The Alaska House of Representatives convened just after 1 p.m., again with Meyer issuing the oaths of office. The House is divided 20-20 between a bloc of Republicans and a bloc that includes Democrats, independents and one Republican. Twenty-one votes are needed to choose a speaker of the House. Illustrating the divide, the House failed to confirm Rep. Bart LeBon, R-Fairbanks, as temporary Speaker of the House. That act that would have allowed the lieutenant governor to return to his normal duties while the House continues to debate who will be its permanent leader. “You guys must like me,” Meyer said after LeBon’s nomination failed, 20-20. “You’re going to love us,” said Rep. Chris Tuck, D-Anchorage, sarcastically replying from the House floor. The House adjourned until 10 a.m. Jan. 21. “For the foreseeable future, there will be a deadlock,” said Rep. Bryce Edgmon, I-Dillingham, and the de facto spokesman for the coalition bloc. Senate begins organizing With the House unable to work, the Senate will set the agenda for the Legislature’s opening days. That work will be slowed by the Senate’s late organization. Committee leaders determine what legislation advances or fails, and those leaders have not yet been named. After Micciche was voted Senate President, the new majority released the names of several other leaders. Sen. Shelley Hughes, R-Palmer, will be the Senate majority leader. Sen. Mia Costello, R-Anchorage, will be the Senate whip, in charge of ensuring the Senate’s leaders have enough votes for particular actions. The Alaska Senate does not normally have a whip, but the majority is operating this year on a nonbinding basis; members are not required to vote together on the budget, though they are expected to, Micciche said. Sens. Bert Stedman, R-Sitka, and Click Bishop, R-Fairbanks, will be in charge of drafting the state budget as leaders of the Senate Finance Committee. Sen. Gary Stevens, R-Kodiak, as leader of the Rules Committee, will be in charge of what bills are scheduled for a vote of the full Senate.

Legislature still in limbo on session eve

The Alaska Legislature is still struggling to pick its new leaders in the wake of the 2020 elections. While members of the Alaska Senate believe they will pick a new Senate president before the Legislature convenes Jan. 19 in Juneau, members of the Alaska House of Representatives say they expect their leadership deadlock to extend through the session’s start. Several legislators said the situation is similar to the 2018 session, when the House deadlocked for a month and failed to pick a leader until February. “I can’t imagine being in the House,” said Sen. Shelley Hughes, R-Palmer. “I’m thinking, ‘Wow, it’s bad enough right now in the Senate.’” In House and Senate elections this year, Republicans won a majority of seats. Internal divisions have kept Republicans from seizing those majorities, though the path is easier in the Senate, where Republicans hold 13 of the 20 seats. Eleven votes are needed to elect leaders and control what legislation advances. “It’s a little bit of a rollercoaster ride, but we’re all still working to get to a place where we can function effectively together,” said Sen. Peter Micciche, R-Soldotna. “So I think it’s going to happen before we go down. I certainly hope so.” “Mathematically, there are fewer of us,” Hughes said, comparing the situation in the Senate to the House, which has 40 members. “And so it’s easier to sort through the options, it takes less time to get through the different combinations.” Hughes and Micciche each said the principal sticking points preventing organization relate to the exact wording of the agreement that will define a new Senate majority. Hughes, Sen. Lora Reinbold, R-Eagle River, and Sen. Mike Shower, R-Wasilla, objected to the previous majority agreement, which required senators to vote together on the budget. The new agreement will not require them to do so, Hughes said. If Republicans fail to reach internal agreement, the Senate could organize around a bipartisan majority that includes Republicans and Democrats. Senate Minority Leader Tom Begich, D-Anchorage, said he’s made “reasonable offers” along those lines but is not optimistic that the Senate will have any kind of majority before Jan. 10. In the House, 21 votes are needed to elect a speaker and control the flow of legislation. Twenty-one Republicans were elected this fall, but Rep. Louise Stutes, R-Kodiak, said last month that she was unable to find common ground on the budget with her fellow Republicans. That leaves 20 Republicans on one side of the House and Stutes, four independents and 15 Democrats on the other side. Current Speaker of the House Bryce Edgmon, I-Dillingham, said Monday that it is “more likely than not” that members of the House will arrive in Juneau without agreement on who’s in charge. “I would be reluctant to give you odds on that one,” said Rep. DeLena Johnson, R-Palmer. Budgetary issues, differences over the Permanent Fund dividend and organizational disputes are separating members of the House’s two blocs. Members of each group, including Rep. Chris Tuck, D-Anchorage, and Rep. Bart LeBon, R-Fairbanks, said they would be willing to join a 30-person coalition that includes members from the opposing party, but Tuck said anything smaller would leave aisle-crossers open to attack from members of their own party. The example, he said, is what happened this year. Anchorage Republican Reps. Jennifer Johnston and Chuck Kopp were defeated in the Republican primary after joining a multipartisan coalition in the House. “Overall, I would say that really hurt,” Tuck said. New lawmakers might see that and be discouraged from compromising, he said, but he believes a solution is possible.

Outgoing Legislative Council sets COVID-19 policies for next session

The public will be barred from the Alaska State Capitol, members of the news media will be prohibited from entering the House and Senate chambers, and lawmakers must wear masks under a set of new anti-COVID-19 rules approved Dec. 28 by a committee of the Alaska Legislature. Any legislator that refuses to submit to a health screening at the Capitol’s entrance “will be denied entrance to the Capitol.” Any lawmaker who refuses to wear a face covering on the floor of the House or Senate “will be escorted … to their individual office where they shall remain,” according to the new enforcement guidelines. The rules will be in effect only until the House and Senate elect new leaders for the upcoming legislative session, but both halves of the Legislature are deadlocked, and it isn’t certain when either the House or Senate will resolve the leadership question. That uncertainty has left the joint House-Senate Legislative Council in charge, and it voted 11-1 to approve the rules. “These rules only apply until we have a new president and speaker. It is pretty extraordinary, but we know the fears that many of our employees have,” said Sen. Gary Stevens, R-Kodiak and the council’s chairman. The lone “no” vote was from Rep. DeLena Johnson, R-Palmer. Johnson said she believes the council’s recommendations could result in the disenfranchisement of Alaskans if their legislator refuses to follow the rules and is denied the ability to vote. With the House and Senate closely divided, the absence of even one legislator could decide key votes. “I personally don’t think Lora Reinbold should be disenfranchised from voting on a new Senate President,” she said, referring hypothetically to the Eagle River senator who declined to wear a mask in the Capitol earlier this year and castigated Alaska Airlines for its masking policy. (Reinbold has not yet spoken about the new rules or her intentions for the upcoming session.) “Maybe when you’re in a deadlock tie, keeping somebody off the floor might mean something,” she said. Four of the “yes” votes came from lawmakers who lost their reelection campaigns this fall. One of them, Senate President Cathy Giessel, R-Anchorage, compared the mask mandate to the Legislature’s “decorum” rules, which require legislators to abide by a dress code. “In this scenario that we’re living in right now, a mask is part of floor decorum,” she said. Legislators are also being asked to quarantine after traveling to or from Juneau and are being discouraged from making their usual return-to-district trips during the session. This year, legislators can arrive in Juneau up to 15 days before session and receive regular per diem expense payments for each day before the session begins. Johnson and other lawmakers question whether the Legislative Council’s vote has power past Jan. 19, when the next legislative session begins. The Alaska Supreme Court has repeatedly ruled that one Legislature cannot bind another, except through a constitutional amendment. The Dec. 28 vote took place during the 31st Legislature. When the 32nd Legislature begins, that action loses power, they say. “Clearly the work that we’re doing today becomes advisory in nature until some other mechanism is adopted,” said Rep. Bryce Edgmon, I-Dillingham. Stevens disagreed, saying the Dec. 28 vote is binding. “It’s a decision by Legislative Council that is in effect now, and it will be until the House and Senate decides who their presiding officers are going to be,” he said. “When these policies need to begin being enforced, we will still be within the 31st Alaska state Legislature, so in my opinion, it is appropriate that this group and the current presiding officers make policy decisions,” Megan Wallace, the Legislature’s legal services director, advised the Legislative Council. Jessica Geary is executive director of the Legislative Affairs Agency, the Legislature’s nonpartisan administrative wing. She said by text message that she considers the vote “binding (Legislative Council) policy until amended or rescinded by the next (Legislative Council).” Earlier this year, similar restrictions in Oregon’s state Capitol were met with violent opposition as rioters smashed buildings, sprayed bear mace and invaded the building. Stevens, who grew up in Oregon, said he doesn’t think that will happen in Alaska. Asked why, he said, “I’m not sure. We have some extremists, but we also have a lot of people who believe in the middle way and compromise and getting things done. I hope, I think, they have a stronger voice.”

State races tighten, flip after 70K more votes counted

New election results released by the state just before midnight Nov. 10 showed Alaska’s Republican congressional incumbents holding on to commanding leads, despite their challengers hoping mail-in and early voters would boost their low turnout from Election Day. But the latest batch did provide positive news for Democrats in some legislative races. Entering the day, Alaska had about 156,000 uncounted votes, or 45 percent of all ballots cast in this year’s election. More than 70,000 were counted by the end of Nov. 10, and additional counts are expected later this week. U.S. Rep. Don Young leads Democratic-endorsed independent challenger Alyse Galvin by 16 points, down from 26 on Election Day. U.S. Sen. Dan Sullivan led Democratic-endorsed independent Al Gross by 30 points on Election Day and now leads by 20 — 57 percent to 37 percent. At the top of the ticket, President Donald Trump leads Democratic candidate Joe Biden by almost 18 points, or 57 percent to 39 percent, down from 29 points on Election Day. Entering Nov. 10, Gross, Galvin and Biden needed to win about 70 percent of all remaining votes in order to overcome Republican leads on Election Day. Instead, they won between 53 percent and 57 percent. That means they must win a much greater percentage of the remaining 80,000 to 90,000 uncounted ballots to win. Any absentee ballots that arrive before the end of the day Nov. 13 will be counted as long as they were postmarked by Election Day. Following the first batch of results on Nov. 10, the Gross campaign sent out a statement saying the race remains too close to call. When asked if he is confident that future batches will more heavily favor Democrats, Gross campaign manager David Keith said “absolutely.” Gross would have to win more than three-fourths of the remaining ballots to win the election. Matt Shuckerow, Sullivan’s campaign manager, said the numbers reflect what the campaign anticipated, and Sullivan continues to hold a strong lead. He said he doesn’t want to be critical of the Gross campaign’s optimism, but eventually the numbers are undeniable. “I think ultimately our opponent is going to begin being far more realistic at what is happening,” Shuckerow said. The Galvin campaign declined to immediately comment on the new batch of results. All judges on the ballot are leading and on pace to be retained by voters. Ballot Measure 1, the proposed oil tax increase, continues to trail by a wide margin. Down by over 29 percentage points on Election Day, it still trails by a 22-point margin. The story is different for Ballot Measure 2, the three-part election-reform measure. Behind by 13 percentage points on Election Day, it now trails by about 5 points. If the state’s remaining uncounted ballots follow the same pattern as the Nov. 10 results, the measure will win. Few state legislative races have definitive results, but Democratic-backed independent Calvin Schrage is now leading Anchorage Republican Mel Gillis by 280 votes (about 4½ percentage points) with fewer than 700 remaining to be counted. In the race to replace Rep. Gabrielle LeDoux, R-Anchorage, Republican candidate David Nelson’s Election Day lead over Democratic candidate Lyn Franks is only 116 votes, or about 2.5 percent. About 770 ballots are believed to remain in that race. Elsewhere in Anchorage, several Democratic incumbents who trailed on Election Day now lead by significant margins. Rep. Ivy Spohnholz trailed Republican Paul Bauer on Election Day, but she now leads by 12 percentage points. About 730 votes are uncounted in that race, but the remaining votes are expected to lean Democratic. Democratic Sen. Bill Wielechowski, whose Anchorage district covers Spohnholz’s House district, trailed on Election Day but now leads Republican opponent Madeline Gaiser by 15 percentage points and appears on track for the largest victory in his political career. Almost 12,000 votes have been tallied, and about 1,500 remain. Rep. Chris Tuck leads Republican Kathy Henslee by about 4 percentage points with 6,816 votes tallied. About 600 votes remain to be counted. Tuck trailed Henslee by 13 percentage points on Election Day. Two Democratic incumbents in Fairbanks — Rep. Adam Wool and Rep. Grier Hopkins — also lead after trailing on Election Day. Two years after winning by a single vote, Fairbanks Republican Rep. Bart LeBon has a 731-vote lead over Democratic challenger Christopher Quist. Estimates indicate fewer than 400 votes remain to be counted there, making it one of a few definitive results from Nov. 10. The others were in the Matanuska-Susitna Borough, where Republicans swept statehouse offices as expected. Few votes were counted in the Anchorage House race between Republican incumbent Rep. Lance Pruitt and Democratic challenger Liz Snyder, or in the race between Anchorage Assemblywoman Suzanne LaFrance and Republican James Kaufman. The winner of the latter election will decide who replaces Rep. Jennifer Johnston. No additional votes were counted in southern Southeast Alaska, where incumbent Rep. Jonathan Kreiss-Tomkins, D-Sitka, has trailed since Election Day, or in rural northern, western and southwestern Alaska. Statewide turnout is on pace to break the all-time record, with about 350,000 votes expected. The old record, set in 2008, saw 327,341 votes cast.

State businesses received $1.2B in PPP loans

Data released July 6 by the federal Small Business Administration lists more than 1,600 Alaska businesses approved to receive over $150,000 each from the federal Paycheck Protection Program through the end of June. The information, released after a lawsuit by media companies and pressure by members of Congress and the public, puts names to more than $1.2 billion in forgivable loans granted to Alaska businesses and nonprofits struggling with the effects of the coronavirus pandemic. On a per-capita basis, Alaska received $1,640 per person, 23rd among the states, District of Columbia and Puerto Rico. In Alaska, about two-thirds of the federal aid has gone to 1,653 applicants. The remaining 9,516 recipients, each receiving less than $150,000, collectively account for $351 million and are not identified by name in the federal data. Those who are listed represent all aspects of Alaska life: groceries, car dealerships, restaurants, churches, Alaska Native corporations and tribes, gyms, bookstores, bicycle shops, hospitals, doctor’s offices, electrical utilities, telephone companies, hotels, the Girl Scouts, companies that drill wells, companies that sell land, dentists, airlines, landscapers, lumber mills and airlines. “It’s been really essential for us,” said Joshua Love, co-owner of Anchorage Yoga and Cycle, which received between $150,000 and $300,000 from the Paycheck Protection Program, which provides low-interest loans to businesses suffering from the pandemic. When the pandemic hit, his business had 62 employees, and though it switched to online classes during Anchorage’s hunker-down order, it still lost 70 percent of its income. “The only way we could really pay our employees was through the plan,” he said. Some workers went on unemployment while others got eight weeks of pay through the federal program. Alaskan Brewing Co. is the state’s largest brewery, but when bars closed and tourism dried up, the Juneau-based business took a major hit, said Andy Kline, its communications manager. According to the federal list, it received between $1 million and $2 million in PPP help. “That money went toward us being able to cover a lot of the expenses (from the pandemic),” he said. The brewery shifted staff around and remodeled its Juneau tasting room to accommodate social distancing. Breweries in Fairbanks, Anchorage and Skagway also received PPP help, according to the SBA list. Several Alaska Native regional and village corporation subsidiaries are at or near the top of the list. Six Tyonek Native Corp. branches received between $13.05 million and $28 million. Calista Corp. subsidiaries are listed as receiving more than $10 million. Tatitlek Native Corp. subsidiaries received at least $7.35 million. Some Native tribes are also listed as receiving PPP help. The Central Council of the Tlingit and Haida Indian Tribes of Alaska is shown as receiving between $2 million and $5 million, plus an additional $1 million to $2 million for its housing authority. The federal Coronavirus Aid, Relief and Economic Security Act calls for $8 billion to be shared among Native tribes, but some tribal governments have sued over a legal definition that would allow Native corporations to receive some of that aid, which would come atop PPP assistance. On July 7, a federal judge paused that additional aid, pending a legal appeal. The Anchorage Daily News received between $1 million and $2 million, according to the list. While Alaska’s major oil producers aren’t listed in the PPP data, several oilfield support companies are among the top recipients. Northern Energy Services, ICE Services and Cruz Construction are each listed as receiving between $5 million and $10 million. Jeff Miller, Cruz’s vice president of operations, said the help was “very important to keeping people working.” Alaska Rubber Group, which manufactures fittings and hoses for the oil industry, received $1 million to $2 million, according to federal data. Chief operating officer Mike Mortensen said PPP has “worked well. It’s enabled us to keep our employees employed, even when we had to do things like split shifts.” Mortensen said the pandemic hit his business with a “double dip” when oil producers cut back amid falling prices in April and May. “We did see quite a decline in our oilfield business, which is a major source of revenue for us,” he said. At the same time, with the pandemic keeping Alaskans at home, the company saw more demand for things like hot-rod hoses and other products used in hobbies and around the house. “We’re starting to see a turnaround. We’re starting to see some glimmers of hope,” he said. Miller, at Cruz Construction, sees things differently. “I definitely don’t feel the worst is behind us, not even close,” he said. Big construction projects take years of planning and funding. With those aspects on hold, “it’s going to be really, really bad in 2021 and 2022. It’s what’s in front of us that’s going to be the scary part,” he said.

Curbed by coronavirus, recall campaign behind pace for fall ballot

A year ago this month, opponents of Alaska Gov. Mike Dunleavy launched a campaign to remove him from office. Furious over budget cuts and led by a multipartisan coalition that included the last living signer of the Alaska Constitution, 49,006 Republicans, Democrats and independents signed a petition within five weeks. That was enough to start the recall process and a lengthy court fight that concluded earlier this year. Recall backers are now trying to force a statewide vote with a second petition. But in four months of work, they’ve gathered fewer signatures than they did in five weeks last year. The large gatherings that the recall campaign held in summer 2019 have been banned this year for public health reasons, and supporters say the difficulty in gathering signatures is solely to blame for the slow pace of the recall this year. The governor and his supporters have a different take. “I would like to believe it’s because folks believe we’re doing a decent job,” Dunleavy said. Through May, Alaska had the fewest virus deaths of any state, had one of the highest testing rates, and hospitalizations were comparatively few. This year’s budget process was smoother, Dunleavy’s cabinet has lost its most controversial members, and while the governor continues to support a larger Permanent Fund dividend — an issue that divides Alaskans — he hasn’t called a special session on the issue, as he did last year. With the recall lagging, plans for a summer vote have slipped to November, and even that is beginning to appear optimistic. “We’re past the submission date for the (Aug. 18) primary, and we’re coming up to the submission date for the general election ballot in November,” said Meda DeWitt, head of the political group backing the recall. Asked why the recall is moving so much slower this year, she laughed. “We have to be reasonable and realize we have the unprecedented pandemic,” she said. A recall ‘marathon’ Recall backers need the support of 71,252 registered Alaska voters to force a statewide vote, and signatures from last year’s petition don’t automatically roll over. Following a decision by the Alaska Supreme Court, signature-gathering kicked off in earnest at the end of February. By March 9, the campaign had 21,678 signatures. The state imposed public health restrictions a few days later, and signature-gathering slackened. The recall switched tactics, holding drive-through events and sending petition booklets to signers through the mail, but it hasn’t restored the pace of those first two weeks. By June 26, the recall campaign reported having only 40,200 signatures. DeWitt said Thursday that it now has more than 41,000. “This is a marathon. This is a slow burn,” she said. Other observers say the pandemic has given Dunleavy a chance to demonstrate his work with something other than the budget struggles that sparked the recall. “From my perspective as an outsider, I think Gov. Dunleavy’s handling of the COVID virus has allowed Alaskans to see his true leadership skills and his adaptability in a crisis, and I think they like what they see,” said Ann Brown, vice chair of the Alaska Republican Party. Alaskans agree with state’s coronavirus response Nationally, most Americans have liked how their governor is handling the pandemic, according to a series of national polls published in April, and feelings about the pandemic aren’t the same as opinions on Dunleavy in general. But campaign consultant Matt Larkin — a Dunleavy ally who has worked with the campaign against the recall — said polls also indicate Alaskans are feeling better about the governor. Last year, his polls indicated that in a recall election, Dunleavy would lose. Now, they say the opposite, Larkin said. “Our polling shows a majority of Alaskans do not support recalling the governor, and I believe that if a recall election were to happen, the governor would win handily,” Larkin said. Other polls show matters differently, and there is a lack of reliable third-party surveying in Alaska. “The question is, even though I think his favorability has moved up, would the same people still vote to recall him, even though they give a tip of the hat for the pandemic?” asked Jim Lottsfeldt, a political strategist who typically works with Democratic and independent candidates. ‘Is it worth the headache?’ Aaron Griffin is the kind of swing voter that Lottsfeldt referred to. A socially conservative Republican who lives in Kodiak and formerly served on the island borough’s assembly, he signed the recall petition last year but hasn’t signed the new edition this year. Griffin is still furious with the governor’s cuts to the state ferry system, but after the pandemic began, “I did think that his early handling of the COVID emergency was competent,” he said. He said he’s concerned that changing governors in the middle of the pandemic emergency would harm the state. In addition, this year is the second of Dunleavy’s term. If a recall election takes place next year, “he’s only going to have a year left, and really, honestly, is it worth the headache and the horsepower to make all of that stuff happen?” Alternately, there are people like Jerry Adams, who didn’t sign the first petition but last week was gathering signatures for the second. A longtime Juneau resident and founder of a local meat and seafood processing company, he said the governor’s budget cuts “really put a curve in us.” His work at a drive-through signing station marked the first time he was returning to volunteer since the COVID pandemic began. Communication is key, Dunleavy says Though the recall hasn’t yet forced a referendum on Dunleavy’s actions, DeWitt said Dunleavy “did dial back on his agenda, and he did change course on some things because of the pressure put on him by the recall.” Asked about the biggest difference between his actions last year and this year, the governor cited his outreach to the public. Speaking about the 2019 budget and his decision to veto more than $400 million in state spending, Dunleavy said, “I assumed that folks understood the math was out of whack, but when I look back on it, I think the people of Alaska needed more of a why, an explanation.” When the pandemic began this year, Dunleavy began a series of nightly news conferences streamed online and at times broadcast statewide by local TV stations. “This pandemic — it was absolutely crucial — we shared, on a daily basis, what we knew,” Dunleavy said. Some have said those appearances — which dwindled as case counts began to spike in June — are part of the reason for changing attitudes. “I should’ve had — maybe not nightly appearances on the budget — but maybe explaining why the reductions are happening,” Dunleavy said, reflecting on 2019. The governor said that even if the recall has slowed, he still expects a statewide vote. If that goes against him, “I can live with the fact that I did what I believe was the best job, and I put every ounce of effort to getting Alaska through this process of the pandemic.”

Judge approves bankruptcy sale for Ravn

An auction after the July 4 holiday may decide the future of Ravn Air Group, Alaska’s largest rural airline. Ravn filed for bankruptcy protection in April, and on Thursday, a Delaware bankruptcy judge approved a plan for selling the company in whole or in part to satisfy creditors. A specific date for the auction has not been set. It is expected to take place after July 4 but before a July 9 court hearing scheduled to finalize the sale. A Ravn attorney said he was not allowed to talk to the media about the case. It isn’t yet known who will bid on the airline, but in a written statement Thursday, Ravn Air said that “approximately 30 bidders expressed interest in buying all or some of the air group’s assets. Of these, five strategic buyers submitted bids to buy the entire air group.” “The outcome of today’s hearing turned out as we had hoped, and we are excited that our employees, our customers, and the many communities we serve will now have a very real opportunity to see Ravn back in the skies later this summer,” Ravn CEO Dave Pflieger said in a written statement. Among the attorneys participating in this week’s proceedings were two representing Float Shuttle, a Southern California commuter service. Rob McKinney, the company’s president, said the firm is interested in buying Ravn and getting it operating again in Alaska. “It’s definitely our intent to keep Ravn as a going concern. We’re all about service to communities, and we really believe we have the right team we’re putting together,” he said. Restarting Ravn is only one possible outcome: If the airline isn’t sold in whole or in pieces big enough that it can continue to operate, the bankruptcy plan calls for its assets to be put into a trust and sold to satisfy creditors. Attorneys for creditors have been debating since April whether to end Ravn and sell its aircraft and other aircraft piecemeal, in what’s known as Chapter 7 bankruptcy, or in a manner that would allow the company to continue operating in Alaska or elsewhere. An analysis conducted as part of its bankruptcy proceedings estimated that Ravn’s assets in liquidation would be worth between $21.2 million and $33 million, far less than its debts of $151.5 million to $185.8 million. Before filing for bankruptcy on April 5, Ravn operated more than 400 flights per day using a fleet of 72 aircraft. During the coronavirus pandemic, passenger traffic dropped more than 90 percent. “Because of the current economic circumstances, the debtors’ financial condition, and the substantial working capital needed to restart the debtors’ operations, the debtors have no prospect of generating positive cash flow before 2021 at the earliest,” according to court filings. What will emerge Several longtime players in Alaska’s air service industry said while there may be bids in the bankruptcy auction to take all of Ravn’s assets it is unlikely that an airline will reemerge with a reach close to what Ravn had before it shuttered. Ravn Air Group regularly serviced 118 communities across the state and had approximately 1,300 employees when it stopped flying in early April. The carrier conducted both FAA Part 121 scheduled passenger and freight service to regional hubs with larger aircraft as well as Part 135 air taxi and charter service to smaller communities predominantly with single-engine aircraft through its subsidiary Ravn Connect. Ravn also comprised approximately 20 percent of the charter flight market across much of the state, according to the company. Danny Seybert, former CEO of PenAir, said in an interview that he believes smaller carriers have largely backfilled the space left in Part 135 air taxi and charter service in the nearly three months since Ravn grounded its fleet. “That void has been filled very nicely by very competent carriers,” Seybert said. “Now those communities have better, reliable service.” Residents in many of the communities Ravn served — where it was often the only carrier — had become increasingly critical of the airline in recent years for deteriorating reliability in its business. Ravn purchased PenAir out of bankruptcy in 2018 for $12.3 million. PenAir operated for decades out of Anchorage serving Southcentral and Southwest Alaska. However, an unsuccessful foray into Lower 48 markets strained the company’s finances. Matt Atkinson, an owner of Fairbanks-based Wright Air Service said there it’s possible a smaller air taxi with more efficient routing could arise out of Ravn but he otherwise generally echoed Seybert’s assessment of the situation. “Carriers around the state have stepped up in a major way and absorbed capacity,” said Atkinson, who is also president of the Alaska Air Carriers Association board of directors. Wright operates primarily in Interior Alaska, but began serving some North Slope communities when Ravn shut down. “With the tight markets Ravn did a lot of good things,” Atkinson said. He added that COVID-19 — which Ravn leaders said pushed the company into bankruptcy — has suppressed air travel demand in Alaska’s villages as it has nationwide so the new air taxi market picture won’t be clear until the pandemic is over. Atkinson said Wright Air is one of the bidders for some of Ravn’s assets, but is not interested in the entire airline. Seybert said the scheduled Part 121 side of Ravn’s operations are “a whole different picture” and he sees room for a smaller carrier to operate in that space. Alaska Airlines announced June 22 that it would be flying Embraer 175 aircraft, which can carry up to 76 passengers, to several hub communities across the starting in October through its regional sister airline Horizon Air. Alaska has traditionally flown larger Boeing 737-series jetliners. The major carrier also said in May that it will be serving the Bristol Bay region — formerly a major market for Ravn — year-round once the busy salmon season there wraps up. Alaska previously flew to the Bristol Bay hubs of Dillingham and King Salmon during the summer peak for the commercial fishing and tourism industries. Seybert noted that Alaska Airlines has filled some of the service gaps left by Ravn but added that even the smaller Embraer 175s are too large to service Unalaska and other Alaska Peninsula communities. Unalaska is the busiest commercial fishing town in the country with roughly 55,000 passengers passing through the small community each year, according to Seybert, who said the current situation of mostly charter service is untenable over the long-term. He emphasized that while Ravn’s bankruptcy was a major shake-up to the state’s air service industry, similarly impactful events have happened before. “There will always be a carrier that will step up and meet the needs of the communities,” he said. Seybert declined to comment on whether he is pursuing assets in the bankruptcy auction.

LBA Committee OKs release of CARES Act funds

A committee of the Alaska Legislature approved Gov. Mike Dunleavy’s plan to spend federal coronavirus aid on May 11, but a handful of lawmakers warned that their vote might not be legal. The governor’s plan calls for $568.5 million to cities and boroughs, as much as $100 million for fishermen and fishing businesses, and $289.3 million for small businesses that have not received aid from existing federal programs. Other sections of the approved plan include $10 million to fight homelessness and $52 million for the Alaska Department of Transportation and Public Facilities. Legislative attorneys previously warned that a vote of the full Legislature is needed to legally approve the three biggest pieces of the governor’s plan. The governor has said he disagrees with that interpretation. Members of the Legislative Budget and Audit Committee agreed with the governor, citing the need to get money to Alaskans quickly, and overturned chairman Chris Tuck, D-Anchorage, to approve the plan. The plan has three main pieces: • Community aid. Cities, towns, villages and boroughs will split $568.5 million that can be spent according to rules set by the U.S. Treasury Department. Municipal officials told a legislative committee earlier this month that they believe those rules are so restrictive that much of the money cannot be spent legally. The Municipality of Anchorage said it feels differently and that Congress intended to allow cities and boroughs to use the aid to cover lost tax revenue. Rep. Mark Neuman, R-Big Lake, said he expects Congress will “continue to hear that local control is the best way” and that the issue will be resolved. • Small-business aid. The Alaska Industrial Development and Export Authority, contracting with Credit Union 1, will offer up to $289.3 million in grants to small businesses. Grants will be granted to businesses with 50 or fewer full-time employees that did not qualify for federal aid programs under the CARES Act. The loans are up to $100,000, and recipients will be subject to audits and other restrictions. The commissioner of the Alaska Department of Commerce, Community and Economic Development said nonprofits would also be eligible for grants. • Fisheries aid. The state can accept up to $100 million for aid to fishermen and fishing businesses, but right now, it is scheduled to receive only $50 million. The Alaska Department of Fish and Game will administer the aid program. Rick Green, a special assistant in the department, said the agency is “still working out the avenue the funds will take on their way down to be distributed.” Smaller pieces have involved $10 million for rental and mortgage assistance to be administered by the Alaska Housing Finance Corporation, funding for rural airports, money for the Whittier Tunnel, and cash for local transit systems. Lawmakers in the Budget and Audit Committee talked for almost three hours about the legality of approving the governor’s plan in committee rather than by the whole Legislature. “So far no one has been able to show me how this is legal. You’re all saying ignore it. Some of us are having a hard time ignoring it,” said Rep. Chris Tuck, D-Anchorage and the committee’s chairman. The budget and audit committee can make limited budget decisions on behalf of the full Legislature when lawmakers are not in session, and it normally can only increase line items already funded with federal cash. The governor’s proposal calls for creating new line items funded by the federal CARES Act. The committee cannot alter the governor’s plan, even if there is a mistake. That contributed to delays, as the administration had to rewrite elements of the plan. Legislative reluctance added further delay. A Department of Law spokeswoman said the department has no public documents explaining the administration’s position. The spokeswoman, Maria Bahr, previously said that those documents are covered by attorney-client privilege. Despite the legal questions, a majority of the committee said the state is in an emergency and action is needed quickly. “The COVID virus itself is stretching the limits of this state and the communities, and this money does need to be dissipated as soon as possible,” said Senate President Cathy Giessel, R-Anchorage. Sen. Bert Stedman, R-Sitka, said the full Legislature will eventually be asked to ratify the committee’s action. In the meantime, the money will go out to communities and programs picked by the governor. The final vote was unanimous in favor after Tuck’s opposition was defeated in a procedural vote, 3-7.

Working group falls short of plan to calculate PFD

JUNEAU — An eight-member legislative panel has failed to reach agreement on possible changes to the Alaska Permanent Fund dividend, leaving legislators with no firm guidance on an issue that is expected to consume their attention this year. The legislative session began Jan. 21, and lawmakers are again expected to struggle to balance the state budget, which contains a $1.5 billion deficit if legislators and Gov. Mike Dunleavy don’t raise taxes, cut state services or cut the Permanent Fund dividend. The “Bicameral Permanent Fund Working Group” was created in 2019 to provide policy recommendations to the wider Legislature, and its membership amounted to a “microcosm” of the Alaska Legislature’s 60 members, said its chairs, Rep. Jennifer Johnston, R-Anchorage, and Sen. Click Bishop, R-Fairbanks. In seven months of meetings, the working group agreed on only one recommendation, which was finalized Jan. 20: The Legislature should not violate a Permanent Fund spending cap approved in 2018. If followed, that could deny any supplemental Permanent Fund dividend payments, such as those proposed by the governor last year. Sen. Shelley Hughes, R-Palmer and a member of the working group, said she doesn’t believe the recommendation completely excludes the possibility. There was no agreement on whether the traditional Permanent Fund dividend formula should change, and if so, how. In failing to reach consensus, the working group’s actions, as well as its membership, are a microcosm of the Legislature. “Unfortunately, I would agree with that,” said Rep. Kelly Merrick, R-Eagle River, one of the working group’s members, when asked whether its failure to reach agreement is emblematic of the Legislature as a whole. Rep. Jonathan Kreiss-Tomkins, D-Sitka, said he felt the workgroup limited itself and that its work isn’t a failure. “It was my perspective that our scope of work was somewhat restrained, so it never felt that we never threw ourselves headlong into looking at new dividend formulas,” he said. Two years ago, lawmakers capped the amount of money that may be transferred each year from the Permanent Fund to the treasury but didn’t say how much of that transfer should be reserved for dividends and how much should be used to pay for state services. The capped transfer is not large enough to pay for both government services and a Permanent Fund dividend under the traditional formula used since 1982. But legislators do not agree on a solution. Some prefer to cut services in order to sustain the traditional formula, which they see as different from other expenses. Some contend that taxes must be raised. Others prefer to simply cut the dividend to preserve services while balancing the books. Arguments over the appropriate size of the dividend have taken place each year since 2016, when then-Gov. Bill Walker vetoed half of it. Hughes said she expects similar arguments this year, but with a different flavor. “Last year, it was pretty much over budget amount and PFDs. This year, you’re going to hear a lot more about revenues,” Hughes said, adding that debates over a higher gas tax and a school tax are possible. Further complicating matters is the fact that the 2018 cap can be bypassed if a majority of the House, Senate and the governor agree. That means there will always be pressure to increase the dividend at the expense of the Permanent Fund’s long-term earnings. “So long as the dividend formula is unresolved, there is going to be political risk to the Permanent Fund,” Kreiss-Tomkins said.


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