Shorthanded hospitals reconsider vaccine mandates

In the rural northeastern corner of Missouri, Scotland County Hospital has been so low on staff that it sometimes had to turn away patients amid a surge in COVID-19 cases. The national COVID-19 staffing crunch means CEO Dr. Randy Tobler has hired more travel nurses to fill the gaps. And the prices are steep — what he called “crazy” rates of $200 per hour or more, which Tobler said his small rural hospital cannot afford. A little over 60 percent of his staff is fully vaccinated. Even as COVID-19 cases rise, though, a vaccine mandate is out of the question. “If that becomes our differential advantage, we probably won’t have one until we’re forced to have one,” Tobler said. “Maybe that’s the thing that will keep nurses here.” As of Sept. 2, about 39 percent of U.S. hospitals had announced vaccine mandates, said Colin Milligan, a spokesperson for the American Hospital Association. Across Missouri and the nation, hospitals are weighing more than patient and caregiver health in deciding whether to mandate COVID-19 vaccines for staffers. The market for health care labor, strained by more than a year and a half of coping with the pandemic, continues to be pinched. While urban hospitals with deeper pockets for shoring up staff have implemented vaccine mandates, and may even use them as a selling point to recruit staffers and patients, their rural and regional counterparts are left with hard choices as cases surge again. “Obviously, it’s going to be a real challenge for these small, rural hospitals to mandate a vaccine when they’re already facing such significant workforce shortages,” said Alan Morgan, head of the National Rural Health Association. Without vaccine mandates, this could lead to a desperate cycle: Areas with fewer vaccinated residents likely have fewer vaccinated hospital workers, too, making them more likely to be hard hit by the delta variant sweeping America. In the short term, mandates might drive away some workers. But the surge could also squeeze the hospital workforce further as patients flood in and staffers take sick days. Rural COVID-19 mortality rates were almost 70 percent higher on average than urban ones for the week ending Aug. 15, according to the Rural Policy Research Institute. Despite the scientific knowledge that COVID vaccinations sharply lower the risk of infection, hospitalization and death, the lack of a vaccine mandate can serve as a hospital recruiting tool. In Nebraska, the state veterans affairs’ agency prominently displays the lack of a vaccine requirement for nurses on its job site, The Associated Press reported. It all comes back to workforce shortages, especially in more vaccine-hesitant communities, said Jacy Warrell, executive director of the Rural Health Association of Tennessee. She pointed out that some regional health care systems don’t qualify for staffing assistance from the National Guard as they have fewer than 200 beds. A potential vaccine mandate further endangers their staffing numbers, she said. “They’re going to have to think twice about it,” Warrell said. “They’re going to have to weigh the risk and benefit there.” The mandates are having ripple effects throughout the health care industry. The federal government has mandated that all nursing homes require COVID-19 vaccinations or risk losing Medicare and Medicaid reimbursements, and industry groups have warned that workers may jump to other health care settings. Meanwhile, Montana has banned vaccine mandates altogether, and the Montana Hospital Association has gotten one call from a health care worker interested in working in the state because of it, said spokesperson Katy Peterson. It’s not just nurses at stake with vaccine mandates. Respiratory techs, nursing assistants, food service employees, billing staff and other health care workers are already in short supply. According to the latest KFF/The Washington Post Frontline Health Care Workers Survey, released in April, at least one-third of health care workers who assist with patient care and administrative tasks have considered leaving the workforce. The combination of burnout and added stress of people leaving their jobs has worn down the health care workers the public often forgets about, said interventional radiology tech Joseph Brown, who works at Sutter Roseville Medical Center outside Sacramento, California. This has a domino effect, Brown said: More of his co-workers are going on stress and medical leave as their numbers dwindle and while hospitals run out of beds. He said nurses’ aides already doing backbreaking work are suddenly forced to care for more patients. “Explain to me how you get 15 people up to a toilet, do the vitals, change the beds, provide the care you’re supposed to provide for 15 people in an eight-hour shift and not injure yourself,” he said. In Missouri, Tobler said his wife, Heliene, is training to be a volunteer certified medical assistant to help fill the gap in the hospital’s rural health clinic. Tobler is waiting to see if the larger St. Louis hospitals lose staff in the coming weeks as their vaccine mandates go into effect, and what impact that could have throughout the state. In the hard-hit southwestern corner of Missouri, CoxHealth president and CEO Steve Edwards said his health system headquartered in Springfield is upping its minimum wage to $15.25 an hour to compete for workers. While the estimated $25 million price tag of such a salary boost will take away about half the hospital system’s bottom line, Edwards said, the investment is necessary to keep up with the competitive labor market and cushion the blow of the potential loss of staffers to the hospital’s upcoming Oct. 15 vaccine mandate. “We’re asking people to take bedpans and work all night and do really difficult work and maybe put themselves in harm’s way,” he said. “It seems like a much harder job than some of these 9-to-5 jobs in an Amazon distribution center.” Two of his employees died from COVID-19. In July alone, Edwards said 500 staffers were out, predominantly due to the virus. The vaccine mandate could keep that from happening, Edwards said. “You may have the finest neurosurgeon, but if you don’t have a registration person everything stops,” he said. “We’re all interdependent on each other.” But California’s Brown, who is vaccinated, said he worries about his colleagues who may lose their jobs because they are unwilling to comply with vaccine mandates. California has mandated that health care workers complete their COVID-19 vaccination shots by the end of September. The state is already seeing traveling nurses turn down assignments there because they do not want to be vaccinated, CalMatters reported. Since the mandate applies statewide, workers cannot go work at another hospital without vaccine requirements nearby. Brown is frustrated that hospital administrators and lawmakers, who have “zero COVID exposure,” are the ones making those decisions. “Hospitals across the country posted signs that said ‘Health care heroes work here.’ Where is the reward for our heroes?” he asked. “Right now, the hospitals are telling us the reward for the heroes: ‘If you don’t get the vaccine, you’re fired.’” Kaiser Health News is a national newsroom that produces in-depth journalism about health issues.

Fed faces ‘ugly fight’ over jobs goal in next big policy debate

Federal Reserve officials are moving on to their next big policy debate: defining their “broad and inclusive” maximum-employment goal that they have pledged to reach before raising interest rates. With Chair Jerome Powell and colleagues paving the way to slowing their massive asset-purchase program this year, attention will turn to when they will hike rates for the first time since 2018. Seven of 18 policy makers wanted to raise in 2022 and that number could grow when the Fed releases updated economic forecasts next month. The discussion could be an even more heated argument than discord over scaling back bond purchases. That’s because the Fed’s overhaul of monetary policy last year didn’t spell out a numeric definition for the minority unemployment rates that would meet their new goal. “It is going to be an issue,” said Derek Tang, an economist at L.H. Meyer Inc. in Washington. “What does broad and inclusive mean? It is going to be a very ugly fight.” At stake is just how hot officials are willing to let the labor market run before they start to shut off support of cheap money. Act too soon and the minority and less educated workers Powell now includes in the policy calculus could miss out on jobs and wage gains. Act too late and inflation could accelerate, pushing the Fed to respond with force, harming labor market gains. August’s employment report isn’t likely to clarify the labor-market picture as the delta variant weighs on consumer sentiment and schools are just starting to reopen. Jobs data for July, for example, showed a large 1 percentage-point drop in the black unemployment rate. But black labor-force participation also fell nearly a percentage point. Falling participation as people drop out of the workforce subtracts from the unemployment rate because they aren’t counted in the jobless numbers. It will take months for officials to sort out what the trend participation might be and any conclusion will be tentative. At the central bank’s annual Jackson Hole conference on Aug. 27, Powell described an optimistic outlook for the labor market “with high levels of employment and participation, broadly shared wage gains, and inflation running close to our price-stability goal.” But assessing full employment has always been hard for the Fed — it doesn’t define it as fixed target in its annual statement on longer goals in contrast to 2 percent inflation — and what the labor market looks like at that point is already a topic of dispute. According to the July meeting’s minutes, there were “several participants” who said the pandemic caused “longer-lasting changes in the labor market,” and pre-pandemic conditions “may not be the right benchmark against which the committee should assess the progress toward” maximum employment.” Officials who saw things that way could argue the employment goal had been met and push for rate hikes sooner than otherwise. Adding complexity to the outlook is President Joe Biden’s appointments of potentially four new people to the Fed board in coming weeks. Democratic support to give Powell another four-year term as chair is partly based on confidence that he will stick to the pledge of broad labor-market gains. If Biden keeps him in the job, Powell will have to broker a committee consensus on labor supply and inflation risks. That puts the Fed in a politically tricky place, said Adam Posen, president of the Peterson Institute for International Economics. “For all the masterful work Powell and company did to get unanimity on the framework review, they could not get unanimity on the substance of what full employment and inflation overshooting entails,” Posen said. “They have not reinforced their commitment to broad and inclusive gains” as more persistent inflation threats emerge, he added. “They could have stuck with it much more than they did. The political blowback is potentially very large.” When the unemployment rate dipped to 3.5 percent in 2019, inflation remained below 2 percent while black unemployment dropped to record lows. The labor-force participation rate defied its downward trend and started to climb as women rejoined the job market. It was labormarket nirvana, and the experience informed the central bank’s new framework. But COVID-19 has turned policy risks upside down. The Fed’s preferred price indicator rose 4.2 percent for the 12-month period ending July. The jobs recovery has picked up, with payroll gains averaging 617,000 a month this year. “Broad and inclusive measures of maximum employment won’t be back to pre-pandemic levels next year” when inflation could still be running above the 2 percent target, predicts Andrew Levin, a Dartmouth College professor and former Fed board economist. “The Fed will almost certainly have to renege on its commitment about holding interest rates at zero until the economy has reached maximum employment,” he said. Indeed, broader measures already show an uneven recovery for some. The unemployment rate for black men 20 years and older is at 8.4 percent versus 5.7 percent at the start of 2020. The participation rate for Hispanic women is at 58.4 percent, down from 61.9 percent in February 2020. The consensus among officials to start to taper asset purchases this year is mostly about managing risks around inflation, said Skanda Amarnath, executive director at Employ America, a pro-labor think tank. “The question is how much of this inflation reflects the labor market,” he said. The recovery in the labor market “is just getting started.” Nevertheless, Dallas Fed President Robert Kaplan and St. Louis’s James Bullard are wary that a chunk of the labor force is gone for good because of a higher pace of retirements during the pandemic. On the other side of the conversation, Governor Lael Brainard, one of the authors of the “broad and inclusive” language in the new strategy, and Kansas City Fed chief Esther George, a 2022 Fed policy voter, are in the wait-and-see camp, as is Minneapolis’s Neel Kashkari. Whenever a shock hits the economy, forecasters tend to raise “their estimate of how low the unemployment rate can go without triggering high inflation,” Kashkari told Bloomberg in an Aug. 15 interview. “What we learned after the ‘08 crisis is all of those stories were wrong. It turns out most Americans want to work,” he said.

US hiring slowed sharply in August with just 235K jobs

The winding down of summer was supposed to set the stage for a full-throated recovery as kids return to school and workers flood back into offices, but the disappointing August employment report Sept. 3 was the latest omen that the economic future looks more cloudy than bright. Employers added just 235,000 new jobs last month. Most forecasters were expecting three times that number, after the economy expanded by about a million jobs in each of the prior two summer months. Retail stores and restaurants and drinking places shed jobs last month, and, even as the unemployment rate dropped to 5.2 percent, hundreds of thousands more workers were sidelined from working or looking for jobs. The explanation, yet again, was that the pandemic has delivered another economic curveball. The Delta variant of the coronavirus has not only struck hard at the unvaccinated, but also has spread into groups and age cohorts that had seemed relatively unaffected by earlier strains. As a result, the wave of consumer spending that was propelling the recovery has faltered. So have the plans of many businesses to move back toward normal operations. And both manufacturing supply chains and the supply of workers remain troubled. “We’re still deep in the hole, and without (government) support, plus with the virus raging, I think the rosy scenario for this fall becomes really dark really fast,” said William Spriggs, chief economist for labor organization AFL-CIO. As recently as two months ago, the images in economists’ crystal balls looked decidedly bright. Most signs supported the idea of an accelerating recovery. The scheduled resumption of in-person classes across the nation’s public school systems would free up thousands of workers — especially women — who had been constrained by childcare needs. Expanded federal payments to the unemployed, which conservatives and some other analysts had blamed for worker shortages, were ending. And the expected large-scale return of workers to their traditional workplaces in urban centers would add to the general “opening up” of the economy. Now, analysts warn that fewer parents and other caregivers may rejoin the labor force right away. More older people, with renewed fears of health risks, could remain on the sidelines or take the plunge into early retirement. “I’m frustrated,” said Cindy Fain, 62, who lives in rural Virginia and has been searching for full-time work since early this year. “I have not been able to do any kind of in-person networking. And I’m definitely very concerned about the fact that there isn’t any clear horizon with this virus.” Another concern to economists is that the share of prime-age workers getting hospitalized and dying from COVID-19 today looks to be higher than in prior waves of the pandemic. And outbreaks at the outset of the new school year in some places have heightened uncertainties about the near future. The AFL-CIO’s Spriggs was particularly worried about the roughly 11 million jobless Americans who are expected by Labor Day to lose unemployment benefits entirely or the extra $300 federal weekly supplement. Eviction moratoriums affecting renters also just expired. The Biden administration should have done more to extend aid, he said, instead of what he saw as caving to pressure from inflation hawks and turning its focus to longer-term infrastructure needs. “There is absolutely, positively no way conceivable that the millions of people unemployed suddenly get jobs,” Spriggs said. That doesn’t mean the jobs recovery will reverse or even stall. The economy has added jobs for 15 straight months since getting walloped by COVID-19 in spring of last year. With the job additions in August, the nation has regained about three-fourths of the 22 million jobs lost early in the pandemic, and the unemployment rate has fallen from a high of 14.8 percent in April 2020 to 5.2 percent, much faster than most economists had projected. Job openings remain at record levels, and many companies, thanks to billions of dollars of government loans and grants, are looking to get back on their feet. Still, the resurgent pandemic is starting to temper both optimism and economic activity. Nick Bunker, chief economist at the jobs posting site Indeed, said he is seeing the pace of new openings slow in such high-contact businesses as beauty and wellness, dentistry and childcare. Whether there’s a broader pullback by employers in the months ahead depends on the path of the Delta variant, he said, and on how workers and consumers perceive the risks and to what extent they adjust their lifestyles. A Gallup poll taken in the middle of last month found that 68 percent of U.S. adults think the coronavirus situation is getting worse, a dramatic reversal from just two months earlier when nine out of 10 said things were getting better. About one-fourth of adults are now “completely” or “mostly” isolating themselves from people outside their household, which Gallup said marked the first meaningful movement in this trend since the start of the prior wave of infections in November. Many Americans, particularly upper-income and more highly educated individuals, have socked away a lot of money in the last 18 months, benefiting from remote work and a high-flying stock market, along with soaring housing prices. But the much more numerous workers who earn lower wages and have little or no financial cushion face increasing risks the longer the pandemic lasts. And if their incomes and financial stability are highly compromised, at least some of their pain is likely to spread to the entire economy. Also, the huge short-term stimulus spending by the federal government is beginning to fade. And President Biden’s massive infrastructure program, if it ever passes Congress, will take time to have a major economic impact. “Part of what kept us afloat in the early phases of the pandemic was fiscal policy, and those (stimulus programs) are dwindling or about to dwindle,” said Erica Groshen, senior economic advisor at Cornell University’s School of Industrial and Labor Relations. “How much that will hurt the recovery, we don’t know yet.” Groshen said that it helps that we’ve learned a lot about the pandemic and how to respond to it, but she also noted that each successive wave increases the risk of more workers leaving the labor force for good and sets further out the date of a full recovery of the labor market. In downtowns and business districts across the country, many restaurants, dry cleaners and other service businesses were counting on more workers to return to their offices this month. But many employers have put those plans on hold. And for some workers, the pandemic has led to life-changing circumstances and irreversible decisions. Groshen, for one, moved from New York to Seattle this summer to be closer to family. She is able to work remotely. Her husband accelerated his plan to retire from his university teaching job by taking a buyout. Whether he looks for new work or not, Groshen said, will depend at least in part on what’s happening with the pandemic. “He’s sitting out in the sidelines for now,” she said.

Seafood logistics groups sue to halt $350M in Jones Act fines

U.S. Customs and Border Protection has issued more than $350 million in penalty notices to several companies involved in shipping seafood from Dutch Harbor in Western Alaska to the eastern United States, according to a complaint filed in court from two of those companies. The federal agency is alleging violations of the Jones Act, according to documents filed in the case. The law requires that vessels carrying goods between two U.S. points be American-made and American-flagged. Kloosterboer International Forwarding and Alaska Reefer Management, providing transportation and logistics services as part of the American Seafoods Group family, filed the 35-page complaint in U.S. District Court in Anchorage on Sept. 2. The two plaintiffs are suing to stop the penalties. They contract with ship owners, cold storage operators and trucking and fishing companies to transport frozen seafood. American Seafoods is a frozen-at-sea processor of Alaska pollock and other fish. The supply chain works like this: The frozen fish leaves on ships from Dutch Harbor to the Lower 48, traveling through the Panama Canal to a port in eastern Canada near the U.S border. From there, the fish is loaded onto trucks that are temporarily loaded onto flat rail cars along 100 feet of track before they drive into Maine. The seafood eventually reaches fast food restaurants and other outlets in several states. The East Coast supply chain uses foreign-flagged vessels to deliver the seafood. But the companies claim they comply with the Jones Act because of a provision allowing an exemption, in part because the frozen seafood makes the brief trip from Canada by rail before it reaches Maine, the complaint says. However, penalty notices have apparently been issued because the Canadian rail route is used, even though the agency has supported the route in its published interpretative rulings, the complaint says. The suing companies say the notices threaten that long-established supply chain and jobs in Alaska and the Lower 48, according to the complaint. “CBP’s penalty notices effectively have shut down a critical shipping route that — for over 20 years — has been approved by CBP as complying with the Jones Act, and which is essential to the delivery of frozen seafood to consumers, fast food chains, and school lunch and food bank programs throughout the United States,” the complaint asserts. Customs and Border Protection “does not comment on matters under litigation,” the agency said in an emailed statement. “Nonetheless, lack of comment should not be construed as agreement or stipulation with any of the allegations,” the statement said. The penalties for Kloosterboer alone total $25 million, the complaint says. Numerous other companies in the plaintiffs’ supply chain have also received notices totaling more than $325 million, the complaint says. “We are reeling from crippling penalties, Customs has not been forthcoming to share specifics, and Customs’ long-standing guidance tells us we are operating in compliance,” said Per Brautaset, president of Alaska Reefer Management, in a prepared statement on Sept. 2. “We just didn’t have a choice but to try and save our business and our partners’ businesses, and all the jobs in Alaska and other communities that will be lost.” The fines are large, more than twice the annual value of frozen Alaskan seafood transported through the Bayside port to U.S. destinations, the statement said. Dutch Harbor, in the Aleutian Islands, is home to the nation’s top fishing port in terms of landed volume. Close to 800 million pounds of fish, valued at $190 million, were landed there in 2019. “This unjustifiable agency overreach is crippling and threatens to destroy plaintiffs’ businesses, along with an entire supply chain transporting frozen seafood from Alaska to the eastern United States through (the port of Bayside in New Brunswick, Canada),” the complaint says. “Moreover, the penalty notices are threatening hundreds of jobs in Alaska and throughout the U.S. in the frozen seafood shipping industry, and unless they are withdrawn, will likely result in higher prices and shortages of frozen seafood across the eastern United States.” The companies are suing the U.S. Department of Homeland Security, the border protection agency, which falls under Homeland Security, and Troy Miller, acting commissioner of border protection.

Weather scuttles Ambler drilling plans

An unusually gloomy summer has so far scuttled more than half of drilling work planned at the most advanced metal prospect in the remote Ambler mining district, according to the owners of the project. Leaders of Vancouver-based Trilogy Metals said in a field season update provided Sept. 7 that as of late August, approximately 6,450 meters of core had been drilled during a season that began with expectations to collect more than 14,600 meters. Just more than half of the drilling was originally planned for within the Arctic multi-metal deposit with another 7,000 meters scheduled for targets nearby and elsewhere in the prospective Ambler region, according to the company. Trilogy Metals is a joint owner with Australian South 32 Ltd. in Ambler Metals LLC, the operating company for the Arctic and Bornite prospects first owned by Trilogy. Ambler Metals spokeswoman Shalon Harrington wrote via email that the 2021 work season has been impacted by persistent overcast and rainy conditions that hamper the ability to safely conduct helicopter flights, which are needed to access nearly all of the drill sites. While overcast and wet weather is typical in the Ambler region as it is across much of the state, Harrington wrote that this is the first year since the notoriously cool and dreary summer of 2011 that it was a season-long issue. The village of Bettles east of the remote upper Kobuk metal prospects has seen about 45 percent more precipitation than normal since the start of June, according to National Weather Service data. Most recently pegged as a $1.2 billion open-pit mine with a 12-year life, the Arctic deposit was first known as primarily a copper prospect, but subsequent drilling tapped into substantial zinc and precious metal resources as well. Located in the middle of the Ambler mining district on the southern edge of the Brooks Range, the Arctic mine project is the most advanced prospect of more than a dozen in the roughly 75-mile long district. It also would likely be the first mine serviced by the state-sponsored Ambler access road, which has drawn the ire of many area residents and conservation groups. Trilogy CEO Tony Giardini said in the update that the company was still able to complete the metallurgical drilling at Arctic and keep advancing pre-permitting work as well. Drilling work at Arctic is done for the year. “We are now well into our regional drilling program with two drills following up on targets within our Ambler belt and the greater Bornite area,” Giardini said. “We are looking forward to seeing the regional drilling results, which should be available within the next couple of months and in commencing mine permitting once we have completed the permitting review process.” Drilling at the regional targets will continue as long as the weather allows, according to Trilogy. Donlin does more Work at the Donlin gold prospect to the southwest has been busier than originally planned, with the company expecting to drill roughly 80 holes totaling approximately 24,000 meters, according to figures provided Sept. 2. The company originally planned to drill about 65 holes totaling 20,000 meters but the additional work should help fill in the remaining gaps about mineralization continuity in the pit and aid feasibility work, according to a statement from NovaGold, a 50 percent partner in the $6.7 billion Donlin project with mining giant Barrick Gold. The best core intervals surveyed so far from this year’s drilling include 92 meters of core with an average grade of 7.8 grams of gold per ton of ore and 41 meters of core averaging 10.5 grams per ton, according to NovaGold. “As with last year’s program, drilling has delivered multiple examples of outstanding gold intercepts,” NovaGold CEO Greg Lang said in a formal statement. “Excellent results, such as those reported (Sept. 2) reinforce our belief in the uniqueness of an asset like Donlin gold, whose combination of outstanding size, quality, and exploration upside are clearly among the only answers to an industry defined by an era of declining reserves, lackluster gold grades and ever-increasing jurisdictional risk.” Donlin representatives have long said the project generally needs sustained, high gold prices because of the extensive network of support infrastructure that needs to be developed but have declined to specify what parameters they believe are needed to green-light development. Gold was trading for about $1,796 per ounce on Sept. 7. The $6.7 billion construction cost estimate was developed from the last feasibility study done on the project in 2011. Elwood Brehmer can be reached at [email protected]

Slow third special session could lead to a fourth

Legislators are likely to know next week whether or not they should prepare for a fourth overtime period this year. Gov. Mike Dunleavy’s spokesman Jeff Turner said Sept. 7 that the governor may see the need for another special session this fall, particularly if the Legislature appears to be gaining more momentum towards the votes to pass the big ticket items in a fiscal plan, but he’s going to let the current session play out a little longer before making a decision. “There’s a good week left; a lot can be done in a week,” Turner said. “We need to see what happens. The PFD hasn’t been acted on in the Senate.” The first couple weeks of the special session that started Aug. 16 were largely consumed by hearings and debate over the Dunleavy’s budget vetoes, most notably his decision to veto the entire PFD appropriation on the basis the dividends of about $525 per eligible Alaskan are far too small. The House eventually passed a spending bill Aug. 31 for dividends of approximately $1,100 per person, the same amount settled on by the budget conference committee back in June. House Bill 3003, the vehicle for the PFD, so far has sat in the Senate Finance Committee for a week. As of this writing it was scheduled for a hearing Sept. 8. Finance experts in the administration and the Legislature also continue to present conflicting projections as to the scale of the budget deficits that would remain if lawmakers passed Dunleavy’s “50-50” plan to split the roughly $3 billion per year and growing pot of spendable Fund earnings evenly between the PFD and other government programs. New Deputy Revenue Commissioner Brian Fechter told members of the House Ways and Means Committee Sept. 3 that some legislators are mischaracterizing the forecasted budget deficits as being $1 billion or more per year for the foreseeable future, when in fact “you’re real target is really in the order of $500 million” per year in new revenues. “We’re not talking about a giant tax with a huge rate,” Fechter said. “We can pull on some more modest levers.” Committee chair Rep. Ivy Spohnholz, D-Anchorage, responded by noting that Legislative Finance Division officials don’t expect growing Permanent Fund earnings and new oil revenues to close the annual budget deficit to less than $500 million until fiscal 2028 — preceded by three years of $1 billion-plus deficits — by which point the state would have accumulated more than $4 billion in budget deficits if the governor’s plan to put the PFD-government split in the constitution had been approved last spring as he originally hoped. At this point there is likely not enough support among legislators for the biggest components of Dunleavy’s fiscal plan, particularly if the governor doesn’t agree to some new corresponding revenue measures. In contrast, the Department of Revenue suggests the Permanent Fund’s strong returns, the near-term boost in oil prices and a long-term boost to North Slope production will limit the deficit spending to at most $826 million in a given year and cumulatively to the $3 billion range. That’s why Dunleavy has also proposed a one-time, $3 billion draw on the Fund beyond the annual 5 percent spending limit passed by the Legislature in 2018. However, the $3 billion draw is a nonstarter for several key legislators wary of the precedent it would set to potentially erode the Fund. Dunleavy contends his constitutional amendment to limit future draws to 5 percent of the value of the Fund would prohibit future governors and legislators from doing the same and siphoning from the fund over the long-term. As for taxes, Fechter said the governor could be willing to accept a modest statewide sales tax from the Legislature without voter approval — as Dunleavy has previously suggested any new taxes should need — if it is part of a fiscal plan that includes a 50-50 dividend and a significantly tighter spending limit. Anchorage Democrat Reps. Geran Tarr and Harriet Drummond introduced a 2 percent sales tax bill to raise approximately $300 million earlier in the session. Elwood Brehmer can be reached at [email protected]

Oil price forecasts scrambled by COVID-19 uncertainty

Oil-price forecasters mostly focus on two things: supply and demand. They watch the Middle East, follow global politics, track industrial activity and other economic indicators. All of which can affect supply and demand. Now they also watch medical charts for COVID-19 infection rates. The market players of oil producers, buyers, traders and investors worry that rising infection rates could slow down the world economy and knock down the recovery in consumption of crude oil. That would shift global oil supply — which OPEC+ is steadily increasing — out of balance if demand pulls back. That worry of too much crude and not enough demand led to a 10 percent drop in oil prices in mid-August, before the market took its temperature again, felt better and recovered by the end of the month to around $70 per barrel for Brent crude. Since then, the resurgence of COVID-19, particularly in Asia, has prompted renewed nervousness as OPEC+ continues with its plan to bring back 400,000 barrels per day of production every month through fall 2022. And now, the latest reports from the Organization of the Petroleum Exporting Countries and the International Energy Agency are adding to the market skittishness. OPEC analysts presented a report Aug. 31 that said global markets could run a supply surplus next year. Due to weakening demand projections, the analysts forecast supply could exceed demand as soon as January, adding more barrels back into storage which the OPEC+ alliance has been working all year to reduce. The OPEC base case now shows global crude stockpiles building to 3.2 billion barrels by the end of 2022, about 10 percent greater than the 2015-19 average. An even more pessimistic scenario from the analysts of COVID-induced lower demand shows 3.6 billion barrels in storage by December 2022, or the most in several years, other than 2020 when storage tanks filled up and crude was parked aboard tankers at sea. The OPEC analysts forecast global supply exceeding demand by more than 100 million barrels per month January through May 2022, then continuing at a lower level the rest of the year. “Unless oil demand turns out much stronger, or production outside the OPEC+ group much weaker than OPEC’s analysts predict, the time will soon come when the members will again have to contemplate cutting, rather than raising, output,” Julian Lee, an oil strategist for Bloomberg, wrote in a commentary Sept. 4. Lee previously worked as a senior analyst at the Centre for Global Energy Studies, a think tank headquartered in London. “When that happens,” Lee said of the prospect of production cutbacks, “expect the old (and new) divisions (within OPEC+) to emerge again,” and the alliance returning to “long and difficult” meetings between the 23 producing nations led by Saudi Arabia and Russia. The International Energy Agency sees it the same as OPEC analysts. The IEA has cut its oil demand forecast for this year, and predicts supply may outpace demand by next year. The agency said global oil demand “abruptly reversed course” in July due to “the worsening progression of the pandemic.” The spreading Delta variant of the coronavirus — coinciding with OPEC+ continuing its plan to bring back production — will eliminate “lingering suggestions of a near-term supply crunch,” the IEA said. “Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil-consuming countries, particularly in Asia, look set to reduce mobility and oil use,” the IEA said in its monthly report. “We now estimate that demand fell in July as the rapid spread of the COVID-19 Delta variant undermined deliveries in China, Indonesia and other parts of Asia.” It was just two months ago that Goldman Sachs and others were predicting oil would reach $80 per barrel by the end of this year. That’s looking less likely. “The scale could tilt back to surplus in 2022 if OPEC+ continues to undo its (production) cuts and producers not taking part in the deal ramp up in response to higher prices,” the IEA said in its report. OPEC+ is prepared to pause or even reverse its scheduled output increases if necessary to keep supply and demand in balance, Saudi Energy Minister Prince Abdulaziz bin Salman said in August. One number that may help OPEC+ avoid any change in its production plans is that the alliance is actually pumping about 10 percent less than its overall quota as some members — notably Angola and Nigeria, and somewhat Russia — are having problems fulfilling their allocations due to deteriorating production capacity from a lack of investment or technical disruptions. Still, some OPEC nations are concerned. “The markets are slowing. Since COVID-19 has begun its fourth wave in some areas, we must be careful and reconsider this increase. There may be a halt to the 400,000 increase,” Mohammad Abdulatif al-Fares told Reuters on the sidelines of a government-sponsored event in Kuwait City just two days before OPEC+ decided Sept. 1 to proceed with the scheduled production boost. The oil-producing nations should be cautious about oversupplying the market, Fares said. OPEC+ last year implemented a record output cut of 10 million barrels per day, equating to about 10 percent of world supply, when energy consumption plunged because of travel restrictions and national lockdowns to counter the spread of COVID-19. The alliance has been slowly restoring production and is scheduled to bring back all of the crude output by fall 2022. Unless COVID changes the plan. “It feels like the Delta variant has gained control of the oil market and the narrative here,” said analyst Patrick O’Rourke, with ATB Capital Markets in Calgary. “We were on the cusp of the economy reemerging and the beginning of international travel. And the brakes have been completely pumped on that,” he was quoted in the Calgary Herald on Aug. 21. “The OPEC+ group faces a real challenge in the months ahead from needing to reduce supply just as many members are itching to open their oil taps some more,” Bloomberg’s Lee wrote in his commentary last week. Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He can be reached at [email protected]

Peter Pan latest processor to announce COVID-19 vaccine mandate

After two seasons of closed campuses, rigorous COVID-19 testing and masks, Alaska’s seafood processors are increasingly turning to vaccine mandates for employees in a bid to keep their facilities open. The latest is Peter Pan Seafood Co., which announced its vaccine requirement for employees on Sept. 1. The requirement won’t go into effect for most employees until Oct. 1, with an extension for King Cove facility employees after that. Peter Pan operates facilities in Valdez, Dillingham, Port Moller and King Cove, but only the King Cove facility is open year-round. The requirement would not apply to the fishing fleet, though Peter Pan said in its announcement that it encouraged fishermen to be vaccinated and has provided the opportunity since April 2021. The company estimates that about 95 percent of its approximately 1,800 employees are already vaccinated, and that it will honor religious and medical exemptions. Rodger May, the president and chief growth officer for Peter Pan, said the decision was one of the most difficult he’d had to debate. “People are right on both sides of (the vaccine),” he said. “I’m hoping that the religious and medical exemptions fill all the gaps.” May said the major driving factor behind the decision is to continue to be responsible to employees and the communities in which Peter Pan operates. Even with the vaccine requirement in place, the company plans to continue its closed-campus and masking policies for workers. Peter Pan has been lucky and not experienced an outbreak at its facilities, he said, but if one happened, it could be devastating for the company and for the employees. “If for some reason you’re shut down for 20, 25 days, that could be 25 percent of their paycheck for the whole summer,” he said. “They didn’t sign up for that.” Alaska seafood processors rely heavily on workers from the Lower 48 and internationally to staff their plants, particularly the seasonal ones. That means many have to enter the state as the season ramps up, and the companies have had to bear the brunt of the cost of mitigating COVID-19 risk in that process, including testing workers frequently, paying for PPE, quaranting them in hotels and trying to social distance where possible in facilities that are normally densely crowded with workers. They received some federal relief funding meant to help offset that cost, but not all of it, and it posed a significant expense for many. To date, processing plants have experienced a number of outbreaks statewide, including several complete plant shutdowns. In July, Camtu’s Alaska Wild Seafoods in Cordova had to shutter briefly in response to an outbreak among workers, and in January 2021, two of the state’s largest processing plants — owned by Trident and UniSea — had to close at the beginning of the crab and pollock seasons. Between spring and fall 2020, 13 COVID-19 outbreaks occurred in Alaska seafood processing facilities and on vessels, with 539 cases that counted as spread among workers, according to the U.S. Centers for Disease Control and Prevention. Until “high rates of vaccination” can be achieved in the seafood processing workforce, the recommendations are to keep quarantine groups to less than 10 people, test workers prior to transfer and perform serial testing to prevent outbreaks. Multiple processing companies have now announced that they will require vaccines for employees, including Trident Seafoods and OBI. American Seafoods states in its information for applicants that it requires new crew members to “undergo COVID-19 tests, pass a fit-for-duty exam, show proof of COVID-19 vaccine, exemption, or obtain vaccination through us, and receive this year’s flu shot.” Trident says its requirement is meant to help alleviate some of the difficulties about where and how it operates. “Our facilities and vessels require employees to work and live in close quarters, there are limitations on the medical services we can provide in remote locations, and it is not reasonably practical to evacuate from remote locations or shut down operations in the event of another outbreak,” the company’s website states. May said the majority of Peter Pan’s employees are already vaccinated, so the remaining few will be able to decide whether they want to receive the shot or seek employment elsewhere. In the case of those who would prefer not to obtain the shot or an exemption, the company will help place them at another processing facility. The timeframe for the company’s requirement will help facilitate that, he said. “We’re not talking a huge amount of people,” he said. “(The King Cove facility) is still very busy, and I didn’t want to put a gun to their head. The goal isn’t to terminate somebody and send them on their way.” He said Peter Pan has been blessed so far that it has not had a facility shutdown due to an outbreak, but if it fell in a high-volume time, there would “literally be no recovering.” In Port Moller and King Cove, Peter Pan is the only processors in the immediate vicinity, but even in Bristol Bay, a shutdown would impact the fleet because the other plants are already operating at capacity. Hiring is competitive, but May said he didn’t expect the requirement to create an issue for Peter Pan in finding employees. In its requirements, the company states that it defines “fully vaccinated” as having two doses of either the Pfizer or Moderna vaccines or a single doze of the Johnson &Johnson vaccine. The CDC has not provided guidance about recognition of foreign-developed vaccines, though President Joe Biden’s administration said in early August that it was working on guidance on verification of international vaccines for tourists. This year is Peter Pan’s first full calendar year operating after the reorganization in 2020. May said he thought the company is headed in the right direction, and that the vaccine decision is a leadership decision he hopes others can learn from. “There’s no right answer here,” he said. “We hope that people learn from it—we’re sure learning from it. Elizabeth Earl can be reached at [email protected]

Movers and Shakers for Sept. 12

Judith Daxootsú Ramos has joined the University of Alaska Southeast School of Arts and Sciences as Project Coordinator for the Haa Yoo X’atángi Deiyí: Our Language Pathway, which is an immersive language program which provides scholarships to scholars across Southeast Alaska who plan to teach their language. She taught for the Department of Alaska Native Studies and Rural Development UA Fairbanks. She is a co-curator for the American Museum of Natural History’s renovation of the Northwest Coast Hall. She holds a master’s degree in teaching-adult education as well as a bachelor’s degree in anthropology. She is working on her Ph.D. in Indigenous Studies on Traditional Knowledge of Tlingit Seal Hunting. Earlier this year Ryan Wark joined UAS as the Director of Equity and Compliance. His responsibilities at UAS include Title IX, Equal Employment Opportunity issues, the American Disabilities Act/504 requirements, and Clery Act compliance. Prior to joining UAS, Wark served as a staff sergeant for the U.S. Air Force, an investigator for the Montana Innocence Project, a criminal investigator for the Montana Office of the State Public Defender-Missoula, and an investigator for the Lane County Public Defenders. He holds a bachelor’s degree from the University of Montana in sociology with a dual focus in criminology and inequality and social justice. Following an upcoming thesis defense, Wark will soon hold a master’s degree in conflict and dispute resolution from the University of Oregon School of Law. Dr. Mary Lou Madden was hired as interim director for the School of Education at the beginning of July. Madden has served UAS in many capacities over the years, most recently as the Education program evaluation consultant. She earned a master of education degree in education leadership from UAS. She also holds a master’s degree in East Asian studies from Johns Hopkins University, and a Ph.D in economics from American University. Coffman Engineers Inc. announced that Anchorage mechanical engineer Scott Patterson has earned the National Association of Corrosion Engineers Senior Internal Corrosion Technologist Certification. Patterson has supported integrity management and corrosion control engineering work, including developing advanced integrity management analysis tools and solutions for many major clients. He has also worked on performing critical stress analysis and destructive testing of specialized downhole drilling tools. Patterson is a 2014 graduate of the University of Vermont with dual bachelor’s degrees in mechanical engineering and mathematics. He joined Coffman as an intern in 2012.

OPINION: Another failing grade for Alaska schools

In its release of the latest statewide performance assessments for Alaska students, the state Department of Education and Early Development cautioned against comparing the results to prior years but I did it anyway. The spring 2021 Performance Evaluation for Alaska’s Schools, also known as PEAKS, were the first administered since 2019 as they were waived amid the COVID-19 suspension of in-person instruction last year. You have to click through the link in the press release to see the results that are once again a dismal indictment of how the state’s public schools continue to post unacceptable outcomes in the core areas of English Language Arts and Mathematics. The state DEED advised not to compare the 2021 results to prior years based on the drastic decline in participation rate — from about 90 percent in 2019 to just 64 percent in 2021 — but there is virtually no difference in proficiency in spite of fewer students taking the tests. In 2019, all students in grades 3 through 9 rated as proficient in English arts numbered 39.2 percent; in 2021 the same cohort tallied 39.5 percent. In math, just 35.7 percent of third- to ninth-graders scored proficient in 2019 compared to 32.4 percent in 2021. There is much to be disturbed about simply looking at the topline statewide results, but one alarming trend stands out: math proficiency in particular declines the longer students are in the state’s public schools. Third-graders posted nearly 38 percent proficiency in math and that number steadily declines at each grade level until bottoming out at 26 percent proficient for eighth-graders (ninth-graders came in at 30.7 percent proficient). A similar trend after reaching middle school appears in the English arts. Student performance improved from 36 percent proficient in third grade to nearly 47 percent by sixth grade. However, by ninth grade proficiency in English arts sinks back to the same 36 percent as the third graders. Gov. Mike Dunleavy, a longtime educator and administrator in rural Alaska, made education reform a central part of his campaign but no meaningful measures have been enacted or gained any traction as the all-consuming fights over the budget deficit, vetoes and the Permanent Fund dividend have become the black hole of state politics that swallows up every other pressing issue. For all the recent obsessing over “equity” (of outcomes) versus “equality” (of opportunities), the single greatest effort that could be made to achieve both is in education. Alongside a stable, healthy home life, no factor is a greater predictor of future success than a quality education. Disengaged parents who treat school as a daycare center without engaging in their children’s progress or lack thereof are just as much to blame as the teachers unions which resist any attempts at accountability for outcomes such as below proficient students in math outnumbering their peers by 2-to-1 year after year. With that said, parents also deserve the freedom and the resources to send their children to the schools where they feel the best education is being delivered. Long since has passed the time when the State of Alaska must hit a reset on its educational priorities to a relentless focus on the basics that is sustained through graduation. Math, reading and writing are not just some co-equal subjects to social justice curriculum and classroom time should reflect that at a minimum until such time as the results afford us the luxury of engaging in university-level hippie-dippy theorizing. Educating students on respecting someone’s pronouns does no good if they don’t even know what a pronoun is. Andrew Jensen can be reached at [email protected]

Lodge owner, salmon drifter tapped for overdue Board of Fisheries vacancy

Gov. Mike Dunleavy’s latest appointment to the Alaska Board of Fisheries believes his ties to both the commercial and sport industries can help bridge the divide between user groups regularly at odds over often contentious allocation decisions across the state. “I have friends on both sides of the sport-commercial; I see both sides; I financially benefit from both sides so there’s no reason why the two sides shouldn’t be able to work together,” appointee Indy Walton said in an interview Sept 7. For Walton’s part, he said he’s not interested in the politics that can muddy the board’s decision. “Fish politics is an ugly business and it’s sad that it is that way,” Walton. Originally from Fairbanks, Walton describes himself as a third generation fisherman who spent his formative summers at a remote Kodiak Island fish camp and now fishes in the Bristol Bay drift gillnet sockeye fishery. In total, he’s fished commercially for 38 years. The Walton family also owns Last Cast Lodge, a restored sport fishing operation on the Kvichak River in the Bristol Bay region. Walton said trust has been the key to success in his parallel career as a financial advisor in Soldotna and will be imperative when making difficult decisions on the Board of Fisheries. He added that he applied for the seat because he wanted to help protect special places such as the Kenai Peninsula and Bristol Bay where he has had the opportunity to fish. Dunleavy appointed Walton Sept. 4 to a seat on the seven-member board traditionally held by a commercial fishing stakeholder from the Bristol Bay region. The governor’s first appointment to the seat, Abe Williams, was roundly rejected by legislators in a mid-May confirmation vote on his appointment. In addition to participating in the Bristol Bay sockeye fishery, Williams is also the regional affairs director for the Pebble Partnership. Many legislators opposed to the mine said they didn’t believe he belonged on the board that regulates the state’s vast fisheries while also working on a mining project that could disrupt the region’s iconic salmon runs; others disagreed with his views on de-regulating the Bristol Bay fishery. Walton’s appointment also ended a nearly four-month vacancy on the Board of Fisheries since the May confirmation vote, during which time Dunleavy violated a requirement in state law for him to appoint Williams’ replacement within 30 days after the vacancy arose. Dunleavy advocated for sport fishing interests while a state senator from Wasilla and Kenai River Sportfishing Association founder Bob Penney donated heavily to an independent expenditure group formed for Dunleavy’s first gubernatorial campaign. The Alaska Department of Fish and Game under Dunleavy also refused to manage Cook Inlet’s salmon fisheries with federal oversight late last year after the 9th Circuit ordered the North Pacific Fishery Management Council to create a fishery management plan under the Magnuson-Stevens Act. The decision backed by the state at the North Pacific council was to instead entirely close the federal waters to salmon fishing in a move that will drastically curtail the Cook Inlet drift gillnet fishery if it is approved by the Secretary of Commerce and upheld by the 9th Circuit overseeing the case. Records officials in the governor’s office also did not respond to a formal request made in early August for copies of the Board of Fisheries applications since Williams was rejected within the 10-day statutory window and did not provide the applications following subsequent requests for the documents until shortly after a Journal story outlining the situation was published Sept. 3. Rep. Bryce Edgmon, I-Dillingham represents the Bristol Bay region in the state House and said he urged for an appointee who lives there year-round for a true local perspective from the area that supports some of the state’s largest and most iconic commercial salmon and sport fisheries. While he does not meet that criteria, Edgmon noted that “it clearly looks like he has impressive credentials” for the board based on his resume and added that it’s the governor’s prerogative to make such appointments. As for the timing of the appointment, Edgmon said it was the first time in his nearly 15 years in the Legislature that he can remember a governor going substantially beyond the 30-day appointment deadline. “I think it’s highly inadvisable and obviously the wrong precedent to establish,” Edgmon said in an interview. Officials in the governor’s office previously avoided questions regarding the 30-day statutory appointment deadline but Dunleavy’s spokesman Jeff Turner said after Walton was named that the governor simply took his time to fill an important seat. “He picked the candidate he felt was best for the position,” Turner said. Walton’s application was submitted June 3, according to a time stamp on a partially redacted copy of the document provided to the Journal by the governor’s office. United Fishermen of Alaska Executive Director Frances Leach wrote via email that Walton’s direct background in commercial fishing and the fact that he still actively participates in the Bristol Bay fishery makes him qualified to fill a historically “commercial” seat on the board. “He understands commercial fishing — which is integral,” Leach wrote. “Additionally, the little I have interacted with Indy gives my the impression he will be a fair voice on the board and be open and willing to listen unbiasedly to all user groups (be it sport, subsistence or commercial), as well as traditional knowledge and science — which is really what makes for a superior board member on the BOF.” Ben Mohr, executive director of the Soldotna-based Kenai River Sportfishing Association, said in an interview that he does not know Walton personally and many longtime players in Alaska fish politics aren’t familiar with him, either, but people Mohr has talked to around the Kenai Peninsula have consistently said Walton is “very well-reasoned, very well-respected. He’s known in town as being reasonable and thoughtful.” Mohr added that more representation from the Kenai Peninsula — home to the state’s most bitter fish allocation fights — on the board is a positive from his perspective “He’s got a big learning curve in front of him and I wish him well,” Mohr said. Elwood Brehmer can be reached at [email protected]

Movers and Shakers for Sept. 5

Janet Weiss and Dennis Michel were appointed to the Alaska Gasline Development Corp. board of directors. Weiss received her bachelor’s degree in chemical engineering from Oklahoma State University and has more than 35 years of experience working in the oil and gas industry in various engineering and leadership roles for ARCO and BP including being as president of the Alaska Region for seven years. Michel received his bachelor’s degree in business administration from University of Southern California Marshall School of Business and his MBA with a concentration in corporate finance from University of Denver. He has more than 17 years of experience working in finance and information services in management and consulting. Weiss term is effective Aug. 23 through Dec. 1, 2025. Michel’s term is effective Dec. 1 through Dec. 1, 2026. Marta Kumle, CH, recently joined R&M Consultants Inc. as a senior hydrographer. Kumle has 15 years of experience in GIS analysis and hydrographic survey. Her skills include project management; hydrographic and GIS data acquisition, processing, quality control and compilation; and GIS database design. She has conducted hydrographic surveys for the National Oceanic and Atmospheric Administration, U.S. Army Corps of Engineers and private contractors. She previously worked at the Alaska Ocean Observing System, where she conducted the Alaska Coastal Mapping Prioritization Survey and led development of the Alaska Coastal Mapping Strategy. Projects include bathymetric surveying in Cook Inlet for the Alaska LNG Project; cable route surveys for Arctic Fibre; and NOAA hydrographic surveys in Unimak Pass, False Pass, the Kuskokwim and Nushagak Rivers, Cook Inlet, Red Dog Mine, Kodiak Island, and a variety of locations in Southeast Alaska. Kumle has a bachelor’s degree in oceanography and a master’s degree in GIS and sustainability management, both from the University of Washington. She is a National Society of Professional Surveyors/The Hydrographic Society of America certified hydrographer, a board member of the Alaska Arc Users Group.

Mental Health Trust Authority transfers $41M after audit

Alaska Mental Health Trust Authority leaders have repaid $41.3 million to the core of the group’s investments to comply with state laws, but continue to insist the initial decisions to use the money elsewhere were justified according to a follow-up report from the state’s auditor. The 60-page report signed by Legislative Auditor Kris Curtis also concluded that trust leaders continued to pay for land development activities totaling $4.7 million out of the trust’s cash principal through March of this year despite a June 2018 audit that deemed the practice inappropriate. Those development expenses included $1.1 million to facilitate a much-publicized Southeast Alaska land exchange and $3 million for mineral exploration at the trust’s Icy Cape property, according to the most recent audit. It is dated July 6 but was released by the Legislative Budget and Audit Committee following an Aug. 27 meeting. The 2018 audit determined the trustees interpreted state regulations as providing them the authority to invest cash principal outside of the Alaska Permanent Fund Corp., which invests the Mental Health Trust assets on behalf of the authority as required by state law. Curtis wrote in the 2018 audit that the decision to use the $39.5 million on seven commercial real estate investments and $1.8 million on property investments for the authority’s programs “appear to be well-intentioned, driven by a desire to maximize revenue for use by beneficiaries” of the authority, despite being outside the bounds of the law. The Alaska Mental Health Trust Authority is an independent, state-owned corporation that utilizes its assets to better the lives of its beneficiaries, who are Alaskans with mental health and addiction challenges. The trust’s investments managed by the Permanent Fund Corp. totaled $704.7 million as of July 31, according to spokeswoman Allison Biastock. A 1994 legal settlement and corresponding legislation directed the state to allocate $200 million for the Mental Health Trust. That money, along with one-time revenues from development activities on trust land — land sales, oil, gas and mineral extraction and 85 percent of timber sale proceeds — was to be handed over to the Permanent Fund Corp., which comingles the Trust assets with its Fund investments. From state fiscal years 2009-17, the Mental Health Trust Authority invested in seven commercial real estate properties in Anchorage, Cordova and the Lower 48 through the Trust Land Office, which is tasked with managing the authority’s roughly 1 million acres of land holdings in the state. Six of the properties were mortgaged and, according to the 2018 audit, portions of those proceeds were used for further real estate investments. The authority can use recurring revenue from land leases or easements more liberally. The money in question came from such one-time revenue streams, according to the 2018 audit. AMHTA Board Chair Christopher Cooke wrote in a formal response included in the recent report that the trustees generally agree with Curtis’ recommendations to consider selling commercial properties managed by the Trust Land Office add more structure to how the trust’s funds are handled, but do not concur with some of the conclusions behind that advice. Cooke wrote in the 9-page response that the trustees believe their “financial practices are lawful, aligned with the rights and fiduciary responsibilities of the board of trustees, consistent with generally accepted standards in the financial industry, and conducted in the best interest of Trust beneficiaries per the 1994 settlement.” The board regularly considers liquidating properties and will continue to do so, according to Cooke, who also noted that the authority gets an annual “hold/sell” recommendation from its real estate advisory firm Harvest Capital Partners. He wrote further that while the authority transferred the $41.3 million for the APFC-managed investments, the trustees stand by their decision to select the Trust Land Office to manage the properties. “The TLO is fully capable of managing seven real estate assets in five cities in a manner that suits the Trust Authority’s objectives,” Cooke wrote in response to the audit. “Our external real estate advisor, Harvest, has confirmed that the TLO is capable of fulfilling this responsibility.” Elwood Brehmer can be reached at [email protected]

Vacancy remains at Board of Fisheries months after Williams rejected

Gov. Mike Dunleavy has gone nearly three months past a statutory deadline without appointing a new member to the critical Board of Fisheries and officials in his office are refusing to address it. The Legislature rejected Abe Williams, Dunleavy’s original appointee to hold a seat on the seven-member board traditionally reserved for commercial interests, during a lengthy joint session May 11. Williams participates in the Bristol Bay sockeye fishery and is also the regional affairs director for the Pebble Partnership. Many legislators opposed to the mine said they didn’t believe he belonged on the board that regulates the state’s vast fisheries while also working on a mining project that could disrupt the region’s iconic salmon runs. Others disagreed with his views on de-regulating the Bristol Bay fishery. Alaska law states that if a seat on the Board of Fisheries suddenly becomes vacant “the governor shall, within 30 days after the vacancy arises, appoint a person to serve the balance of the unexpired term and submit the name of the person to the Legislature for confirmation.” It has been more than 110 days since the Legislature rejected Williams’ appointment. Officials in the governor’s office have twice announced large groups of appointments to the state’s various boards and commissions since Williams was shot down but Dunleavy has not named his replacement. When asked why he hasn’t made the appointment so far, Dunleavy’s spokesman Jeff Turner wrote via email that the governor would appoint a new Board of Fisheries member before the board’s busy winter meeting schedule starts in late October. Senate President Peter Micciche, R-Soldotna, said he began discussing the appointment shortly after Williams was rejected and has suggested a couple of names to administration officials as well. “I know there are qualified Alaskans who want to serve on the Board of Fisheries,” said Micciche, who holds a Cook Inlet commercial salmon permit and characterizes his district as split 50-50 sport and commercial. Micciche said he is aware of several people from different user groups who have applied in recent months but his queries to administration officials about their names have not been answered. He encouraged the administration to better meet statutory deadlines and also stressed the need for balance on the board that continuously deals with contentious issues that directly impact the livelihoods of thousands of residents. “I think the public, who already struggles with the decision of the board of fisheries — depending on which user group they belong to — will have less and less faith in the decisions if there is not balanced representation for the user groups.” Dunleavy advocated for sport fishing interests while a Wasilla senator and Kenai River Sportfishing Association founder Bob Penney donated heavily to an independent expenditure group formed for Dunleavy’s first gubernatorial campaign. The Alaska Department of Fish and Game under Dunleavy also refused to manage Cook Inlet’s salmon fisheries with federal oversight late last year after the 9th Circuit ordered the North Pacific Fishery Management Council to create a fishery management plan under the Magnuson-Stevens Act. The decision backed by the state at the North Pacific council was to instead entirely close the federal waters to salmon fishing in a move that will drastically curtail the Cook Inlet drift gillnet fishery if it is approved by the Secretary of Commerce and upheld by the 9th Circuit overseeing the case. Dunleavy’s Director of Boards and Commissions Courtney Enright did not respond to emailed questions about the applicants and calls to Enright were referred to Turner, the governor’s spokesman, who said the Dunleavy is reviewing the applicants and is committed to making an appointment prior to the next board meeting that starts Oct. 20. Records officials in the governor’s office also did not respond to a formal request for copies of the Board of Fisheries applications since Williams was rejected within the 10-day statutory window and did not provide the applications following subsequent requests for the documents. Micciche said he believes the applications should be publicly available records. Former board member Fritz Johnson of Dillingham said in an interview that he applied once Williams’ seat became vacant and discussed the appointment briefly with administration officials. “I haven’t heard anything back, though I understand there’s a handful of people who have expressed interest,” Johnson said. “It makes sense to have as much expertise on the board as possible.” Dunleavy originally appointed Williams to replace Johnson in 2020. United Fishermen of Alaska Executive Director Frances Leach said the statewide commercial fishing group has twice provided names to the governor’s office upon request since Williams left the board and has generally been encouraging commercial fishermen to apply as well. “It’s concerning because right now the Board of Fish is definitely stacked against commercial fishermen. It has very strong support of sport and personal use and lacking in subsistence and commercial fishing,” Leach said. The board rejected an emergency petition from Cook Inlet setnetters on a 4-2 vote Aug. 2. She added that the critical nature of the appointment process regularly discourages qualified applicants. “It would be great to see some actual commercial fishing representation on the board,” Leach said. Elwood Brehmer can be reached at [email protected]

FISH FACTOR: Pink surge, strong sockeye harvest beats 2021 forecast

Alaska’s 2021 salmon harvest has blown past the forecast and by Aug. 27 had topped 201 million fish, well above the 190 million projected at the start of the season. The catch was bolstered by a surge of pink salmon to the three top producing regions — Prince William Sound, Southeast and Kodiak — combined with strong landings of sockeyes. “Pink salmon runs are over 95 percent complete, based on average run timing. Effort drops off quickly this late in the season, so it is difficult to predict where that harvest will end up,” said Forrest Bowers, deputy director of the Commercial Fisheries Division at the Alaska Department of Fish and Game. “My guess is up to another half million late-run sockeye salmon and perhaps 10 million pink salmon will be harvested. If that occurs, we will end up with around 143 million pink salmon, 54 million sockeye, and 207 million total salmon harvested. 2021 could end up being the sixth-largest sockeye and sixth- or seventh-largest pink salmon harvest on record.” Pinks are the “bread and butter” catch for Alaska salmon fishermen and total landings were approaching 137 million, well above the 124 million projected for this season. At Prince William Sound, which had a catch forecast of about 25 million pinks, nearly 62 million had crossed the docks. “Wild stocks are returning stronger than anticipated (to PWS) given the uncertainty about spawning success from the 2019 parent year which was negatively impacted by drought conditions,” said the weekly ADFG inseason summary. Southeast Alaska humpy landings had topped 40 million on a forecast of 28 million fish. At Kodiak, the pink harvest was on target to reach 22 million. The Alaska Peninsula also has had a strong catch nearing 11 million humpies. The bigger catches combined with increased prices for all salmon will mean a nice payday for Alaska fishermen, well above the $295 million from the 2020 season. Base prices for pinks were averaging 35 cents per pound, up a nickel from last year when the catch totaled about $62 million. Sockeye base prices, which last year averaged just 76 cents per pound, were at $1.25 to fishermen at Bristol Bay, making that catch worth $231 million to fishermen. The value will increase substantially as bonuses and other prices adjustments are added in. Base prices for sockeyes at Kodiak were reported at $1.45 to $1.50 and $1.75 at Southeast. For the other salmon species, chum catches had picked up and were nearing nine million on a forecast calling for 15.3 million. At Kodiak the base price for chums had doubled to 50 cents per pound and nearly doubled to 85 cents at Southeast. Coho catches typically near their peak around this time and a statewide catch of 3.8 million is predicted. For chinook salmon, the catch had topped 204,000 out of a projected 296,000 kings. The Southeast fleet of 713 trollers was averaging $6.68 per pound for chinook ($74 per fish vs. $70.42 for a barrel of oil) compared to $5.07 last year. Troll-caught cohos were fetching a whopping $2.84 per pound and $1.03 for chums, according to ADFG. Cod catch shares Fishery managers are set to implement a catch share program for cod trawlers in the Bering Sea. Shares would be divided up based on harvest history over certain years. The goal is to make the fishery safer and more valuable, and to end the race for cod that results in high bycatch levels of unwanted species. The measure has the support of the Seattle-based trade group United Catcher Boats that represents more than 70 trawlers and the Pacific Seafood Processors Association that includes eight shoreside processing companies. A low of 29 trawl boats and a high of 69 fished for Bering Sea cod each year from 2004 to 2020, according to a report by the North Pacific Fishery Management Council which oversees Alaska fisheries from three to 200 miles offshore. Documents will be posted to the NPFMC website and public comments will be accepted from Sept. 17- 29. A final decision will be made at the NPFMC meeting Oct. 10-15 tentatively at the Egan Center. Fish farewells Jim Balsiger, director of NOAA Fisheries Alaska plans to retire on Nov. 30. Balsiger has headed the Alaska agency since 2000 and plans to remain in Juneau after retirement, according to the Deckboss blog. No word yet on his replacement. Frances Leach, the executive director of United Fishermen of Alaska since 2018, is leaving to launch Capitol Compass, a lobbying firm in Juneau. “I’m really excited to continue lobbying for an industry that I really have a lot of respect for. But then also be able to lobby for other things that I care about greatly like environmental issues and nonprofits,” she told KFSK in Petersburg. Prior to her role at UFA, which represents 36 member groups, Leach worked at ADFG as staff to the state Board of Fisheries. Applicants for the UFA position are being accepted through Sept. 24. Salary is dependent upon experience; lobbying records show Leach’s most recent UFA salary was $95,000. Send applications to UFA vice-president Rebecca Skinner at [email protected] Fukushima water release Tokyo Electric Power, or Tepco, plans to meet with fishing communities before finalizing its plans to release 250 million gallons of treated but still radioactive water into the Pacific Ocean within two years. The water has been stored in massive tanks at Tepco’s Fukushima nuclear plant that was badly damaged by an earthquake in 2011. Reuters reported that a senior official said: “We haven’t had direct consultations with fisheries regarding the discharge,” and added that the plans would be “open to public consultation.” The water, which was contaminated by melted uranium fuel from damaged reactors and is stored in huge holding tanks, is enough to fill 500 Olympic-sized swimming pools. Tepco said it costs about 100 billion yen ($910 million) to treat and store the water and “space is running out so it needs to release it to the ocean.” The company plans to dilute the water more than 100 times with seawater to ensure it is within regulatory limits on radiation before pumping it through a tunnel under the seabed to a discharge point less than one mile offshore. The Japanese government in April called it “the most practical solution” and said “it will do its utmost to provide compensation to fishermen for any damages.” Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

COMMENTARY: Tongass holds wealth of resources in renewables, mineral exploration

Southeast Alaska is at a unique crossroads in its management of the Tongass National Forest. How will reimposition of the 2001 Roadless Rule impact development of natural resources like geothermal, hydroelectric and mineral resources? As stewards of these public lands, we need deliberative and balanced Forest Service consideration of the best use of and access to these resources to protect and sustain Southeast communities, and their economic future. The Forest Service needs to carefully consider the serious ramifications that reimposition of the Roadless Rule will have on our nation’s efforts to increase local, high paying jobs and reduce our dependence on fossil fuels. Currently, mines operating within the Tongass National Forest occupy a footprint of roughly 320 acres. Even if there were a dozen more mines their size scattered throughout the Tongass, they would only occupy 3,840 acres in the 16.9-million-acre forest. Yet the future potential for the Tongass to help power America is enormous. For example, the Bokan Mountain Project is a rare earth prospect that would produce the minerals needed for batteries to power electric cars. The final environmental impact statement, or FEIS, for the 2008 Tongass Land and Resource Management Plan pointed out that the U.S. Bureau of Mines had identified 148 locatable mineral deposits in the Tongass. Of these, 52 were ranked as having the highest mineral potential. Seven were ranked as having the next highest potential and at least one “critical” and “strategic” mineral. In addition to the 148 Identified Mineral Deposits, the 2008 FEIS described 930 “Undiscovered Mineral Resource” tracts. However, no mine can be developed unless it: 1) meets the strict environmental requirements of 36 C.F.R. Part 228 as analyzed under the National Environmental Policy Act process and 2) survives the inevitable litigation testing whether the analysis complies with NEPA. Mines making it through this process are not going to end hunting, fishing, and tourism on the Tongass, yet they will provide opportunities and jobs for citizens. The benefits of mining are evidenced by the Greens Creek and Kensington Mines which, which combined provide more than 800 jobs with average annual wages over $115,000. Mining provides high-paying, year-round employment on the Tongass. The potential for many more high-paying mining jobs on the Tongass is enormous. A 1991 United States Geologic Survey study estimated a value for discovered minerals of $37.1 billion, and a value for undiscovered minerals of $28.3 billion. Obviously, the escalation in metals prices that has taken place since has dramatically increased these numbers. So, clearly the Forest Service should be concerned about how reimposition of the Roadless Rule would affect mining. The Response to Comments in the 2001 Roadless Rule interpret Section 294.14(d) in a way that creates uncertainty about the construction of roads to access future hydropower and support facilities in Inventoried Roadless Areas. Some respondents were concerned about the impact of the rule on special uses and requested clarification regarding the ability to construct or maintain roads in inventoried roadless areas to access electric power lines or telephone lines, pipelines, hydropower facilities, and reservoirs. The response was the proposed rule stated that the rule would not suspend or modify any existing permit, contract, or other legal instrument authorizing the use and occupancy of the National Forest System lands. Existing authorized uses would be allowed to maintain and operate within the parameters of their current authorization, including any provisions regarding access. The 2020 FEIS identified 19 geothermal resources in Southeast Alaska. “Because of the potentially significant environmental impacts that road construction could cause to inventoried roadless areas” the Final 2001 Roadless Rule denies access to new leases for geothermal resources (along with other minerals subject to the Mineral Leasing Act of 1920). The Final Rule contained no discussion of the impact of the loss of geothermal energy to rural Southeast Alaska communities. For these reasons the Forest Service (and public) should work toward a management result that acknowledges the opportunities provided by the vast wealth of multiple resources that surround us. Work to solve real needs and access to critical resources, and not be swayed by the red herring of “large-scale old growth” clear-cutting which has not occurred for decades and still would not even with a full exemption. Access for mineral exploration and renewable energy is essential to developing and maintaining vibrant communities, strong economies, and a healthy environment in Southeast Alaska. Robert Venables is the executive director for Southeast Conference, the Economic Development District for Southeast Alaska. Southeast Conference plans for the success for each economic sector in Southeast Alaska. Bill Jeffress is a Mining Consultant and president of the Alaska Miners Association, a professional membership organization representing miners from across Alaska.

COMMENTARY: Biden leaves behind more than Americans, weapons in Afghanistan

As Americans watched in horror at the tragic scene of U.S. Marines losing their lives in Kabul, Afghanistan last week, emotions ran the gamut from anger to frustration and sadness. A two-decade effort to bring stability to Afghanistan ended in failure and humiliation. Lives were lost. Chaos reigned at the airport. Hopeless efforts were made by many who wanted to leave the country, but couldn’t. Twenty years after terrorists used Afghanistan to launch the attacks on September 11, the Taliban flag once again flew over Kabul. America’s longest war ended in defeat. As the last American troops left Kabul this week, we left behind not only our fellow citizens, but also so many people who put their lives on the line to help us. So, too, remained military hardware, with its technology sure to be reverse-engineered by the Taliban and other countries eager to learn how to replicate its might. Simply put, the blunders of the current administration in its haste to end our involvement in Afghanistan will have consequences for decades. Also left behind, and now under Taliban rule, are trillions of dollars of mineral resources in the country. Afghanistan is known to have world-class deposits of lithium, copper, coal, gold, mercury and rare earth elements under its surface. To date, the United States and its allies have been able to keep them untapped, in spite of their value to the “green” energy movement and the massive increases to mine them to vastly increase “green” energy component production. Sadly, the Taliban and their allies will undoubtedly look to quickly exploit this failure as well. According to a recent Bloomberg article, plans may already be underway for the Taliban to work with China to mine those deposits. Should that business relationship develop, you can bet that neither partner will have qualms about using labor and environmental methods that run counter to accepted practices for much of the world. Even with U.S.-led sanctions against trade and business dealings with the Taliban in place, there are legal and illegal ways to work around them. Think that’s a stretch? Remember, China has a more-than-cozy relationship with North Korea. They both have history with bringing desired outcomes to bear — by any means necessary — in an effort to show their might on an international stage. While China and the Taliban work to bring the mineral deposits to market, the American mining industry is stuck in neutral because of misguided public policy. Efforts by anti-development groups and wealthy ideologues have made the process of permitting and opening a mine well beyond common-sense regulation. While the U.S. has incredible quantities of nearly every critical mineral and rare earth element that the “green” movement cries for, you would be hard-pressed to find more than a handful of prospects and projects not under siege by the eco-left and misguided environmental evangelists. Whether by spreading fear about potential environmental catastrophes or through foolish efforts to place protecting wildlife above advancing human life, mining opportunities in America are required to run a never-ending, multi-year obstacle course. In the meantime, the Taliban and China plot their partnership and development of Afghanistan’s mineral riches without hesitation. While China begins to consider how to work around international pressure in doing business with the Taliban, American eco-zealots consider how to keep an American mineral project from moving forward. And while the Taliban and China strategize how to undermine America’s international leadership, the current administration lends credence to the “leave-it-in-the-ground” movement by placing environmental radicals in leadership positions throughout Washington. America deserves better. American workers deserve opportunity. Americans shouldn’t ever again see the greatest country in the world subjected to ridicule on an international stage. Leaving Afghanistan in defeat stings on many levels. Let’s hope the future doesn’t bring anything equivalent — let alone much worse — especially if it will be financed by the development of Afghanistan’s mineral wealth. Rick Whitbeck is the Alaska State Director of Power The Future, a national nonprofit organization that advocates for American energy jobs. Follow him on Twitter @PTFAlaska or contact him at [email protected]

High prices for new, used cars to last next two years

Sky-high transaction prices and near nonexistent discounts for new and used cars — due to scarce vehicle stock — will be the new normal for the next couple of years. That’s even after the shortage of semiconductor chips abates, which is expected to start later this year and take all of next year as a recovery period, industry experts say. “We may never see normal in the near future or we’ve redefined normal,” said Jeff Schuster, LMC Automotive’s president of Americas Operations and Global Vehicle Forecasts. “The industry and consumers need to be flexible. For the industry, it means moving around production and inventory as the market dictates.” The Japanese automakers have mastered operating with lean inventory and matching production to what consumers will buy. They’ve been rewarded with increased U.S. market share over the past few years. The Detroit Three each have lost market share, despite reporting profits, prompting them to tweak their future go-to-market strategies and production plans. The weird year of high prices, thin inventory, idled factories and seas of thousands of half-built new vehicles parked near and around plants awaiting parts is due, in part, to the aftermath of COVID-19, as automakers shut down their factories in North America for eight weeks last year. Also to blame is a worldwide shortage of computer semiconductor chips. Big prices, few incentives Acres of barren concrete have surrounded showrooms in recent months as hungry car buyers salivate over a handful of new cars rolling off a carrier, snapping them up at full sticker price. “It’s a scramble like I’ve never seen in the car business,” Gordon Stewart, owner of Gordon Chevrolet in Garden City, Mich., told the Free Press in July. “Car loads come in and half the cars on the trucks are presold and the other half, people were on the ground and picking them off as they came off the trucks.” But sales are slowing as some consumers either postpone a purchase, perhaps hoping for prices to drop, or can’t get what they want because of tight inventory. The industry’s annualized selling rate in April was 18.5 million cars, said Jessica Caldwell, executive director of insights at Edmunds. That means if every month were to be replicated by that month, the industry would sell 18.5 million cars this year. But last month, that rate dropped to 14.7 million, Caldwell said, likely due to the low inventory. If inventory were normal, the selling rate would likely be 17 million or more based on consumer demand, she said. The average transaction price for a new car was $42,832 last month, a 9.5 percent increase over the year-ago period, Caldwell said. In used cars, it’s a similar trajectory because the limited new car stock means fewer trade-ins, creating a shortage of supply in used cars too. The average transaction price for a used car is $27,245, a 29 percent spike from the year-ago period, she said. “Vehicle prices will remain high,” Caldwell said. “A few automakers, such as Ford, have said they will try to scale back on inventory because bigger margins have made (dealers) happy. We could see high prices for a longer period of time.” She said prices will eventually level out as inventory ramps up, “but we’ll see less incentives in the short term.” Reinvention All of it is an opportunity for the carmakers and their dealers. “The good news is it allows the industry to reinvent itself,” said Charlie Chesbrough, Cox Automotive senior economist. “The idea of having hundreds of vehicles on a lot to choose from is an American idea. They don’t do that in other parts of the world.” General Motors CEO Mary Barra has said the automaker has improved its production efficiency and supply-chain management to better match what it builds to what customers want. In the future, GM dealers will carry less stock, just enough for those car buyers who want to drive home in a new car the same day they buy it. But most customers will order online and wait for delivery. Ford Motor Co. presented a similar go-to-market strategy for when the chips shortage ends. And, earlier this year, Stellantis CFO Richard Palmer said that inventories might not need to bounce back fully. A leaner inventory picture makes the business more nimble, he said. “I don’t think we will be pushing to necessarily go back to the same levels of stock we had in the past,” Palmer said. “The organization is learning to function with lower levels of stock and seeing the benefits.” An off-road test track? Some car dealers see the benefits too. At Matick Chevrolet in Redford Township, Mich., there were 105 new vehicles in stock as of Aug. 25. In years past, Matick would have had about 1,200 cars on its 13 acres, said Paul Zimmermann, vice president and owner. “On July 1, we had 79 vehicles in stock, yet we sold 210, so we got a bunch in,” Zimmermann said. “My concern now is there are only 100 or so in transit. But I know some dealers who have none.” Still, Zimmermann sees benefits. Because he is selling cars so fast, the costs he would usually pay in interest to hold the cars on his lot are “significantly reduced” and that is boosting his bottom line. “I’m fine with them reducing inventory levels to make it smart so it does reduce that waste,” Zimmermann said. “But you have got to find that balance.” In the meantime, he has thought about what do with his land if it won’t hold thousands of cars in the future. “In the past seven years we’ve both leased and purchased other properties for parking. So those, we’d look to divest or repurpose,” Zimmermann said. As for his Chevy store along Telegraph Road near I-96, “This is a huge piece of property, so if they ever went to a restricted stocking level like it is now, we would repurpose it to do an off-road type experience. Part of it would be a dirt road, a hill and you could get a real test-drive type experience.” Toyota defies gravity Zimmermann is used to managing limited supply across town at his Matick Toyota store in Macomb Township, Mich. Toyota has typically limited its supply more than Chevrolet. In doing so, Toyota does “a great job of creating demand” and properly supplying the right cars in certain markets. Overall, Chesbrough said, the Japanese automakers, specifically Toyota, have managed the chips shortage better than their American competitors. “They’ve kind of defied gravity the last couple of months,” Chesbrough said of the Japanese carmakers. “We’re tracking them having very weak inventories out there and yet their sales have actually held up quite well. … We’re really kind of surprised by Toyota’s strength, and having a decent quarter relative to some of the competition.” A snapshot of data shows the market share gain for Japanese carmakers. Here are market share percentages comparing the first five months of 2019 to the same period in 2021, from Cox Automotive: • Toyota: In 2019, 7.7 percent; in 2021: 14 percent. • America Honda: In 2019, 1.3 percent; in 2021, 2.4 percent. • Nissan North America: In 2019, 13 percent; in 2021, 13.7 percent. • Mazda: In 2019, 0.9 percent; in 2021, 2.2 percent. • Mitsubishi: In 2019, 1.2 percent; in 2021, 1.4 percent. • Subaru: In 2019, 1.7 percent; in 2021, 1.8 percent. • GM: In 2019, 19.7 percent; in 2021, 16.1 percent. • Ford: In 2019, 21.7 percent; in n 2021, 18 percent. • Stellantis: In 2019, 18.6 percent; in 2021, 14.4 percent. Last week, Toyota Motor Corp. said it will suspend production for several days at almost all its plants in Japan in September, resulting in a 40 percent cut in its production plans, Bloomberg reported. That’s 360,000 fewer cars being made next month. Chips will trickle in LMC’s Schuster said there were about 1.1 million vehicles in inventory across the industry at the end of July, less than half of what is typical this time a year. He does not see the industry returning to those levels until 2023, with the recovery taking the rest of this year and next year. But that depends on no new shocks like variants ratcheting up the pandemic again, or shortages in steel or aluminum raising commodity prices. “Something will be looming out there to disrupt us,” Schuster said. Edmunds’ Caldwell agrees the industry won’t just return to normal overnight. “It’ll take quite a bit of time to get things matched up to where the consumer demand is,” she said. Which is why, according to Chesbrough, consumers can expect to keep paying higher prices for new and used cars, “certainly for the rest of this year.” “We know there are a lot of partially built vehicles out there, so when the chips come in, it will be more supply. But my sense is consumers are already waiting for those vehicles. … My message to consumers is be ready to pay high prices, not have room for much negotiation and be ready to have a hard time finding exactly what you want.”

‘Burnout city’: Labor shortage leaves workers, owners exhausted

The ongoing labor shortage in Alaska, compounded in part by an unexpected surge in tourism and consumer spending, is having widespread impacts on the economy. Some restaurants that closed earlier in the pandemic are staying shut, uncertain they’ll find enough employees to provide service. Construction companies and other businesses are experiencing project delays. And a number of hospitality businesses are shutting their doors periodically, to give shorthanded staffs a much-needed break. “During the pandemic, I went from the frying pan and into the boiling water,” said Jack Lewis, a franchise owner of Krispy Kreme doughnut shop and other dining establishments in Anchorage. “I went from no sales and looking at going out of business, to plenty of sales and no labor,” he said. As the economy recovers from the depths of the pandemic, employers say they’re grateful for the business but frustrated by a months-long labor shortage that continues to drag on. They say the shortage is slowly easing but remains a giant obstacle that has kept them from fully reopening after the COVID-19 pandemic gutted the economy last year. They’re offering more pay, overtime and flexibility to hire new workers and retain the exhausted staff they do have, with an eye toward long-term sustainability. Lewis said that counting his other operations that include Firetap Alehouse and Restaurant in South Anchorage and BurgerFi in Midtown, he’s about 50 workers short. That’s putting strain on his existing employees, who are pulling extra shifts, he said. On Aug. 24, BurgerFi was closed to give employees a break. He’s planning to close additional businesses over Labor Day weekend. “I’m going to lose money being closed that Sunday and Monday, but I’m doing it to give my good, hard-working people a day off,” he said. Mark Kotalik, a cook and supervisor at the Peanut Farm, said this summer was his busiest in a decade at the sports bar. He often clocked 12-hour shifts, six days a week. He’s close to 60 years old, and the extra work was hard, he said. “My knees were killing me, my feet were killing me,” he said. “You go home, you rest and you get up all over again. It wears on you.” His boss, Travis Block, said he couldn’t get enough applicants to show up for interviews or start working as planned. He dangled higher pay, including a $500 bonus for staff who found employees that worked through summer. Many people don’t seem ready to start working after the pandemic sparked widespread layoffs, he said. Kotalik and other core employees “saved” the restaurant this summer, putting in 60-hour weeks. “I’ve never been as stressed out in 35 years as I have been this summer,” Block said. “Every day, you ask if you’ll have enough staff, will you find new people, and then those people need training. It’s been a constant challenge.” Last month, Block took the unusual step of closing the first three Mondays, to give workers an extra day off. “I felt horrible these guys were working so hard,” he said. The pandemic forced more than 65,000 people onto Alaska’s unemployment rolls last year, or one in five workers. It will take a long time to recover from that disruption, experts say. In July, some 20,000 people continued to collect unemployment benefits in Alaska, about three times as much as pre-pandemic levels. And there were 30,000 fewer jobs than in July 2019. Employers often blame the labor shortage on generous federal benefits. Bill Popp, head of the Anchorage Economic Development Corp., said he believes that’s less of an issue than people think. Gov. Mike Dunleavy ended a $300 boost to Alaska unemployment checks in June, so that aid is gone, Popp said. Other benefits, including rental relief that thousands of Alaskans are collecting, could be a factor in why some workers are staying on the sidelines, Popp said. But more important is the lack of available child care and a limited influx this summer of Lower 48 and foreign workers, Popp said. People also continue to leave Alaska, adding to the problem, he said. The situation will improve a lot if those migrant workers return next summer, he said. “It will be next year before we see significant improvement in our current situation,” he said. The Alaska branch of PeopleReady, a nationwide temporary employment agency, is experiencing its best year in at least five years, said Sarah Houck, Alaska manager for the company. She said more companies across many sectors are increasingly turning to the agency for help finding workers after their job ads failed to produce enough candidates. “People are thinking outside the box when traditional hiring is not working,” she said. On some days, the agency might need to fill 150 openings, but only half the number of needed workers is available, she said. Many people say they’ll show up for work but don’t, which is partly why businesses are increasingly turning to the agency for help, she said. “It’s been a good year for us, but it’s been a lot of work,” she said. “For every five people you hire, maybe one or two go to work. And everyone is seeing that across the board, so you have to work extra hard for every employee you get.” The shortage is affecting a wide swath of industries in Alaska and nationwide, from government to the service sector to construction. Betsy Holley, a spokeswoman with Alaska Department of Corrections, said the state agency is advertising $5,000 sign-up bonuses for new correctional officers. The job, available to applicants with minimal educational requirements, starts at about $60,000 annually. The lack of Alaska applicants following through forced Candice McDonald, owner of the 15-room Copper Whale Inn in Downtown Anchorage, to hire one woman from the Lower 48. Hiring Outside is something she never does, McDonald said. McDonald bought a condo in Downtown Anchorage to provide housing for the new worker, after she couldn’t find an available apartment that was reasonably priced. McDonald also flew the woman to Alaska and purchased a bike and helmet for transportation. Business exploded in May, but the inn made it through the summer with a few employees, she said. She needed a few more. At times she recruited her parents and other family members to help, she said. Early this month, McDonald stopped taking most new bookings for the rest of August so she doesn’t wear out her staff. But she’s taking bookings again in September and beyond, she said. Raul Villa Rojas, the longtime head housekeeper at the inn, said tourism will soon slow down, providing some breathing room after a busy summer. “The last week is like ‘OK, I’m ready for vacation,’” he said, as he snapped clean sheets onto a bed. Fire Island Rustic Bakeshop recently began closing on Sundays, mainly because it’s been slammed with business. “Basically we went down to four days a week to preserve employee wellness,” said Rachel Pennington, who owns the bakery with her parents, Jerry Lewanski and Janis Fleischman. “We want to survive this period with our staff intact and it was starting to feel like burnout city.” It’s uncertain how long the Sunday closure will last, said Tyler Murphy, general manager at the bakery. The bakery typically had the workforce it needed, though it was shorthanded a couple of times this summer as college-student workers transitioned in and out of Alaska, he said. Finding employees this summer was harder than normal, Murphy said. The bakery advertised on Indeed.com since it couldn’t find all its employees through word-of-mouth, as it usually does. “That was a first, we never had to reach out and use traditional marketing means to get employees in the past,” he said. Andre Spinelli, with Spinell Homes, one of the state’s biggest residential builders, said labor shortages in the construction industry this summer have delayed projects. He said the workforce is coming back, slowly. “But overall as a whole, all my subcontractors are all looking for help and they can’t find it,” he said. Orso restaurant in downtown Anchorage is among the restaurants that have not reopened since shutting down earlier in the pandemic. Launching a restaurant at any time is challenging, said Chris Anderson, an owner with Orso. The “incredible” lack of employees and continued uncertainty in the economy as COVID-19 numbers rise complicates the picture, he said. “It’s labor, and it’s do we have enough guests in town to fill restaurants?” he said. “It’s will we have more mask mandates, and get closed down again? It’s how much risk do you want to take?” Frank Perez, owner of Alaska Porta Potty, said he has unsuccessfully tried to hire an employee since April to service portable toilets. He acknowledged it’s a job most people don’t want, though he said it’s sanitary thanks to equipment, sterilizer and other gear. He added an extra $2 an hour, bumping the starting pay to as much as $44,000 annually, depending on experience. Six people accepted the job, then didn’t show up, he said. Two others left soon after starting. On Aug. 27, he serviced portable toilets in the rain after his work kept him in Palmer so late that he slept in his truck at a gas station there. In better times, he’d have enough employees so everyone could work stable hours. He’s had one day off since April, on Father’s Day, he said. “This is not normal, not even a little bit,” he said.

House sends $1,100 dividend back to Senate

Progress is being made two weeks into the special session to settle this year’s PFD but many House Republicans insist that it will come at the expense of a so-far elusive long-term solution to the state’s financial imbalance. House Bill 3003 containing appropriations for Permanent Fund dividends of approximately $1,100 per eligible Alaskan passed the House Aug on a 24-16 vote with all of the opposition coming from members of the House minority Republican caucus. Rep. Kevin McCabe, R-Big Lake, stressed in floor debate that most members of the Republican caucus compromised by backing Gov. Mike Dunleavy’s “50-50” plan to use half of the available Permanent Fund earnings in a year on PFDs because it would result in dividends starting at about $2,350, which is still far less than what the currently disregarded statutory formula calls for of more than $3,000. “I’m a full PFD guy,” McCabe said. “The $2,350 was our compromise. It was a huge compromise for us and it was met, I think, with a slap in the face.” McCabe was an active member of the bicameral Comprehensive Fiscal Plan Working Group that produced a series of recommendations before the special session to steer other lawmakers towards solutions durable enough not just for the unforeseeable events of the future but also to pass the Alaska Legislature. Nikiski Republican Rep. Ben Carpenter, also a member of the fiscal plan committee, argued for voting for a bill to pay this year’s PFD before tackling the big, underlying issues allows lawmakers to avoid the problem one more time in the 30-day special session that started Aug. 16. “What it doesn’t do and what we haven’t done is the very thing we were supposed to come down here for, which is to address a long-term fiscal plan,” Carpenter said of HB 3003. “We have to say ‘no’ to something in order to say ‘yes’ to something else.’ McCabe asked to move House Joint Resolution 7, the proposed amendment to the governor’s 50-50 Permanent Fund and dividend plan into the Constitution, out of the House Judiciary Committee via a floor vote that ultimately did not pass. HJR 7 was scheduled for a hearing Sept. 1 as of this writing and HB 3003 is on its way to the Senate for consideration. The $1,100 PFD matches what the budget conference committee negotiated in June. The Senate originally passed a PFD of approximately $2,300 by a narrow margin, with supporters saying it was the first step towards a compromise at the time. House legislators initially avoided the PFD in the budget, only approving a $525 per person dividend after refusing to approve a draw from the Constitutional Budget Reserve that requires a three-quarters vote of each body that the conference committee tied to other appropriations — including the $1,100 PFD — in an attempt to gain support. Dunleavy called the $525 PFD “a joke” shortly after vetoing it from the operating budget. Despite the tension in the House, Senate President Peter Micciche said in an interview prior to the HB 3003 vote that he still sees a path to a solution based on what the fiscal plan work group put together. The group reached consensus or offered conceptual options on how to fill the nearly $1 billion budget gap the 50-50 plan would leave as well as ways to settle the PFD but did not produce specific policies that could easily translate to legislation, as was suggested would happen when the group started meeting in early July. “I believe if those eight (in the fiscal plan group) were a body, they would’ve produced a product that could’ve gone to the governor’s desk. If those diametrically opposed eight legislators can get there, then by golly the rest of the Legislature can get there,” Micciche said. The work group had two members from each caucus of the Legislature, selected in part for their divergent philosophies regarding Alaska’s fiscal policy, according to legislative leaders. More lawmakers are now willing to invite tough votes than in the prior years of Alaska’s near-decade run of deficits simply due to the “evolution of the frustration of inaction,” according to Micciche, who said many legislators need to accept that they need vote for one thing on the expectation of another. “These issues need to be transparently discussed and available for people to process,” he said. “If the votes aren’t there, we need to work together but that’s not going to happen when all of the process is stymied by those who fear the outcome. I don’t fear the outcome.” House Republicans again voted against a CBR draw, which was once again partially tied to oil tax credit payments. HB 3003 sought to fund the $114 million minimum statutory oil and gas tax credit payment with $54 million from the General Fund and $60 million from the CBR. An initial $114 million tax credit appropriation died with the first failed CBR vote in late June. Paying off the tax credits, of which the state owes more than $700 million, has long been a priority of most Republican legislators. Elwood Brehmer can be reached at [email protected]

Pages

Subscribe to Alaska Journal RSS