Labor leaders see ‘domino effect’ from Amazon union push

A high-profile attempt to unionize nearly 6,000 workers at Amazon’s warehouse near Bessemer, Ala., could spur more organizing at Amazon facilities elsewhere, say Washington state labor leaders. Win or lose, the union vote, which began in early February and ends March 29, could energize the labor movement, in part because of the steep odds stacked against organizers, said Nicole Grant, who leads the MLK Labor Council in King County, Wash. Alabama, a right-to-work state, has one of the nation’s lowest unionization rates. And Amazon has unleashed a no-holds-barred anti-union campaign targeting the Alabama workers while wooing the public with a crusade highlighting the company’s $15 minimum wage. “It could have a domino effect,” Grant said. “Everything that’s happened in Bessemer makes things better for Amazon warehouse workers in Seattle and across the country.” For one, the union drive has focused on issues of racial pay disparities within Amazon’s workforce that are particularly relevant in Bessemer, where the vast majority of Amazon workers are black, but which cut across geography and job titles at Amazon, Grant said. A bipartisan chorus of policymakers, including President Joe Biden and U.S. Sen. Marco Rubio, R-Fla., have voiced their support for the organizing drive in Alabama. Union organizer Jennifer Bates, who trains employees at the Alabama warehouse, testified March 17 at a Senate Budget Committee hearing on income inequality that she and other workers believed unionizing could help them earn “a living wage, not just Amazon’s minimum wage.” Amazon founder Jeff Bezos — often the wealthiest man in the world, depending on fluctuations in the price of Amazon shares — declined an invitation to testify. Amazon has said it believes a majority of workers do not support unionizing. At the same hearing, Sen. Bernie Sanders, I-Vt., announced a bill to increase taxes on companies at which CEOs earn 50 times more than their median employees. Critics have accused Amazon of playing hardball to halt the Bessemer organizers’ momentum. The company rolled out a slick website that says union dues would make it hard for workers to afford their children’s school supplies. On Amazon’s request, county officials changed traffic signals outside the Bessemer fulfillment center to make it harder for organizers to canvass workers driving into the warehouse. Amazon sent workers anti-union texts and hung anti-union signs throughout the Bessemer facility, including in bathroom stalls. And the company unsuccessfully attempted to force an in-person vote, a move organizers said was intended to sway the outcome, and held mandatory meetings with workers about the perils of unionization. Amazon’s history of employing similar tactics to quash dissent has made the employer a difficult target for union organizing, say Washington labor leaders. “It’s challenging in high-turnover industries to get a committee together and organize, especially when you have one of the wealthiest organizations in the world fighting against you,” said Faye Guenther, the president of United Food and Commercial Workers Local 21, representing Washington grocery workers. The Alabama union drive “will really help workers feel like there’s hope in organizing, hope in sticking together and building something better for the future.” Meanwhile, Amazon has rolled out advertising calling on policymakers to raise the federal minimum wage to $15 an hour. The company has used its implementation of the $15 wage floor in 2018 to burnish its own image, circulating videos of Amazon workers saying they’re grateful to be earning more than at previous jobs. Though a federal initiative to institute a $15 minimum wage died last month, Amazon issued another salvo in the debate March 16, publishing results of a national survey showing 2 out of 3 Americans with an opinion on the federal minimum wage believe it should be raised to $15, from where it currently rests at $7.25. “We have advocated for an increase to the federal minimum wage for some time, and believe while there are many voices from various experts, policy makers or others being cited — the opinions of the American people should be heard loud and clear,” Amazon spokesperson Karen Sawyer said in a statement. Amazon critics have said the company’s support for a $15 minimum wage could in part be a cynical attempt to undermine rival retailers while deflecting attention from the union push in Alabama. “It’s a sleight of hand. They’re using the PR blitz to obscure that they are aggressively anti-union,” said Stacy Mitchell, the co-executive director of the Maine-based antimonopoly think tank Institute for Local Self-Reliance. Bates, at the March 17 hearing, said what she and other employees at Amazon earned was not commensurate with the strain of the job. “Amazon brags it pays workers above the minimum wage,” Bates said. “What they don’t tell you is what those jobs are really like. And they certainly don’t tell you that they can afford to do much better for the workers.” Amazon has seen record profits during the pandemic, driven in part by a surge in online shopping from quarantined consumers. Meanwhile, Amazon “would like to see the $15 minimum wage as the same floor as their competitors might be operating in,” said Larry Brown, the president of the Washington State Labor Council, AFL-CIO, the state’s largest union organization. Amazon executives have said they were “thrilled” when other retailers, including Target, Best Buy and Costco, chose to pay workers at least $15 an hour, according to a statement by Jay Carney, Amazon’s senior vice president of global corporate affairs. “We are hopeful that more (companies) follow suit. That’s what U.S. workers deserve.” Amazon has sought to control the narrative around its $15 minimum wage. The company declined an invitation to testify at another Senate Budget Committee hearing last month about how large companies pay their workers. (Costco CEO Craig Jelinek announced at that hearing that the wholesale club planned to raise its wage floor to $16 an hour.) While Amazon boasts that its fulfillment center employees, on average, earn more than workers in the retail sector, those Amazon employees typically earn less than workers in the more-unionized warehouse sector. An analysis by Bloomberg showed non-Amazon warehouse workers saw no wage growth for five years in counties where Amazon built fulfillment centers, and that average industry wages fell in the first two years after the Amazon warehouses opened. “Retail is not the right comparison point because it’s so much less taxing on your body” than working in a fulfillment center, Mitchell said, pointing to evidence that Amazon’s warehouse workers are injured at higher rates than industry averages. Delivery drivers are concerned that Amazon’s major expansion in trucking, shipping and “last-mile” delivery could threaten wages and benefits in that sector, too, said John Scearcy, the principal officer of Teamsters Local 117, which represents retail, transportation and delivery workers in Washington state. “Teamsters are interested in this (Alabama) organizing effort and in Amazon as a whole, not only to make sure that workers in this system are brought up to a standard that includes livable wages, health care benefits and retirement security, and also so that Amazon doesn’t threaten those benefits for the rest of our workers,” he said. Amazon has rebutted attempts to muddy its minimum-wage campaign, pointing to recent research from the University of California, Berkeley and Brandeis University showing that its minimum-wage increase in 2018 led to a 2.6 percent uptick in average wages among all nearby employers. And, Amazon says, its own polling shows that Americans believe large employers like Amazon should play a larger role in increasing the federal minimum wage than policymakers, advocacy groups or the media. The survey did not ask respondents what role unions should play.

Movers and Shakers for March 28

The membership of Fairbanks Native Association has elected six people to its board of directors. Renee Linton and Terri Cadzow join incumbents Travis Cole, Sharon Hildebrand, Charlene Stern and Tonya Garnett. Cole is the expeditor at Tanana Chiefs Conference. Cadzow is the executive assistant for health services at TCC, and Linton works as a rural economic development specialist at TCC. Hildebrand works for Doyon, Ltd. as the village outreach liaison. Garnett oversees the Native Village of Venetie Special Projects and is self-employed. Stern is the interim vice chancellor for Rural, Community and Native Education at the University of Alaska Fairbanks, and the vice president of Tanana Chiefs Conference. They join Jessica Black, Andrea Durney-Nield, Glenn “Manny” Carlo and Anna Frank on the board. In a meeting following elections, the board voted to elect Black as president, Garnett as vice president, Durney-Nield as secretary, and Hildebrand as treasurer. Nancy Burke has joined United Way of Anchorage as a special assistant to President and CEO Clark Halvorson for Housing and COVID-19 response programs. Burke brings a wealth of experience in non-profit, municipal and state government services to assist in data collection, design, funding and improvement of community and government systems serving people who are homeless or who experience a mental illness and disability. Burke has a master’s degree in social work focusing on family and mental health systems and has experience with clinical and housing service design needed for successful supportive housing programs for persons with severe disabling conditions. She will support United Way’s Home for Good program on the clinical and housing components of the project as it continues in the first full year of a three-year Pay for Success financed program. In partnership with the Anchorage Coalition to End Homelessness and our community partners, Burke will convene work on identified areas of the Anchored Home plan’s prevention and diversion strategies. In what is a traditional role for the United Way, she will help in convening groups to identify and monitor relevant data and community indicators and to evaluate progress on key outcomes, as well as working with community leaders to strengthen the community’s abilities to identify, address and fund priority issues. Recover Alaska’s executive director Tiffany Hall was recognized nationally as a leader in health advocacy and social justice after being awarded the Andy Hyman Award for Advocacy. This award is presented by Grantmakers In Health each year to individuals who embody the late philanthropist’s courage and commitment to action, leadership advancing social change and dedication to making progress in policy and practice despite challenging political environments. Recover Alaska is an action group that uses data, inclusive partnerships, and forward-thinking to advocate for policy and perception change around alcohol, including strategies to eliminate stigma around alcohol use disorders, increase access to help, promote protective factors, and craft policy to create a safer built environment. Bering Straits Native Corp. announced the promotion of shareholder Lucille Sands to vice president of Shareholder Development. Sands has been employed by BSNC for many years, and has worked across many departments, which enhances her ability to assist management in meeting our commitment to shareholders and descendants. Sands previously served as Shareholder Development director for BSNC. She earned an MBA degree from Western Governor’s University, a bachelor of business administration degree with a minor in Alaska Native business management from the University of Alaska Anchorage and an Associate of Arts degree from the University of Alaska Anchorage. Sands was recently appointed by Gov. Mike Dunleavy to the State of Alaska Workforce Investment Board. Four members were recently elected to Doyon Ltd.’s 13-member board of directors. Elected with three-year terms ending in 2024 were Christopher Simon, Charleen C. Fisher, Walter “Wally” Carlo and Jennifer Fate. The newly elected and re-elected board members will join existing board members Cheryl Cadzow, Shirley Cleaver, Sonta Hamilton-Roach, Betty Huntington, Jerry Isaac, Georgianna Lincoln, Marvin Roberts, Orie Williams, and Miranda Wright. Doyon also announced the Shareholder of the Year awards: Chief Andrew Isaac Leadership, Kenneth “Kenny” Kokrine Esmailka, Kaltag; Daaga’ Community Service, Donna Folger, Tanana; Hannah Solomon Elder of the Year, Clara Honea, Ruby; and Irene Roberts, Poldine; Carlo Citizen of the Year, Marie Yaska, Huslia. In addition, longtime Doyon Ltd. employee Carole Ann Newcomer received a special recognition from the board.

Division continues over pandemic powers

House and Senate leaders have continued on divergent paths to address gaps left in the state’s pandemic response when the official public health emergency declaration expired last month. The House Finance Committee passed House Bill 76 to extend the emergency declaration March 22, readying it for a floor vote before that would likely send it to the Senate. However, the governor no longer supports the legislation that his office submitted just before the session. Dunleavy has said he believes his administration can adequately manage public health concerns without a formal declaration. Doing so is one step towards returning to a state of normalcy, according to the governor. House majority coalition leaders sent a letter to Dunleavy March 17 outlining their rationale for sticking with HB 76 despite his change in approach. They emphasized that numerous health care and social service organizations across the state have stressed the importance of having an active declaration while unemployment remains high and health care and business practices are altered because of the pandemic. House Speaker Rep. Louise Stutes, R-Kodiak, said after the House Finance passed HB 76 that it provides the resources needed to help end the pandemic in Alaska. “While there has been an active disinformation campaign about what this bill does, the measures it contains are not at all controversial. We will not allow opportunist politics to get in the way of good policy,” Stutes said in a coalition statement. Numerous Republicans in both chambers argue a declaration is unnecessary as daily statewide COVID-19 case counts have stabilized at lower levels and vaccines are now available to all adults. Declaring a disaster again will just facilitate the continuation of government restrictions that have been overly burdensome for months, they contend. Illustrating that, HB 76 moved out of the Finance Committee on a 6-5 vote. House leaders noted to Dunleavy in their letter that a disaster declaration does not require any of the business restrictions such as “hunker down orders” that many have long opposed. Dunleavy responded March 18 writing to Stutes that after a thorough analysis of what authorities his administration needs to manage the public health response, administration officials concluded they require the continued ability to distribute vaccines and COVID-19 treatments; limited immunity for officials conducting the state’s public health response; a continuation of waivers allowing for enhanced telehealth services; and authority to access available federal funding. In the meantime the Department of Health and Social Services has continued to operate as if the statutes and regulations waived and suspended during the formal emergency still are, a position that has caused some confusion among providers, according to Alaska State Hospital and Nursing Home Association officials. Representatives from the Food Bank of Alaska and other charitable organizations have said the state needs to pass some sort of authority by March 31 to continue accepting $8 million per month in boosted federal Supplemental Nutrition Assistance Program, or SNAP, funds, which equates to an additional 2.2 million meals per month that can be distributed across the state, according to Food Bank of Alaska officials. Senate President Peter Micciche, R-Soldotna, said in a March 19 press briefing that he believes it’s pointless for the House to pass a bill the governor has no intention of signing. “There’s no doubt the communities of Alaska are worn out feeling like we’re in an emergency declaration stage,” Micciche said. “If the fit-for-purpose tools are available without a declaration that’s the way we want to go in the Senate and that’s the way the governor wants to go.” Senate Republicans have said for weeks they have drafted legislation with the tools to address the administration’s requests without the political hang-up of actually renewing the public health emergency declaration; Micciche called it a “disaster declaration light,” but they have yet to formally submit the bill. He also said Senate leaders are “not allowing populous politics to get in the way of managing this pandemic.” Senate Rules chair Sen. Gary Stevens, R-Kodiak, said he believes House leaders “will come along once they realize what the governor’s concerns are.” Little interest in bonds Micciche also said March 19 that he sees little need for a primary piece of Dunleavy’s economic recovery plan for the state. The Senate President said the $356 million general obligation construction bond package largely seeks to fast-fund the state’s minor share for road and airport projects funded at upwards of 90 percent with federal dollars that are already in the state’s long-term transportation plans. Bond funding for construction projects typically takes years to “hit the streets” with a tangible economic impact and Micciche noted the state is about to get another roughly $1.5 billion from the $1.9 trillion American Rescue Plan. Taking on debt when the state is about to have a cash infusion is an inefficient way to manage funds, he said. “There’s no doubt that we have infrastructure needs in this state but if there is another billion-and-a-half dollars coming to our state from Congress we can put that money to work,” Micciche said. Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: Preventing the next Exxon Valdez

There is a sad irony when you consider that the laws and regulations necessitated by the Exxon Valdez oil spill to protect the marine environment are not designed to accommodate the conditions that exist in Western Alaska and the Arctic today. Alaska’s coastline and environment were forever changed when the tanker Exxon Valdez ran aground on Bligh Reef on March 24, 1989 – and the impacts of that spill reverberate today. It was in the aftermath of the spill that Congress enacted the Oil Pollution Act of 1990, or OPA 90, requiring ship operators to implement comprehensive systems to respond to an oil spill. Much like the system for tankers in Prince William Sound, the new regulations required the worst-case oil spill from any tank vessel to be covered with resources contracted from the private sector. However, the regime developed under this seminal law simply does not adapt to the challenging conditions that exist in Western Alaska and the U.S. Arctic. The vast distances and enormous time involved to respond to a spill are not reflected in the regulations, which were largely developed in consideration of the type of incident that could occur in the contiguous U.S. Following other high profile ship casualties and oil spills — like the Cosco Busan in San Francisco Bay and the Selendang Ayu west of Dutch Harbor — attention turned to the immense number of vessels transiting Alaskan waters which were not incorporated in OPA 90. Congress worked to resolve this problem by including vessels that do not carry oil as cargo (“nontank vessels”) in the OPA 90 regime. This congressional “fix” worked well in ports located in the Lower 48 but fell short in Alaska. Many ports in the Lower 48 already had existing response systems developed by oil spill cooperatives, making compliance with these changes to OPA 90 relatively easy to achieve. But the same type of infrastructure simply does not exist along the vast majority of Alaska’s expansive, remote and rugged coastline. Alaska operators, principally the barge operators who deliver refined oil products that fuel Western Alaska’s economy and sustain our communities, came up with effective alternatives to meet compliance objectives. These alternatives would preserve safety, while accounting for the uniqueness of the Last Frontier. The creation of the nonprofit, industry-funded response organization Alaska Chadux̂ Corp. in 1993 was an integral part of their compliance solution (now called Alaska Chadux̂ Network). In this new era for OPA 90 compliance and its application to the nontank vessel fleet in Western Alaska and the Arctic, the Alaska Chadux̂ Network stood up to meet the challenges confronting the maritime industry and expectations of the communities of Western Alaska and agencies. The result was a comprehensive prevention and response program developed by Alaskans with decades of response experience in Western Alaska. Using the Juneau-based Marine Exchange of Alaska, our program now takes preventive measures to track each vessel in Western Alaska and the Arctic, monitoring its operating status and providing early warning if assistance is needed. Despite these initiatives, marine casualties can still occur, and for that reason the Alaska Chadux̂ Network also developed 17 response hubs throughout Western Alaska and Prince William Sound. This includes the only two fully dedicated offshore, oil spill response vessels in Western Alaska stationed in Kodiak and Dutch Harbor. Alaska Chadux̂ Network’s approach of “prevention focused and response ready” is easily said but not always easy to execute – particularly as ships grow larger, the U.S. Arctic opens, and climate changes impact the communities throughout Alaska. OPA 90 never envisioned a comprehensive oil spill response system in these remote stretches of Western Alaska and the U.S. Arctic, however, such a system is becoming more necessary with time. Alaska’s communities and businesses will feel the brunt of a major marine casualty in Western Alaska and the Arctic just like so many communities did 32 years ago along the coast of Southcentral Alaska. Instead of waiting for the next Exxon Valdez to spur us to action, now is the time to develop solutions which ensure the residents and communities of Western Alaska enjoy protections to the pristine waters that surround them. We at the Alaska Chadux̂ Network are ready to contribute our 28 years of working throughout Western Alaska as we debate and address these critical issues. Let us not wait for another oil spill disaster to initiate action to change the law to address this circumstance because, just like winter in Alaska, we know that day could soon come. Buddy Custard is the president and CEO of the Alaska Chadux̂ Network. He possesses extensive knowledge and expertise working maritime operations from both the public and private sectors, including serving with the U.S. Coast Guard for over 30 years attaining the rank of Captain and as a senior manager for an oil exploration and production company operating in the U.S. Arctic Outer Continental Shelf.

Stakeholders urge Legislature to update emergency declaration

Update: Alaska State Hospital and Nursing Home Association CEO Jared Kosin wrote to the Journal via email that the organization recieved a letter from federal Centers for Medicare and Medicaid Services officials that addresses many of the concerns ASHNHA member organizations had about pandemic response operations without a formal state emergency declaration. However, the health care group still "wholeheartedly" supports the Legislature's passage of House Bill 76, the public health emergency legislation lawmakers are debating to mitigate the regualtory amibuity and unintended consequences caused by the current situation, according to Kosin. Original story: Alaska business, health care and local government leaders are urging lawmakers to renew the state’s COVID-19 disaster declaration to support social and economic recovery from the pandemic as much as public health needs. Anchorage Economic Development Corp. CEO Bill Popp told members of the House Finance Committee March 15 that safely and effectively welcoming back the tourists the Alaska’s economy desperately needs will require further support from the state. The state’s largest city — and likely its top visitor hub this year — needs to be able to offer tourists an environment in which they can feel safe and have minimal odds of contracting COVID-19 or being caught in another lockdown because of an outbreak of the virus, Popp said. He stressed that state-sponsored programs enabled by a declaration, such as COVID-19 testing for arriving travelers at the state’s major airports, are crucial to a prolonged economic rebound statewide. Mandatory COVID-19 testing for incoming travelers who did not have proof of a test within the past 72 hours ended with the Feb. 14 expiration of Gov. Mike Dunleavy’s most recent 30-day COVID-19 public health emergency declaration. The airport testing program detected 2,514 positive cases of COVID-19 since being stood up early last June, according to Department of Health and Social Services records. “We need these tools in the toolbox to facilitate proper health care, proper food services and to give assurances to our businesses and our out-of-state visitors that Anchorage and Alaska are a safe place to visit and enjoy a great vacation,” Popp said. Alaska Municipal League Executive Director Nils Andreassen said since the declaration expired that local governments have been struggling to fill gaps in management of the pandemic and many have had to rework local declarations that also expired because they were tied to the state’s. The situation has also led to questions about how resources such as vaccine allotments and COVID-19 testing supplies will continue to be distributed, according to Andreassen. “Ultimately, it’s this uncertainty that ends up being the most challenging,” he said. Dunleavy asked the Legislature to pass a bill extending the declaration through September when the legislative session began in mid-January but it did not pass because of roughly a month of disorganization in the House and members of the Senate Republican majority who questioned the need for continuing the state of emergency. Dunleavy declined to unilaterally extend the declaration despite a nonbinding resolution from the Senate and letters signed by the vast majority of House members asking him to do so. Attorneys for the Legislature said the governor likely cannot extend the emergency declaration on his own, even though he did so in the past while the Legislature wasn’t in session to maintain emergency health orders and regulatory changes. DHSS Commissioner Adam Crum acknowledged during the House Finance hearing that the lack of a formal emergency declaration has left the department in a “precarious position” as DHSS officials try to navigate the complex realm of federal funding and regulatory flexibilities tied to the state declaration. Crum noted that he believes Anchorage, for example, could require testing at the state-owned airport without an emergency declaration but other issues are more challenging. State health department officials have attempted to continue operating with suspended statutes and regulations as if there has been a valid declaration in place since mid-February, a position that Senate President Peter Micciche said in a prior interview would normally raise significant concerns about DHSS overstepping its authority; however, the need to continue an effective, coordinated response to the pandemic trumps those issues for now, according to Micciche. Senate leaders have said for several weeks they are working on a bill to give DHSS and other state agencies the authorities needed to be flexible with policy mandates and accept federal COVID-19 aid, such as $8 million per month in boosted food stamp assistance, without the politically sensitive formal disaster declaration. It’s unclear exactly when the Senate legislation will be submitted. Instead, the House is gradually moving House Bill 76, the governor’s bill to renew the declaration, ahead of an April 1 deadline for the state to have an emergency declaration or other statutory mechanism that meets the U.S. Department of Agriculture’s requirements to get the extra $8 million per month from the Supplemental Nutrition Assistance Program known as SNAP. Cara Durr, engagement director for the Food Bank of Alaska, testified that the charity saw a 43 percent increase in demand during the last half of 2020 compared to 2019 and the record need has continued into this year. The $8 million per month provides about 2.2 million meals, while the Food Bank currently has the capacity to distribute about 750,000 meals per month she said. “With the current high level of need that we’re seeing, we’re deeply concerned about the loss of the SNAP emergency allotments could mean for food insecurity in Alaska and for the additional burden their loss will place on the charitable food network,” Durr said. Rep. Dan Ortiz, I-Ketchikan, relayed concerns from a constituent who he said could not continue to receive telehealth care from an Outside provider because regulatory exemptions tied to the emergency declaration had also expired. “Removing ambiguity” from declaration-related telehealth mandates is one of the main immediate priorities for DHSS, Crum said. Alaska normally requires a provider to conduct an in-person visit before future telehealth appointments. Out-of-state providers also usually need a valid Alaska medical license to conduct telehealth appointments with Alaskans — another requirement the declaration lifted. Alaska State Nursing Home and Hospital Association CEO Jared Kosin testified that the group “strongly supports” HB 76. “There is no harm or unintended consequences to passing (HB 76). In fact, there are only unintended consequences and harm if this legislation is not passed,” said Kosin, who also emphasized that broad COVID-19 testing at airports is still very important. Testimony from the general public was mixed on HB 76, with several individuals stressing a need for Alaska to move past emergency declarations to help the economy recover. Kosin wrote via email that ASHNHA requested a formal letter roughly a month ago from Centers for Medicare and Medicaid Services officials clarifying hospitals and providers can still operate under a host of waivers once effective in the state because of the declaration, including one allowing health care organizations to have off-site facilities, such as COVID-19 testing sites. The group is still waiting for a response from CMS, according to Kosin. “A disaster declaration is a legal mechanism,” Kosin said. “Alaskans may not see it or experience it in everyday life but Alaska’s health care providers do.” The House Finance Committee tabled HB 76 at the end of its March 15 meeting and another hearing on the bill had not been scheduled as of this writing. Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: How Alaska can make the most of one more round of federal relief

Congress, over the course of two administrations, has passed relief measures totaling $6 trillion. The most recent, the American Rescue Plan, or ARP, accounts for a third. Individuals, businesses, state and local governments, schools, hospitals, and many others will see benefits from this effort in the months to come. For each tranche of federal relief, there were – and remain – strong arguments for more targeted spending, or at least not financing it only with debt. Ultimately, however, those gave way to political considerations. Because Congress can always add to national debt, the easiest way to address competing claims for need at the federal level is by increasing the size of an aid package. The same flexibility isn’t available at the state level, however, and decisions must become more fine-tuned when the aid reaches state and local governments. Here, let’s focus on what this means for Alaska. First, what’s headed to the state. Overall, Alaska state and local governments already have or will receive roughly $2 billion from prior Congressional action. The ARP directs just over an additional $1 billion directly to state government, plus another $112 million for specified capital projects (broadband, water/sewer, energy). More is headed directly to Alaska’s schools, the University, local governments, businesses, families, and other recipients. Alaska’s 165 cities and boroughs will see $230 million distributed amongst them, over two years. Before we get too excited, the distribution will mean roughly 76 will receive less than they do from Community Assistance. The total is about equal to vetoes these last two years of school bond and port/harbor debt reimbursement, Community Assistance recapitalization, and other important funding. It’s by no means a windfall, but it does help to offset some of the costs of COVID-19 and lost revenues experienced this last year. It hopefully stabilizes the majority of, but not all, local budgets. It does the same, potentially, for the state. Facing a roughly $2 billion revenue shortfall, the aid gives lawmakers options. Now is not the time to come up with a wish list of funding priorities, but Legislative Finance presented a pretty clear picture that the state had reduced its budget about as far as can be done without making significant statutory changes. The Alaska Municipal League has argued that for some things it has gone too far. A first step to consider is to sort through the categories of state spending that are receiving direct federal aid. Schools, the university, local governments, and others are receiving direct aid for specific purposes. There also will be direct appropriations from federal agencies into Alaska’s agencies. Together, those funds can help fill gaps in the amount the state needs to provide, but shouldn’t replace current spending levels or requirements. Most middle and lower income Alaska families, beneficiaries of the PFD, will directly receive $1,400-per-person stimulus checks. After that assessment, and consideration of fund source changes, if any are possible, the next step is to look at this current “base” budget and use the federal funds received by the state to true up what’s remaining to be spent this year at the statutory funding formulas. That means to fully fund the State’s statutory obligations. Essentially, a review of the budget should include filling gaps or targeting programs that need it. Then, if there are funds remaining — and there may not be much — the third step we would recommend is to address the state’s infrastructure deficit, and more specifically the maintenance backlog. These needs fall into three buckets: school construction and major maintenance, university and state deferred maintenance, and transportation projects (road maintenance, rural airports, and coastal infrastructure). In light of the federal aid, lawmakers should reconsider the need for the Alaska Housing Finance Corp., Alaska Industrial Development and Export Authority, and general obligation bond proposals. These don’t necessarily have to be taken off the table permanently, but the better course may be to defer them to a later date in order to better spread out and sustain Alaska’s economic recovery. Totaled up, the scale of federal relief is such that Alaskans can breathe something of a sigh of relief, but we can’t take our eye off the end goal. This federal aid doesn’t solve the challenges that lie ahead. During this legislative session we still need action on new, equitable revenues; a fix to the PFD formula that avoids continued, deep cuts, the most harmful approach to most Alaskans; and other package items that may include a reasonable spending cap. Relief doesn’t come with reduced responsibilities to fix these things now; instead, we should view it as providing a bridge from where we have been to where we are headed. Nils Andreassen is the Executive Director of the Alaska Municipal League. Brad Keithley is the Managing Director of Alaskans for Sustainable Budgets.

GUEST COMMENTARY: Bring critical supply chains home — now

Bipartisan consensus has finally emerged on the need to bring critical industries and supply chains home. Overreliance on imports — particularly from geopolitical rivals — is now an urgent issue for both parties. The question is whether this consensus can be turned into robust policy solutions to confront the startling scale of the problem. President Biden’s recent executive order on supply chains calls for an immediate 100-day review of four critical sectors: pharmaceuticals, critical minerals, semiconductors, and advanced batteries like those used in electric vehicles, or EVs. While pandemic-related supply chain disruptions of everything from raw materials to personal protective equipment highlight the urgency, China’s dominance of key supply chains should drive us to think big. Consider mineral production and processing. China has made dominance of mineral markets a strategic priority, giving its companies government support in order to capture market share. From rare earth elements to key mineral inputs in lithium-ion batteries — namely lithium, cobalt, nickel and graphite — China’s control of global production and processing is unrivaled. China uses its dominant position as both a source of geopolitical leverage and a means to swallow the industries that rely on these essential materials. For more than a decade, China has exploited its control of rare earth elements for strategic advantage. Just last month, rumblings emerged that Beijing might cut rare earth supplies to the U.S., to see if this would affect F-35 aircraft production. The national security implications are obvious. China’s vise-like grip on the materials needed for electrification of the auto sector is just as concerning. The shift to EVs has become a sprint. From GM to Ford and Tesla, the future of transportation will be electric. But despite U.S. producers’ ambitions, China is far in the lead as it aims to dominate auto manufacturing for the remainder of the 21st century. China’s metal mining underpins this dominance. Given preferred access to key materials, Chinese battery manufacturers are gobbling up the global market. As of last year, China had 107 battery mega-factories in the pipeline, with 53 of them now active and in production. In contrast, the U.S. has only nine battery mega-factories planned or producing. The auto industry — once the crown jewel of American manufacturing might — is in danger of slipping away. Despite vast domestic resources, U.S. mineral import reliance has doubled in just the past two decades. And for nearly two dozen minerals and metals that the Departments of Defense and Interior have classified as critical to U.S. national and economy security, China is the dominant supplier. The Biden administration’s supply chain review should formalize what we already know: it’s time for multi-faceted, aggressive action to bring these supply chains home right now. The hollowing out of our auto industry and its millions of good, family-supporting jobs is something we cannot let happen. Nor can we let China tighten its grip on the production of irreplaceable materials used in our most advanced weapons systems. There is no building back better without the material supply chains needed to support infrastructure investment. Moreover, national security requires the reshoring of critical industries. From minerals to pharmaceuticals, we must ensure safe domestic production using the full breadth of our policy tools. The time for half-measures is long past. John Adams, U.S. Army brigadier general (ret.), is president of Guardian Six Consulting and a former deputy U.S. military representative to NATO’s Military Committee. He is a national security adviser and writer on national security and defense issues, and was the lead author for the 2013 study on the U.S. defense industrial base, “Remaking American Security.”

DEC: Current staffing sufficient for spill response division

A decision to cut positions from the state agency charged with preventing oil spills despite potential new revenue is a step towards longer-term sustainability, according to the Dunleavy administration, while the group dedicated to preventing another Exxon Valdez insists it is a needless step towards unpreparedness. Gov. Mike Dunleavy’s 2022 fiscal year budget proposal calls for eliminating five positions from the Spill Prevention and Response, or SPAR, Division, which is a move Department of Environmental Conservation leaders settled on several years ago to keep SPAR on a gradual path to maintaining solvency, Commissioner Jason Brune said. “We believe that we can continue to responsibly prevent oil spills and clean up contaminated sites, which is the role of SPAR, with FY22 funding levels,” Brune said in an interview. He emphasized that the position reduction is part of a multi-year plan developed to reduce the number of funded positions in SPAR by up to seven each year rather than cut up to 30 positions at once as he was told would eventually be necessary when the Dunleavy administration took over in late 2018. He also highlighted that the positions slated to be cut are currently unfilled, as are 12 other positions in the division; he said that is a longstanding issue department leaders are working to address as well. Nearly all of the prior cuts were to vacant positions, Brune added, noting that impacted staff were able to find other positions in the department. “We can’t go and ask for additional positions if we’re not filling the current ones we have,” he said. The division would have 123 positions next year with the cuts under the governor’s budget. SPAR is funded by surcharges levied on each taxable barrel of oil produced in the state and each gallon of fuel produced at Alaska’s refineries instead of general fund appropriations, so lawmakers and the administration are able to forecast with a reasonable degree of accuracy how much money will be available to the division. Members of the Prince William Sound Regional Citizens’ Advisory Council, the public oversight body created by Congress after the 1989 Exxon Valdez oil spill, argue the department is voluntarily hamstringing itself while a once-popular bill to add funding is making its way through the Legislature. House Bill 104, sponsored by Rep. Andy Josephson, D-Anchorage, would generate approximately $3.5 million in added revenue to the division’s prevention account, which covers general SPAR operating costs, by adding 0.55 cents per gallon to the current 0.095 cents per gallon surcharge on refined fuels. The revenue decline mostly stems from the fact that the prevention account was historically funded by a 4 cents per barrel surcharge on produced oil, meaning SPAR funding is also tied to the long and gradual decline in North Slope production. The Legislature added the fuel surcharge in 2015 to address the issue but inflated estimates of how much fuel Alaskans consume have since led to less new revenue than was initially expected. As a result, draws on the prevention account are exceeding surcharge revenue by more than $1 million per year and is on pace to be depleted by 2025 without increasing the fuel surcharge to 1.5 cents per gallon, the council stresses. The prevention account held $8.5 million at the end of 2019, according to the division’s annual report. HB 104 primarily deals with increases to the state’s motor fuel taxes and largely mirrors legislation that was passed by the Senate last year and was nearing approval in the House before the onset of COVID-19 pushed the Legislature to adjourn early. It was moved out of the Transportation Committee March 16 and will next be taken up by House Finance. PWSRCAC Executive Director Donna Schantz testified to House Transportation before the bill was passed out of the committee that the “chronic” revenue issues in the prevention and response funds have led DEC to cut 17 positions from SPAR since 2015. “The division is beyond doing more with less and is now having to make difficult choices about how to do less with less and still meet its statutory responsibilities,” Schantz said, also contending that SPAR staff will have to prioritize and delay some work cleaning up the more than 2,400 contaminated sites across the state. Brune told lawmakers during a March 9 DEC budget subcommittee meeting that SPAR Director Denise Koch had resigned earlier that day. Koch had emphasized the need to increase funding for the division and keep the five positions before leaving, council spokeswoman Brooke Taylor wrote in an email. Brune said in an interview that Koch had concerns about staffing levels at SPAR but he couldn’t comment further on personnel issues. “Whenever you take cuts there is concern and I appreciate that concern,” he said. “I’m really sad that Denise left.” Koch did not respond to questions in time for this story. Last fall, Brune told the council that he would advocate to the governor’s office for increasing revenue to the prevention account but the best way to that over the long-term was through increased North Slope production, he said. Now, Brune said he still supports the surcharge increase in HB 104, but noted the bill has yet to get through the Legislature and Dunleavy may veto it so he expects to move forward with the position cuts regardless of whether the bill passes. Doing so would allow SPAR to maintain 2022 budget levels for the next 10 years based on modeling by the department, while keeping the five spots would cut the sustainability period to six years, according to Brune. HB 104 sponsor Josephson said in an interview that he finds Brune’s assertion that more production is the best solution to SPAR’s funding issues “bizarre” and the administration’s decision to cut the positions whether additional funding is available or not is consistent with their review of spill prevention and response rules, which he sees as an industry-backed deregulatory effort. The administration also de-funded the Ocean Ranger cruise ship-monitoring program paid by passenger fees when lawmakers rejected legislative attempts to end the program in statute. “They just don’t have much passion for monitoring and regulating the threat of oil spills. That’s just not a thing they’re particularly concerned about” Josephson said. Brune said he first came to Alaska as a biologist to work on sea otters oiled in the Exxon Valdez spill. “I promise you (preventing spills) is something I give the utmost passion to,” he said. “If I believe that we need to make increases and propose increases in the future I will do that. At present I do not believe that is the case.” Elwood Brehmer can be reached at [email protected]

Movers and Shakers for March 21

3-Tier Alaska and Travis/Peterson Environmental Consulting have merged, effective Feb. 1. The merger expands and deepens their civil, environmental and land surveying services across Alaska. Jim Ringstad started 3-Tier Alaska the early 1980s specializing in land surveying and civil engineering. In March 2018, Jim’s son, Nick Ringstad, took over the company and grew it from two to 12 full-time employees. Michael Travis and Larry Peterson formed Travis/Peterson in 1998. Travis/Peterson specializes in environmental engineering and consulting. The company currently has seven full-time employees, composed of engineers, biologists, geologists, and environmental scientists, as well as seasonal staff. Travis/Peterson is now a division of 3-Tier Alaska and will maintain their offices in Fairbanks and Anchorage. The new company will continue to offer the following services: drinking water, storm, and wastewater treatment system design, spill response, prevention, and site remediation, SWPPPs, environmental site assessments, wetlands and permitting along with subdivision design and engineering, property, boundary and remote surveying and construction surveying, among other services.

Heavy oil study finding success on Slope

The early results are promising in a years-long study of an advanced oil recovery method that could unlock billions more barrels on the North Slope. “We have not failed; let me put it that way. We have succeeded so far,” said Abhijit Dandekar, chair of the University of Alaska Fairbanks Petroleum Engineering Department. Dandekar is leading a small team of UAF researchers in collaboration with Hilcorp Alaska engineers to flesh out the viability of a seldom-used technique to drive heavy oil to the surface. The four-year, $9.7 million Department of Energy-sponsored study is intended to determine whether a thick, syrup-like water-polymer can be used to improve recovery of the viscous heavy oil that geologists say is abundant across the North Slope. “It really is an experiment done on a field scale,” Dandekar said in an interview. The field is Hilcorp’s Milne Point, which the company bought from BP in 2014 and has since focused on rejuvenating the mature Prudhoe Bay satellite. It’s unclear exactly how much heavy oil is spread across the Slope but Department of Natural Resources officials broadly believe the potential resource to be in the tens of billions of barrels. Seawater is often injected into light and even more viscous oil reservoirs to “flood” the rocks and push as much oil out of the tiny pores of the rocks that hold it. But the “heavy oil” of the North Slope, which Dandekar said is a very “Alaska-specific definition,” is unique. “There needs to be something different done for heavy oil,” he said. Launched in 2018, the specifics of the project involve injecting the polymer into Milne Point’s Schrader Bluff heavy oil reservoir via a pair of horizontal injector wells and production tests at a nearby pair of horizontal producers. Dandekar compared the synthetic polymer to tapioca pearls before it is mixed with water; afterwards the thickening agent increases the viscosity of the water up to 40-fold, he said. “You want to slow down the mob of water, which is basically helping sweep more oil,” Dandekar said. Heavy oils tend to be shallower, as oil pools go, and the Schrader Bluff target of the polymer flood project is up to about 5,000 feet deep. Dandekar said it’s the relative shallow location of the oil that makes it so heavy. It’s colder than deeper oils, particularly in Alaska. That cold, thick oil simply doesn’t move as easily when pushed by water, which can cause a water “breakthrough” and in a way dilute the oil pool. The recovered liquid is often more than half water when a traditional flood is used on heavy oil and enhanced viscous oil recovery techniques used elsewhere often involve injecting steam into the wells to heat the oil and help it flow more easily. “Anything thermal, which is easily deployable elsewhere in non-Arctic conditions, is unimaginable here in Alaska because we’ve got 1,800 to 2,000 feet of continuous permafrost,” he noted. According to a summary of the project by the federal National Energy Technology Laboratory, the work being done at what researchers have dubbed the Alaska North Slope Field Laboratory is the first polymer flood production in the country, though it has been used internationally. Dandekar said the team first had to prove the “injectivity” of the polymer in Arctic conditions. “The ambient temperature plays an important role,” he said. “The operation aspects of a polymer injection unit — those are something nobody had tried before.” Since proving they could inject it, the researchers have refined their polymer management techniques to achieve roughly 1,000 barrels per day of additional oil production from the pair of producers in the test. Use of the polymer has also decreased the water “cut” of what is produced from 65 percent to between 15 percent to 20 percent, according to a briefing on the work published by the research team in February. “We are a team working on this and without a team I obviously don’t think this would go anywhere,” Dandekar said. “This is a classic example of collaboration between the federal government, industry and academia.” Hilcorp Alaska spokesman Luke Miller wrote in an emailed response to questions about the project that the company is proud of the partnership it has with the university and federal research agency. “UAF and DOE provide outstanding Arctic and industry expertise, as well as technical and project support,” Miller wrote. “As we build on our initial success at Milne Point, we’re expanding polymer flooding to additional reservoirs at Milne Point and continue to evaluate new opportunities across the North Slope.” The team detected a polymer breakthrough last October of 600 to 700 parts per million in the producer wells, according to Dandekar, meaning the polymer had traveled the roughly 1,100 feet between the injectors and producers. He described the recovered polymer particles as “beaten down, sheared and spent.” He said it was simply a matter of when the polymer would appear and the fact that it took more than two years is another positive. “That is a good thing in the sense that the polymer — it still is — really sweeping the oil,” Dandekar said. The February paper additionally suggests updated reservoir models indicate heavy oil recovery could reach 36 percent, or about twice what was forecasted for continued water flooding. Now that the preliminary viability of the polymer flood has seemingly been proven, the next challenge is repeating it. The UAF engineers are trying to match the data they have collected from the wells to what simulation models have produced. “The idea is to honor that (production) history, match it and then do a forecast,” he said. The project spawned from a nagging urge UAF researchers felt to work on the well-known heavy oil challenge. “There’s so much heavy oil, we’ve got to do something,” Dandekar said. That led the university researchers to seek out funding for the work. Milne Point was selected as the test case because it provided of a long history of data from a mature field that previously had been flooded with water, according to Dandekar. He reached out to Hilcorp officials about the polymer flood after working with them on previous company-funded projects, he said. “For projects of this scale, unless you have an industry partner, nothing’s going to happen,” he said. “It’s been a great, functional team.” The research is set to conclude in September 2022. Elwood Brehmer can be reached at [email protected]

FISH FACTOR: Pinks drive projected increase in salmon haul

Alaska’s salmon harvest for 2021 is projected to be a big one with total catches producing a haul that could be 61 percent higher than last year, due mostly to an expected surge of pinks. Fishery managers are predicting a statewide catch topping 190 million fish compared to 118.3 million in 2020. The break down by species includes 46.6 million sockeye salmon (a 203,000 increase); 3.8 million cohos (1.4 million higher); 15.3 million chums (6.7 million more); 296,000 chinook (up by 4,000); and 124.2 million pink salmon (a 63.5 million increase). In its report titled Run Forecasts and Harvest Projections for 2021 Alaska Salmon Fisheries and Review of the 2020 Season, the Alaska Department of Fish and Game provides breakdowns for all species by region. Along with the projected 49 percent increase in pink salmon catches, Bristol Bay will again rule the day with sockeye runs to the region’s nine river systems expected to exceed 51 million fish and a harvest of 36.35 million reds, or 13 percent higher than the 10-year average. Other highlights: the Southeast Alaska pink salmon harvest of 28 million is predicted to be in the average range. The total all-species take for the region is projected at 40.2 million fish. At Copper River, the sockeye catch is projected at a meager 844,000 fish and 13,000 chinook salmon. For Prince William Sound, the total salmon harvest forecast calls for 59.7 million fish, of which nearly 55 million are pinks. Upper Cook Inlet fishermen are projected to take just more than 2 million salmon this summer, including 1.64 million sockeyes. At Lower Cook Inlet the all-salmon forecast calls for a harvest of 3.2 million fish, of which 1.8 million are pinks. Kodiak fishermen are expected to haul in 25.6 million salmon, including two million sockeyes and 22.5 million pinks. At Chignik, a catch of 3.1 million salmon is projected of mostly pinks. Fishermen at the South Alaska Peninsula could have an “excellent” haul of pink salmon of nearly 13 million. For the Arctic-Yukon Kuskokwim region, managers predict below average fisheries across the board, including a catch of just over half a million chum salmon. Grants for gear For more than a decade, derelict fishing nets, lines, pots and other marine debris has generated enough electricity to power over 44,000 homes per year. That’s thanks to the Fishing for Energy program and its partners who are now looking to gather more gear at no cost to fishermen or coastal communities through its annual grant program. Fishing for Energy is an arm of the National Fish and Wildlife Foundation which works with nearly 60 U.S. fishing communities in 14 states to help them dispose of old gear. Through March 2020 the program provided collection bins at 56 ports and collected more than 4 million pounds of gear normally destined for landfills, or which often ends up as derelict marine debris. In many cases, the old nets and pots are first sorted at Schnitzer Steel Industries where the metals are recycled into rebar wire rod and other specialty products. The remaining materials are converted into renewable energy at Covanta Energy-from-Waste facilities across the nation. Annually, Covanta converts nearly 22 million tons of waste from municipalities and businesses into clean, renewable electricity to power one million homes. Eligible grant applicants have been expanded to include non-profits, state, local, municipal and tribal government agencies and organizations, educational institutions and ports. Non-federal matches in cash or in-kind services are strongly encouraged but not required. Priorities this year include $15,000 grants for existing or new ports to install gear collection bins, or $10,000 to host gear collection events. Other grants averaging from $75,000 to $150,000 will be awarded for Capacity and Logistics Development for long-term fishing gear removal programs. To date, Fishing for Energy has awarded over $5 million in gear removal grants to more than 55 projects in 17 U.S. states, Washington, D.C., and Puerto Rico. Deadline to apply for the latest round of grants is March 30. Find links to an Easy Grants Help Desk at [email protected], or contact [email protected] Check out a video at called Fishing for Energy, ocean debris turned into fuel in Florida. COVID-19 cash for more fishing sectors The $1.9 trillion American Rescue Plan Act of 2021that was recently signed into law includes $4 billion for the U.S. Department of Agriculture to purchase food and agricultural commodities for distribution, including seafood. A breakdown by Undercurrent News shows that the money, which must be used during the 2021 fiscal year, also can be made available for grants and loans for small or midsized food processors or distributors, seafood processing facilities and processing vessels, farmers markets, producers, or other organizations to respond to COVID-19, including for measures to protect workers against the virus. The Act also will prioritize grants to “small business concerns owned and controlled by women, veterans, or those who are socially and economically disadvantaged.” Grants to eligible businesses will not exceed $10 million and also will be limited to $5 million per physical location. reports that grant funds can be used for expenses incurred as a direct result of, or during, the pandemic, including payroll costs; payments of principal or interest on mortgages; rent payments; utilities; maintenance expenses such as constructing outdoor seating; supplies, including protective equipment and cleaning materials; food and beverage expenses; supplier costs; operational expenses; paid sick leave; and “any other expenses that the Administrator determines to be essential to maintaining the eligible entity.” The Rescue Plan narrowly passed last week by a 50-49 vote in the U.S. Senate. Both Alaska Sens. Murkowski and Sullivan voted against the bill. Fish Board push back The state Board of Fisheries voted unanimously on March 8 to not double up its meeting cycle to include two Alaska regions, and instead advance them by one year. The board, which regulates commercial, sport, subsistence and personal use fisheries in state waters, meaning out to three miles, would normally be wrapping up a roster this month that included 275 proposals for Southeast, Yakutat, Prince William Sound and statewide shellfish. But the ongoing Covid pandemic curtailed those plans. “Starting in October of 2021 it will do its work session followed by a Prince William Sound meeting in November and December and the Southeast finfish and shellfish meetings in January, and then do its statewide all shellfish meeting in March of 2022,” said boards director Glenn Haight. In October 2022, the Board’s work session will be followed by a two-day Pacific cod meeting and then fishery issues for Bristol Bay and Chignik, the Bering Sea, Arctic-Yukon- Kuskokwim and Alaska Peninsula regions. The doubling up faced push back from the public and regional advisory committees. “I think it was an admirable thing that the board was trying to get back on track in regard to the pandemic we’re dealing with. Recognizing the headwinds and navigating through the comments, I think it’s important that we listen to the constituents,” said unconfirmed member Abe Williams. The double up also would have cost an additional half million dollars in a supplemental budget, said ADFG Commissioner Doug Vincent-Lang. Haight advised that the call for proposals for Bristol Bay, Chignik and regions further west that were due on May 10 of this year also has been extended. “For anyone out there fastidiously creating proposals for those meetings to turn them in this May, no need to hurry as you’ll have almost a full year.” Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

State revenue outlook improves with oil price rebound

Alaska’s ride on the oil price rollercoaster should again get a little smoother as markets have recovered quicker than expected from the pandemic but special provisions in the CARES Act will cause the state to forgo some corporate tax revenue as well, according to Department of Revenue officials. “Revenues are moving in a much better direction, which is up,” Revenue Commissioner Lucinda Mahoney remarked during a March 16 Senate Finance Committee hearing. The Revenue Department published the spring update to its official Fall 2020 Revenue Forecast March 15 with projections that the state will collect approximately $791 million more over the next year-plus than was thought last fall. Higher oil prices and increased production — a rare combination of late — are the primary drivers behind the slightly improved fiscal outlook though the expected additional revenue would not nearly come close to fixing the state’s structural budget deficit. The state is specifically projected to collect $332 million more in the current 2021 state fiscal year than was thought last fall and $460 million more in fiscal year 2022, which starts July 1. The added revenue would cut current year deficit down to approximately $550 million and the deficit in Gov. Mike Dunleavy’s 2022 budget proposal would fall to roughly $1.7 billion, according to figures from the Office of Management and Budget. Petroleum taxes and royalties currently account for about 20 percent of all state revenue, according to the forecast. Chief Revenue Economist Dan Stickel told Senate Finance members that global oil markets seem to have rebalanced quicker than most analysts expected in recent months, which led to an updated average price forecast of $53.05 per barrel of Alaska North Slope crude for fiscal 2021 and $61 for 2022. The new price projections are nearly $8 higher for 2021 and $13 higher for 2022 than what was expected last fall and were based on Brent benchmark oil futures prices in late February, according to Stickel. The price for Alaska oil has largely plateaued in the high $60s per barrel in recent weeks. State economists expect oil prices to stabilize after 2022 and rise with inflation. “We believe that looking at financial markets is probably the best indicator as to where oil prices are headed,” he said. However, he also cautioned that there is “particularly large uncertainty” with the forecast given what happens to COVID-19 cases domestically and worldwide in the coming months. On the production side, North Slope operators will ultimately produce about 5,000 more barrels per day on average this fiscal year than was thought last fall as well, according to the forecast, which now pegs 2021 North Slope oil production at 482,000 barrels per day. According to Stickel, Revenue and Department of Natural Resources officials still believe the lack of drilling on the Slope last year will still lead to a sharp drop in production in 2022, but it isn’t expected to be nearly as severe as once thought. Last fall they were predicting a year-over-year North Slope production decline of 38,000 barrels per day; that has been revised down to a decline of about 23,000 barrels per day for 2022 production of nearly 460,000 barrels of oil per day from the North Slope. Production is also supposed to rebound and begin a longer-term upward trajectory after the 2022 dip. State officials now expect North Slope operators to collectively produce more than 502,000 barrels per day by 2024 with production exceeding 555,000 barrels per day by the end of the decade. “We’re expecting a lower decline rate in the existing fields and then an improved outlook regarding new fields coming online with the higher price forecast,” Stickel said. CARES Act refunds The COVID-19 relief bills passed by Congress last year directed approximately $5.8 billion to Alaska but special corporate tax provisions in the first aid package are likely to cost the state $162 million in forgone revenue through 2022, according to revenue officials. Stickel said the CARES Act passed nearly a year ago allows corporations to “carry back” net operating losses from 2018-20 for up to five years and receive refunds for previous taxes paid. Another provision allows companies to “accelerate alternative minimum tax refunds into tax year 2019,” he said, and because Alaska uses the federal corporate income tax code by reference in state statute the federal tax changes will hit the state if the Legislature does not change them. “The biggest refunds are expected in tourism-related companies, which are expected to show very large losses for 2020,” Stickel said. Overall, the state is expected to collect $80 million in corporate income taxes this year and $35 million in 2021, compared to $102 million and $175 million for the respective years without the tax changes, according to Stickel. Total annual corporate income tax revenue should return to roughly $240 million by 2023 when the impacts of CARES Act provisions and broader pandemic economic conditions will lift, according to the forecast. Elwood Brehmer can be reached at [email protected]


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