Opinion

OPINION: Attacks on Saudi Arabia highlight importance of Alaska

Oil markets have collectively yawned over the past few months as tensions in the Persian Gulf intensified with attacks on oil tankers and tit-for-tat drone shootdowns by the U.S. and Iran. Just a decade ago, before the U.S. became the No. 1 producer of oil and natural gas on the planet, such events would have sent oil prices soaring but it wasn’t until more than half of Saudi Arabia’s daily output was taken offline by the Sept. 14 attacks alleged to have been carried out with Iran’s backing that we saw the biggest one-day jump ever recorded on Sept. 16. Brent futures, the benchmark that Alaskan oil is priced to, shot up as much as $12 before settling at a one-day increase of $8.80 per barrel. The spike was short-lived as both Brent and West Texas prices dropped by about $5 each the following day. That short decade ago, some half of the U.S. imports of crude came from OPEC nations that largely surround the Persian Gulf. This past March, imports from those same countries fell to just 1.5 million barrels per day, or about 20 percent of our imports, to hit the lowest levels since 1986. In June, a bit more than half of U.S. imports from OPEC nations were delivered to West Coast refineries totaling about 850,000 barrels per day. Total imports to the West Coast were 1.37 million barrels per day. As is generally known, Alaskan North Slope crude oil almost exclusively travels to West Coast refineries, although this year has seen a few million-barrel tankers head to Korea and even China as sanctions waivers ended for seven of Iran’s biggest customers. The attacks on Saudi Arabia are a serious matter and nobody knows how this is going to play out militarily or economically, but we must pause for a moment and recognize the remarkable achievement of American energy dominance that has prevented oil prices from escalating along with the brewing conflict in the Persian Gulf. House Democrats are still trying in vain to stop the development of the Arctic National Wildlife Refuge coastal plain, and failing to do so will rely on their allies in the environmental activist movement to try to stop it through litigation. The hapless Sen. Ed Markey from Massachusetts suggested we should restore the ban on crude oil exports even though the repeal engineered by Sen. Lisa Murkowski in 2015 is a major factor mitigating the volatile price swings we’ve seen all too often in the past amid similar events. The only estimate we have of the potential oil resource in ANWR dates to the surveys conducted in the 1980s that settled on a mean total of more than 9 billion barrels, or roughly similar to the first guess at nearby Prudhoe Bay, which has now produced more than 13 billion barrels. A field that size could produce 1 million barrels per day. Combined with the projects in permitting at Pikka and Willow, the three fields alone could replace every barrel now being imported by the West Coast with ANWR itself having the ability to erase OPEC shipments entirely. From mocking “Drill, baby, drill” to declaring Alaska at the end of its run as an oil-based economy, Democrats have been wrong at every turn when it comes to energy policy and now is no different. Alaska could make the West Coast import independent and fill our pipeline at the same time. The only problem is that it makes too much sense. Andrew Jensen can be reached at [email protected]

GUEST COMMENTARY: Many reasons for optimism about future of North Slope oil

Alaskans worried that BP’s sale of its Prudhoe Bay assets to Hilcorp means Alaska’s oil and gas potential is waning can be reassured: Hilcorp’s growing strength is just the beginning of a new wave of investment and activity heralding a more energetic phase in our resource-rich state’s top industry. Here are a few examples. When we faced a potential gas shortage in Cook Inlet in 2012, Houston-based Hilcorp was purchasing mature fields from Chevron and Marathon. Hilcorp then embarked on a vigorous drilling and efficiency program, increasing oil and gas production and ensuring reliable energy supplies for Southcentral Alaska. Hilcorp next took their plan north, buying in to four of BP’s North Slope units in 2014. Most recently they began producing viscous oil from their Moose Pad at Milne Point, increasing field production to levels not seen in years. With declining oil throughput in the Trans-Alaska Pipeline System, Hilcorp’s aggressive strategy is delivering the kind of results Alaskans need, and the jobs critical to our economic security. Oil Search, a Papua-New Guinea independent new to Alaska, is systematically, deliberately and thoughtfully pursuing its Pikka development, aiming to start oil production in less than four years. Pikka will create high-paying jobs and boost state royalty revenue, and could increase pipeline throughput up to 20 percent. Oil Search and its partners Armstrong, a Colorado independent, and Repsol, a Spanish global oil company, have several other North Slope prospects that may not be far behind. U.S. major ConocoPhillips may bring its Willow prospect online about the same time as Pikka, increasing oil production by a similar amount. This expansion of development westward from Alpine and Greater Moose’s Tooth into the National Petroleum Reserve-Alaska will add critical infrastructure, making other western prospects more commercially feasible. London-based newcomer Premier Oil, in partnership with Australian independent 88 Energy and Texas independent Burgundy Xploration, plans to drill this winter to further evaluate a block of leases called Project Icewine, 50 miles southwest of Prudhoe Bay. We’ve known since the 1960s this area holds potential for oil discoveries, and these optimistic independents believe they can bring this prospective area into production. Other veteran and new independents have big exploration and development plans. We saw expressions of interest at CERAWeek last March, and I’m confident we’ll see evidence of that interest at the state’s North Slope areawide lease sale on Dec. 11. Lease sales generate immediate revenue for Alaskans through lease sale bonus bids and rents, and are the third-largest source of revenue generated by the Division of Oil &Gas, after production royalties and net profit shares. Last year, lease sales brought in more than $28 million to support the General Fund, Alaska Permanent Fund, and others. Along with its regular lease offerings, the State plans to offer three Special Alaska Lease Sale Area, or SALSA, blocks. These contiguous lease blocks represent a unique opportunity to acquire lease rights combined with a trove of associated well and seismic data and other information compiled by the State. The intent is to jump-start a company’s understanding of the North Slope and thereby accelerate drilling and development plans. Also in December, the Bureau of Land Management will offer leases in the NPR-A and, for the first time ever and after decades of waiting, tracts in North America’s most prospective onshore prospect: the coastal plain of the Arctic National Wildlife Refuge. Clearly, there are many reasons to be optimistic about the future of oil and gas in Alaska. New technologies, new investments and new players will add more jobs in the industry, more money in the economy and state treasury, and put more oil in the pipeline. Last winter was the North Slope’s busiest in 15 years. That trend continues. ^ James B. Beckham is acting director of the state Division of Oil &Gas.

GUEST COMMENTARY: Attempt to repeal ANWR development an insult to Alaskans

Last week the House of Representatives approved measures that would restrict America’s future energy supply, including one that would block responsible development in northeast Alaska. As the state’s congressional delegation, we are unified in strong opposition and believe passage would be a reckless strategic mistake. The bill in question comes from a California representative and targets the non-wilderness 1002 Area of the Arctic National Wildlife Refuge, which Congress set aside in 1980 for future exploration. After years of debate, Congress agreed in 2017 to allow careful development of just 2,000 acres of the 1.5-million-acre area, itself located within the ANWR’s 19.3 million acres. This developable fraction of a fraction amounts to one ten-thousandth of the refuge. We believe, in fairness to Alaskans, that the leasing program should proceed responsibly, with Congress and the Trump administration ensuring that lands and wildlife are cared for. All of us are working to put the proper guidelines in place. Yet some in Congress still remain eager to repeal the provision, based on misperceptions about what is at stake and what most Alaskans want. Most offensively, the repeal effort ignores the Inupiat people of Kaktovik, the only village located in the ANWR. Most who live there, like a sizable majority of Alaskans, support responsible development of the 1002 Area. Members of Congress seeking a repeal ignore the significant environmental protections that apply to development, as well as the decades-long record of safe operations on Alaska’s northern coast under some of the world’s strictest environmental regulations and oversight. They ignore incredible advances in technology, which have dramatically reduced the surface footprint of development while increasing drillers’ subsurface reach by as much as 40 times. They also overlook the importance of economic vitality in sustaining Alaskan life. Our state wasn’t allowed into the union until 1959 when Washington was finally satisfied we could support ourselves through resource production, and maintaining a strong economy remains essential to all of our goals, including environmental preservation. Alaska is still young and will need to develop its resources long into the future. As recent years have shown, our economy, our state budget and our people suffer when federal restrictions prevent development. But it isn’t only Alaska that stands to lose. According to the Seattle Metropolitan Chamber of Commerce, Alaskan oil supports 12,000 jobs and $780 million in wages in Washington’s Puget Sound region each year. All of that could vanish if the Trans-Alaska Pipeline shuts down. The pipeline is currently only a quarter full and needs new throughput from the 1002 Area to reach capacity. Further south, data from the California Energy Commission shows the state’s imports of foreign oil have risen significantly as Alaska production has declined. California’s answer is that it plans simply to stop using oil—yet it still ranks near the top of the list of oil-refining states. Despite ceaseless rhetoric about a Green New Deal, the reality is that our nation and the world are demanding the resources that will come from the 1002 Area. If Alaska doesn’t supply them, another country will. Global oil demand is rising, not falling. President Trump’s commitment to America’s energy renaissance has helped create thousands of well-paying jobs across America, strengthening families and communities along the way. And while prices have been relatively stable, artificial restrictions can lead to price spikes that cause hardship and unrest. See Paris as a recent example. Careful development of the 1002 Area will help strengthen America’s economy and improve our energy security in the long-term. It will also benefit global energy markets, allowing the U.S. to provide allies with alternatives to resources from unfriendly nations and cartels. Competition for resources in the Arctic is another geopolitical dimension of the ANWR issue. Russia and China are expanding their presence in the region, with billions of dollars of investments in infrastructure. The U.S. is falling behind in icebreakers, deep-draft ports and other Arctic infrastructure needs. Pulling up the stakes on an American energy program that helps build a presence in the region would put us further behind. We understand that Alaska has earned an almost mythological place in the minds of many Americans. But we cannot be treated like a snow globe, to be placed on the shelf for viewing pleasure only. Alaska has tens of millions of acres of national parks, wildlife refuges and federal wilderness. We also have room for the responsible development of a small part of the 1002 Area, and all Americans should recognize this is in our nation’s best interest.

GUEST COMMENTARY: ‘Open for business’ means Alaska must protect Bristol Bay

Bristol Bay’s salmon fishery raised me. I spent my summers commercial fishing with my brothers and later helped my family run a seafood processing company. Today I have a young family and business of my own, Northline Seafoods, a salmon processing company that uses ultra-low-temp freeze technology and an innovative business model that allows us to pay our fishermen more for their catch. We just finished our first season in Bristol Bay, which had its second-largest commercial harvest on record. The biggest threat to the success of my business and my family’s future is the proposed Pebble mine project. Worse than the threat of the mine itself is its current permit process, which is being increasingly compromised by politics and lacks the scientific rigor and transparency that Alaskans have been promised for years. I invested in Alaska because there is tremendous economic opportunity in our fisheries, especially in Bristol Bay, where we have record-high salmon runs, intact habitat and a regional brand that commands a high market price. The value of the Bristol Bay salmon industry has increased significantly over the last decade — progress that is a direct result of financial investment and the innovative energy of Bristol Bay’s fishermen, processors, and thousands of individuals who participate in the fishery every summer. Every year, we continue to improve fish quality, reduce fish waste, increase efficiencies in processing, and grow consumer loyalty. We have only begun to scratch the surface of Bristol Bay salmon’s full economic value. Bristol Bay’s salmon fishery has been going strong for more than 130 years, and my personal stake in its economy are a solid bet on a consistent natural resource — that is, if you could take the threat of Pebble out of the picture. The Pebble mine is just a proposal at this point, yet it’s already having a negative impact on Bristol Bay’s fishery and businesses like mine. This past spring, our largest customer expressed concern about the Pebble mine and market risk to Bristol Bay salmon. The controversy and environmental threats posed by the Pebble project are a dominant theme in national news coverage of Bristol Bay salmon. As we expand distribution of our sockeye into new markets we now must also educate and inform consumers on Pebble. Consumer perception of Bristol Bay salmon cannot be defined by open-pit mines and tailing pond waste. It’s shocking to see our federal agencies turn a blind eye to all of this and instead let politics drive their analysis and decision-making. In Pebble’s permit review, the U.S. Army Corps of Engineers completely downplays Pebble’s potential impacts on Bristol Bay’s fishery, basing their conclusions on incomplete information and false assumptions. In Chapter 4 of the key document called the draft environmental impact statement, or DEIS, the Army Corps goes so far as to say that a change in the market reception of Bristol Bay fish is “not expected to occur.” I know that I’m not alone in my disappointment with the Army Corps’s DEIS; both the Bristol Bay Regional Seafood Development Association and Bristol Bay’s biggest seafood processors submitted strong comment letters to the Army Corps documenting the glaring gaps and flaws. Bristol Bay’s seafood processors went so far as to request that the Corps “withdraw the DEIS and reinitiate an analysis of the Pebble Project of the appropriate scope and depth, as required by NEPA.” I echo their request and look to Alaska’s elected leaders to restore integrity and public confidence in this flawed permitting process. Both Sens. Lisa Murkowski and Dan Sullivan have been strong champions for Alaska’s fishing industry in the past, and I appreciate Murkowski’s recent acknowledgement that the Environmental Protection Agency’s concerns with the DEIS are “substantial.” Because the Army Corps is unwilling to take an honest look at this project, we need our senators to step in and make sure our questions and concerns are addressed before any permits are issued. Alaskans deserve to know the truth, especially Alaska businesses whose assets, investments, and employees are on the line. If Alaska wants to have a healthy economy and attract new businesses like my own, we need to uphold rigorous, science-based permitting and make sure we protect places like Bristol Bay, which make Alaska — and Alaska’s economy — work. Ben Blakey lives in Sitka and is the president and co-founder of Northline Seafoods.

OPINION: BP hands off Prudhoe Bay to a hungry wolf in Hilcorp

A hungry wolf runs faster, and that means Prudhoe Bay should be in good hands with Hilcorp. The long-rumored blockbuster deal finally announced on Aug. 27 marks a historic transition for the largest North American oil field ever discovered as pioneering Alaska producer BP is exiting the state in a $5.6 billion asset sale. BP leaves huge shoes to fill, not only from its 60-year presence on the North Slope where it has helped produce more than 13 billion barrels of oil to far exceed the original estimates of less than 10 billion, but also from its community presence of active employees and millions upon millions in charitable donations. Hilcorp was named No. 20 on Fortune’s Best Places to Work in 2015, one of many such lists it regularly appears upon (although one can wonder how a company that paid all of its 1,400 employees $100,000 bonuses that year could possibly not be No. 1). There will no doubt be transition and turmoil for BP’s employees and the thousands of jobs tied to contractors, suppliers and the indirect impacts of its payroll across Alaska. But ultimately it must be kept in mind that this was inevitable and despite the unraveled recent mantra from BP about “40 more years” in Alaska, the company is handing off an asset it has spent the past several years revitalizing from years of annual decline averaging around 5 percent or more. BP Alaska President Janet Weiss shaved her long locks in early 2018 after losing a friendly bet with her employees that they could hold production from Prudhoe Bay steady, which they did over three straight years from 2015-17 at about 280,000 barrels per day thanks to record amounts of drilling and well workovers even as prices sank to as little as $26 per barrel in early 2016. Whether in anticipation of this sale or not, BP conducted a 400-square mile seismic shoot over the entirety of the Prudhoe Bay field this past winter and the results must have been encouraging enough to cement Hilcorp’s and its financiers’ willingness to execute the biggest transaction in Alaska’s history. BP personnel have stated they believe there is another billion barrels of recoverable oil at Prudhoe Bay and they praised Hilcorp’s ability to squeeze more oil out of aging fields as demonstrated at assets the Houston-based company acquired from BP in 2014. That capability not only impressed BP, but it had to have earned the trust of fellow Prudhoe Bay working interest owners ConocoPhillips and ExxonMobil, who would have had to sign off on a transaction that makes Hilcorp the operator and guardian of their still large financial interests on the North Slope. Southcentral Alaska can also thank Hilcorp for turning around the aging and neglected assets of Marathon and Chevron after it entered the state with its first purchases back in 2012. That was not long after the Cook Inlet Recovery Act passed the Legislature unanimously in 2010 amid widespread fears of looming natural gas shortages, and should remind us that the tax credit incentive programs the state enacted with diminishing production both on the Slope and the Inlet worked despite the fact they came under fire and were ended during the recent budget deficits. Hilcorp drew unwanted attention for a natural gas leak in 2017 from an old Cook Inlet pipeline cracked by a rolling boulder, but it should have earned more praise for spending $90 million to build a new subsea oil transportation system long sought by environmental groups and the Regional Citizens’ Advisory Council to drastically reduce tanker traffic and mothball the oil storage farm in the shadow of the Mt. Redoubt volcano on the west side of the Inlet. The purchase of Prudhoe and the rest of BP’s assets brings Hilcorp’s total investment in the state to about $10 billion over the past seven years, and it stands to spend billions more to recoup those investments including building the offshore Liberty project that could add 70,000 barrels per day to the pipeline it now owns half of. With ConocoPhillips and Oil Search also in the midst of permitting massive projects with six-figure per day production estimates and multi-billion dollar price tags, this should also serve as a red flag to those who would like nothing more than to raise taxes by a billion or more per year. Now is not the time to shoot the wolves just as they are hunting the state’s dinner. Andrew Jensen can be reached at [email protected]

GUEST COMMENTARY: Regardless of our structure, UA is committed to students

There has been much concern regarding the future of the University of Alaska, given the events of the last six months. I’d like to assure all Alaskans that, despite all the upset over our budget and the ongoing need to right-size, no matter what UA’s structure ends up being, UA must and will continue to provide broad access to high quality education and workforce training to students throughout the state. At statehood UA was established as a single legal and financial entity. Over the years, with support from the state, the university established new campuses and facilities across Alaska. The system grew from one university serving Alaskans at numerous locations to three separately accredited universities—each with a distinctive identity and its own administration. In 2012, due to decline in the number of students graduating from high school and changes in student preferences, UA student enrollment and associated tuition revenue began to decline. In 2014, state funding for the university followed as oil revenues fell. This year’s funding agreement with the governor provides for a $70 million reduction over three years. While this is far better than the $136 million reduction in one year originally proposed by the governor, by 2022 annual state funding to the university will have declined by $121 million (32 percent). These continued reductions require that we right-size the university without downsizing our geographic footprint. I believe many would agree that we should reduce unnecessary administration and focus resources on academic programs and student services. Of course the details matter, and each detail will impact numerous stakeholders. The immediate issue the Board of Regents must face is the $25 million budget reduction in the fiscal year that started in July, and the right-sizing that must happen as a result. Regents will do so with an eye on another $45 million in cuts over the next two years. In response to direction from the Board of Regents, we are implementing administrative consolidations across the system. We are collecting input on how best to combine duplicative academic colleges and schools, consolidate research institutes, and better integrate our community campuses. However, the savings we generate from these consolidations are limited by our current structure of three separately accredited universities. So the broader question the legislature, the governor, the Board of Regents and all Alaskans are asking is whether we can afford, and effectively staff, three universities, or whether one university, with programs based in locations across the state, can more cost effectively deliver programs and services to all students. Maintaining three separate universities has the advantage of initially requiring the least structural change and disruption, while preserving local control and identity. However, it also requires three administrations and multiple administrators. This comes with a cost in real dollars which are then not available for students. The three-university structure also has built-in geographic and political constituencies with inevitable silos. That structure impacts UA’s adaptability to respond to a fast changing technological, economic, and demographic reality. It promotes unnecessary competition rather than collaboration, as well as costly differences in student processes and requirements that are barriers to students’ access and progress. In this funding environment, even if the Board of Regents ultimately decides to maintain three separate universities, those universities will need to change. If savings do not come from elimination of senior administration and redundant bureaucracies, savings must come from the faculty and staff who deliver our academic programs and student services. The board will need to assess whether preserving the current structure is worth the cost to students and academic programs. With just 27,000 students across the state, our entire system is the size of one regional university in the Lower 48. There is no question that changing back to a single university would pose issues in institutional and program accreditations, as well as challenges to maintaining local responsiveness and a sense of local identity. Change also creates uncertainty and fear, some real, because jobs and programs will be lost, but some groundless because opportunities for innovation will be created. A transition to one university would not occur without successful accreditation. Nor would it mean that all programs and services would be located in one area. One university would make use of faculty, staff, and facilities across the state to offer programs in-person and on-line to meet student demand. Change must happen, regardless of UA’s structure. As we right-size and consolidate administration and academic programs, the Board of Regents and administration will methodically evaluate the options and proceed with a structure that makes the most sense for our students and the state. Because in the end, the University of Alaska must continue to provide access to a high quality education to students all across Alaska. Jim Johnsen is the 14th president of the University of Alaska.

OPINION: Of ants and grasshoppers

Winter is coming, and the grasshoppers are knocking on the ants’ door once more. A two-page rewrite of the production tax code was filed as a voter initiative on Aug. 16 by the usual suspects made up of former Gov. Bill Walker’s anti-oil buddies Robin Brena and Merrick Peirce, Walker’s Tax Division director Ken Alper and one-note Democrat fiddle players Sen. Bill Wielechowski and former Sen. Joe Paskvan. Singing the tired old song of “Alaska’s Fair Share” that could be covered as Disney’s “The World Owes Me a Living,” the group is promising its measure would tax the producers by at least an extra $1 billion per year, or nearly a 40 percent increase over the approximately $2.6 billion they paid in the just completed 2019 fiscal year. To put that in context of North Slope operations, $1 billion is roughly what ConocoPhillips spent to build Greater Mooses Tooth-1, which started producing last fall, and another $1 billion is what it is spending right now to build the sister project GMT-2 scheduled to start producing this winter. According to ConocoPhillips’ most recent second quarter financial report, the company’s Alaska profits so far this year have been matched nearly dollar-for-dollar on what it is spending to bring GMT-2 online in addition to ongoing exploration work at the nearby Willow discovery that has the potential to produce 100,000 barrels per day or more and will cost several billion dollars to construct. Rather than work to get Alaska’s own financial house in order, this short-sighted grasshopper coalition is aiming to tax the stores of the North Slope ants and gorge itself on the future. Like Aesop’s fabled layabout, the state strummed away its savings over the past five years instead of reforming the budget. Inspired by Walker and his vetoes of tax credit payments and the Permanent Fund dividend, the Legislature followed suit time and again to solve its cash flow problems not through structural changes but by simply not paying the bills. Enabled by the Supreme Court decision that it could ignore the PFD formula, the Legislature’s failure to address the issue has poisoned the budget process as its members pick and choose which laws to follow. The failure to pay the tax credits forced Caelus Energy to sell out to the majors and helped send Furie Operating Alaska into bankruptcy. While the major producers were losing billions of dollars from their upstream operations, they did not come to the state asking for a cut in the gross minimum tax or relief from their royalty payments. Instead they worked to find efficiencies. ConocoPhillips slashed its dividend by two-thirds to save cash. They not only kept producing oil but increased throughput while at the bottom of the price trough. And, finally, they kept exploring, invested billions of dollars with scant available capital to bring new projects online and made major discoveries that promise to add hundreds of thousands of barrels to the pipeline in the near future. For all that foresight and prudence, their reward after absorbing years of losses is only to have the grasshoppers come calling with demands for another billion dollars per year. In the original version of Aesop’s fable, the ants tell the grasshopper to go dance the winter away. In Disney’s Silly Symphony adaptation, the ants take pity on the irresponsible grasshopper and after he is nursed back to health he changes his tune. After bailing out the state for years with no corresponding sign that any lessons have been learned, the ants have every right to tell Brena, Wielechowski and the rest of the grasshopper gang to grab their fiddles and get to steppin’. Andrew Jensen can be reached at [email protected]

GUEST COMMENTARY: State is committed to helping coastal fishing communities

I read with interest a recent guest editorial penned by long time Adak fisheries advocate Clem Tillion regarding the need to take immediate actions to protect Alaska’s residents and coastal communities to ensure for their economic viability. The insinuation is that not enough is being done. Let me begin by saying that the State of Alaska is committed to developing fisheries management policies that benefit Alaska residents and coastal communities. We recognize the unique challenges faced by fish harvesters and processors operating in remote Alaskan waters and are committed to finding solutions. The state has worked closely with our management partners over the years to develop programs that provide economic benefits and stability to fishery-dependent communities in Alaska. Specific to Adak, the state has actively participated in the development and implementation of several fisheries management actions to promote economic opportunity. For example, the Alaska Board of Fisheries established the Aleutian Islands Subdistrict Pacific cod fishery in 2006 to provide economic benefits to Adak. In 2018, the board took action to increase the state-waters Pacific cod guideline harvest level to provide more harvesting opportunities for Alaskans and more fish delivered to Adak. The board action increased the amount of Pacific cod allocated to the state waters fishery from 27 percent to 31 percent of the total allowable Aleutian Islands removals for 2019 and 35 percent for 2020. The overall state waters allocation could increase to a maximum of 39 percent in subsequent seasons if 90 percent of the guideline harvest level is taken in 2020. In March 2019, the Board of Fisheries again acted to benefit Adak by authorizing a Western Aleutian District Tanner crab fishery under the authority of a commissioner’s permit. The state also supported several management actions in federal waters off Alaska to support Adak. A 2004 congressional action allocated Aleutian Islands pollock to Adak in order to promote a local, small boat pollock fleet to deliver fish to Adak and further develop the local fisheries-based economy. While several challenges have prevented Adak from realizing the benefits from its pollock allocation, the state supports continued efforts to fulfill Congress’ intent to benefit fisheries development in Adak. In 2005, the state supported action by the North Pacific Fishery Management Council and Congress to allocate 10 percent of the Western Aleutian golden king crab to Adak and require 50 percent of the Western Aleutian golden king crab allocations to be processed in Adak. These measures were implemented as part of the Bering Sea and Aleutian Islands Crab Rationalization program and intended to aid in the development of seafood harvesting and processing activities within the community. In 2010, the state actively supported council action to authorize Adak to purchase and hold commercial halibut and sablefish quota to provide fisheries access for a local fishing fleet and benefit the community. Finally, the state strongly supports the council’s most recent action, known as Amendment 113, to provide opportunity for trawl catcher vessels, onshore processing plants, and communities, including Adak, to sustain participation in and receive benefits from the Aleutian Islands Pacific cod fishery. The 2018 and 2019 fishing seasons demonstrated that Amendment 113 worked as intended for Adak by providing deliveries of Pacific cod to keep the plant operating and the associated benefits flowing to harvesters and the community. The state was disappointed by the March opinion in the Washington, D.C., District Court that vacated the regulations for Amendment 113. We are actively working with our management partners, the Alaska congressional delegation, and our legal advisors to pursue all available options to reinstate Amendment 113 regulations and/or develop new regulations that benefit Adak and other Aleutian Islands shore plants. Unfortunately, immediate solutions are constrained given the court decision. The record is clear. The state has well documented history of taking actions to help ensure the continued viability of this remote community. We will continue our efforts as we move forward on issues that affect this and other remote Alaskan communities and Alaskan fishermen. ^ Doug Vincent-Lang is the commissioner of the Alaska Department of Fish and Game.

GUEST COMMENTARY: A path forward to unify Railbelt electric utilities

The article entitled “Concept scrapped for unified Railbelt utility,” written by Elwood Brehmer in the Alaska Journal of Commerce on July 17, does not mean the future of our utilities is doomed; it just means there is opportunity to work out better solutions. The electric utility companies that cover the Railbelt have been working to form the Railbelt Reliablity Council and have been working on the formation of a transmission company, or transco, intended to simplify electrical transmission transactions among entities along the Railbelt. The real driver for all this is the desire by some to allow open access of renewables to any point along the system, and this vision was driven by House Bill 306. In 2010, HB 306 “An act declaring a state energy policy” was passed. Item 2 of the legislative intent reads: “…the state receive 50 percent of its electric generation from renewable and alternative energy sources by 2025.” There are efforts to establish a binding Renewable Portfolio Standard that would require 50 percent renewable electric generation by 2030 as some think Alaska’s (or Alaskans’) feet need to be put to the fire. Before we get to a binding standard, Alaska needs a plan to work out all the issues that hinder even starting the process of achieving 50 percent and greater renewable energy sources, as there are many issues that need to be solved. First, the Regulatory Commission of Alaska and the state have not provided any real incentives to achieve a unified utility. Instead, they have threatened to do it for them if they fail to get it done. The Railbelt utilities comprise the largest supplier of electric power to the residents and businesses in Alaska, and yes, there have been efforts to encourage the addition of renewable energy sources to the Railbelt. There are those who would have the Legislature create an independent entity in the Railbelt with the desired intent to mandate the increase of the amount of renewable sources that are connected to the Railbelt utilities. The concern that drives this is that the Railbelt does not deliver the maximum benefit possible to ratepayers. Forcing the Railbelt utilities to change their practices by mandate and regulation will not result in the desired effect, as there are many technical and business problems to address before all the separate utilities can operate effectively as a combined entity. There are also political hurdles that need attention, since there have been numerous complaints from the public against the Railbelt utility companies over the $1.5 billion spent for generator upgrades, which many think should have been invested, instead, directly in renewable resource connection. Understandably, utility companies are reluctant to invest any more money in infrastructure when their previous investments only drew the ire of their ratepayers, resulting in rate case intervention against them in some circumstances. Second, combining five separate entities into one is not as easy as many think, as each utility must consider the adverse impact to their own ratepayers; thus, some positive motivation should be provided to the utilities to ensure obvious and measurable benefit is achieved in their combining to become one utility. As noted before, for the entire Railbelt to be combined into one entity and be open to connection of Independent Power Producers, or IPPs, there are technological problems to be worked out. Third, the list of issues that work against adding generation to the system are many. Decreasing population, decreasing loads (with increased efficiency through conservation efforts), insufficient communication over the extent of the Railbelt, lack of energy storage, and insufficient transmission line capacity all provide negative incentives to develop a unified utility. As rates continue to rise, more customers will be incentivized to install peak-shaving, load-leveling, and distributed generation assets to decrease their costs, and this will require adjustments to rate structures to meet utility revenue requirements. Likewise, introduction of distributed battery energy storage and distributed generation will also require new rate structures for charging, discharging and production. To complicate matters, every change in rate structure requires the approval of the RCA, a lengthy and political process subject to public intervention and scrutiny. Under the current circumstances, why would the utilities be motivated to increase the amount of generation they have available when everything is working against them? Fourth, the technical deficiencies of the current Railbelt paradigm should not be underestimated. Communications and control capabilities along the Railbelt need to be upgraded to allow proper monitoring and control of all the new inverter-based equipment that will be connected. Even if we do not implement a true “smart grid,” it will need to be a lot smarter than it currently is to accommodate a lot of renewables interconnected throughout the system. Transmission lines need to be upgraded not only for the current loads and generators but also for the future loads as well as a reconfigured Railbelt utility. Sufficient energy storage must also be added to the system in strategic locations to smooth out the variability of renewable sources as well as variable loads to ensure system stability and minimize renewable resource curtailment. Right now, Railbelt utilities are compensating for the existing variability from Fire Island and other sources with conventional generation. This wastes fuel as well as renewable generation potential. To illustrate the scale of the problem posed by the desire to incorporate 50 percent renewable energy resources, a recent annual value for energy consumed along the Railbelt is just more than 5 million megawatt hours, or MWh, which is an average generation of 580 megawatts. The 50 percent share of renewable and alternative generation called for by HB 306 would be 2.5 million MWh. This could be provided by 725 MW of interconnected renewable and alternative generation sources operating at a capacity factor of 40 percent (typical for wind power), provided there is sufficient energy storage to account for the variability. At some point in the future, nearly 100 percent of the Railbelt’s energy demand could be supplied by alternative sources, but large-scale, long-term energy storage is needed to make this possible. The best current technology for storing and absorbing energy on the needed scale of weeks to months is pumped hydro. In any case, the solution needs to be big enough to continuously store surplus energy during seasons of high energy production and to discharge continuously during seasons of low production. Additionally, implementing anything on this scale will require extensive transmission line upgrades to handle the flow of power. By the way, spending $1.5 billion for upgraded generation seems to have been a good idea, as the new generation will help ensure a more efficient and reliable system while the distributed renewable resources are added than the old generation ever could have. Finally, The Railbelt utilities need to be in the business of providing the lowest cost electricity possible. One way to do that is grow their load base to increase the economy of scale and decrease the cost of service to meet revenue requirements. Therefore, utilities should look for ways and cooperate with other entities to encourage the diversification of Alaska’s economy through value-added endeavors on all extracted resources in Alaska (i.e., processing rare-earth minerals and heavy metals), developing new industries (such as the ocean industries or “Blue Economy”), and improving the economy in more communities. If Alaska is “open for business” then let’s produce the power to support the new businesses while serving the long-time customers with low-cost power. For example, the utilities should be marketing power to the mining projects currently in process. How can six individual utilities market to encourage an expanding marketplace? The consumer marketplace has its own considerations. Electric vehicles are supposed to “take over the world” in the next few years. How can six separate entities incentivize fast-charging stations in their respective service territories? What about incentivizing customers to use electricity for heating and cooling instead of using natural gas? Business development efforts such as these should have the overall goal of increasing the demand for their product, electric power. Once utilities become serious about providing low cost power and growing their customer base, we can look at the necessary capital improvements that are necessary to accommodate the vision we wish to achieve. In summary, moving the integration of the Railbelt utilities forward requires a PLAN, not a mandate. They (the utilities) will have to find a way to become one utility while keeping all the customers happy with rates lower than they are paying now. Let’s be innovative! For Alaska to develop a long-term energy plan takes leadership to expand our energy base beyond oil and gas, while we still have a good oil and gas economy. Robert Seitz, PE, electrical engineer, is Alaska resident for more than 75 years, and an advocate for renewable energy sources.

GUEST COMMENTARY: State budget is a reflection of Alaskans’ values

As the Legislature and the governor wrestle with assuring an affordable and sustainable budget, Alaskans are being forced to decide what we, as a society, value. It’s not surprising that good people disagree. In these past weeks, Alaskans have spoken loudly and clearly about the programs and services they value, causing the governor to re-examine his vetoes. In our own lives, we pay for what we value: electricity, school supplies, winter boots, cell service. Deciding what we value — and how to pay for it — in our very diverse, unique and vast state is the heart of what legislators and the governor must do every year. We’re sometimes told that government is “bloated.” Or, we hear anger and resentment toward “government” in general. So, it’s important to step back and look at what government is and what it does. In reality, “government” is mostly an array of public services delivered for Alaskans by Alaskans. These services are an expression of what we, the people, have collectively deemed worthy to provide for ourselves, our families, and our neighbors. Whether it’s the school custodian, driver’s license examiner, child protection worker, prosecutor, fisheries biologist, water quality specialist, or corrections officer, it’s a public service. And, government is citizens like me and hundreds and hundreds of other everyday Alaskans in the Legislature or on assemblies or school boards across the state elected to conduct the public’s business and to assure critical services. Citizens wrote the Alaska Constitution, which requires state government to provide education, health, and welfare, all of which are more expensive in a high cost-of-living state with few concentrated population centers. Those citizen delegates decided that Alaska must manage its vast public resources, such as oil, gas and fisheries. And, those same citizens determined that our new state would be responsible for services typically provided by counties, such as courts, jails, child support, juvenile justice, roads, ferries, public safety, medical examiners, and airports. (In fact, Alaska is the largest operator of airports in the world.) I think it’s worth noting here that a 2017 state analysis demonstrated that once “Alaska-unique” obligations and programs are accounted for, per capita state spending is within a few percentage points of the national average. Despite the state’s extensive responsibilities, state jobs and departments have shrunk in the past four years since oil prices dropped. While the total state budget is higher than last year due to increased federal contributions (mostly for Alaskans’ health care coverage), overall state general fund spending for agencies, the university, Legislature, and judiciary actually dropped by more than $1.5 billion or 25 percent since 2015. Since the per-barrel price of Alaska’s crude plummeted by more than half (landing at $49 per barrel in January 2015, after being at or more than $100 per barrel for nearly four years), 2,900 state jobs have been eliminated (about 11 percent of the workforce); university positions have dropped by 17 percent. Can state government be downsized further? Yes, and it will. Can state government be made more efficient and effective? Yes, and it should. Agencies and the legislature must be diligent in seeking efficiencies and implementing savings. But we must also be vigilant to not be penny-wise and pound-foolish, harming our future generations for short-term savings. In this process, we also must be vigilant to not upend Alaska’s fragile economic recovery. Surely, a stable economy is at the top of our collective values list. Local chambers of commerce, banks, and economic development corporations have warned about the damage of sudden, big cuts. Business values stability. As legislators, we must, as well. And, like a business, we must take care of our assets and protect our investments in order to support our core mission, as well as what we value — including the Permanent Fund, the Permanent Fund dividend, and public services — for the long haul. We are in a great debate about the future of our state. Tough decisions require digging deeply to evaluate spending and to ensure that funding is directed at that which, collectively, Alaskans value. And, we must remember: state spending, for the greater part, is an investment in Alaska’s economy, it’s people, and our future. Rep. Andi Story represents House District 34 in Juneau.

OPINION: Sound and fury with no assembly required

About the only good thing to say about the ongoing effort to recall Gov. Michael J. Dunleavy is that at least it won’t cost as much as the Mueller Report. In the end, though, it will end up being just as effective at reversing the outcome of an election. The opponents of the governor launched their effort on Aug. 1 to much fanfare and media coverage highlighted by a rally at Cuddy Park in Anchorage where a couple hundred people gathered just steps away from homeless camps as Democrat Rep. Ivy Spohnholz egged on the crowd with her fist raised like John Carlos and Tommie Smith. Lost in the excitement was much, if any, of a critical look at not only the high legal hurdles to overcome but the more relevant length of time this pointless fight is going to take. First, the recall pushers have to gather some 28,000 legitimate signatures to even deliver the petition to Lt. Gov. Kevin Meyer, who oversees the Division of Elections and is required to make the call on whether it passes legal muster. Meyer will rely on the advice of Attorney General Kevin Clarkson in deciding whether to certify the petition, with the odds of a positive recommendation somewhere in the neighborhood of President Donald Trump appointing Rosie O’Donnell as chief of staff. Once Meyer denies the petition for lack of meeting the legal standard for recall, the battle will move on to Superior Court with the losing party in that venue sure to appeal to the state Supreme Court. Should the Superior Court ruling go in the recall petitioners’ favor, they will be allowed to begin gathering the more than 71,000 signatures needed for a special election while the appeal is pending. Should it not, they won’t be able to start unless they ultimately prevail at the Supreme Court. Recent history on two high-profile cases that reached the Supreme Court show that even in an expedited timeframe the entire process would take nearly a year if not more to be resolved. When Sen. Bill Wielechowski, D-Anchorage, sued former Gov. Bill Walker in September 2016 for vetoing half of the Permanent Fund dividend, it was not until August 2017 that the Supreme Court issued its decision in favor of Walker. After former Lt. Gov. Byron Mallott denied the Stand for Salmon initiative from the ballot in September 2017 and was subsequently challenged in court, it was not until August 2018 that the final ruling was made. To think a case as monumental as the recall of a governor would take any less time is wishful thinking. As the petitioners note in their legal analysis, no recall petition against a statewide official has ever been certified in Alaska. Presuming the petitioners gather enough signatures in the next month or so, and they said they got to 18,000 within the first week, it likely won’t be until the fall until Meyer makes his decision and kicks off the court fight. Further presuming at least a year to receive a ruling from the Supreme Court, the soonest a recall election could take place would be sometime in early or mid-2021 depending on whether they are allowed to gather signatures while the appeal is pending based on how the Superior Court decides. That would be just more than a year away from the regularly scheduled gubernatorial election in 2022. Now we have entered the be-careful-what-you-wish-for stage of the recall effort for the petitioners. Should everything somehow go their way, a recall election is held and they are successful in giving Dunleavy the boot, they will have only succeeded in elevating Meyer to the governor’s office. Giving him more than a year to govern, including a legislative session, would provide Meyer an opportunity to present himself as a reasonable and drama-free Republican alternative much in the way the low-key former Gov. Sean Parnell benefited from simply not being Gov. Sarah Palin after her abrupt resignation in summer 2009 and he easily won election in his own right in 2010. That isn’t going to help Democrats win a statewide office for the first time since Mark Begich squeaked out a win over the unjustly convicted late Sen. Ted Stevens in 2008. Legal process aside, the recall petition itself is as thin as the paper it’s printed on even as the authors throw as much spaghetti at the wall as possible hoping just one piece sticks. When the top arguments by their own admission are Dunleavy’s failure to appoint a judge to the Palmer Superior Court within 45 days (he eventually did) and their unproven allegations of campaign finance disclosure violations, even they know they are throwing a Hail Mary hoping for a judicial miracle. If failure to follow a statute (cough, PFD formula, cough) and APOC violations are grounds for recall, then there are a lot of legislators who should be sweating. Further, the allegation of “incompetence” for an admitted error in a Medicaid funding veto is laughable. While the habitual rake-stepping of this administration has been described in this space as incompetent, that is not the legal standard for a recall. The petitioners even acknowledge this in their legal memo with the admission that the legal standard is “lack of ability to perform the official’s required duties,” which refers to situations such as medical incapacity. The leaders of this effort likely know all of this and understand the real purpose is to gin up enthusiasm for the 2020 legislative races. Those who actually believe this is going to work may also be interested in buying a bridge to Gravina Island. Andrew Jensen can be reached at [email protected]

GUEST COMMENTARY: The private sector, not the government, is what drives an economy

Despite what you might read in some recent media publications, Alaska’s economy is recovering. Jobs have increased every month since last year’s election, GDP is up by more than 3 percent, wages are climbing, and the private sector is showing a willingness to invest in Alaska. If you believed some of the recent doom and gloom headlines that have come out you’d think that state government is truly the economic driver of a state’s economy and without it, we are destined to fall off the cliff. In reality when looking at the entire operating budget and all fund sources, the reductions equate to about a 6 percent reduction from fiscal year 2019 …hardly fiscal Armageddon for a state government that has been living comfortably for several decades. Fortunately, most Alaskans understand that the private sector, not the government, is what drives an economy. It’s true that Alaska’s private sector has been through the wringer the past four years but businesses large and small are starting to get back on their feet. A smaller, leaner more efficient government will help build confidence as these businesses make investment decisions in Alaska. While there has been a bit too much “the economy may never recover” rhetoric, it was good to see that Anchorage Economic Development Corp. recognized some of the great things that are happening in our economy. Some of the highlights include statewide cruise volumes increasing by 16.5 percent as well as new developments on the North Slope adding an estimated 350,000 barrels per day in the next few years. Alaska is and will continue to be a resource state and AEDC nailed it when they reported North Slope investment is “an encouraging sign of optimism among producers.” Overall investment on the North Slope has increased from $4.4 billion in fiscal year 2018 to a projected $5.5 billion in 2020. However these new developments will require multi-billion dollars of additional investments by the private sector. We are realizing this rebound in investments is due in large part to the fiscal stability we’ve had in place for the past five years. Make no mistake, Alaska does not have the expertise or balance sheet to develop these resources. We will continue to rely on private sector investment to get our resources to market. They in turn must count on the state to put in place a stable budget that lives within its means. There was a substantial disconnect between how private sector and government reacted to the recent recession. The private sector was forced to react swiftly and immediately while government refused to face the reality of the recession. How can I say this? Just look at the actions taken over the past few years. Spending far outpaced annual revenue as we blew through $15 billion in our biggest savings account, the Constitutional Budget Reserve. At the same time family households and businesses small and large were forced to adjust their spending habits to adapt. During this time Alaska lost 12,000+ jobs of which a very small fraction were government jobs. Job losses are painful regardless of how they are funded but government was held harmless for the most part through the CBR spend down. It is more important than ever that we create a smaller governmental footprint to adjust to our new revenue realities. Alaska does hold nearly $70 billion of reserves, almost 25 percent of which is in unrestricted accounts. Those financial assets generate nearly $4 billion per year in earnings and represent a potential source of funding should a temporary reduction in revenues cause cash flow troubles. That’s on top of over $2 billion of other state revenues that covers nearly half of the cost of running our state government. This means we have a coverage ratio that is the envy of almost any other government. I met with all three rating agencies (Moody’s, S&P, Fitch) last week and they certainly recognize the vast financial and natural resources with which Alaska is blessed. They also give the previous legislature and Gov. Bill Walker kudos for passing Senate Bill 26 in 2018: the Percent of Market Value framework that accesses a portion of the Permanent Fund Earnings Reserve. However, they also correctly point to the statements made by those same politicians last year regarding SB 26 as only a “partial fix.” The PFD calculation has been faithfully followed for nearly 37 years. SB26 is a 12-month-old law and an incomplete by many legislators’ own admission. If there’s one thing that government can do to assist in this recovery it will be to get its fiscal house in order, which will allow the recovery to continue. Alaska is blessed with tremendous resources and will rely on private sector capital to monetize our resources. An unbalanced state budget will ultimately lead to confiscation of hard earned private sector dollars. It is imperative that we reduce the government footprint to put our state on solid footing for generations to come. Bruce Tangeman is the commissioner of the Department of Revenue.

GUEST COMMENTARY: The self-destructive fight over the PFD

Like many Alaskans, I’m dismayed at how the debate over the size of the Permanent Fund dividend has degenerated into cutthroat politics, pitting Alaskans against each other. I’ve always felt the small-town character of our state, where many people know each other, would allow us to work out our disagreements in a more reasoned manner. No more, it seems. Former Gov. Jay Hammond, who passed away in 2005, would be dismayed at how the PFD has divided Alaskans and corrupted our politics. Civil debate is no longer how to improve schools or solve homelessness, but about the size of the annual dividend check. It’s obvious, too, that many Alaskans, a lot of legislators and possibly our governor, have little knowledge of the history of the Permanent Fund and the dividend, and how they work. I forgive ordinary people who are busy earning a living for this, but I’m not so forgiving to elected officials who should know better. I was around the Legislature when the Fund was created by the Legislature and the voters in 1976, as well as in 1980, when the dividend was approved by the Legislature. You wouldn’t know it now listening to those who see the PFD as an entitlement, but the dividend was actually quite controversial when it was created, and almost didn’t pass the Legislature. Many Alaskans were true conservatives in those days and were dubious about the state handing out checks. Gov. Jay Hammond and a group in the state House pushed the dividends, but there was a lot of opposition from other legislators, particularly in the Senate, where there were worries about the dividend diverting money from sorely-needed public infrastructure. Hammond had to strong-arm senators with threats to veto the state capital budget to get the votes, and even then the margin was narrow. When the Permanent Fund was created in 1976, there was no discussion about a dividend. The idea was mentioned once during a legislative hearing by a consultant, but there was no public discussion. I served on an advisory board to Hammond and in a long series of public forums we held in the late 1970s on how Alaska should handle policy issues, including our new oil wealth, I don’t recall any mention of a PFD. All that was years ago, however. Memories fade and myths develop. One myth I heard a lot of during public meetings on the PFD this spring and early summer was that the dividend is the “people’s share” of state oil wealth. In a symbolic sense, that can be true — people are free to believe it because the PFD does represent a public sharing of some of the Permanent Fund’s income, but there is no legal basis of a private right to this public resource or that the PFD is guaranteed. In fact, when Congress passed the Alaska Statehood Act in 1959, our new state was given a generous land endowment, including mineral rights (the basis of future oil wealth), but the state was forbidden to sell or privatize its mineral rights. Leasing of extraction rights was allowed, however. which we do. This prohibition in the statehood act cuts against any notion of a private right, through the PFD, to an individual’s direct share of oil ownership. Congress’s reasoning for this is buried in the committee records, but the common belief was that congressmen were worried about the young state’s ability to support itself and wanted to encourage natural resource development to provide revenue for public services. The prohibition was inserted to forestall any temptation by Alaskans to sell off resources, other than through orderly leasing programs, to get quick bucks. In its wisdom, Congress was protecting us from ourselves. But while the state can’t legally grant a private right to oil income the Legislature, which has the sole authority to appropriate funds, can certainly develop a mechanism to share the wealth, which it did in creating the PFD in statute. However, our constitution gives the Legislature the flexibility to change any statute any time, including that for the dividend. The PFD also requires an appropriation every year in the budget, and despite the existence of a 1980s-era statute that guides the calculation of the dividend the amount is purely up to the Legislature. The existing formula was designed at a time when the Permanent Fund consisted mainly of investments in bonds and it worked well at the time. When the Fund diversified into stocks and other equities distortions began to appear but legislators essentially followed the formula over the years because the Permanent Fund was small at the time and the PFDs relatively modest, but most important because state oil revenues were ample. State leaders were preoccupied with other issues that were more important at the time and left the PFD formula alone. Then came 2016, when state oil revenues dived, and the Permanent Fund, its earnings and the PFDs had grown. The need to use some Fund earnings became apparent. Reducing the PFD was part of that, even though the dividend remained high by historical standards. We certainly face a political collision over this now. As he campaigned, Gov. Mike Dunleavy promised a “fully-funded” PFD under the old formula, which works out to about $3,000 this year. There is strong pushback from most legislators and many in the public, however. To pay for the large dividend, the governor has effectively cut the state budget through vetoes. Critics feel huge cuts to the University of Alaska and social services for needy Alaskans, through vetoes, aren’t worth the $3,000 PFD. Others, however, argue their families need the large dividends to help ends meet. It’s hard not to be sympathetic. It was interesting to me, however, that in hearings by the House Finance Committee on the PFDs last week, many who argued for the larger checks also said they would be willing to pay modest state taxes to help support public services. One person said she arrived in Alaska in 1977 and paid a hefty state income tax. If the taxes Alaskans paid then were adjusted for inflation, she said, they would bring $1.4 billion yearly into the state treasury. That’s easily enough to cover the budget deficit and even pay for the PFD. Alaskans now essentially pay no state taxes as individuals. The state is still supported by oil revenues and, now, a portion of Permanent Fund earnings. Other Americans look at our political fight over the PFDs and think Alaskans are nuts. They’re right. ^ Tim Bradner is co-publisher of the Alaska Economic Report and Alaska Legislative Digest.

GUEST COMMENTARY: Governor’s vetoes don’t reflect Alaska’s values

Over the past month, Rasmuson Foundation’s board of directors has urged our elected leaders to compromise and seek solutions that are best for Alaska when addressing the state’s $1 billion plus budget gap. We have stated our belief that a solution relying primarily on cuts will negatively impact critical services throughout the state, causing harm to many Alaskans. The Alaska Legislature responded with a budget that included $190 million of cuts, which was the largest decrease in year-on-year spending in state history, while preserving a high quality of life for our citizens. The governor’s vetoes announced June 28 will harm Alaska’s most vulnerable citizens and have a significant and detrimental impact on our state’s economy. The impact of these decisions will carry negative consequences well beyond this year, impacting generations to come. The budget he signed into law has set off a battle that addresses the soul of Alaska, who we are and what we represent, and the kind of state we hope to leave to future generations. Since 2016, Rasmuson Foundation has been conversing with Alaskans about the budget through townhalls, community meetings and online discussions. Research shows that a majority of Alaskans prefer a multifaceted approach to balancing our state budget. Yes, this includes reducing spending, but it also means exploring new ways to generate revenue and the use of Permanent Fund earnings will need to be part of the solution. The vetoes must be closely examined by our elected officials: • The defunding of housing and services for families and individuals experiencing homelessness is inhumane. It’s estimated that the cuts to Brother Francis Shelter, Clare House, Covenant House and AWAIC in Anchorage will put hundreds of people out on the street adding to an already intolerable homeless population of 1,100. • Very low-income seniors will be pushed into homelessness with the loss of their senior benefits. • The closing of Head Start programs for low-income families will decimate the childcare now available to working parents and force many into public assistance. • Seven hundred professionals will be laid off from the University of Alaska Anchorage and 40 student programs will be shuttered. It’s estimated that 3,000 students will be directly affected. Whether a local government, business, nonprofit or individual, we all benefit when we are able to plan. Businesses want certainty in regulation and taxation, which in turn allows them to build strategy. Individuals base decisions like buying a house on what they expect their annual household income to be. Dramatic changes — the sudden repeal of a law or elimination of a job — can cause chaos, not just on an individual level, but across entire communities. Nonprofits are no different. They build their budgets each year using the best available data. When you cut expenditures for homeless services, housing, legal assistance, telecommunications and healthcare as dramatically as was proposed by Gov. Mike Dunleavy, our nonprofits will have to drastically change the way they do business, and they’ll have to do it overnight. It will be the financial equivalent of the 7.1 earthquake that hit Southcentral last November. But this time, there is no state or federal agency to step in and help handle the emergency. That’s because Alaska’s nonprofits handle emergencies on a daily basis as they are the stopgap between homelessness and having a place to rest your head. Between hunger and having a warm meal. The place that houses women and children who need a safe haven. Total state general fund spending has been cut from almost $7.8 billion in fiscal year 2013 to about $4.5 billion in fiscal year 2018. It is change that has been painful but measured in annual steps. As a result, systems in healthcare, education, resource management and the arts continue to serve Alaskans while adapting to our new reality. Massive cuts will dismantle, in just one year, services, organizations, and programs that took decades to build. These cuts are a priority of the governor, but what about Alaskans? Do these cuts represent the philosophies and beliefs of Alaskans? Given the high level of community support across the state for nonprofits and education, from the arts to services for the poor and vulnerable, it seems unlikely that the depth of these cuts represents Alaska residents’ beliefs. Rasmuson Foundation promotes a better life for Alaskans. Our mission guides us every day to be part of a solution that improves the quality of life for all Alaskans. We believe notice is critical for Alaskans to plan, make the hard decisions and adjust. Reducing spending — dramatically and on such short notice — will significantly diminish certainty and confidence in Alaska. We can and must do better. The budget, as reduced by the governor’s vetoes, does not embody the values of the Alaska we all support and love. Diane Kaplan is the president and CEO of the Rasmuson Foundation.

OPINION: The messianic arrogance of isolation

“Any Given Sunday” doesn’t seem like Gov. Michael J. Dunleavy’s kind of movie, but Oliver Stone’s outlandish take on pro football does have its moments of profundity. Late in the film after a game when his offensive line allowed him to take a beating over his bigshot attitude, quarterback “Steamin” Willie Beamen walks into the sauna occupied only by linebacker Luther “Shark” Lavay. “Yeah, you led,” Lavay says. “But did anybody follow?” The question, like most are when the answer is obvious, was purely rhetorical. Dunleavy’s support has shriveled in the Legislature to a handful of members mostly from the Valley while traditional Republican Party allies across the business community have either refused to defend him or have directly come out against his vetoes and the House minority holding the capital budget hostage in exchange for a statutory PFD. Dunleavy has led. But how many are still following as he stakes his office on a minority of legislators barely large enough to sustain his vetoes and the oftentimes hateful rhetoric of his PFD-or-bust base in the Valley? Rather than recognize the lack of support for his proposals as evidence of a need to change course, Dunleavy has chosen the path of Valley Rep. David Eastman, who also arrogantly takes his isolation as a badge of honor and proof of his messianic righteousness. Instead of attempting to be a governor for all of Alaska, Dunleavy has chosen to be the governor of District E. This outcome is what many who supported Dunleavy feared when he hired former Republican Party Chairman Tuckerman Babock as chief of staff cum wartime consigliere. And, not to belabor the references to movies starring Al Pacino, he has not governed like the cool-headed and savvy Michael Corleone but as a combination of Sonny and Fredo mixing vindictiveness with incompetence. Dunleavy’s single-minded focus on a $3,000 PFD has leveled the once high ground of sustainable budgeting and respect for the rule of law with his vetoes ranging from punitive to petty to preposterous. Not that the legislative leadership is blameless. Far from it. The aimless stewards of the House allowed the PFD issue to fester for months rather than addressing it or showing even a modicum of respect for the minority members whose votes they now need to fund the capital budget and overturn some or all of Dunleavy’s vetoes. The Senate is led by Cathy Giessel, who was perfectly willing to run on a full PFD with back payments when she faced a tough reelection battle in 2016. “There’s a difference between looking at options and grabbing someone else’s money,” Giessel told the camera in a video that is still live on her 2016 reelection Facebook page. “That’s what Gov. Walker did. He grabbed your money. That money grab didn’t solve anything. A money grab is not a solution. “Sen. Mike Dunleavy is proposing a solution that would give that money back to you. I support that solution and we’ll be working with him in January to see that done. You see, you deserve to have that money back. Alaska deserves a real solution to the budget crisis.” Alaska’s budget situation wasn’t any better in 2016 than it is now — in fact it was worse — but Giessel has done a complete 180 on what she successfully ran on just three years ago. In that regard, Dunleavy deserves credit for trying to deliver what he promised. But in reality the state is not with him as measured by the best possible indicator, which are the votes cast in the Legislature that he has been on the wrong side of all year. Dunleavy could have introduced a sensible four-year plan to gradually reduce government spending to sustainable levels but he blew his chance for real budget reform when he attempted it all in one bite and in such draconian fashion that he spawned the bipartisan majority in the House that has frustrated him at every turn. It’s been written in this space that the PFD is not a suicide pact, but right now Dunleavy and Babcock are mixing the punch with their Valley cohort and intending to force it down everyone’s throats if they don’t get what they want in spite of their lack of popular support. Time is running out for a compromise with the least fortunate among us being turned out to the streets and the University of Alaska declaring the equivalent of bankruptcy a month away from the fall semester. Dunleavy and his dwindling number of allies would do well to remember one more line from “Any Given Sunday” delivered by Pacino’s Coach Tony D’Amato to his players facing one last shot to keep their season alive: “Either we heal now, as a team, or we will die as individuals.” Andrew Jensen can be reached at [email protected]

GUEST COMMENTARY: Dunleavy governing by coercion instead of persuasion

The Alaska Legislature’s failure to override Gov. Mike Dunleavy’s budget vetoes would be an interesting topic for a political science class if the consequences were not so devastating. Dunleavy has followed the path of minority rule, and minority rule in a democracy is always of interest to students of politics. How do you justify minority power over the majority and what mechanisms are available to implement it? In classrooms, students routinely are taught the importance of protecting minority rights. American history, students learn, is replete with controversies over the limits of majority rule. The U.S. Constitution itself was born of one of these controversies. In 1789, how could tiny Rhode Island protect itself from the behemoth next door, Massachusetts? Equal representation in the Senate was one way. The history of the struggle to end slavery can be seen as a protracted battle over of the property rights of the slave-holding minority. Slaveholders built an intricate intellectual and legal structure to maintain their minority power, backed by force. The American majority stripped them of their slaves not after debate but through violence — the Civil War. In Alaska, Gov. Dunleavy has the mechanism for minority rule over the budget — the veto — but does not have a majority of the Legislature behind him, nor a majority of the public. Legislators say they have received thousands of messages damning Dunleavy. Civic and business leaders have spoken out against the cuts to the university, Medicaid, public schools, the arts and old folks’ benefits. I would wager the majority of paid lobbyists, so often trashed for everything that smells in Juneau, are against the vetoes. They have too many clients who directly benefit from government spending and the stable political system Gov. Dunleavy upended. The governor’s oft-repeated justification for the cuts is: There is no choice. Government doesn’t have the money to do what it did in the past. Governments always have a choice, no matter how unpalatable. Subsidizing oil companies is a choice. Rejecting all forms of state taxation is a choice. Demanding a $3,000 Alaska Permanent Fund dividend while laying off thousands of workers is a choice. Gov. Dunleavy has said that it is fine by him if the cuts shackle government — and that is what he intends to do, while championing the genius of the free enterprise system as the solution to our difficulties. Whatever free enterprise can do, it will never respond rapidly enough to rescue teens whose college plans have been ruined. Don’t misunderstand; The governor has Alaskans who agree with him - maybe a third of the Legislature and a chunk of public opinion perpetually riled up about big government. In the 2018 election, the governor received 51.44 percent of the vote. It is a good guess there are people who picked Dunleavy who now think “I voted for the guy because he was the best choice at the time. I didn’t expect him to eliminate my job.” By governing via veto, Gov. Dunleavy has abandoned persuasion for coercion, and he has magnified his weaknesses in the rest of the legislative process. He can’t pass Constitutional amendments by himself. He can’t appropriate money by himself. Non-budgetary legislation he introduces will face a new level of scrutiny and hostility from burned lawmakers. Governors understand that they will make enemies. Bill Walker knew this when he reduced the amount of the Alaska Permanent Fund dividend. But governors rarely set out to make enemies as Dunleavy has. I have heard people say Gov. Dunleavy is a tool of the Koch brothers, the right-wing billionaires. There is some evidence for this, given Dunleavy’s relationship with the Koch-created group Americans for Prosperity. But however close Dunleavy is with the brothers, it is clear that he understands two of the core Koch beliefs, rarely expressed publicly by the Koch family members themselves but commonly heard from the university and think-tank intellectuals who have joined the Kochs. First, to succeed, you must use the legislative rules to maximum advantage and then change the rules to your advantage through Constitutional amendments. Second, killing major state-funded programs is never popular with a majority of voters. Too many people (“takers, not makers,” in Koch-speak) benefit from student loans, Medicaid, power cost subsidies. A referendum on dismantling the university would never pass. Gov. Dunleavy knew this when he began his veto review. The cries of pain were expected, even those of establishment Republicans like Senate President Cathy Giessel. Gov. Dunleavy has had his way, but he has paid a price - to his reputation, to public respect for his office. He has been especially hurt by his inability to either show (or fake) empathy for the people he is damaging. In candidate Dunleavy’s 2018 election-pamphlet statement, he concluded “Too many politicians have squandered the trust of the people with broken promises on the PFD, taxes, the budget, and other issues. I am committed to earning that trust back, the only way I know how; by keeping promises and commitments.” At the moment, Gov. Dunleavy’s trust department is earning a rate of return of about zero. Michael Carey is an Anchorage Daily News columnist. He can be reached at [email protected]

GUEST COMMENTARY: Governor holds UA future in hands with veto pen

In this austere budget environment, and after intense scrutiny, the Legislature passed a budget that includes a reasonable $5 million general fund reduction for the University of Alaska. In the next few days, the governor will decide whether the state will continue its investment in the university — allowing Alaskans of all ages to carry on, uninterrupted, with their vocational, continuing, or higher education — or veto a large portion of the UA budget. Make no mistake, the university cannot absorb an additional, substantial reduction in state general funds without abruptly halting numerous student career pathways mid-stream, eliminating services, or shutting down community campuses or universities. An additional reduction of even $10 million — on top of the $51 million in cuts we’ve already taken — will mean the discontinuation of programs and services with little or no notice, and that in turn will have ripple effects, damaging UA’s ability to generate revenue and causing even greater harm across the state. Severe reductions in state Undesignated General Funds, or UGF, as originally proposed by the governor would require closure of hundreds of programs and affect thousands of students. To provide context for such a reduction, $134 million is nearly the equivalent of the total UGF budget for University of Alaska Anchorage and UA Southeast combined. At that level we may need to cut whole programs or close one or more of our universities, UAA, UA Fairbanks or UAS. But a university system is not like a typical corporation or factory; it needs a critical mass of faculty with different specialties to provide a quality education. Eliminating whole programs to reduce costs does not eliminate our responsibility to affected students. We are obligated to complete their programs, which carries costs that delay any immediate savings. The university’s total budget this year is comprised of $327 million from the state (about 40 percent). The remainder comes from tuition and fees paid by our students, research grants and contracts, proceeds from land development, and private donations. However, those private revenue sources will inevitably be harmed if general fund support is reduced. Prior cuts have had the effect of reducing opportunities for our students and services to our communities, while increasing tuition. The cumulative reduction in the university’s budget of $195 million over the last five years has resulted in significant reductions in administrative staff and services, to the point that further reductions will compromise UA’s ability to meet its many obligations. Indeed, the university’s statewide administration, which provides consolidated support services, has taken a 37 percent cut over the last several years, almost triple the average cut across the university system. Still, the university remains a highly accessible and affordable path to an excellent education and the opportunities that only education can provide in the workplace. However, that will not continue with further substantial reductions. We have had numerous meetings with the governor and his team, demonstrating how the university has focused its mission, reduced costs, increased private fundraising, developed strategic plans with measurable goals, created a task force to look at the university’s structure, and developed an exciting vision for how the university enables Alaskans to create a strong and sustainable future for our state. The governor was receptive, and I think impressed with the work that’s been accomplished by the university. However, he may feel compelled to follow through with his original proposal to reduce the university’s appropriation. As a result, if the governor vetoes a substantial amount, I ask that you contact your legislator to request that he or she consider overriding that veto. The educational investments and opportunities for thousands of Alaskans will depend on it. Jim Johnsen is the president of the University of Alaska.

GUEST COMMENTARY: America’s energy, tech and defense future needs mining

As the recent trade war with China has escalated, Beijing has implied that it may retaliate by withholding rare earth minerals. Such a strategic vulnerability — and America’s alarmingly high reliance on imported minerals and metals — is now in the spotlight for all the world to see. China’s rare earth threat underscores just how perilous U.S. mineral import reliance has become. While rare earths are currently the focus, America’s overall reliance on imports of these minerals is indicative of a far larger problem. According to the U.S. Geological Survey, the U.S. is now 100 percent import-reliant for 18 minerals and metals, and 50 percent or more reliant for another 30. Despite ever-growing demand for these minerals and metals in defense technologies — such as stealth and night vision technologies — or consumer goods and green energy technology, U.S. import reliance has doubled over the past 25 years. Notwithstanding the nation’s vast mineral reserves, mining investment in the U.S., and production of essential minerals, has steadily declined. The atrophying of the nation’s materials supply chain shouldn’t just be chalked up to the march of globalization and large-scale economic integration. It’s also the product of a decades-long adversarial approach to domestic mining that can be seen in federal land-withdrawals and a mine permitting process that now regularly stretches to 10 years or more. Modern, responsible, and well-regulated mining should be encouraged in the U.S., not pushed aside. To meet the material needs of our advanced tech, manufacturing, energy, and defense sectors, America will need almost exponential growth in the mining and refining of a vast array of minerals and metals, many of which can be produced here at home. While materials recycling should be a key part of meeting this demand, it’s hardly a cure-all. It’s past time for the U.S. to place strategic importance on mining and the greater materials supply chain. China is already years ahead in this industrial arms race, prioritizing mining as a cog of its industrial policy. For example, China is the top resource holder for 10 of the minerals and materials vital to wind, solar and battery technologies. A new report from the Commerce Department stresses the urgency of action. It warns that the U.S. has become “heavily dependent” on foreign sources for 31 of the 35 minerals recently designated as “critical” by the Department of the Interior. While the U.S. has fallen far behind, there are signs of hope. Bipartisan legislation introduced by Sen. Lisa Murkowski and Sen. Joe Manchin, D-W.V., The Minerals Security Act, is an important step forward in responding to China’s dominance and beginning to right our supply chain. The legislation would streamline a variety of mine permitting and regulatory processes currently sapping U.S. mining competitiveness. Their leadership in beginning to address this issue deserves strong, bipartisan backing. The technologies of tomorrow — whether they’re energy technologies or the defense applications that keep us safe — are more materials-intensive than what they’re replacing. It’s essential we build a supply chain to support them. Failing to do so won’t just be an economic missed opportunity. It would be a geopolitical blunder that undermines our global leadership. The time for decisive action to encourage domestic mining, and rebuild our industrial base, has arrived. Retired U.S. Army Brig. Gen. John Adams served more than 30 years in command and staff assignments as an Army aviator, military intelligence officer, and foreign area officer in Europe, Asia, the Middle East, and Africa. He is president of Guardian Six Consulting.

OPINION: Ignoring session call latest offense for a scofflaw Legislature

The zombie legislative session that will not sine die staggers on aimlessly, consuming the brains of anyone trying to make sense of what’s going on and swallowing the souls of those still naïve enough to believe in following the laws as written. In the latest escalation of a race to the bottom, Senate President Cathy Giessel and House Speaker Bryce Edgmon have thumbed their noses at Gov. Michael J. Dunleavy’s call to a special session in Wasilla to decide the fate of the Permanent Fund dividend despite admittedly not having the votes to call themselves to Juneau. A great irony of the 31st Legislature will be going down in history as one that managed to pass a new tough-on-crime bill while simultaneously breaking as many laws as possible. The 90-day time limit on legislative sessions approved by voters? Pffft. The 35-year-old statutory formula for calculating the PFD? Yeah, right. No per diem without an operating budget? We didn’t really mean that. The law says the governor can choose the site of a special session? We. Don’t. Care. Most galling of all is that when the leaders of the Legislature decide to ignore a law they hide under the claim of constitutionality. Sometimes they don’t even bother going that far. “It’s a gray area,” Edgmon told James Brooks of the Anchorage Daily News about the leadership’s authority to ignore the governor’s call, but they plan to conduct some mutant combination of floor sessions in Juneau and committee hearings in Anchorage anyway. These leaders would be a lot more credible when it comes to defending their turf if they’d shown any competence at doing their jobs or a bare minimum respect for the laws they’ve passed. Instead, the scofflaws have only been emboldened over the past four years after escaping any repercussions for skipping out on their lease at the Downtown Anchorage Legislative Information Office under the guise of the “subject to appropriation” clause. The result of that decision is that the Legislature has spent $24 million on the Wells Fargo bank-turned-LIO but still has no place to actually conduct a special session in a single building on the road system. Many people cheered that decision to abscond from the Downtown office and leave the owners to face foreclosure on a $28 million loan taken out on the faith and credit of the Legislature, and likewise approved of the subsequent refusal of former Gov. Bill Walker to fully pay off the year’s balance of refundable oil tax credits without any warning to banks or the industry. The owners knew what they were doing, some argued. The companies knew the terms, some excused. Now some of these same folks are squealing about not following laws governing the PFD or per diem. Only now do they realize that just because something is legal doesn’t make it right. Only now may they realize that the decision to take the easy way out on the Anchorage LIO without really saving any money was the gateway drug to funding government by cutting the PFD. Once the Supreme Court enabled the Legislature to ignore its formula on the PFD, it has been a free-for-all on gimmicks and budget shortcuts and disregard for the law, even those that are barely a year old. Their “solution” to the tax credit liabilities ran afoul of constitutional questions and is headed for the Supreme Court. So is their claim about the legality of forward “funding” of education without actually funding it and their assertion that they don’t have to convene a session according to the governor’s call. Perhaps it’s only fitting that the Legislature keeps getting dragged into court. That’s where most scofflaws eventually end up. Andrew Jensen can be reached at andre[email protected]

GUEST COMMENTARY: Narrative of fear doesn’t need facts to win

Alaskans know that the future of our state depends on our ability to responsibly extract natural resources. Perhaps more certainly than citizens of any other state, we understand how our economy and livelihood depends on whether we are allowed to utilize our own land as we please, without interference from the Lower 48. That’s why recent attempts from some politicians in Washington to limit the rights of Alaskans are so counterproductive. Just last week, Former Vice President Joe Biden rolled out an energy plan that included a ban on offshore drilling in the Arctic. Senators and representatives from states like Rhode Island and Maine – Republicans included – have rolled out legislation to do the same. Recent history suggests that every major development in Alaska will be “controversial” going forward. The proposal to expand Alaska’s economy by permitting responsible development in ANWR is just one example. Yet there is nothing wrong with that word; it simply means there are strong opinions on both sides. But “controversy” isn’t a reason to stop progress. Here’s why: Every major development will be met by a narrative of fear perpetrated by its opponents, often environmental activist groups. Stoking fear is the easy way to try and halt development. It doesn’t rely on winning the facts or making the best case – it’s all about denigrating opponents and being the loudest voice in the room. The funny thing that typically accompanies these fear-inducing declarations? They’re nearly always ended with a plea for campaign donations. Environmental activists do this because it works. Fear-mongering produces a fortune for the groups who use them. In Alaska, we’ve seen these narratives since before I was born. In 1968, with the plan to build the Trans-Alaska Pipeline System underway, eco-groups wrongly predicted the end of caribou herds and the destruction of the pipeline due to earthquake activity, and the demise of Alaska Native cultures. Check your watch – it has been 51 years, and none of those have happened. You may look at those predictions now and see them as absurd, but many believed them in the moment. After all, those statements preyed on many peoples’ fears. Eco-groups are using the same tactics today, but with even larger platforms on social media, e-mail blasts and online-organized activist rallies. They use these tactics to stifle development, often by trying to halt the already-long permitting process that accompanies major projects. There are rules for approving resource projects. Lots of requirements. Lots of time for the public to weigh in. The rules tell you the terms and how to prepare. For mines, there is a book printed by the Environmental Protection Agency, titled EPA and Hardrock Mining: A Source Book for Industry in the Northwest and Alaska. This book outlines the requirements for pursuing approval for mining projects, and knowing the information in the book is critical to the prospect of having any mining opportunities in our state. It simply costs too much money and time to enter a project without a clear understanding of the requirements. For those willing to undertake the process, years and several million dollars (at a minimum) of scientific and technical work will be required. Impact studies must be done, branches of the federal government must approve, and the public has plentiful opportunities to comment. All this must be done while fending off the alarmists hard at work on their narrative of fear. As Alaska’s future resource opportunities develop, here’s hoping that the activist groups who speak factually-inaccurate, emotionally-charged fear in hopes of dimming Alaska’s bright future are seen for what they are. If fear is given credence over fact, Alaska will lose out on significant opportunities. Rick Whitbeck is the Alaska State Director for Power the Future, a nonprofit advocacy group focused on energy and resource development.

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