Knowles spending plan, amount draw jeers from Republican side

Republican legislative leaders were predictably critical of proposals put forth by Gov. Tony Knowles in his State of the State address Jan. 16.The governor’s plan to increase spending came in for the heaviest criticism."When you’re in a hole, the first thing you do is stop digging," said Senate President Rick Halford, R-Chugiak. "It simply doesn’t make sense for the governor to dramatically increase spending when we’re facing a $1 billion deficit."House Speaker Brian Porter said, "I’d like to tell you I support every part of the governor’s speech, but I can’t. The very first thing he mentioned was increased spending, and that is the very first thing Alaskans tell us they want to curtail."Porter, R-Anchorage, also said he was disappointed the governor didn’t include a proposal involving Alaska Permanent Fund earnings. The fund was created to help sustain public services when oil production declined, he said.Porter also said that he supported a personal income tax, but he was sure a majority of the House Republicans did not.House Finance Committee co-chairman Rep. Eldon Mulder challenged the governor’s figures on a proposed $180 million increase in the state operating budget. Mulder, R-Anchorage, said his tally showed the increases really amount to $300 million in increased general fund spending.Knowles has proposed about $190 million in new social services and education spending, $55 million for Medicaid and $47 million in his homeland security initiative, Mulder said.When combined with expected requests for supplementals to the budget, the increases will hit $300 million, he said."Proposing $400 million in new revenues and $300 million in new spending only nets $100 million," Mulder said. "It doesn’t get you very far," in addressing the fiscal gap.Senate Finance Committee co-chairman Dave Donley, R-Anchorage, said 26 states have responded to projected budget deficits by "implementing well-constructed budget reductions and by setting priorities for state services."Donley urged Knowles to instruct state agencies to prepare contingency plans for reduced budgets.

Gas line study group disbanding

The North Slope gas producers group, working on the feasibility of a gas pipeline, is winding up work and closing shop, at least for now, a state legislative committee was told Jan. 16.Results of more than $100 million in engineering and environmental studies have been sent to the three companies sponsoring the effort, BP Exploration (Alaska) Inc., ExxonMobil Production Co. and Phillips Alaska Inc., and what happens next is up to them, Dave MacDowell, external affairs manager for the joint project team, told the House-Senate Natural Gas Committee in Juneau.However, one of the producers, speaking separately, voiced continued optimism about prospects for a pipeline along a southern, or Alaska Highway, route."We believe a project along the southern route has the best chance of being developed in a timely fashion and will be the one most supported by the various stakeholders," Mike Hurley, a Phillips spokesmen, told the legislators.MacDowell said that at the peak of the study last fall, the three-company effort employed as many as 800 contractor employees as well as 100 people assigned by the companies.The effort is now down to about 200 contractor employees and 60 company staff and will be "close to zero" by February, he said.One project that remains is a test of new permafrost trenching technology that will be conducted in early February near Deadhorse and in the Interior north of Fairbanks, MacDowell said. If the procedure works as expected there could be big cost savings.Efforts will continue on federal legislation and initiatives with the state to get fiscal clarity and certainty for a gas project, he said, but these involve the individual companies, not the joint project group.The major effort with federal legislation is a provision that streamlines regulatory review. Language doing this is now in proposed energy legislation in the U.S. Senate.Alone among the three producers, Phillips supports a federal tax credit that would become effective if gas prices dropped. It would be a form of protection with a very high risk project, Phillips’ Hurley told the legislative committee.On the state initiatives, Hurley said fiscal clarity refers to clearly defined rules and understanding on administration of state taxes and royalties and involves discussions with the state departments of Natural Resources, which administers royalty, and Revenue, which administers state taxes.Fiscal certainty, however, means some understanding with the state that taxes on a gas project will not change over time, Hurley said. With a billion-dollar fiscal gap facing the state, this is a matter of some concern to the gas producers.BP, ExxonMobil and Phillips are now analyzing the information, and the next step is up to the individual companies, MacDowell said.

An effective rainmaker can make it pour sales

The constant quest for most businesses, small, medium and large, lies in generating qualified sales leads. For the company marketing to a highly targeted base of hard-to-corral prospects, especially high-level executives at large corporations, the need becomes more pressing, the process more complex and the success more elusive. Enter the rainmaker, the subject of sales mythology, part-man, part-god. Like the Loch Ness monster, such people are rarely evidenced, but sometimes considered as a solution of last resort when business is down or flat and "for some unknown reason, our message isn’t getting out to prospects and we’re not getting invited to the pitch." In most cases, the hired-gun rainmaker fails to deliver. Why? The expectations are unrealistic; the time frame for the delivery of results is too immediate and short term; the company is not really committed to the process; or the incentive compensation basis is out of skew. Rainmaking works In spite of the difficulties and risks associated with the process, rainmaking can work if executed with strategic discipline and managed with professional care. Rainmaking can deliver the serious pre-sales meetings with senior management. Successful rainmakers are familiar with the reconnoitering techniques that result in usable market intelligence. What are the projects on the horizon and what’s the timing for associated spending decisions? Will there be request for proposal competition? Have preliminary budgets been developed? The professional rainmakers don’t close the sale. That’s not their job. Their responsibility is to profile the prospect, fill the information gaps and conduct a highly qualified pre-sell that establishes the foundation for a cost-effective and time efficient follow-up sales blitz. The bottom line is: Good rainmakers know how to get in the door and make a strong pre-sell. Naturally, the stronger the pre-sell, the better the ultimate close rate. Introducing Corporate Rain Corporate Rain Inc., with headquarters in New York, is one of a handful of rainmaking consultancies servicing the corporate marketplace. The company, which boasts clients such as insurance giant AIG, Amadeus, Deloitte&Touche, E*Trade and Avaya Communications, employs 35 associates, both full-time employees and independent contractors who have had extensive experience in a corporate executive position. These high-level sales cowboys work the phones on behalf of CRI’s clients, which run the gamut from medium to very large companies. Because the biggest obstacle in getting to the prospect decision maker is making it through the gatekeeper, persistence coated in trust and lacquered in courtesy is a must. For that reason CRI associates are experienced, more than 35 years old, and carry significant business and corporate scar tissue, which allows them to exhibit executive judgment and demeanor. Most have chosen to exit the corporate rat race, yet still practice in their chosen field, executive sales. CRI maintains that it averages a 10-20 percent pre-sell hit rate. CRI associates position themselves as staff members of the client they are representing, make repeated calls to targeted prospects, qualify the prospects according to client criteria, set up meetings for client top executives and glean detailed information from each prospect that will assist the client in tailor-making the pitch in each case. The process The CRI process follows a logical course of action. The procedure commences with client-provided prospect lists normally culled from in-house contacts and files, selected listings from local area business journals, as well as prospects from national list brokers. CRI will offer to confirm the client-provided prospect lists by appending names, addresses and direct phone numbers of the appropriate decision makers. This cleaning up process helps to significantly drive up the appointment rate during the call cycle. Each calling campaign is preceded by an introductory letter-mailing campaign, executed by the client, not CRI, at a suggested mailing rate of 80-100 letters per month. In this way the client controls the volume and rate of mailing. The client is also asked to appoint an internal administrative assistant to monitor response and resends. Mailing blitzes will sometimes be executed in support of trade shows and as an introduction to calls that are made seeking sales appointments during the shows. CRI manages an up-to-the-minute prospect database. The monitoring system calls for immediate notification to the client as soon as an appointment has been set together with information like time, date, location, key prospects attending, as well as background data like prospect needs or issues, level of purchase interest and competitor involvement. Databases continue to be updated with new contacts and contact information, all of which is transmitted to the client on a regular, ongoing basis. Evidently, the process works. According to Brad Smith, CRI executive vice president, "Amadeus is a classic example of how the system works and delivers." CRI executives met with key Amadeus players to plan strategic coordination, undergo pitch training for CRI associates, and learn company background and capabilities. In less than five months, CRI landed 70 meetings with key prospects and provided competitive feedback that helped Amadeus further fine tune its sales process. Alf Nucifora is an Atlanta-based marketing consultant.  

Boston Pizza's building first restaurant in Alaska

A franchise operator for Boston Pizza Restaurants USA Inc. aims to open the first Anchorage location April 2, with other possible area sites to follow in future years.A Fairbanks restaurant also is planned and could begin construction this spring, restaurant officials said.Construction of the eatery, at Benson Boulevard and C Street, should be finished in March, said Don McMillan, general manager of franchisee Great White North LLC.McMillan already operates a Boston’s Pizza restaurant in Salmon Arm, British Columbia, between Vancouver, British Columbia, and Calgary, Alberta.The restaurant’s menu features pizza, pasta, soups, sandwiches and salads with a sports bar on one side and a restaurant on the other.Boston Pizza Restaurants also have operated a restaurant in Yellowknife, Northwest Territories, and another in Whitehorse, Yukon Territory, for several years, said company chief executive and owner Jim Treliving. Those restaurants have done well, "so it was natural for us to go to Alaska," he said."We thought Alaska would be a great spot for us," Treliving said in a telephone interview.McMillan’s franchise agreement allows him to develop three restaurants in the Anchorage area, said Rick Villalpando, director of franchising and development."We see there’s a real opportunity for us in the Anchorage market," he said, adding that the area has only recently added other casual dining restaurants like its competitors Chili’s and Applebee’s. The separate areas for the sports bar and family dining help set Boston’s Pizza apart, he said."There’s a niche there for that type of concept. We think we’ll do very well there," he said.McMillan said future Anchorage store development depends on diners’ response to the first restaurant."We hope to build one every year and a half in the next three to four years," he said.The company plans to open another Boston’s Pizza in Fairbanks, said Villalpando, who is based in Vancouver. Negotiations are under way for property, and Villalpando hopes construction can begin in spring.McMillan began planning for the Anchorage franchise nearly two years ago and obtained the franchise rights last August. Construction began in late September led by Anchorage-based general contractor Linder Construction Inc.The restaurant measures 5,600 square feet and will seat 204 diners including 73 in the sports bar, he said. Another 52 seats will be available on the patio.Boston’s Pizza will employ 75 to 80 people in full- and part-time positions, said McMillan, who in early January drove to the new Anchorage site from British Columbia.McMillan said he initially chose the franchise for its dining concept and because of the people he met at the corporate office.Boston’s Pizza traces its roots to the first store, which opened in 1964 in Edmonton, Alberta. The company later expanded across western Canada. The Richmond, British Columbia-based restaurant, which now operates more than 150 locations in North America, tallied more than $300 million in 2001 annual revenue. The company aims to open 30 to 45 restaurants in eastern Canada and 35 in the United States by the end of 2003.Company owner Treliving believes a slowing economy won’t hamper growth plans, since Boston’s Pizza is a midprice restaurant.The company operates a regional office in Dallas. Boston’s Pizza, which first entered the U.S. market in 1998, operates restaurants in Tempe, Ariz., Spokane, Wash., and Denver among others and is now building a restaurant in Grand Junction, Colo.

Providence looks to expand mental health services

Providence Alaska Medical Center officials are planning to build a $25 million, 60-bed psychiatric facility in Anchorage. The hospital has applied to the state Department of Health and Social Services for approval.The state must determine a need for health care facilities before construction.The project would expand Providence’s mental health services to meet community needs for children 12 and younger, said Susan Humphrey-Barnett, assistant administrator. In Anchorage, Alaska Psychiatric Institute doesn’t serve that age group, although North Star Behavioral Health System does, she said.Alaskans send some adolescents, age 13 to 18, out of state for long-term care since these types of residential care facilities are available outside Alaska, she said.A new facility would be built off campus and allow Providence to convert its existing 27 mental health services beds to medical/surgical beds, thereby decreasing the need to divert some emergency patients to other facilities because rooms aren’t available, she said. Diversions have also been caused by a lack of qualified hospital staff, she said."Both the mental health needs of the community would be served through this, and the diversion, although it would not necessarily be solved, but could be ameliorated," Humphrey-Barnett said.The project could be completed in 2004, according to a state public notice.Providence in Anchorage is certified by the state for 345 patient beds. The new certification would increase that total to 405 beds, including the mental health care beds.Planning for the facility traces its roots back several years when hospital officials looked to move some ancillary services off campus, Humphrey-Barnett said. The goal was to gain more medical/surgical beds. They next studied what patient services could be relocated and chose mental health services.Last summer Providence submitted a certificate of need application to the state health department for approval of a 60-bed child/adolescent psychiatric facility, Humphrey-Barnett said.After submitting the application, Providence and state health officials discussed the possibility of the hospital starting designated evaluation and treatment services, she said. This type of evaluation and treatment for all ages is involuntary and often is a court-ordered process, she said.The hospitals in Fairbanks and Juneau provide these services, and the state wanted a hospital in Anchorage to provide them as well, she said.Based on these discussions Providence chose to alter plans for the facility. Although the number of beds will remain the same, fewer beds will be used for children and adolescents. Of the 60 beds, 18 will be designated evaluation and treatment beds, the existing 10-bed adult unit will be moved to the new facility, and 24 beds will be designated for adolescents and eight for children.At Providence’s current 27-bed unit, 11 beds are for adults and 16 are for adolescents.Public comments on the project change were due Jan. 26, and officials from the Department of Health and Social Services were to review the project through Feb. 12. Next the department commissioner would issue a decision on the certificate of need application, Humphrey-Barnett said.As part of the planning process, Providence officials have selected six possible sites near the Anchorage campus, she said.Further planning, including site selection and design, could begin after hospital officials receive approval from the state, she said.Although the facility, if approved, would be certified for 60 beds, Providence may choose to start with fewer beds and eventually expand, said hospital spokeswoman Karina Jennings.

Start-ups need skilled advisors

The Alaska economy is in dire need of an active private capital network. Many well-intentioned local investors invest directly in exciting entrepreneurial opportunities, but more often than not they are neither making a wise investment nor really helping the entrepreneur.In Alaska, frequently the business plans for new businesses are underdeveloped and the operational skills of management are untested. It is very important for most new ventures in Alaska to seek active capital before seeking passive uninvolved capital.The active capital investor should have documented successes in operating and investing in businesses similar or related to the new business opportunity. The active investor should be on the board of directors or have a representative on the board.He or she would usually own a more senior class of stock than the founders and require rights. For instance, if certain operating benchmarks aren’t attained, then the active capital investor has the right to do whatever it takes to salvage the business. This type of investor is very important to the future of high-growth business opportunities in Alaska.Alaska has very few "business validators," but we do have numerous "real estate validators." There are several real estate developers who have successful track records as well as repeat investors waiting for the next opportunity. This is the type of successful network we need to grow for nonreal estate opportunities.Seldom do first-time entrepreneurs realize that the appropriate initial money usually has many strings attached, but those strings frequently turn out to be lifelines that rescue the company.In concert with active investors, developing a strong board of directors or advisory board is often the difference between success and failure for many companies. The initial "business validator" helps a new business establish credibility. This investor is considered an active capital source and helps the entrepreneur validate his or her business model and provides valuation to other potential investors.Most available capital sources in Alaska are considered passive and should not invest in local deals unless they have a "business validator" that has committed to the opportunity. It isn’t that Alaska is lacking in investment capital so much as it is lacking in lead investment capital.One of the proven ways of nurturing this process is by developing an "Angel Network." This is normally a formal network of successful business individuals and organizations that are "business validators" in various types of business.It also includes wealthy individuals and organizations that are looking for suitable investment opportunities, but the successful business individuals and organizations with documented operating skills are initially the most important seed in growing the network.This network usually evolves into one of the most important sources of active capital, co-investment capital, advisory board members and prospective directors for new businesses.This initiative is now under way in Alaska under the Alaska InvestNet banner. It is an excellent opportunity for village and regional Native corporations to nurture shareholder development by signing up some of their current and future leaders and dealmakers into these types of self-help organizations.Alaska InvestNet’s mission is not to replicate any existing support activities, but rather to initiate missing components and encourage collaboration among like-minded existing organizations. To get a feel for the incubation process in action, I encourage prospective participants to watch Bruce Borup’s Alaska Business Plan Competition at Alaska Pacific University.In the competition, master of business administration students are paired with an Alaska entrepreneur or develop an idea from one of their student team members. The students develop and refine a business plan with all the appropriate financial information and compete in a well-rehearsed and dynamic investor presentation.Hopefully, the business plan competition model will expand statewide and other schools will have feeder competitions that will lead to an annual competition co-sponsored by all institutions of higher learning in Alaska, all financial service organizations and all for-profit Native corporations.I envision that the Alaska InvestNet "Angel Investors" will be involved in numerous advisory boards on winning business plan competitions. Some of the winning business plans will probably receive active funding from their advisory board members, and many students will find jobs either from the entrepreneurial businesses or from one of the advisory board contacts that were impressed by the students’ thought process, initiative or other factors that were displayed through the competition.Alaska InvestNet needs early adopter civic entrepreneurs to join to help the organization reach critical mass. Early investors in the organization shouldn’t be too concerned about what type of deal flow they will be exposed to, but how they can help support and incubate the process.Allan Johnston is chairman of the Alaska InvestNet Advisory Board and a co-founder of the Alaska Business Plan Competition. He can be reached via e-mail at ([email protected]).

Tourism data available as tough season looms

An Alaska research company recently completed a visitor industry survey, pooling statistics into a database it can tailor for different clients.The report comes as the national travel industry seeks to regain its footing and Alaska tour operators prepare for an uncertain summer season.Last year Juneau-based McDowell Group interviewed more than 4,500 visitors as they left Alaska, according to Susan Bell, senior manager at McDowell Group. Interviews were conducted in Anchorage, Fairbanks, Juneau, Ketchikan, Kodiak and Sitka.Locations for the interviews included airports, cruise ship piers and state ferries, with an emphasis on talking to people exiting to Prince Rupert, British Columbia, and Bellingham, Wash., Bell said. Some surveyors also worked in Tok, interviewing highway travelers.An Alaska study late in 2001 showed bookings to date were off pace with previous year’s statistics. The Alaska Travel Industry Association plans to petition the Legislature for $12.5 million to boost marketing efforts this year."One of the things we’ve been hearing is that people need to market aggressively," Bell said. Precise information from the database can help, she added.Some key findings include the significance of the Internet to travelers. More than half of study participants used the Internet for trip planning, and one-fifth of participants purchased at least one Alaska travel product electronically.The research firm estimates May to September 2001 visitors totaled about 1.3 million. Cruise ship volume slowed in growth compared with previous years, and the noncruise market was flat.Also, the survey showed repeat visitors have increased to become one-third of the total market thanks to a high satisfaction rate of 4.8 on a five-point scale.Travelers are reducing their trip planning times, the survey noted. More than one-half of the participants made their arrangements less than 90 days before their trip.Visitors cover less of the state than in previous years and are more likely to focus on specific areas and activities, the survey said.Niche sectors like wildlife viewing, adventure travel and cultural tourism are gaining in importance. Also, the survey showed cruise visitors are buying more shore excursions than in the past.McDowell Group can produce a tailored report for different clients from communities, regions, nonprofit organizations or private businesses, Bell said.The price of the reports is negotiated with each client and varies based on the sample size and degree of analysis used for each report, she said. Reports can be crafted for various aspects of the industry, from different areas of the state to types of visitor activities, she noted.McDowell Group, which started this survey in summer 2000, last year interviewed 2,100 cruise passengers and 2,400 noncruise passengers.A few clients signed up before the study was complete and have received reports already. "The first few reports we did do, the people were delighted with the information we had gathered," Bell said.The report results will help future marketing plans for one of those clients, the Alaska Marine Highway System, said marketing manager Sharon Gaiptman."I will be going over all the results and using it as I tweak our marketing plan," she said.McDowell Group’s analysis showed Anchorage was the No. 1 destination for summer ferry passengers, she said. Also, most summer passengers originate from the West Coast and see the Alaska Marine Highway as part of their travel experience rather than a transportation link, Gaiptman said. The report revealed 60 percent of summer ferry passengers were pleased with service on state ferries."I’m very happy with what the Alaska Travel Survey does for the Alaska Marine Highway," she said.Other visitor industry leaders agree the information is valuable.Although not a client for McDowell Group’s survey, Julie Saupe, executive director of the Matanuska-Susitna Convention and Visitors Bureau, believes the survey results come at a critical time. The research firm’s experience in tourism also is helpful, she said.Specific data would be useful for Matanuska-Susitna CVB since the area typically is lumped in other research with other Southcentral Alaska areas like Anchorage and the Kenai Peninsula, she said.Officials from Alaska Wilderness Recreation & Tourism Association note the importance of tourism research."Any effort to add to research is positive," said executive director Sarah Leonard.AWRTA added some questions to a state survey conducted last year that is set for release this winter, she said.Researchers are now compiling findings for a summer Alaska Visitors Statistics Program study, she said. AWRTA plans to release its findings at a conference in Fairbanks in March, she said.

Holiday Inn, Aspen Hotel construction to add 140 rooms

Construction continues on two hotel projects set to add 140 rooms to the Anchorage market.Work has started to expand the Holiday Inn Express in Anchorage. The project will add 50 rooms to the 78-room hotel, said Teresa Wasson, regional director of sales and marketing for the Alaska division.The Holiday Inn Express in Anchorage is operated by a national hotel management company, The Hotel Group, based in Edmonds, Wash. The Anchorage hotel, at 4411 Spenard Road, opened in June 1999.Construction began in early January and should be completed by June, Wasson said. The project also will expand seating in the hotel’s breakfast area and add microwaves and refrigerators to all rooms. Previously, microwaves and refrigerators were available in 30 rooms on the executive level, she said.Although Wasson did not list the value of the project, the contractor, A&A Construction and Development Inc., received a city building permit in August for a $2.3 million hotel addition.The Spokane-based general contractor is part of the ownership group, she said.Since the hotel opened three years ago, operators of the Holiday Inn Express in Anchorage said the property exceeded their goals. Wasson also believes future demand will stem from the expanded Ted Stevens Anchorage International Airport and overall travel to and from Alaska.Holiday Inn Express is geared to business travelers, and Wasson said the brand is capitalizing on a trend that business travelers are more inclined to stay at hotels with limited rather than deluxe, downtown facilities. The hotel differs from others, she said."We are the only hotel in the city that has the pool, spa and fitness center open 24 hours," she said.In other Anchorage hotel construction news, builders have nearly enclosed the 90-room Aspen Hotel, adding a fifth hotel to a statewide chain.Work on the hotel, which began last June, should be complete in late May, said spokeswoman Megan Sumner. Aspen Hotel should open by June 1, she said.City building permit application records show the project is valued at $4.9 million. Western Steel is general contractor and parent company of the hotel. Aspen Hotel has sister hotels in Fairbanks, Juneau, Soldotna and Valdez as part of GuestHouse Inn & Suites.The 97-room Fairbanks hotel opened last May. The 63-room hotel in Soldotna is scheduled to open in April."Our goal is to garner loyalty from critical partners in the oil, gas and fishing industries, as well as in the leisure market," Sumner said. "These are hotels for Alaskans to work and play in."The Anchorage Aspen Hotel at 8th Avenue and A Street should employ about 25 people, Sumner said. The hotel will feature extended stay suites similar to a one-bedroom apartment, a spa suite with a four-poster king bed and a whirlpool bath, plus family suites with a king bed for parents and children’s bunk beds in an adjoining room with a television, videocassette recorder and Sony Playstation. Another suite, called the Aspen Suite, will total 1,100 square feet and features a balcony, indoor spa, steam room and bar.All rooms will have refrigerators, microwaves, coffee makers and VCRs, she said.By late January builders were to complete roof work, Sumner said. Subsequent work will include interior framing, she said.

Trucker traces roots to Gold Rush

Sourdough Express Inc. has been hauling freight since 1898 using everything from beasts to big rigs.While the mode of moving freight has changed in 104 years, the company’s philosophy of dependable service and customer satisfaction hasn’t.Robert "Sourdough Bob" Ellis started the company during the Klondike Gold Rush in Dawson City, hauling prospectors’ equipment by dog sleds or horse-drawn wagons, depending on the season.According to company history, Ellis was a one-man operation through the Klondike strike, moving supplies for miners through some of the most treacherous territory known. When gold was discovered in the Tanana Valley in 1902, Ellis pulled up stakes and moved to Fairbanks to tend to the gold miners there.It proved to be a good move for Sourdough Bob and the business.Today, the Fairbanks-based moving and freight company and its subsidiaries have more than 100 full-time and another 100 seasonal employees, a fleet of 150 trucks and trailers, and is an agent with major worldwide mover, Global Van Lines Inc.In 1923, Ed Herring bought the business from Ellis, who had begun using Ford Model T trucks to haul freight in town, but still depended on dogs and horses to pull sleds and wagons on the rugged roads out of town to villages and mining camps.Jeff Gregory, Herring’s great-grandson and current president of Sourdough Express, said Ellis died shortly after he sold the business, about the same time the wagon trail from Valdez to Fairbanks was transformed into the Richardson Highway.Gene Rooge, Herring’s son-in-law and pioneer Fairbanks trucker, made the first trip on the new highway in 1929, hauling eight barrels of gasoline from Valdez to Fairbanks in a 2-year-old Chevrolet truck. The 270-mile trip took two days down and three days back to Fairbanks.The Richardson Highway became a lifeline to Fairbanks from Valdez, where a ship from Seattle would arrive about three times a month, laden with groceries and other goods.Though the Richardson Highway was a vast improvement over the old wagon trail, the road was still far from perfect, Gregory said. But Sourdough Express prided itself in successfully hauling crates of eggs along the rough road.Sourdough Express today touts its packers and drivers, who are careful to make deliveries undamaged. The company says it has one of lowest claim costs in the industry.While gold and oil strikes over the years helped contribute to the success of Sourdough Express, World War II brought more business to the trucking company. According to the company, there were times when a truck left the Valdez port every eight minutes, hauling military cargo to the Interior, a journey greatly helped by a newly built bridge over the Tanana River.Trucks began hauling supplies to the North Slope in 1974 over the Dalton Highway, a 520-mile trip from Fairbanks. Under the reign of then-president Whitey Gregory, who married into the family in 1957, the company grew fourfold.At the height of the oil boom, Sourdough had about 70 trucks delivering supplies to Prudhoe Bay, with drivers averaging about two trips a week.

Red Dog's new trucks keep tight seal on dust

A new $4.2 million fleet of trucks with tightly covered trailers is being used along the Red Dog Mine haul road to move more ore and to reduce the potential of spilling lead and zinc concentrate.Ten new tractors with dual 130-ton capacity, hard-covered trailers have replaced NANA/Lynden Logistics LLC’s old fleet, which had far less capacity and used tarps to cover the loads, said Dave Roper, NANA/Lynden president.Each set of trailers costs about $250,000 and are made by Alpine Trailers, a Canadian company, Roper said.Similar but smaller trailers built by the company are used in Australia and Canada, Roper said.Each tractor, made by Mack Trucks Inc., costs about $170,000, Roper said.Nine tractors and trailers were shipped to the Red Dog Mine site last summer, and have been phased in since last fall. A 10th tractor-trailer will be added next summer, Roper said.The company hauls ore concentrate for mine operator Teck Cominco Alaska Inc. along the 52-mile haul road from the Red Dog Mine to a port on the Chukchi Sea.About 20 miles of the road runs within the Cape Krusenstern National Monument, and that portion has been scrutinized by the National Park Service. The agency last summer released a report saying high levels of zinc, lead and cadmium metals in Red Dog Mine concentrates, were found in mosses along the side of the haul road, presumably from trucking operations.An Anchorage-based environmental group called for a closure of the haul road, but the state Department of Environmental Conservation denied the request, saying the levels were below those required to be cleaned up under state law.Roper said the company was in the process of bringing the trucks and new trailers on line before the National Park Service issued its report. Red Dog officials have criticized the report, saying it did not get the appropriate peer review."We made the decision long before the concerns of the National Park Service of what may or may not be along the road," Roper said.The Alaska Industrial Development and Export Authority owns the road and port that serve the Red Dog.John Wood, AIDEA’s project manager, said his agency believes the source of the metals along the roadside is from dust that had collected on the trucks during loading and unloading operations and fell off between the mine and the port.The mine has been in operation for a dozen years, and some 1.3 million tons of concentrate was trucked last year along the haul road, said Wood, adding that he has never seen zinc and lead concentrate blowing out of a trailer."It’s not to say in the early days it didn’t happen, but in my nine years, I’ve never seen it happen," Wood said.Trucks and trailers are now being washed and vacuumed, and a series of curtains and baffles have been added at buildings where the trucks load and unload to keep the dust from escaping, Wood said.Teck Cominco has reported about 30 spills of ore concentrate over the years because of trucking accidents. Four have occurred in the past year, the company has said.David Spirtes, superintendent of the Cape Krusenstern National Monument, said the National Park Service has been concerned about the accumulation of the heavy metals along the roadside for several years. He said his agency’s report "probably speeded up the replacement of the trucks."Sprites said he has noticed fewer trucks on the haul road.Roper of NANA/Lynden said that has been the intent all along, since the new trailers haul about 50 more tons per load than the ones they replaced.Roper said the company expects the new trailers to last from seven to 10 years. Tractors can be used about four years before needing replacement, he said.

Business Profile: CCI Inc.

Name of the company: CCI Inc.Established: 1989Location: 800 Cordova St., Suite 102, AnchorageTelephone: 907-258-5755Web site: www.ccialaska.comMajor focus of services: CCI Inc. provides construction services including new construction, improvements and maintenance. The company also handles environmental services like spill response, remediation, site assessment and asbestos abatement.History of the company: CCI was founded in Fairbanks and in 1992 started handling work at Prudhoe Bay for oil companies. Through 1998 that oil field focus contributed to a majority of CCI’s business.Bristol Bay Native Corp. purchased the company in January 1998. CCI then diversified its services to other industry sectors.CCI has worked for federal, state and private clients. The company has provided workers for major cleanup projects including a spill from the freighter M/V Kuroshima at Dutch Harbor, Alaska Railroad spills and a gunshot-triggered spill on the trans-Alaska oil pipeline last year. CCI also has contracts with BP Exploration (Alaska) Inc. and Alaska Clean Seas for work on the North Slope.The company employs an average of 60 full-time staff members, and peak employment can reach 120 workers.CCI recorded its best year in sales and earnings for its fiscal year that ended last March. This year CCI expects to exceed that tally, said Mark Hylen, president and chief executive.In addition to its Anchorage and Prudhoe Bay offices, CCI opened an office in Tukwila, Wash., last fall in an effort to pursue Pacific Northwest work and reach Seattle-based government offices handling Alaska work.In the last two years, CCI has helped develop a sister company, Kakivik Asset Management LLC, which handles oil field inspection contracts for Alyeska Pipeline Service Co. and Phillips Alaska Inc. at Kuparuk. Kakivik is also owned by engineering firm CH2M Hill.Top accomplishment of the company: CCI President Hylen cites his company’s Alaska Native hire record, which was 28 percent of the total work force in 2001. As a subsidiary of BBNC, the firm also aims to hire shareholders of the Native corporation.Major player: Mark Hylen, president and chief executive, CCI.Hylen, who was born and raised in Alaska, spent summers between 1992 and 1994 working for CCI as a field laborer. In 1995 he earned a bachelor’s degree in business administration from California Polytechnic State University in San Luis Obispo. He returned to CCI to work as a business manager based in Fairbanks and was later appointed general manger. Hylen was chosen president and chief executive in late 2001.-- Nancy Pounds

Around the World January 27, 2002

STATECompany seeks permits for northern gas lineFAIRBANKS -- A Houston-based company has applied to Canadian authorities for approval of its proposal to ship North Slope natural gas to market by a route that would bypass Interior Alaska.Arctic Resources Co., through its Canadian affiliate, on Jan. 16 filed a "preliminary information package" with the National Energy Board of Canada. It is the first step for the company to receive approval from Canadian energy officials for the "Over-the-Top" route proposal, a process that could take two years.The Over-the-Top proposal calls for North Slope natural gas to be shipped offshore through the Beaufort Sea to the Canadian Arctic, then south through Canada. The pipeline also would pick up Canadian gas in the Mackenzie River Delta on its way to the Lower 48.The Over-the-Top route faces strong opposition from Alaska members of both Congress and the Legislature, who argue that it would export the state’s resources without providing jobs for Alaskans and the opportunity for in-state use of the gas.Sealaska announces joint venture in plasticsJUNEAU -- Sealaska Corp. and Nypro announced Jan. 17 they have entered into a joint venture for a plastics injection molding operation in Guadalajara, Mexico.The molding operation, TriQuest Guadalajara, previously was fully owned by Sealaska.The Juneau-based Native corporation will continue to own and control a majority of the firm. Nypro will own a minority share and operate the facility under a management agreement.The announcement was made jointly by Sealaska President Chris E. McNeil Jr. and Nypro President Brian S. Jones.McNeil said he expected the arrangement would increase the amount of work the plant receives from major electronics and computer manufacturing firms.Alaska unemployment rate up but still lowANCHORAGE -- Alaska’s unemployment rate rose in December, when about 18,650 people were jobless and looking for work.December’s rate was 5.8 percent, an expected seasonal increase from November’s 5.6 percent rate, the state Labor Department said Jan. 18.Anchorage had the lowest unemployment rate in the state, holding steady at 3.7 percent in December.The total number of unemployed was lower than during December 2000 in both Alaska and its largest city, the department said.In other parts of the state, the December jobless rate was: 6.7 percent in the Matanuska-Susitna Borough; 10 percent in the Kenai Peninsula Borough; 12.9 percent in Kodiak; and 9.7 percent in the Valdez-Cordova area.The national unemployment rate grew to 5.4 percent in December from 5.3 percent in November.Count indicates Belugas may be more abundantANCHORAGE -- The Cook Inlet beluga whale population continues to show signs of recovery after a decade-long decline.The National Marine Fisheries Service reports that an aerial survey conducted last June counted 211 whales. From that, federal scientists estimate there are 386 whales in the Inlet.The increase marks the fourth year in a row that scientists have seen an increase in beluga numbers in the Inlet."I would say it’s good news in that comparing this to 1998, it shows more than a 3 percent annual growth rate," said federal biologist Rod Hobbs of the National Marine Mammal Laboratory in Seattle.Once thought to number 1,300 in Cook Inlet, the number of whales in this genetically isolated group dropped to about 350 in 1998 and 1999.A lawsuit arguing that the whales need additional protection under the Endangered Species Act from a broad range of other human factors continues in federal court.NATIONKmart Corp. files for bankruptcy protectionDETROIT -- Kmart Corp., known for its BlueLight Special and discount prices, filed for bankruptcy protection Jan. 22, becoming the largest retailer to seek shelter from creditors under Chapter 11.Kmart has struggled in the fiercely competitive discount market against rivals like Wal-Mart and Target.The filing comes a day after a major food distributor, Fleming Cos., said it had cut off most shipments to Kmart because the discounter failed to make its regular weekly payment for deliveries. Fleming said Kmart, its largest customer, owes $78 million.Other suppliers have delayed or stopped shipments to Kmart in recent days, but the Fleming situation posed perhaps the biggest crisis yet, because grocery offerings often drive traffic.Fleming said it intends to resume deliveries to Kmart "upon receiving satisfactory assurances from Kmart, via the bankruptcy court."Kmart operates five stores in Alaska.WORLDPrincess rejects latest bid from rival CarnivalLONDON -- P&O Princess Cruises PLC balked Jan. 21 at a sweetened takeover bid by Carnival Corp., the world’s biggest cruise ship operator, arguing the $5 billion offer was still too low and was likely to run aground on regulatory concerns.Princess insisted it would stay on course with its own plan to merge with rival Royal Caribbean Cruises Ltd., the world’s second-largest cruise company.After Princess, headquartered in London, turned down its original bid, Miami-based Carnival followed up Jan. 17 with a revised cash and shares offer worth 12 percent more. Carnival is eager to break up Princess’ planned merger with Royal Caribbean, which would create a $6 billion business that would sink Carnival as market leader.All three companies operate cruise ships in Alaska waters."We made it clear when Carnival made its initial proposal that our response was based on two simple criteria -- value for our shareholders and deliverability. The revised proposal still falls short on value and adds nothing on deliverability," Princess’ chief executive Peter Ratcliffe said in a statement. -- Compiled from business wire services.

Dillon acts as big rigs' biggest booster

Whether in a public forum or on the street, Frank Dillon never misses the opportunity to drive home his point about the importance of the trucking industry and the need for improved highways."If you got it, a truck brought it,’’ said Dillon, executive vice president of the Alaska Trucking Association Inc. "Trucking is not a necessary evil. It’s as vital to our way of life as blood is in your body."Whatever is eaten, worn or otherwise consumed and then disposed was delivered or hauled off in a truck, says Dillon who has represented the 300-member state trucking association for the past 13 years.Dillon has never driven big rigs commercially, although his bearlike stature and flat-top haircut would likely make him hard to pick out at a truck stop. An anthropologist by education and a lobbyist by trade, Dillon is a master public speaker and parliamentarian, attending scores of meetings that are in any way transportation related, promoting the trucking industry, its importance and image."Everything goes on a truck one way or another,’’ Dillon said. "We don’t understand, as a citizenry, transportation. People are mystified by it and take it for granted. Without the trucking industry people would not have the opportunity to make choices from the clothes they wear to the food they eat."Trucking is the ninth largest employer in the United States, and holds about the same ranking in Alaska, where about 22,000 people bring home a paycheck from a trucking-related industry, Dillon said.Commercial trucks and trailers make up about 5 percent of the total vehicle registrations in Anchorage, according to the state Division of Motor Vehicles. The number of registered commercial vehicles act as a indicator of the state’s financial health, as registrations rise and fall with Alaska’s economy, according to DMV statistics.There are about 35,000 Alaskans who hold commercial driver’s licenses, though not all work in the industry at any given time, Dillon said.The trucking industry contributes about $700 million annually to the state’s economy, Dillon said.Trucking, Dillon said, is what ties all other transportation modes together. In Alaska, truckers and their companies enjoy a cooperative relationship with airlines, the railroad and oceangoing shippers, Dillon said.The trucking organization also has a good relationship with trucking unions in the state, something that isn’t always the case elsewhere, Dillon said.In the Lower 48, the trucking industry and railroads often vie for the same freight. But in Alaska, the trucking industry and the Alaska Railroad Corp. complement each other, Dillon said."Trucks here to not compete with the railroad, and we don’t have an adversarial relationship with them,’’ Dillon said.The railroad last year pulled more than 36,000 100-ton hopper cars from Palmer to Anchorage. Dillon said it would be impractical, unsafe and cause much wear and tear on roads if trucks were to haul those loads.Alaska has about 15,000 miles of roads, only about 22 percent of them paved, according to state Department of Transportation and Public Facilities.Alaska needs more roads and increased maintenance and improvements to those it has, Dillon said.According to state estimates, nearly $8 billion is needed to bring the state’s roads and transportation facilities to an acceptable level.Improvements to the state’s transportation infrastructure make roads safer for truckers and motorists, lowers the cost of moving goods, and the air becomes cleaner when traffic is not congested, Dillon said.But building roads takes too long, largely because of an onerous environmental review process that can stop a road project or delay it for many years, Dillon said.He has led a nationwide effort to streamline the National Environmental Policy Act, a law crafted 30 years ago that requires government agencies to consider affects to the environment by federally funded projects.Dillon says he supports the intent of the law, but it’s being used as "a roadblock to road building," because it has been abused and distorted by road-building opponents and environmentalists."We have to go back and change the National Environmental Policy Act," Dillon said. "NEPA has been absolutely manipulated and has become a bureaucratic Christmas tree, designed to impede infrastructure development."Today, if we wanted to build the Parks Highway, it couldn’t be done,’’ Dillon said. "If you fill in a wetland, it is a crime."Dillon has worked with his contemporaries in nationwide trucking organizations, and with Rep. Don Young, R-Alaska, chairman of the House Transportation and Infrastructure Committee, to streamline and make less burdensome the environmental review process for highway construction and improvements.Young, Dillon said, is committed to amending the environmental review process, a key feature to the Transportation Equity Act for the 21st Century, which expires at the end of the year.Young will be the principal architect in the legislation, which provides billions of federal dollars for planning and building transportation projects in the United States over the next several years.Another major issue facing the trucking industry, and ultimately consumers, is a new federal ultra-low sulfur diesel requirement used for highway vehicles.The requirement goes into effect in four years, but Alaska may be given an extension to 2010.Still, Dillon said, because vehicle engines will be built starting in 2007 to use only the low-sulfur diesel, the fuel will have to be made available in the state.Dillon’s organization has estimated that the new fuel could add 20 to 25 cents a gallon to existing prices, which will make for increased freight rates.

This Week in Alaska Business History January 27, 2002

Editor’s note: "This Week in Alaska Business History" revisits events that shaped our past."Those who cannotremember the past arecondemned to repeat it."-- George Santayana, 1863-195220 years ago this weekAnchorage TimesJan. 28, 1982Gas pipeline package fight moves to courtBy Betty MillsTimes Washington BureauWashington -- In a move that could substantially delay the Alaska pipeline project, a group of 24 members of Congress, five states and several consumer groups joined in a lawsuit to overturn the pipeline waiver package.The suit was filed in the U.S. Court of Appeals here by Sen. Howard Metzenbaum, D-Ohio, who led the Senate opposition to the waiver package passed by Congress last fall. At the time, Metzenbaum threatened legal action.The suit claims the waiver package was enacted under flawed procedures and will require natural gas consumers in 36 states to guarantee payment of $32 billion in costs of building the project.The waivers include the North Slope gas conditioning plant in the project, streamlining regulatory procedures and allowing consumers to be billed before gas starts to flow.Anchorage TimesJan. 25, 1982Oil companies shell out $61 million for leasesBy Bruce BartleyThe Associated PressFairbanks -- Oil companies offered more than $61 million Wednesday for federal oil and gas leases on about 762,000 acres in the National Petroleum Reserve-Alaska.While oil company executives were generally pleased with the results of the largest onshore federal lease sale in history, federal officials said they were disappointed it didn’t generate more money.Alaska and the federal government will divide equally the bonus money offered Wednesday, as well as annual rental fees of $3 per acre on the 10-year leases.The oil companies also may pay royalties equal to one-sixth of any oil and gas produced from leased lands. That money also will be split 50-50 between the federal government.It was the first lease sale ever in the 23-million-acre reserve on the North Slope, just west of the producing Prudhoe and Kuparuk oil fields.10 years ago this weekAlaska Journal of CommerceFeb. 3, 1992Oil field technology pushes limitBy Ray TysonAlaska Journal of CommerceARCO Alaska Inc. believes more barrels of crude oil can be squeezed out of the Prudhoe Bay reservoir during its lifetime but says the means to recover billions more above current estimates doesn’t exist."We don’t mean to trivialize it, but at the same time we want to make the point that we don’t see a breakthrough in technology," said Jerry Pollock, ARCO’s manager of engineering of Prudhoe Bay.Technology and ingenuity have boosted Prudhoe Bay’s estimated recoverable reserves from 9.6 billion barrels to about 12 billion barrels, leaving a remaining target of roughly 10 billion barrels.To help reach the 12 billion barrel mark, Exxon and co-field operators ARCO and BP Exploration plan to invest at least another $2 billion to $2.5 billion in America’s largest oil field.Alaska Journal of CommerceFeb. 3, 1992Sawmill waste becomes roofing for pricey homesBy Lew BreseeWrangell SentinelWrangell -- Frank Age has built a business utilizing a product that would otherwise go to waste.Age produces roofing products from culled cedar that normally is discarded by lumber firms. He previously manufactured the product in his native Oregon, but he came to Wrangell last April, after logging started to hit a decline in his home state.The move to Wrangell was first contemplated by Age and his wife, Debbie, in October 1990. He said he flew up to see if there would be a large enough supply of cedar to manufacture his product. He found about 15 to 20 years’ worth of unused culled cedar.Age’s Cedar Products produces shakes, or roofing shingles, from red cedar. Since the shakes are relatively small, Age can get a quality product by selectively cutting the short pieces of cedar.-- Compiled by Ed Bennett.

Chignik salmon co-op 'a courageous step'

Alaska’s salmon industry crossed a threshold Jan. 14 when the state Board of Fisheries authorized Chignik fishermen to form a cooperative, which would allow a few boats to fish and share harvest revenues with co-op members opting not to fish.The result will be an unusual system where fishermen could collect checks for not fishing."Change is difficult, and it’s a courageous step for fishermen and the state fisheries board in trying something to save the endangered salmon fishery," said University of Alaska fisheries economist Gunnar Knapp.There are possible legal problems, but the fisheries board decided to try the cooperative approach anyway.The board voted to allow 100 fishermen who hold permits to fish in Chignik to form a cooperative, with a majority, or 51 permit holders, required to join if a co-op is formed.If the co-op is formed, the fishery would be split into two parts. A percentage of the allowable harvest would be allocated to the cooperative boats and a period set for them to fish.A portion of the harvest, and a time period to fish, would also be reserved for those who opted not to join the co-op, who would fish in the traditional manner, racing to catch as many salmon as possible in the time allowed for them to fish.The plan has the advantage of reducing the number of boats in the fishery, cutting costs because only a few boats would operate, Knapp said. For example, six or seven boats might harvest the same number of salmon over a longer period than were caught previously by more than 50 boats in the competitive open fishery.More salmon are thus caught with lower costs, which addresses a key problem facing Alaska’s salmon industry. Competition from farmed salmon has lowered the prices Alaska fishermen receive. But the costs of fishing in Alaska have remained high partly because of the way the fishery operates, with many small boats competing against each other for fish during short harvest openings.There are still major policy problems to be addressed by the Board of Fisheries if the Chignik co-op experiment proceeds, Knapp warns.One is how to limit fishermen who opt not to fish in Chignik from fishing in other areas.Another is to address the potential of stacking of harvest shares, where one person might buy up allocation shares from others, as has happened with halibut and sablefish individual fishing quotas, he said.The experiment also raises fundamental social questions and issues."It raises questions of self-identity," Knapp said. "There is a lot of pride and self-respect that comes when someone identifies with what they do. When that changes, when someone becomes essentially a coupon-clipper rather than an active fishermen, it’s an important threshold," he said."Any change is painful," but changes like this may be needed to save the industry, Knapp said.Another long-range question is that if groups of fishermen are allowed to receive revenues without fishing, there’s less reason for them to continue living in coastal communities near fishing areas.While many fishermen today live far from where they fish, in Anchorage or Seattle, the plan could eventually encourage people to move away from coastal communities, Knapp said.State fisheries managers have said that while the co-op approach may work in Chignik, which is a distinct salmon run with only 100 fishermen, it may not be appropriate for larger salmon fisheries like Bristol Bay, where there are complex, mixed salmon runs and more than 1,000 fishermen.The co-op concept echoes a somewhat similar plan now in effect in offshore, federally managed waters. The American Fisheries Act, passed by Congress, allowed vessel operators and processors to form cooperatives as a way of reducing capacity in the fishery.There are important differences between the federal and state actions, however. The federal law allows processors to form cooperatives with fishing vessel owners, where the state action applies only to fishermen.The federal law also provided for a buy-out of some large catcher-processor vessels, to reduce the fleet. No buy-out is proposed, at least for now, in the salmon fishery.

Missile Defense System contract expected in April

FAIRBANKS -- The Department of Defense may spend up to $250 million on missile defense work in Alaska during the next two years, according to information released by the U.S. Army Corps of Engineers.The agency expects a prime contractor for the job will be selected by April 12. The Corps estimates the work to be worth between $100 million and $250 million.The project is expected to be a boost for the Fairbanks area. The project likely will produce 500 to 1,000 jobs, said Dick Cattanach, executive director of the Anchorage-based Associated General Contractors of Alaska.The money will come from the $7.8 billion Congress approved for missile defense work during this fiscal year. President Bush signed that expenditure into law Jan. 10.Defense officials have said they want to build about five silos at Fort Greely to house interceptor missiles."The government is going to be looking at getting a contractor that has done work like this, of this magnitude. There’s only a half-dozen companies in the world" who would likely qualify, Cattanach said.Alaska companies are expected to serve as subcontractors, he said.

Knowles upbeat about economy, seeks tax, a fiscal plan

In his final State of the State address to the state Legislature, Gov. Tony Knowles challenged lawmakers to solve key problems facing Alaska, including development of a long-range fiscal plan and passage of an amendment to protect subsistence rights of Alaskans.The Democratic governor was upbeat about prospects for the state’s economy, citing an increase in oil production, new exploration activity and work on a major natural gas pipeline. He noted challenges, however, facing the state’s fishing, tourism and forest products industries.To make a step toward covering a looming fiscal gap, Knowles proposed reintroduction of a state personal income tax, an increase in state alcohol taxes and imposition of a new state tax on cruise tourists.The top priority should be to ensure a growing private economy, Knowles said."We know the best social program is a job and only a growing private sector economy can provide the resources to invest in education, children and safety," he said."While other states are reeling from high unemployment and recession, Alaska’s economy is moving forward. We can stay on track by continuing a pro-business environment, encouraging investment, building transportation and providing essential services."Citing examples, the governor said North Slope oil production will increase this year "for the first time in a decade, due to production from Northstar and new discoveries. Activity in the NPR-A and 16 scheduled state area-wide lease sales will keep exploration and new production growing."Knowles also cited ANWR’s oil potential and the prospect of a large natural gas project as reasons for optimism."There’s no other place in America with the huge quantities of oil our national economy needs than beneath a small portion of the Arctic National Wildlife Refuge," he said."Development of our enormous North Slope natural gas resources is at the top of every national energy plan. Now the question of building an Alaska gas line is not if, but when."However, the governor cited challenges facing the state’s tourism industry because of the terrorist attacks last September and the national economic downturn, and the continued challenge of farmed salmon to the state’s fishing industry.A major concern is the looming state fiscal gap, but the governor defended proposed increases in spending despite a larger deficit."Some have asked if it is responsible to increase the budget when lower oil prices have produced a billion-dollar budget gap," Knowles said."First, let me remind you that $81 million of this increase is a direct result of actions you have taken in approving laws, budgets, contracts and replacing lost federal and other funding sources," he said. He said the rest of the increase, mostly for education-related expenses, was a top priority for him and for most Alaskans.On the fiscal gap, Knowles said, "I have proposed solutions to these issues seven years in a row, in every regular legislative session and I have called special sessions."Across political party lines, individual legislators have worked hard to make progress. For 20 years, Alaska governors, legislators, economists, business and civic leaders have all urged long-range budget plans recommending the same basic combination of cuts and revenues to replace dwindling oil dollars. Now the day of reckoning is upon us."A solution to the fiscal gap should have five elements, Knowles said."One, any plan must be fair. Everyone should contribute, including those who make money here but live elsewhere. Two, Permanent Fund earnings, after inflation-proofing and dividends and a vote of the people, should be used only after a broad-based tax and corporate taxes are in place.""Three, new revenues should be phased in rather than imposed all at once. This avoids shocking the economy and helps families and businesses adjust to the change. Four, any budget plan must be realistic, not based on unsubstantiated estimates or bogus promises."Five, efficiencies, savings and continued cost reductions must always be part of budget considerations."The math of the challenge before us is pretty simple. We must average approximately $1.2 billion a year in new revenues to balance our budget though the end of this decade."Knowles proposed that the solution be phased in over three years, implementing additional measures each year to generate about $400 million dollars each year.This year, the governor proposes to raise $350 million dollars from resumption of "a modest state income tax, which is less than half the rate Alaskans paid under our old income tax. Second, $30 million from the first alcohol tax increase in 19 years; and third, $20 million would come from a passenger fee on the cruise ships that pay no state tax."Knowles defended the income tax."I believe the most fair, broad-based tax is an income tax based on the percentage of federal income tax paid. People who work in Alaska but live elsewhere would contribute about $23 million of the bill. The federal government would pay about $52 million through federal tax deductions Alaskans would get on their state income taxes."That means to generate $350 million in taxes, Alaskans would pay about $275 million." Those figures were based on Alaskans paying 18 percent of their federal tax to the state.He also spoke strongly in favor of a higher alcohol tax."The state tax on alcohol was last raised in 1983. Asking those who consume alcohol to contribute an extra dime a drink will raise $30 million. This is small compared to the cost each year of treating the problems of alcohol abuse, estimated at $453 million a year."The most surprising element of the governor’s plan is the cruise passenger tax, but he defended it strongly: "Today, the multibillion dollar cruise ship industry pays no corporate income tax to Alaska on its cruise ship operations, or for that matter, to the federal government or any other state in America."It is only fair that every industry contribute something to Alaska for the many benefits they receive here. A tax of $30 per passenger would raise about $20 million for the state."The governor declined to make proposals for future years, leaving that to a new governor and Legislature."There are sufficient tools available to fill the remaining gap before the reserves are totally exhausted," he said.He also reserved judgment on an increase in petroleum taxes."This may be a potential source of revenue in future years, but any change must be carefully considered as they currently pay about 80 percent of the state budget in taxes and royalties," Knowles said."Private investment in future oil and gas development depends on fiscal stability and global competitiveness. Tax rates should be changed only if they meet those criteria or we will kill the goose that has laid the golden egg."Each year in this balanced budget plan requires heavy lifting and the first may well be the most difficult. Yet the do-nothing approach is a blueprint for future economic disaster," Knowles said."Doing nothing when reserves are exhausted means drastically and irresponsibly cutting basic services and liquidating state assets, including permanent fund earnings, at a frightening clip."

APU, Alaska Regional offer women's ski, fitness workshop

Alaska Regional Hospital and Alaska Pacific University will sponsor the Women’s Ski and Fitness Symposium on Jan. 26. The event precedes the annual 2.4-mile Alaska Ski for Women event Feb. 3.The skiing portion of the symposium will run from 10 a.m. to noon at Kincaid Park. Participants can learn ski techniques while touring the Ski for Women course with skiers from APU’s Gold 2002 women’s team.During indoor sessions, guest speakers will address health and fitness topics from 2-4 p.m. at APU’s Atwood Center. Dr. Tina Tomsen will discuss coordinating a busy schedule and fitness activities. Young Fisher, a registered dietitian from Alaska Regional, will discuss nutrition for athletes. Dr. Tom Vasileff, an orthopedic surgeon, will present measures for preventing and healing sports injuries. Ann MacInnes Mize, APU Gold 2002 women’s team coach and Ski for Women co-founder, will speak on developing a ski fitness plan.Cost for the symposium is a donation to the Abused Women’s Aid in Crisis shelter. The Ski for Women also benefits AWAIC. For more information, visit the Web site ( or call the Nordic Ski Club hotline at 907-248-6667.Patient Care Alliance sponsors meeting on weight, billing issuesPatient Care Alliance plans to conduct a free public meeting on dealing with weight issues and related medical bills at 7 p.m. Jan. 24 at First American Baptist Church, 1200 E. 27th Ave., in Anchorage.Speakers will discuss the topic and the related options for medical testing, health care professionals and insurance payment.For more information contact Lorrie Saunders, executive director of the Patient Care Alliance, via e-mail ([email protected]) or call Noni Bordwell at 907-745-4378.Mat-Su breast cancer support group plans February meetingThe Mat-Su Breast Cancer Support Group has scheduled a meeting for Feb. 12. The event runs from 7-9 p.m. at Valley Hospital Medical Campus, Classroom C in Wasilla.Dr. Susan Lemagie will discuss hormone replacement therapy following breast cancer.For more information, call 907-376-8689.

Land offered for logistics

City land is being offered for sale near the Ted Stevens Anchorage International Airport with the hope that the parcel will be developed into an aviation-related global logistics center or industrial park.The 9.3-acre parcel, valued at $1.65 million, is south of International Airport Road, between Minnesota Boulevard and Minnesota Drive, near the Chugach Electric Association headquarters.It is the nearest undeveloped and available parcel of its size close to the airport, according to George Cannelos, director of the city’s real estate department.Cannelos said investors have been interested in building aviation-related facilities near Anchorage International, but they’ve been unable to find an appropriate piece of land."They want to take advantage of Alaska’s strategic position, but there is a lack of available land for development,’’ Cannelos said.The city began advertising the land in early January and will take bids until Feb. 1.All proposals must be for the development of an aviation-related industrial park, or what the city is calling a global logistics center. The facility should have at least 80,000 square feet of warehouse or light-manufacturing space, according to the city’s request for proposals.Ideally, the facility will somehow incorporate Port of Anchorage and Alaska Railroad Corp. operations, the city’s advertisement said.Proposals will be graded by a committee of city officials and business leaders, Cannelos said. Points will be awarded based on a company’s experience, financial capability, and development and marketing plans, Cannelos said.A $500,000 performance bond will be required to ensure the land is developed for its intended purpose, Cannelos said.

Stevens intends to keep federal spigot open

Alaska Republican Sen. Ted Stevens fully intends to keep the federal dollars flowing to Alaska in 2002. As ranking minority member -- and former chairman -- of the Senate Appropriations Committee, he has become legendary in his ability to fund Alaska projects."Defense spending in Alaska was about $1 billion last year," Stevens told the Journal in a telephone interview. "It should be about the same this year."In addition to operating Alaska’s military bases, those funds include about $300 million per year in construction projects funneled through the U.S. Army Corps of Engineers. The biggest construction project in Alaska for 2002, the $215 million replacement for Bassett Army Hospital at Fort Wainwright, is one of dozens funded via the Corps.This year, Stevens said he will try to put funding for a causeway to Fire Island in the Corps budget. The island, just offshore from Stevens’ namesake airport in Anchorage, has been eyed as the site of a possible cargo-only airport in the past.Stevens said Alaska has been getting about $350 million per year for highway construction, and he’s looking to increase that amount. The act, which authorizes federal spending on highways, is being rewritten this year, and Stevens sees this as a unique opportunity for Alaska.The reason: Alaska Republican Rep. Don Young is chairman of the House Transportation and Infrastructure Committee, the lead committee on the highway funding bill."This is a big year for Don Young," Stevens said.While highway funding is not handled on the Senate side in Stevens’ committee -- it goes to the Public Works Committee -- Stevens was confident he could influence the Senate version of the bill."Don (Young) and I have a good synergy going between our committees on transportation projects," Stevens said.What does Stevens want included in the highway bill? Bridges. As many bridges as he can get, including the Knik Arm Crossing, a bridge to the Ketchikan Airport on Gravina Island, and a new bridge linking Juneau and Douglas Island."How many we’ll get, we don’t know," Stevens said.Stevens said he plans to continue providing the Alaska Railroad with $50 million per year to keep straightening its track.He will also push for continued funding of the Denali Commission, which saw its budget increase to $96 million last year from $65 million in 2000. The commission has been funding a series of targeted projects in rural Alaska, including building health clinics, replacing leaking fuel tanks, and installing water and sewer systems in villages."We’re 60 percent there" in eliminating honey buckets, Stevens said.The commission also has funding to train rural residents to build its Bush projects."The No. 1 problem we’re trying to tackle is unemployment," Stevens said. "These construction projects help that."Another rural priority for the senator is installing landing lights at every village runway. He said he got $11 million for the project last year and is aiming for $17 million this year to finish it.Stevens plans to again tackle the thorny issue of bypass mail, a program that subsidizes mail shipments to the Bush and is designed to encourage air carriers to serve small villages. However, the U.S. Postal Service is losing more than $100 million a year to run the program, and Stevens said it must be streamlined for it to survive."The Postal Service demanded we revamp it or it would ask Congress to abandon it," Stevens said.Stevens said bypass mail and a second subsidy program, Essential Air Service, are vital to Alaska’s smaller communities."If that system collapses, the rural economy would collapse," Stevens said. "And it would have a large impact on Anchorage suppliers."Stevens sounded guardedly optimistic about the prospect of opening the Arctic National Wildlife Refuge to exploratory drilling for oil. The Republican-controlled House approved the measure last year, but it faces tougher sledding in the Democrat-controlled Senate.Stevens said opening ANWR is still included in the energy bill."We have the votes to pass it, but not the votes to override a filibuster," Stevens said. A filibuster is a delaying tactic Democrats have promised to use to block ANWR drilling; it requires 60 votes to stop it.Stevens said the terrorist attacks of Sept. 11 have helped the prospects for passage of the ANWR provision."Since Sept. 11, there’s been a total swing around in public opinion in every poll I’ve seen, except those controlled by the major environmental organizations," Stevens said. "They show the public supporting ANWR. People are starting to wonder how stable are our energy supplies."Stevens said that if an ANWR drilling provision is passed, it would be litigated for years. He said a natural gas pipeline from the North Slope faces far less opposition. He said he’s working on a provision in the tax laws that would encourage construction of such a pipeline.The plan would allow the owners of a gas pipeline to pay reduced taxes in years when gas prices are low, and then pay the government back later, when prices are higher."We’re working on a formula now," Stevens said.The other big project in the wings is a National Missile Defense System. The decision by President Bush to pull the nation out of the 1972 Anti-Ballistic Missile Treaty clears the way for further testing of the system this year, with construction of facilities to launch five missiles at Fort Greely and using the launch pad at Kodiak for other tests. Stevens said all necessary funds for those projects have been appropriated and can be spent immediately.Stevens said an X-band radar site at Shemya Island in the Aleutians is still part of the planned system. An aide to the senator said the radar won’t be built until the operational version of the system is deployed, in 2005 to 2006. At that time, the facility at Fort Greely would be expanded to accommodate 100 missiles, under current plans.The aide said a radar site in Hawaii is under consideration for a naval version of the missile defense system, but is not currently in the budget.Stevens is also continuing to keep an eye on the fishing industry in Alaska. He’s clearly annoyed at the Agriculture Department’s decision to prohibit Alaskans from labeling their fish as organic."The farm bill has not passed," Stevens said. "We may have to do it by law."


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