James Brooks

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.

On AG advice, Elections Division rejects recall petition

The Alaska Division of Elections on Nov. 4 declined to certify a petition to recall Gov. Michael J. Dunleavy from office, citing a legal opinion by the state attorney general. Proponents say they will challenge the rejection in court. The opinion, issued Nov. 4 by Alaska Attorney General Kevin Clarkson, says petitioners gathered enough signatures, paid the appropriate fees and did the “technical” work correctly, but that the four allegations against the governor “fail to meet any of the listed grounds for recall — neglect of duty, incompetence, or lack of fitness.” “The recall application failed to make these showings. The grounds of incompetence and lack of fitness, as a matter of law, were not applicable here,” Clarkson said in a written statement. Recall campaign manager Claire Pywell said backers intend to file an appeal Nov. 5 in Anchorage Superior Court. “Without question, the recall application submitted to the Division of Elections meets the standard under Alaska law,” said recall attorney and former attorney general Jahna Lindemuth in a written statement. “This rejection is without basis, and we will now turn to the courts for a remedy. We do so with confidence that we will receive fair treatment and we will prevail.” Dunleavy is on a trade mission to Japan this week, but deputy communications director Jeff Turner provided a statement by email. “Today’s opinion by the attorney general appears to be well reasoned. As I have always said, the allegations by the recall group are not legitimate reasons to overturn the outcome of the statewide election held barely a year ago,” the governor said. Recall supporters gathered more than 49,000 signatures in little over a month because of discontent with the governor’s decision to veto more than $400 million from the state operating budget. About half those vetoes were subsequently reversed. Even with 23 signature pages rejected for a technical error, recall backers had more than the 28,501 signatures needed to submit the petition to the Alaska Division of Elections for consideration. If the recall petition is upheld in court, backers would need to collect 71,252 verified signatures to trigger a special election. If the governor is recalled in that election, Lt. Gov. Kevin Meyer would become governor. Recall supporters listed four reasons for removing Dunleavy: • He failed to appoint a judge under the schedule required by state law; • He used state money and resources to make “partisan statements about political opponents and supporters”; • He committed a mistake with a budget veto; • And he violated the state constitution’s separation of powers with specific line-item budget vetoes. The legal opinion issued addresses each of those four allegations in turn. It attributes the budget veto mistake to a “scrivener’s error,” not an action by the governor, and says the Alaska Constitution permits the governor to delete “sums of money in any appropriation bill at his discretion.” On the allegation that the governor used state money and resources for partisan ends, the legal opinion says the recall petition doesn’t make a strong enough case. “Without more facts, it is impossible to determine whether the advertisements or mailers were intended for partisan purposes and whether the language was partisan,” the opinion states. Under the rules governing recall petitions, a recall statement cannot exceed 200 words. On the first reason for the recall, that the governor failed to appoint a judge to a vacancy within 45 days as required by law, the opinion says that because the position was still filled at the time of the replacement, with a departure still pending, it didn’t qualify as a vacancy. In addition, “because the forty-five day timeframe is merely procedural rather than substantive, the mere failure to comply with it does not amount to neglect of duty,” the opinion states. A footnote says the 45-day timeline is “considered more of a guideline than a mandate” and compares it to the often-ignored state law limiting sessions of the Alaska Legislature to 90 days. “Legislators cannot be subject to a recall application for the mere failure to adjourn in ninety days, just as the governor cannot be subject to a recall application for the failure to meet the forty-five day timeline for appointment of a judge, especially where no judicial seat was left vacant,” the opinion asserts. Maria Bahr, an assistant attorney general with the Alaska Department of Law, said she did not know who worked on the opinion, but it was provided to the attorney general. Division of Elections director Gail Fenumiai said she received the legal opinion Nov. 4 and had two draft decisions ready to go, depending upon the advice of the Department of Law. When the attorney general advised rejecting the petition, she followed suit. “I base all of my decisions using the advice of the Department of Law,” she said. Asked whether she had ever acted against that advice, she said no. In 1992, the only other time the Alaska Division of Elections has considered a recall petition against a sitting governor, the Department of Law hired independent counsel to avoid the appearance of a conflict of interest. In that case, Division of Elections director Charlot Thickstun approved a recall petition against then-Gov. Wally Hickel and Lt. Gov. Jack Coghill despite the advice of independent legal counsel Hal Brown, a former state attorney general. Thickstun said at the time that it was “patently inappropriate” to have the attorney general, “who is appointed by and serves at the pleasure of the governor,” appoint the independent counsel. After Thickstun approved the recall, the state sued itself: Attorney General Charlie Cole sought to have Thickstun’s decision overturned by the court system. “You cannot run a democratic government with the director of elections … setting off on a one-way frolic of her own,” he said at the time. Cole dropped the issue after others filed suit. Five cases were levied against the Division of Elections before a judge in Fairbanks ruled in 1993 that Thickstun was partially correct and the recall could continue. By then, backers had abandoned their cause, and both Hickel and Coghill finished their terms of office.

Dunleavy takes another crack at District M, taps Revak

Gov. Michael J. Dunleavy has appointed Anchorage Republican Rep. Josh Revak to an Alaska Senate seat left vacant by the August death of Chris Birch. The seat is key to the state’s ongoing debate over the Permanent Fund dividend, and the struggle to fill it has generated a historic amount of friction among Republicans. The governor announced the appointment Sept. 27. Revak’s appointment is subject to confirmation by the Alaska Senate’s 12 Republicans, and in a written statement, Senate President Cathy Giessel, R-Anchorage, said Republicans are determining a time to meet and consider the appointment. “It would be an honor to serve with them if they choose to confirm me,” Revak said by phone from Washington, D.C., where he was attending a reunion of his military unit. On Sept. 20, Senate Republicans failed to confirm the governor’s first choice for the vacancy, Rep. Laddie Shaw. It was the first time in state history that sitting Republicans declined to confirm a candidate nominated by local Republicans and picked by a Republican governor. The 6-6 vote on Shaw’s nomination, one vote shy of confirmation, was due to Senate Republicans’ ongoing disagreement over the Alaska Permanent Fund dividend. The six who voted no on Shaw either offered no comment when asked about Revak’s appointment or did answer their cellphones Friday. Shaw had voted in favor of a payment using the traditional formula in state law. Half of the Senate’s Republicans (and an 11-9 majority of the Senate overall) voted in favor of a smaller amount. One of the votes in favor of the smaller amount came from Birch. If he is replaced by a senator in favor of the traditional dividend formula, it would deadlock the Senate 10-10 unless another lawmaker changes his or her vote. Revak voted for a traditional dividend in the House this year. “I have a voting record on the dividend, but I haven’t spoken about it with the Senate,” he said when asked about the vote. Dunleavy also supports a traditional dividend payment. Speaking to reporters about Revak’s prospects for confirmation, the governor said, “We’re hopeful, just like we were with Laddie Shaw.” Like Shaw, Revak represents one half of the South Anchorage district Birch was elected to represent. Like Shaw, Revak is a military veteran and was first elected to the House last year. “He’s well-qualified, and we think he will make a good senator,” Dunleavy said of Revak. Shaw and House Minority Leader Lance Pruitt, R-Anchorage, offered their support for Revak in a written statement. “There is absolutely no good reason on this Earth that he should not be confirmed for this seat, and I look forward to calling him ‘My Senator,’” Shaw wrote. Revak was not one of the three candidates suggested to the governor by local party officials. Governors are not required to follow the wishes of local officials but traditionally have done so. Dunleavy press secretary Matt Shuckerow said by phone that because Revak has already been elected to the House after an endorsement by local officials, he has their support. “The governor feels that Josh Revak has won in the district, is a sitting representative, has been elected in the district and has been supported in the district, so in his eyes, it makes him one of the more qualified candidates out there,” Shuckerow said. Revak has previously worked as a staffer for U.S. Rep. Don Young, R-Alaska, and U.S. Sen. Dan Sullivan, R-Alaska, and both lawmakers offered him their congratulations Sept. 27. Revak said he learned Sept. 26 that Dunleavy would be appointing him to the seat. “This was very much a shock to me,” he said. “I didn’t realize I was being vetted for this. I was just sort of going about my daily life here and yesterday got a call from the governor’s office. “The governor called me and said, ‘Josh, I would like to appoint you to go through the process to fill the vacant Senate seat, and would you accept?’” Revak said. He said the governor did not ask about the dividend. On Sept. 27, he took time out from a bus tour of Mount Vernon, President George Washington’s traditional home, to watch the governor announce the pick. He said he has since spoken briefly with Giessel to offer her respect as Senate president and “let her know that I’m very much looking forward to sitting down with the senators.” If senators reject Revak, Dunleavy must name a replacement within 10 days of the rejection.

PFD continues to divide the GOP

On Sept. 19, Alaska Senate Republicans left a closed-door meeting in Anchorage and walked past Rep. Laddie Shaw, R-Anchorage, without a word. Shaw eventually got the news: Those Republicans had deadlocked 6-6, failing to confirm his appointment to a vacant Senate seat. The next day, the Alaska Republican Party’s central committee started a meeting in Fairbanks. Shaw was greeted by applause. The Republicans who had voted against him — and some Republican members of the House — were confronted by a resolution of disapproval. That measure failed narrowly. One year before the 2020 primary election, Alaska’s Republican Party is deeply divided on the issue of the Permanent Fund dividend, and that divide has effects that cover every Alaskan. Democrats are also split on the dividend, but they have a fraction of the power that Republicans do statewide. Last year, Alaskans sent 23 Republicans to the House of Representatives and 13 Republicans to the Senate, more than enough to secure majorities in each body and provide support for the agenda of Gov. Michael J. Dunleavy. But differences over the payment of this year’s Permanent Fund dividend prevented the creation of a pure Republican majority. The House is governed by a coalition that includes Democrats and independents. In the Senate, Republicans have named a Democrat their majority leader, and there are persistent speculation that it, too, could be governed by a coalition by the time the next Legislature convenes in January. “There’s no doubt that conversation has percolated up because of this impasse,” said Sen. John Coghill, R-North Pole, one of six senators who voted against Shaw’s confirmation. “I didn’t support (Shaw) because of the long-term economy of Alaska and how the PFD plays into it,” he said. Between 1982 and 2016, the state relied on a formula in state law to determine the amount of the Permanent Fund dividend. Starting in 2016, and every year since, the dividend has been set by legislative or gubernatorial fiat. In 2018, lawmakers agreed to cap the amount of money that can be taken from the Permanent Fund each year. That money might be spent on dividends or government services. This year, Coghill and a majority of legislators voted for a “surplus” dividend — an amount set determined by the amount of money left over after cutting the budget. Paying more, he said, would require violating the spending cap and overspending from the Permanent Fund, even though it contains enough money to do so. In the Senate, the vote for the surplus dividend was 11-9. In the House, Shaw voted with the minority in opposition. “I couldn’t support him because the Senate is so close on those issues, in my view, it would’ve been not a good thing for Alaska generally, and it certainly didn’t fit with the way the previous senator in the seat had it,” Coghill said. “It has become very clear that the position of either putting (the dividend) in the constitution or paying it out regardless of your ability to pay has become the main theme of many Republicans, and I don’t buy into that theme,” he said. Five other Republican senators — Senate President Cathy Giessel of Anchorage, Click Bishop of Fairbanks, Natasha von Imhof of Anchorage, Bert Stedman of Sitka and Gary Stevens of Kodiak — also voted against Shaw’s confirmation, but Coghill said he could only speak about his own reasons for voting no. Coghill said he does not believe the Senate is headed toward a coalition at this time. “That’s always a possibility, but guys like me are reluctant to split up the Republicans,” he said. Away from the Legislature, some rank-and-file Republicans have grown dissatisfied with the dividend positions staked out by Coghill, some of his Senate colleagues, and like-minded Republicans in the House. “We still get along, but I would say it is divisive,” said Carol Carman, a retired teacher and the Republican Party chairwoman of House District 9, which stretches from Valdez to Delta Junction. Before last week’s central committee meeting, Carman authored two motions. One was to censure Rep. Chuck Kopp, R-Anchorage, and Rep. Jennifer Johnston, R-Anchorage, for their role in creating a coalition House majority. The other was to partially censure the six no-voting senators and others in the House who failed to vote for the traditional dividend or support the governor’s proposed budget, among other matters. The second was presented by another person. Both motions failed, though the second failed in a closer vote than the first. State Republican Party Chairman Glenn Clary opposed censuring Kopp and Johnston, saying by phone that he believes such a decision should be up to district officials, not the state. That’s a change from prior practice. In 2016, under a prior chairman, the party pulled support from three Republicans who had joined the coalition. In this case, district officials opposed the censure, contributing to its defeat. Earlier this year, Rep. Gary Knopp, R-Kenai, who joined the bipartisan coalition, was censured by the party after district officials suggested it. “I’m doing my best to unify the party so we can move forward,” he said. Though Republicans are divided, he believes the situation in the state is improving rather than worsening. “What we need to do is repair relationships between all three bodies,” he said of House, Senate and the governor’s office. Carman agreed that should be the priority. “The only way we can back our governor and back the legislators who are backing our governor is to all unite,” she said.

Vetoes final with PFD session to come

Gov. Michael J. Dunleavy said he plans to continue to push for a Permanent Fund dividend calculated using the formula in state law. He also wants to keep cutting state spending, he said. “My plan is to continue to work at reducing this deficit as much as we possibly can, as soon as we possibly can,” Dunleavy said during a conference call with reporters Aug. 20, the day after he announced his final decisions on the state operating budget for the fiscal year that started July 1. Despite Dunleavy’s decision Aug. 19 to reverse a list of his prior vetoes, the governor said his budget plan moving forward remains the same: Cut state spending. “I’d like to get this issue of the deficit settled sooner rather than later,” Dunleavy said. The budget signed by Dunleavy this week formally has a surplus of $145.7 million, according to the state Office of Management and Budget. That takes into account a dividend reduced from the traditional formula and the draining of about $300 million from the state’s savings accounts: the Constitutional Budget Reserve and Statutory Budget Reserve. The traditional formula calls for a dividend of about $3,000 — costing around $1.94 billion total. The budget crafted by legislators and signed into law by Dunleavy calls for spending about $1 billion on the dividend, or about $1,600 per person. If the traditional formula is used to pay the dividend, there’s a deficit. If it isn’t, the deficit goes away. ‘There may need to be two checks’ In interviews on conservative talk radio shows earlier Aug. 20, the governor confirmed his intention to call the Alaska Legislature into a special session this fall to pursue a supplemental dividend payment above the amount already approved. He said he believes the upcoming 2020 election will put pressure on legislators, a majority of whom have refused to approve a $3,000 dividend. “There are a number of folks who don’t want to have an incomplete dividend hung around their necks,” Dunleavy told radio host Dan Fagan. Speaking to talk show host Michael Dukes, the governor said, “I believe in talking to some of the legislators that having the sole focus on the PFD will — not using a pun here, Michael — will return dividends.” On the radio and during the call with reporters, the governor said he intends to change his communications strategy and reach out directly to voters, in part because he is unhappy with news reports. Dunleavy announced his budget decisions Aug. 19 in a pre-recorded video, and he told reporters that the announcement was a “direct appeal to the people,” and his office will continue to do that. When it comes to the dividend, he told Dukes, he hopes the strategy switch will help convince legislators to change their minds on the dividend. “I am hoping the people of Alaska get agitated. I am hoping the people of Alaska really get on the phones and really start sending letters to their legislators,” Dunleavy said. Anne Weske, director of the Permanent Fund Dividend Division, previously said that any PFD payment in October must be finalized by the end of August. Given that, any additional payment would come later. “There may need to be two checks, one after another,” Dunleavy told Fagan. The Legislature and governor disagree about the dividend in large part because paying a traditional dividend — at current levels of state spending — requires violating a spending cap approved last year. Going above that cap increases the risk that the Permanent Fund will lose value, according to analyses by the Alaska Permanent Fund Corp. Some legislators have proposed a possible compromise: a change in the traditional payout formula in exchange for a one-time boost this year. Dunleavy said during the call with reporters that if people want to discuss “a potential statute change and constitutional amendment, we can have that discussion, but first and foremost we need to complete this incomplete dividend.” ‘The right thing to do at this time’ For months, state lawmakers have wrestled with the PFD and spending on services. The Legislature first cut $76 million from the state operating budget, according to figures from the Legislative Finance Division. Dunleavy then vetoed more than $400 million from that budget. The Legislature responded by passing a bill that added back most of that money. On Aug. 19, Dunleavy cut more than $200 million of those add-backs before signing the bill. Again, away went funding for Medicaid, the state court system and school bond debt, among cuts to other programs and agencies. Dunleavy agreed to restore other funding, but the majority of the cuts remained. Asked during the call about his reasons for cutting some programs and not others, Dunleavy said based on input from Alaskans and how late in the fiscal year final budget decisions were made “led us to conclude that adding money back into some of these areas would be the right thing to do at this time,” he said. “Our plan is, as we move forward in building a budget for the following year, is to engage a number of these organizations and groups early on this fall and have the discussion as to how they can assist by working together with us to lower the state’s footprint with regard to these programs and these services,” Dunleavy said. Dunleavy said that would also give groups more time to seek additional funding from other sources. Next year, the goal is to end the legislative session in 90 days, he said. That way, he said, “everyone has plenty of time to adjust to whatever budget realities will come out of this session.” What will this year’s PFD be? Though the governor and legislators have repeatedly mentioned a “$1,600 dividend,” this year’s payout has actually been estimated at $1,580, according to figures provided by Department of Revenue Commissioner Bruce Tangeman. That’s because the Legislature appropriated (and the governor approved) a set total amount for dividend payments, and that amount will be divided by the number of applicants. Legislators had estimated a slightly smaller number of applicants, leading the Legislative Finance Division to estimate a $1,597 payout on July 27. This is the first year since 2015 that the state budget does not set a specific amount for the dividend.

Legislature sends capital budget, $1,600 PFD and spending bills to gov

JUNEAU — The Alaska Legislature has approved legislation fixing the state’s four immediate fiscal problems, and now the final decision is up to Gov. Michael J. Dunleavy. On July 29, lawmakers passed two pieces of legislation that address this year’s Permanent Fund dividend, the governor’s operating budget vetoes, the capital budget and reverse sweep. • House Bill 2001 sets this year’s dividend at $1,600 per person and reverses all but $23.29 million of the $444 million in vetoes Dunleavy made to the state’s operating budget in June. The remaining vetoes include $20 million from the University of Alaska and travel reductions to many state agencies and departments. • Senate Bill 2002 funds the state’s capital budget with money from the Constitutional Budget Reserve and includes the “reverse sweep,” a procedural matter that prevents 54 state savings accounts from being automatically drained into the budget reserve. It also contains permission for the Legislature to spend $250 million from the Constitutional Budget Reserve on as-yet-undefined projects, such as wildfire fighting. The Legislature would be required to specify the spending at a future date. Legislation is not sent to the governor’s desk immediately when it passes the Legislature. Legislative drafters, lawyers and clerks first examine the bill before transmitting it to the governor. In addition, the leaders of the House and Senate have the final word on when a bill is transmitted, and they can hold on to legislation (though not indefinitely) before sending it to the governor. It remains unclear when the bills will be transmitted. “The Senate has every intent of getting the capital budget to the governor’s office as soon as possible,” Senate President Cathy Giessel, R-Anchorage, said by text message. “The money for roads, and funding for our UA scholars less than a month from classes starting, is too important, and will not be held up.” A spokesman for Speaker of the House Bryce Edgmon, I-Dillingham, was unable to answer questions before the end of the day on July 30. The current special session adjourns Aug. 6. According to the Alaska Constitution, if the Legislature is not in session, the governor has 20 days (Sundays excluded) to sign a bill, veto it, or allow it to become law without his signature, once it is transmitted to him. In a July 29 phone call with reporters, the governor said of the capital budget bill and reverse sweep that “we’re glad for that, and we’re glad because … it helps Alaskans.” The governor was less positive about the legislation setting the PFD amount and reversing many of his budget vetoes. In the same call, he referred to the bill as a “disappointment because the PFD was now taxed by almost 50 percent for every man, woman and child.” The governor has consistently maintained his view that the state’s budget should be balanced by cutting services and not raising taxes or reducing the dividend. In February, he introduced a proposal to do so in one year. He now believes that proposal should be implemented over two years. Even if the governor were to re-veto all of the budget items he vetoed in June, the state would not have a balanced budget if a full dividend were paid this year. The governor has said he will propose additional cuts next year.

Legislative leadership rejects Dunleavy’s call to Wasilla

JUNEAU — Two weeks before an anticipated special session in Wasilla, the leaders of the Alaska Legislature say they are rejecting Gov. Michael J. Dunleavy’s plans in favor of meetings in Juneau and Anchorage. In an emailed announcement June 24, Speaker of the House Bryce Edgmon, I-Dillingham, and Senate President Cathy Giessel, R-Anchorage, said, “The Alaska Legislature announced today it will convene in Juneau on July 8th for the 2nd special session, with the majority of meetings to be held in Anchorage.” While lawmakers lack the votes to change the special session agenda or timing laid out by the governor in a June 13 proclamation, the leaders of the House and Senate believe they can change the location away from Wasilla Middle School. The legality of such a decision is a significant question. “Really, a lot of this is gray area. It hasn’t been tested,” Edgmon said by phone. Article II, Section 9 of the state constitution says, “Special sessions may be called by the governor or by vote of two-thirds of the legislators.” State law implementing that section says in part, “The legislature may call itself into special session if two-thirds of the membership responds in the affirmative to a poll conducted by the presiding officer of each house.” Currently, fewer than 40 of the Legislature’s 60 members support a change to the governor’s agenda. All 15 members of the Alaska House Republican minority support it, as do at least six of the 10 members of the Senate who voted in favor of a traditional Permanent Fund dividend this year. State law also says the governor can designate a location for the special session. The constitution does not grant the governor that power, and Edgmon said the doctrine of separation of powers trumps state law in this case. “The Legislature is exercising its right to the location,” Edgmon said by phone. “Although we are one vote short of the 40-vote threshold to call ourselves into our own special session agenda, the majority of legislators in both bodies considers it our right to determine the location and venue best equipped to conduct business on the Governor’s special session call, while providing the most access to as many Alaskans possible,” Edgmon and Giessel said in their joint statement. The decision to keep the agenda and timing but not the location is making the governor and some lawmakers unhappy. “I feel like the Legislative leadership is pulling an end run to try to move the venue when they don’t have the votes,” said Rep. Colleen Sullivan-Leonard, R-Wasilla and co-chairwoman of the Legislature’s nine-member Matanuska-Susitna delegation. Hours before the statement from Edgmon and Giessel, the delegation had issued a press release welcoming the Legislature to the region. “I think we probably need an independent legal opinion on this. To arbitrarily challenge the governor … I don’t know legally they can do that,” Sullivan-Leonard said. In the Senate, Senate Majority Leader Mia Costello, R-Anchorage, is among the lawmakers in favor of a Wasilla session. She echoed Sullivan-Leonard’s concerns about legality and added, “Frankly, we have a trust problem with the public already, and I think we should follow the law.” The governor came within a step of calling the House and Senate leadership criminal. “The Senate President and Speaker of the House admit they lack the votes to change the venue or call a special session of their own, yet they are committed to thwarting the law and the voice of the Alaskan people. This is all part of why Alaskans have lost trust in their lawmakers. How can we with a straight face expect people to follow the law when the legislative leadership ignores, breaks, and skirts the law at every turn?” he wrote in a prepared statement. The issue of the Permanent Fund dividend is the sole item on the special session agenda envisioned by the governor and the session envisioned by the House and Senate leaders. The governor supports a dividend paid using the traditional formula in state law. The Legislature’s leaders — despite dissent from many of their members — do not. According to revenue projections for the fiscal year that begins July 1, the state does not have enough revenue to pay both a traditional dividend and spending at levels proposed by the Legislature. (The governor may cut the budget via the veto process, and a final decision is pending.) With tax increases off the table and sufficient budget vetoes unlikely, that means lawmakers and the governor must spend from savings in order to pay the traditional dividend. A majority of the House is opposed to spending from savings for the traditional dividend, as is half the Senate. The governor supports it, however, and he chose Wasilla, a hotbed of support for the traditional dividend.

Dunleavy launches ‘massive’ plan to cut state spending

JUNEAU — Alaska Gov. Mike Dunleavy on Wednesday unveiled his proposal to balance the state’s budget without new taxes and without a reduction to the Permanent Fund dividend. “This budget is going to impact all Alaskans. It’s too massive not to,” the governor said in a televised news conference from Juneau. The state released a trove of documents detailing his proposal on the state Office of Management and Budget’s website Wednesday morning. Initial figures released by OMB show the governor is proposing to spend $9.1 billion in the fiscal year that starts July 1. That figure does not include the Permanent Fund dividend. If the governor’s $1.9 billion in dividend spending is included, overall spending is near $11 billion. Last year’s budget, not including the dividend, was $10.9 billion, according to OMB figures. The dividend last year cost $1 billion. The governor had said he would cut the budget by $1.6 billion, but based on dividend-included figures, spending in his plan will be down less than that because of the boost to the dividend. Health care and K-12 education, the largest components of the state’s budget, are cut under the proposal. The Department of Education is cut from $1.66 billion to $1.34 billion under the governor’s plan. The Department of Health and Social Services is cut from $3.25 billion this year to $2.47 billion, according to figures from the Office of Management and Budget. One of the biggest duties of Health and Social Services is overseeing the federal-state Medicaid program, which provides health care to more than 210,000 Alaskans, according to the latest figures from the state. Of those, almost 48,000 are covered by Medicaid expansion by an executive order signed by former Gov. Bill Walker. Dunleavy will not reverse that order at this time, he said Wednesday, but the state will work with the federal Centers for Medicaid Services to adjust benefits, he and Arduin said. Medicaid spending, which stands at $2.27 billion, will be cut by $714 million, according to OMB figures. About one-third of that cut is state money; the remainder consists of federal dollars the state will forego, according to OMB’s analysis. State support for the University of Alaska is cut 45 percent, from $327 million to $193 million, but the university is granted the authority to raise additional money through tuition, grants or other sources to make up the difference if it can. Arduin said about 625 full-time state jobs would be cut under the budget, and if part-time positions are included, that figure is above 700. Those figures do not include cuts at the University of Alaska. The governor’s proposal must be vetted and approved by the Alaska House and the Alaska Senate before it becomes official. That process is expected to take several months, and the timeline may be lengthened by the House’s ongoing inability to elect a leader, a prerequisite to officially consider legislation. “We know this is just the beginning. This is the beginning of the journey for this budget,” Dunleavy said. Groups and agencies affected by the budget cuts are expected to spend Wednesday and the next few days examining the governor’s proposal to see how it would affect them.  

Dunleavy plans to release amended budget in January

JUNEAU — Gov. Michael J. Dunleavy’s full vision for Alaska’s budget will wait until January. In an interview with reporters before the start of the holiday open house Dec. 11 at the Governor’s Mansion in Juneau, Alaska’s new governor said he will use a modified version of former Gov. Bill Walker’s budget in order to meet a legal deadline. State law requires the governor to publicly release a budget proposal by Dec. 15 each year. “We’re going to roll it out probably on the 14th,” Dunleavy said. “It’s going to have some slight changes from what the governor (Walker) did because we need a little more time to actually put our stamp on it and spend some time working through the details with the different departments.” Dunleavy said the document coming this week will be amended “in January.” Office of Management and Budget Deputy Director Laura Cramer confirmed Dunleavy’s schedule as accurate. The governor said Alaskans should expect his budget will follow his campaign promises. “Public safety is job No. 1, making sure we have a balanced budget, putting our resources to work so we can get people back to work, and paying a full dividend,” he said. When it comes to a “full dividend,” Dunleavy confirmed that he means a dividend paid on the statutory formula and the repayment of portions of the dividend vetoed by Walker and cut by prior sessions of the Alaska Legislature. That proposal is expected to cost about $4 billion. Earlier in the day, Alaska Permanent Fund Corporation executive director Angela Rodell told the Daily News that she is planning for a $2.9 billion draw from the Permanent Fund next fiscal year. That amount was set by the Alaska Legislature last year as part of a plan for sustainable spending from the fund. “Everything about this administration is going to be about making things sustainable over the long term,” Dunleavy said, but Permanent Fund trustees have repeatedly warned about the dangers of withdrawing more money from the fund than called for under a “rules-based” approach. Earlier this year, they approved a resolution asking elected officials to keep within the rules, the better to allow investment officers to reduce risks to the state’s investments. Even staying within those rules carries some risks. In 2017, an independent analysis found that the fund stands a 50-50 chance of losing value and a significant chance of losing all of its investment earnings, which are held in an account unprotected by the Alaska Constitution. Speaking on other matters Dec. 11, Dunleavy said he will leave Alaska Dec. 12 for Washington, D.C. and meetings with President Donald Trump, the Secretary of the Department of Transportation, officials of the Federal Emergency Management Agency and other federal representatives regarding recovery efforts following the Nov. 30 Southcentral earthquake. “We’re still in the process of plugging in a few more appointments,” Dunleavy said of his itinerary. He said he has not yet named a new commissioner for the Department of Military and Veterans Affairs and is “still working over that particular appointment.”

Stability amid new adminstration at Permanent Fund Corp.

JUNEAU — New Alaska Gov. Michael J. Dunleavy has made sweeping changes to the management of state agencies since taking office Dec. 3, but in the first meeting of the Alaska Permanent Fund Board of Trustees since his term began, stability was the word of the day. “Stability is going to be critical,” said new Department of Revenue Commissioner Bruce Tangeman, who, along with Natural Resources Commissioner Corri Feige, took his seat as a corporation trustee Dec. 11 in Juneau at the start of the corporation’s regular quarterly meeting. Tangeman said that when it comes to the Dunleavy administration and the Permanent Fund Corp., “there’s no grand plan coming out of the gate.” No one at the corporation, whose headquarters is in Juneau, received resignation requests sent to more than 800 state employees by the new administration, and CEO Angela Rodell remains at the helm as she was under the Walker administration. The corporation also was not included in the administrative order issued by the governor last week. That order broadened the powers of the Office of Management and Budget, allowing it to absorb the budgetary machinery within various state agencies. During his campaign for governor, Dunleavy pledged to “pay Alaskans back the money owed to them after three years of dividend cuts.” Doing so would cost $3,733 per dividend recipient. Multiplied by the 593,000 recipients mentioned by interim dividend division director Anne Weske in October, the cost is $2.2 billion. Dunleavy also pledged to use the traditional dividend formula enshrined in state law, then put it into the Alaska Constitution. That formula would result in a dividend of just more than $3,000 in 2019, for a total of $1.8 billion. The $4 billion price tag for Dunleavy’s dividend plan would rise if there are more recipients. In an interview after his election win, the governor said he would look to the Permanent Fund — and specifically the reserve account that contains its investment earnings — to pay for the idea. That will require spending above and beyond the sustainable plan approved by Alaska legislators last year. According to figures presented Dec. 11 to the corporation’s board of trustees, the corporation will make $2.93 billion available to lawmakers for appropriation in the next fiscal year, which starts July 1. Rodell told the Daily News that so far, the corporation has not changed its expectations and is not planning to make more money available. We “need to see bills and legislation” before changing investments, she said. Earlier this year, the corporation’s board of trustees renewed their request for Alaska’s elected officials to abide by a “sustainable, rules-based approach” for spending from the Permanent Fund. Trustees have also requested the Legislature continue to provide inflation-proofing payments to the fund. In 2017, the Fund’s performance suffered when lawmakers briefly considered using the Permanent Fund to balance the state’s deficit and avoid a more politically difficult maneuver to spend money from the Constitutional Budget Reserve. The prospect of needing to come up with billions of dollars for the state treasury caused fund managers to pull money from longer-term investments into more liquid ones, hurting returns. Chief Investment Officer Marcus Frampton told trustees Dec. 11 that since lawmakers passed their sustainable-draw plan, the fund has been providing the state treasury with money on an installment basis rather than a lump multibillion-dollar sum at the start of the fiscal year. That allows the Permanent Fund to hold on to investments longer than it might otherwise, increasing earnings. “If you can keep an extra $100 million in the fund for nine months, it’s worth it,” Board of Trustees chairman Craig Richards said. The state treasury department has also allowed the Permanent Fund to vary its payments based on the needs of the treasury. When oil prices are higher than expected, it has delayed asking the Fund for money the Legislature appropriated. That allows fund managers to hold on to investments slightly longer. “If there were huge volatilities in the amounts, that could be really challenging to manage. I think that’s worth Revenue keeping in mind,” Frampton said.

Walker unveils budget; Dunleavy names budget director

Gov. Bill Walker unveiled the first “balanced budget” draft of his four-year term Nov. 26, but it will be up to Gov.-elect Mike Dunleavy to decide whether to implement it. Walker didn’t release exact numbers, but according to figures presented to the Anchorage Chamber of Commerce and in a spreadsheet released to the Anchorage Daily News, his budget appears to increase state spending by about $330 million for the fiscal year that begins July 1. That money would partially come from oil: The state is forecasting oil prices to average $76 per barrel during the current fiscal year, which ends June 30, and $75 per barrel next fiscal year. “Through over a billion dollars in cuts and the restructuring of the Permanent Fund and a little bit of relief on oil price, this year’s budget is a balanced budget, and that’s what we’ll be handing off in a week,” Pat Pitney, Walker’s director of the Office of Management and Budget, told Chamber members. It’s unclear how much, or if any, of the plan will be taken up by Dunleavy, who takes office Dec. 3. Under state law, the sitting governor is responsible for sending a budget proposal to the Legislature by Dec. 15. “Typically, they don’t stay the same, and that’s certainly appropriate,” Walker said. Walker isn’t the first governor to publicly unveil a budget before leaving office. Frank Murkowski did it in 2006. Incoming Gov. Sarah Palin promised to cut that proposal by $150 million, only to eventually sign an operating budget that increased spending and was the second-largest in state history at that point. Walker himself received a transition budget from departing Gov. Sean Parnell, who is now an adviser to Dunleavy. The governor’s budget proposal is always raw material for the legislative meat grinder. State lawmakers have their say on the budget and can take it in radically different directions from what was proposed by the governor. Walker’s announcement, given that Dunleavy will have his own opinions, amounts to a first draft of a first draft. And that’s before the real world enters the picture. When lawmakers ended their legislative session this year, they approved a budget of $11.2 billion. At the time, the Alaska Department of Revenue estimated that North Slope oil prices would average $63 per barrel and that production would average 526,600 barrels per day between July 1, 2018 and June 30, 2019. At those prices and production levels, the state was expected to have a deficit of about $693 million. So far, production has been only slightly below that estimate. Prices have been much higher, even with the recent dip. Through the end of last week, they’ve averaged $75.46 per barrel, more than enough to erase the deficit. “We will now expect a surplus,” said Sheldon Fisher, Alaska’s commissioner of Revenue, to the Chamber crowd. Walker is proposing to spend $230 million of that surplus on deferred maintenance projects across the state. He called it an effort to generate construction jobs and said that when combined with matching funds, it could generate as much as a billion dollars in economic activity. Other spending increases would go toward public education and public safety. In addition to oil, Walker and his advisers talked about the importance of Senate Bill 26, the Permanent Fund plan approved by the Legislature. That plan, signed into law earlier this year, calls for a regular transfer of money from the Permanent Fund’s investment earnings to the state’s accounts. That transfer can be divided between state services and a dividend however lawmakers wish. This year’s transfer was $2.7 billion. Next year’s will be $2.9 billion, thanks to the rising value of the fund. Walker is proposing an $1,800 Permanent Fund dividend, which would cost $1.17 billion. Dunleavy proposed a larger amount while campaigning for governor. “That will be a decision that the Legislature will have to make and the administration will have to make going forward,” Fisher said. Dunleavy taps consultant as budget director Donna Arduin is a little bit jet-lagged, but she’s ready to work. On Nov. 26, Arduin, president of the financial consulting firm Arduin, Laffer & Moore Econometrics, was one of four officials named by Gov.-elect Mike Dunleavy for his new cabinet. Arduin will serve as the director of the Office of Management and Budget. The other three appointments: • Jonathan Quick, chief of staff to Kenai Peninsula Borough Mayor Charlie Pierce, as commissioner of the Department of Administration. • Adam Crum, executive vice president of Northern Industrial Training, as commissioner of the Department of Health and Social Services. • Jason Brune, Cook Inlet Region Inc.’s senior director of land and resources, as commissioner of the Department of Environmental Conservation. The four follow the appointment of John MacKinnon as commissioner of the Department of Transportation and Public Facilities, Corri Feige for the Department of Natural Resources and Tamika Ledbetter for the Department of Labor and Workforce Development. As Arduin’s name was announced by press release, she was settling into a transition office six floors below the Juneau headquarters of the Office of Management and Budget. “I’ve done this many times before in other states. It’s what I’m passionate about,” she said of budget work. Arduin was living in northern Michigan when she got the call from Dunleavy, she said, and she was fewer than 48 hours removed from her arrival when the governor-elect announced her appointment. Arduin has a reputation as a budget fixer for Republican governors. She was deputy director of the budget for Michigan Gov. John Engler in the early 1990s, then joined New York Gov. George Pataki in 1995. Florida Gov. Jeb Bush named her his budget director after he won election in 1998. She moved across the country in 2003, becoming budget director for Gov. Arnold Schwarzenegger, but left that job after 11 months of shepherding the celebrity governor’s then-new administration. In 2005, she joined Arthur Laffer, an adviser to President Ronald Reagan, and created Arduin, Laffer & Moore Econometrics. Laffer is known as the father of supply-side economics. As a consultant, she has advised Republicans across the country, including Florida’s Rick Scott and Marco Rubio. In her various roles, she has favored libertarian and Republican approaches to fiscal policy, including broad tax and spending cuts. Her approach has garnered critics. In California, legislators were outraged by proposals to cut social services, and in Florida, the Sarasota Herald-Tribune published a detailed story in 2014 focused on controversial work performed by her firm. Talking Nov. 26, Arduin said she has worked all over the country, but Alaska has an advantage in that it is a relatively new state, and it is easier to change things. “Alaska has some unique opportunities to build some things anew,” she said. She said she is familiar with states that have drastic fluctuations in revenue, thanks to her experience with California’s income tax system. She said she wants to change the state’s “structural deficit” and provide fiscal stability. Summed up, that goal is straightforward: “Have predictability for dividends and those who rely on state money every year,” she said.

Deal struck on capital budget

The Legislature is headed back to Juneau. Don’t expect lawmakers to stay long. On July 27, the Legislature will convene what is expected to be a one-day special session to pass the state’s capital construction budget. “We have conducted a straw poll, and the 27th is the day,” Senate Majority Leader Peter Micciche said by phone Thursday. The capital budget funds road construction and building projects across Alaska, and most of its funding will come from the federal government, but it — like the state’s multibillion-dollar operating budget — was caught in the political divide between the Democrat-led House Majority and the predominantly Republican Senate Majority. An agreement between those two sides has now been reached. The Legislature failed to pass the capital construction budget before the July 1 start of the state fiscal year, and that failure has begun to have consequences. For example, the Alaska Department of Transportation has long planned a $40 million effort to rebuild nine miles of the Haines Highway. The project was supposed to go out to bid in late July, but with no capital budget, it hasn’t. Aurah Landau, a spokeswoman for the DOT’s Southcoast Region, said that if the Legislature delays the capital budget until July 27, the project will be delayed. Other projects have also been affected, according to a list provided by DOT. Those include the effort to replace the ferry Tustumena, and projects to renovate roads and bridges from Ketchikan to Fairbanks. During this year’s regular legislative session, the House passed one version of the capital budget; the Senate passed another Informal negotiations between the House Majority and Senate Majority have reached the harvest phase, and lawmakers will take formal action next week. “We wouldn’t risk coming down if we didn’t feel like there was a comfortable agreement,” House Minority Leader Charisse Millett, R-Anchorage, said by phone. She said her caucus was preparing to arrive in Juneau by the evening of July 26, ready to start work the next day. Under the Alaska Constitution, the approval of two-thirds of the Legislature is necessary to call a special session. Gov. Bill Walker could also call a special session, but he is required to give 30 days’ notice beforehand. If lawmakers call themselves into action, they can act more quickly. Micciche said allowing informal negotiations outside of session will allow lawmakers to conclude their work quickly next week. Unlike during the first and second special sessions this year, lawmakers will not be collecting per diem payments while waiting for a small group of negotiators to finish their work. “I think it’s a better operating philosophy, instead of being in special session, to do the one-dayer or two-dayer,” Micciche said. I think when we get to the end of the regular sessions, these remaining conference committee-type issues —it doesn’t require the entire Legislature waiting in Juneau doing technical sessions.” Details of the compromise capital budget have not been officially released, but legislators familiar with the compromise said it does not include a boost to the Permanent Fund Dividend. Members of the House suggested including money in the capital budget to raise the dividend to $2,200 per person, but that idea was rejected by the Senate. The agreement will also decide the future of funding for several Alaska megaprojects, including Juneau Access and the Knik Arm Bridge. Gov. Bill Walker has said the state will not advance Juneau Access, but funding for the road north out of Juneau has not yet been recommitted to other projects. According to an outline of the deal obtained by the Alaska Journal of Commerce, the capital budget will look a lot like the version that passed out of the House Finance Committee in mid-June. It is likely that half of the money remaining for the Juneau Access project will be reappropriated to other projects in the Lynn Canal area, as well as to fund a new school for Kivalina — a court-mandated project. Similarly, half of the remaining funds for the Knik Arm crossing are to be divided amongst the Kivalina school, state ferry maintenance and other highway projects, according to the draft budget deal. There is $5 million in state funds for the Knik Arm crossing and $47 million in Juneau Access funds available to be moved to other projects, according to DOT. The plan would use about $122 million from the Statutory Budget Reserve Fund, which has $288 million left in it. The agreement is also expected to determine how much money the state will spend on cashable tax credits to oil and gas explorers and small producing companies. It would add $20 million to the $57 million approved for oil and gas tax credit payments in the operating budget, bringing the total between the two to the statutory calculation of about $77 million, according to the outline. Last week the Legislature passed a bill immediately ending cash outlays for the credits, but the state still owes almost $1 billion in already-outstanding subsidy claims. Additionally, the deal would not pull any of the roughly $100 million the Alaska Gasline Development Corp. has to advance gasline projects. An amendment quietly added to the Senate’s capital budget — largely a political statement — would’ve pulled $50 million from AGDC for other state expenses. House Finance Co-chair Paul Seaton, R-Homer, said in May when the move was made that the AGDC money would be duplicative, as the programs it would’ve supported were already funded in early versions of the operating budget. Seaton also said his caucus did not want to pull the rug out from under the administration’s pursuit of the Alaska LNG Project by taking back the previously appropriated money. Contact reporter James Brooks at [email protected] Journal reporter Elwood Brehmer contributed to this report. He can be reached at [email protected]


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