Opinion

Time for Walker to change course

In the past few years, some of our state leaders, particularly when discussing the state's fiscal challenges, have been trying to convince the public that the days of oil pumping billions of dollars into the state's economy and coffers is over. This notion seems to have taken root in the current administration, as evidenced by the fact that Gov. Bill Walker has failed to discuss, as part of a broader fiscal plan, how we can get more oil running through the Trans-Alaska Pipeline System. Walker's inability to develop policies that will result in additional production is odd given that more oil through TAPs means more funding for our schools, first responders and social service agencies. More oil would also bolster the Permanent Fund, provide good paying jobs, and pump billions of dollars into the Alaska economy. Conversely, the continuing decline of oil production almost certainly guarantees that the state will never be able to balance its books, businesses will shutter, and economic opportunities will be lost. But declining oil production, a contracting economy and a government unable to pay its bills do not have to be our fate. Alaska's oil and gas endowment remains staggering. New discoveries on the North Slope, led largely by independent companies, demonstrate that oil production can continue to play a vital role in solving our fiscal crisis and reviving our economy. In particular, Caelus Energy, one of the handful of independents risking hundreds of millions of dollars in Alaska to find new oil, announced a tremendous discovery holding more than 2 billion to 3 billion barrels of recoverable oil on the North Slope, which would make this field the second largest discovery in Alaska's history. This follows the announcement that Armstrong Energy's Pikka Unit may hold over a billion barrels of recoverable oil and could be, according to the Department of Natural Resources, the third largest field ever discovered in Alaska. These discoveries, coupled with the considerable amount of reserves in existing legacy fields and the new developments being pursued by ConocoPhillips, Hilcorp Energy and Brooks Range Petroleum Corporation could result in an additional 300,000 to 500,000 barrels of new oil production per day within the next five to 10 years. Those kinds of numbers translate into billions of dollars for our state's economy, general fund, and Permanent Fund, thousands of jobs for Alaska workers, and a bright future for our children. While the potential benefits associated with these new discoveries are huge, the challenges are daunting. To get the oil developed requires tens of billions of dollars in investment, thousands of trained Alaskans, permits from federal and state agencies, and fending off the inevitable litigation from environmental groups. Perhaps the biggest challenge Alaska faces is attracting the capital required to develop these projects. Anyone who has ever tried to get projects developed in Alaska knows that investors are reluctant to spend money here because of high costs and long timelines and because projects become imperiled by permitting delays, litigation, and shifting state tax policies that make it impossible to determine the economics of a particular development. Unfortunately, Walker is not rising to the challenge to develop credible policies that will ensure these new fields move into production in a timely manner.  Instead, Walker has been spending all of his time on a liquefied natural gas project and issuing statements about how he is going to convince the Obama administration to open up the Arctic National Wildlife Refuge. Although most Alaskans can agree that both of those would be a good thing, none of this will happen anytime soon, if ever. Further, his erratic attempt over the past two years at tax reform has spooked investors who have frozen lines of credit to the companies exploring and developing our state's resources. This in turn has resulted in hundreds of millions of dollars that were poised to be invested in Alaska fleeing the state with lenders blackballing Alaska and, as they leave, swearing never to invest here again. Most troubling of all, the Walker administration has proposed additional changes to the tax regime that would destroy the economics of many new oil developments and would force the new independents to delay investment decisions, or leave the state, because they cannot find investors willing to risk money in Alaska. Walker's proposed tax reforms, unfortunately, suggest an unfamiliarity with a fundamental law of economics: Companies are not going to be able to raise the capital necessary to pursue risky projects that our tax laws have made unprofitable. This is not to say that we cannot change our tax laws — it is apparent that changes need to be made to create a more balanced system at all price levels. But we must be careful that any changes do not drive away investment and delay the development of projects that will rejuvenate the state's economy and help pay for essential services. The bottom line is that in recent years independent companies have made significant oil discoveries on the North Slope that could keep oil flowing into TAPS for years to come. The development of these fields will also ensure that the state has a vibrant economy, a competitive North Slope, and the money to help close the deficit. Walker's actions, however, indicate an indifference to whether these discoveries move into development in a timely fashion. Worse, he has embraced tax policies that kill the economics of these projects and that will result in returning control of the North Slope to the three legacy producers. Moving forward, the choices facing Walker are simple. He can either continue on the present unproductive course of discouraging investment and keeping our resources buried in the ground or he can advocate for tax policies that create a positive investment climate and promote responsible development of our natural resources. Walker's legacy will largely be determined by which option he chooses. Jonathan Katchen works at a law firm in Anchorage that represents independent oil and gas companies operating in Alaska.

Democrats play by the Lombardi rule

“Winning isn’t everything, it’s the only thing.” The well-known motto of the late great Green Bay Packers coach Vince Lombardi is a philosophy Democrats understand and practice ruthlessly. The GOP, on the other hand, is content to play the Chicago Cubs’ role of lovable losers, but without the lovable part. If that wasn’t apparent before, it should be obvious now as we lurch toward the end of a presidential campaign pitting the Worst Candidates of All Time. In a matchup of the crude versus the criminal — and depending on the day you can decide which is which — there is only one side that is determined to win no matter how horrible, awful and downright terrible their candidate is. There’s no other way to explain anti-Wall Street crusader Elizabeth Warren rallying with Hillary Clinton, the candidate who’s taken more money from Wall Street than anyone in history. How else to figure the once-revolutionary Bernie Sanders telling his supporters to forget about Clinton’s coordination with the Democratic National Committee to ensure his loss in the primary or ignore the revelations about what she’s said behind closed doors for millions of dollars in “speaking fees” that would be known as bribes in a quainter time. Women by the thousands still gather to cheer wildly for Bill Clinton despite his 40 years of history abusing them while his wife quarterbacked the destruction of his victims. Republicans, meanwhile, are falling over themselves in a stampede to the microphones to express their distaste for Donald Trump and assert their sacred honor that amounts to little more than a naïve and ultimately futile belief that doing so will ensure they can retain some entrée into the cool kids club of the D.C. establishment. Fighting on your opponents’ terms and their ground is the surest way to lose, but the GOP is incapable of even holding the high ground it possesses when Trump alleges that the election is rigged. The faux fainting spells of the Democrats over this supposed threat to our system would be laughable were it not for every Republican politician on the planet lining up with their opponents to denounce their own candidate. This is the party who claimed for eight years that George W. Bush was an illegitimate president who was “selected not elected” by his daddy’s appointees to the Supreme Court and his brother’s administration in Florida. This is the same party that floated conspiracy theories about Diebold voting machines in Ohio being no doubt manipulated from Dick Cheney’s underground lair to defeat John Kerry in 2004. For years the likes of Sanders and Warren have been shouting about a system being “rigged” in favor of the so-called 1 percenters. Yet rather than throw all this back in the Democrats’ faces as shameless hypocrisy, the Republicans play along with their game. Let’s get real. The IRS is rigged. The Department of Justice is rigged. The EPA is rigged. The VA is rigged. The FBI, in making the most political decision in its history to not forward a case against Hillary Clinton for her multiple and years-long violations of basic record-keeping and national security laws, is rigged. Oh, but Trump is dangerous? What’s dangerous is that electing Clinton is a complete abdication of the idea that we have a rule of law that’s applied equally. What’s dangerous is the weaponization of the federal bureaucracy against the political out-party that has permeated the Obama administration and will no doubt expand under a woman who will stop at nothing to win power and use anything at her disposal to silence, threaten and punish her enemies. What’s dangerous is that what’s left of the opposition party has thrown their lot in with her in the name of preserving some kind of integrity or status they never had. Ask John McCain, who was once a favorite of the media and Democrats (but I repeat myself) as long as he was a thorn in the side of Republican leadership. By the time they were done with him in 2008 he was a doddering old fool who couldn’t work email or even remember how many houses he had. Ask Mitt Romney, quite possibly the nicest and most decent human to ever run for president, who by the end of 2012 was an Ebenezer Scrooge caricature of a robber baron intending to ship every job out of the U.S., give the newly unemployed cancer and strap Hispanics to the top of his car as he drove them back into Mexico. We don’t even need to get into the Democrats’ portrayal of George H. W. Bush and his son as evil incarnate. Now all these Republicans are suddenly the Democrats’ favorites because they’ll throw shade on Trump. The fact is it doesn’t matter who the GOP nominates, this year or ever. The Democrats and media are going to destroy them. It’s better to go down swinging than to try to curry favor with an approved opinion in the false hope you’ll be the last to swing. Trump at least understands this. The GOP would rather lose with honor, but they’re still going to be losers. Andrew Jensen can be reached at [email protected]

What’s to gain for those funding political attack ads?

Wow! You can’t turn on the radio or TV these days without hearing a negative campaign ad. The election races this year are more heated and hateful than we have seen in years. It’s easy to recognize that much of what is being said in the ads is nonsense, but nonetheless, people and political action committees are spending a huge amount of money to get us to believe things that just aren’t true. So I have to ask, what’s in it for them? What do they get in return for the “free” advertising supporting certain candidates, and how is any of this good for Alaska? This is an incredible period in our young state’s history. Budget deficits are high and state cash flow is at the lowest level in decades. The near-term outlook isn’t rosy either, as oil prices are predicted to stay lower for longer. If you believe the barrage of campaign ads, the problems that Alaska faces today were caused by a handful of current Legislators in Juneau, rather than being the result of sudden price collapse in the largest sector of Alaska’s economy – oil and gas development – which generates nearly 90 percent of the state’s income. Those paying for all the campaign attack pieces don’t want you and I to think rationally and try to solve the state’s problems with common sense solutions and good business practice. Instead, they want us to react emotionally and behave like school kids circled around the playground bully chanting “fight, fight” while he kicks dirt in the face of the class nerd. That makes great theatre, but it doesn’t solve Alaska’s budget problem and it doesn’t make the state a better place to do business or raise a family. What does make Alaska better is having strong leaders and elected officials who aren’t afraid to look past the drama and do the hard work necessary to find real solutions and fix the problems we face. There is no magic bullet or quick fix here. Alaska has got to reduce the size of government, especially in those areas that do not generate revenue for the state or serve a core government function like education or public safety. And Alaska has got to have a stable, balanced tax policy that lets the oil industry know that we very much want them to be here, but that we have got to mind our own checkbook, too. Yet it seems those behind the campaign attack ads want us to believe that no one in Juneau has been working to find solutions, and that simply is not true. During the last Legislative session, members of the House and Senate took action to reduce the size of government and cut reimbursable oil and gas tax credits that had simply gotten to be too much for the state to bear. Sen. Cathy Giessel and Sen. John Coghill both worked to find a comprehensive bill that overhauled the oil and gas tax credit system, yet retained incentives critical to advancing new oil developments on the North Slope. This approach also allowed Alaska to maintain its reputation and credit worthiness. Strong, resourceful leaders like Giessel and Coghill are just the people we need to keep in Juneau. People who aren’t afraid to take some heat doing what is right for Alaska, even if it means facing a firestorm of political ads aimed at twisting the truth and scaring us into believing that new taxes and changing the Permanent Fund are the only solutions. So, the next time you hear another attack ad on the radio, stop and ask yourself what those who paid for that ad stand to gain from unseating someone like Sen. Giessel. Do they really have your interests and the interest of a thriving Alaska at heart, or are they just trying to load our Legislature with people they can manipulate? Corri Feige is a geophysicist and former Director of the Division of Oil and Gas for the State of Alaska.

Walker went Bulworth at Alaska Chamber

“Going Bulworth,” if you don’t know, is an expression for politicians who say what they actually think. It comes from the 1998 movie starring Warren Beatty about a disillusioned U.S. senator who starts drinking at campaign events and rapping about single-payer healthcare. Gov. Bill Walker went Bulworth in front of the Alaska Chamber. At its annual meeting in Kenai on Oct. 12, Walker took the podium unshackled from any need to impress a group that was among those who gave him a grade of “D” on its business report card from the 2016 legislative session. “Don’t give me grades,” Walker said at one point. Minus the inebriation and the rapping, that was Walker, who angrily told people not to criticize his cabinet officials, said he doesn’t care about approval ratings, promised to introduce tax increases next year that will be bigger than those he proposed this year, and then cried poor about the pay cuts he and his appointees have taken to enter public service. Walker, who sold his law firm to Robin Brena upon taking office, said he’s taken a “90 percent” pay cut to be governor. He said he’s convinced people to take less pay to leave the private sector to join his administration. Yes, Walker said this in front of a room full of people from the oil industry that has shed 3,000 jobs over the past two years while state government payrolls haven’t been cut by a tenth of that. We don’t know exactly what Brena paid Walker and his wife Donna for the firm, but financial disclosures put the number between $200,000 and $400,000 for the firm and that they sold the downtown office for between $400,000 and $1 million. We do know that Brena, who was the chair of Walker’s oil and gas transition committee, is working to defeat pro-business candidates in the Nov. 8 election and recently wrote a newspaper column claiming that there’s an additional $1 billion to $3 billion to be wrung out of the North Slope oil producers who’ve been bleeding cash all year. Walker had to be prompted through questions to simply acknowledge the Oct. 4 announcement by Caelus Energy executives that believe they’ve discovered a huge oil reservoir at Smith Bay that could produce 200,000 barrels per day. The governor downplayed the find, saying it’s at least 10 years away from production and located far from the trans-Alaska Pipeline System. From the governor’s perspective, a project that needs a 125-mile pipeline to reach existing infrastructure to deliver to established markets is a longshot but his $45 billion-dream of an 800-mile gas pipeline with no existing market has been “ignited” and is full steam ahead now that the state is in charge. It’s clear Walker hates talking about Caelus, or the Armstrong Energy project at Nunashuk that could produce 120,000 barrels per day. The two projects combined represent more than 60 percent of current TAPS throughput, so why could this be? The answer isn’t difficult to figure. When Walker is forced to talk about the recent discoveries, not only is it a rebuke to his desire to repeal the law that brought Caelus to Alaska in the first place, but it shines a light on his policies of raising taxes on production and shafting businesses out of hundreds of millions in tax credits owed by the state through his irresponsible budget vetoes in the last two years. Regarding the tax credits, Walker said the state has to “balance our checkbook” and therefore vetoing the appropriation was the right decision. He said potential investors in Alaska want to see its fiscal house in order before putting money in the state. How Walker is going to convince anyone that refusing to pay money owed is a sign the state is a safe place to invest is one thing, but more immediately it is oblivious to how companies who are owed money by the state — for Caelus, that’s $200 million — are supposed to balance their checkbooks. Want more proof that Walker doesn’t want to talk about the positives in the oil business? Since Aug. 24, his office has issued at least nine press releases with 2,267 words about the Alaska LNG Project that amount to little more than hope and a hill of beans. When Caelus made its Oct. 4 announcement about Smith Bay, Walker issued a three-sentence statement totaling 65 words. Two days later when ConocoPhillips announced it has ordered a new extended-reach drilling rig from Doyon Ltd., Walker managed a whopping 63 words. Walker opened his remarks to the chamber by saying he’s happy to take all the blame for unpopular decisions while giving all the credit to others. He then proceeded to say how many people are thanking him for what he’s doing and went on to blame the Legislature for not enacting his fiscal plan. No matter what Walker says about not caring about getting credit, the press releases from his office reveal he’s desperate to show how much progress he’s making on AK LNG. The lack of enthusiasm for projects he can take no credit for — and is in fact actively working to undermine through his tax policies — also speaks volumes. On Oct. 12 in Kenai, he delivered the message loud and clear. Andrew Jensen can be reached at [email protected]

Vote and get others to vote too

There’s a saying that goes “Get involved in politics or get out of business.” That doesn’t mean you need to run for office, though many of you reading this would be good, no-nonsense politicians. What it means to “get involved in politics” is to learn about the issues. It means getting to know who your elected representatives are and what they stand for. If you agree fundamentally with them, then support them any way you can. That support can include contacting them and donating time to their campaign, a sign in your yard and attending a fundraiser or getting online to donate. Most of all, vote for them. If you don’t vote for your own interests, who will? The Nov. 8 election may be the most important election in recent years. You hear that every election, but this one is different. It is important because we have the opportunity to change the direction of the country for at least the next four years, and hopefully beyond. The national press will be calling the election long before the polls in Alaska have closed. But just because the presidential election will have been decided before our polls close, don’t let that stop you from voting. Alaska has a lot at stake as we elect a U.S. senator, a congressman and 50 legislators. For the past few months, candidates have been spending afternoons, evenings and weekends walking, going door to door, knocking and talking, being received warmly or getting a door slammed in their face. When they’re not walking, they’re home stuffing mailers in envelopes, studying precinct maps, answering the countless surveys sent out by as many special interest groups. They’re making phone calls when they can’t walk and they are having fundraisers to help support their campaign. They’re going to so many events and meetings; they start thinking about joining Meetings Anonymous. The Aug. 16 Primary Election had one of the largest slates of candidates we’ve seen in years. In 11 of the races, there was no opponent in either the primary or general election. Just filing for office in May made them a winner. After the August primary, six others are unopposed on Nov. 8. Seventeen of the races are already decided, but that leaves 33 races that will be decided on Tuesday, Nov. 8. Some of these are hotly contested and will be close. The August primary also had an unimpressive voter turnout. It’s not unusual to have less than a third of registered voters take the time to vote in an election. History, especially recent history, is full of examples in which an election was decided by very few votes — even a coin toss in the case of a tie. Voting is a right, a privilege and one of the most important freedoms we have. Unfortunately for many, it is more important to exercise the TV remote than the right to vote. Why does it matter? In the 2012 Presidential election, there were 218 million eligible voters in the United States. Only 124 million voted in the general election that year. Fifty-one percent voted for Barak Obama. Doing the math, the direction of our country was decided by less than 30 percent of the eligible voters. Look at a few key states where the electoral votes swung the election: a handful of additional voters in every precinct could turn the district which could turn the state, which could turn the election. To paraphrase Edmund Burke: “All that is necessary for evil to triumph is for good men and women to do nothing.” There’s a lot of truth to that. Get involved! Get informed on the issues and the candidates. Talk to your family, your friends, your co-workers. And all of you vote on Nov. 8. The rest of us are depending on you. John MacKinnon is the executive director of the Associated General Contractors of Alaska.  

Defending the PFD reduction as painful but prudent

Alaskans will soon receive our annual dividend checks. This year’s $1,022 check for every qualified resident will help Alaska families with things like winter fuel, food and clothes, holiday gifts, and saving for college. These checks will boost local businesses and increase local tax revenues. At the same time, I am keenly aware that many Alaskans are disappointed — and some are angry — about the size of this year’s dividend. While the average dividend since the inception of the program has been $1,150, many were counting on a larger amount this year. Indeed, this year’s checks would have been $2,052 without my vetoes. How did we get here? Why did I veto roughly half the dividend? The answer requires some context.  When I filed for office, state unrestricted general fund revenues were $7.5 billion. This year, they’re $1.2 billion. That’s an 83 percent drop. Please consider that for a moment. Imagine your family’s income fell more than 80 percent. Or that your business lost 80 percent of its revenue. You would probably start spending less. We have done that. Over the past four years, unrestricted general fund spending has dropped 44 percent — nearly in half. That’s according to the Legislature’s nonpartisan budget analyst David Teal. The budget is now down to $4.4 billion. That’s below the spending level called for by the Alaska State Chamber of Commerce and others calling for big spending cuts. And we still have a massive deficit. We could close every school and every prison, and we still wouldn’t have enough money to pay for state services. We simply can’t cut our way down to a $1.2 billion budget. I come from a family of homebuilders. I’ve never built anything without a plan. And we can’t build Alaska back to prosperity without a plan. In December I proposed a plan to balance the budget in a sustainable way. The plan called for a combination of budget cuts — including cuts to oil tax credits — along with modest tax increases and sustainable use of permanent fund earnings. The idea was balance. We can’t do it with cuts alone. We can’t do it with taxes alone. For example, it would take a statewide sales tax of 19 percent to raise enough revenue to balance the budget. That’s a nonstarter. And I am not willing to balance the budget using permanent fund earnings alone. That would jeopardize our dividends and the fund itself. Unfortunately, lawmakers failed to pass my plan or any other, leaving a nearly $4 billion budget gap. In the past four years we’ve drawn down our savings from $16.3 billion to an expected $3.6 billion at the end of this fiscal year. We’re burning through our savings at an alarming rate. I therefore took action to extend the life of our fast-shrinking savings. In June I vetoed $1.3 billion, including $430 million in oil tax credits. My vetoes also included roughly half of the money for this year’s permanent fund dividends. The vetoed dividend money is not being spent. It remains in the permanent fund earnings reserve, prolonging the state’s ability to pay dividends in the future. I labored long and hard over the decision. It was by far the most difficult decision I have made to date as Governor. However, it is clear we can’t continue to use the current dividend formula. In the past few years, revenues have plummeted while Permanent Fund investment earnings have grown. The current dividend formula would have us spending more on dividends than any other state service — including education. It’s not a sustainable path. If we do nothing, the permanent fund earnings reserve will likely be depleted within four years. Then dividends will be zero. I don’t want that to happen. My commitment to Alaska and Alaskans has never wavered. I believe we must find a balance between the wants of today and the needs of tomorrow. If we don’t make changes, we’re on a course to economic disaster. It’s a 100 percent preventable disaster, and I will do everything I can to prevent it.  Gov. Bill Walker, an independent, is the eleventh governor of the State of Alaska.

Separation of powers question must be answered

Gov. Bill Walker thinks he did the right thing by vetoing half of this year’s Permanent Fund Dividend appropriation. There can be no definitive answer to that question, but there will have to be one as to whether what he did was legal. The legal question is obvious when Walker not only crossed out the $1.3 billion that was to be transferred from the Permanent Fund Earnings Reserve into the Dividend Fund, but also struck through the statutory language authorizing the payment. Clearly Walker received legal advice that he had to cross out the statute as well as the appropriation to make the veto, which means someone at the Department of Law recognized there is a potential conflict with the law and his constitutional line item veto authority. Although the case is in Superior Court now, the Alaska Supreme Court will ultimately have to decide the matter. It’s a worthy issue to determine, and even though there has been plenty of criticism directed at Sen. Bill Wielechowski from this page, in this case he and his fellow plaintiffs are doing the state a service by refusing to allow Walker’s action to go unchallenged. Wielechowski, the runaway winner for least media-shy member of the Legislature, is no stranger to grandstanding but Walker is way off base to allege the motivations here are about reelection. Walker and his Department of Law believe his constitutional line item veto authority applies to every appropriation and therefore trumps any statute that may conflict with it. The plaintiffs argue it only applies to appropriations from general budget funds, and because the PFD transfer never touches the general fund it is off limits to Walker’s power to veto. In Walker’s column justifying his action in our current issue, the governor writes that, “it is clear we can’t continue to use the current dividend formula.” That formula is set in statute, and if Walker wants the formula changed he has to get the Legislature to approve it. The governor hurts his constitutional case by excusing his action with a reference to the statute that determines the dividend. Around this time last year there was another lawsuit filed based on a separation of powers question when Walker — again, after failing to convince the Legislature to go along with him — unilaterally expanded Medicaid by accepting federal dollars to cover a new group of enrollees. Speaking of grandstanding, Walker and Wielechowski were lined up on that one accusing Republicans of not wanting poor people to have health care and all but die in the streets instead. It wasn’t in dispute that Walker could accept federal dollars. What was in dispute was a very legitimate constitutional question as to whether Walker could add a new class of people to the Medicaid program without legislative approval. Walker had proposed legislation to do just that earlier in 2015 but had no success dealing with the Legislature, just as he has failed to work constructively on a host of other issues. That raised the question: if Walker thought he needed a bill to expand Medicaid at one point, what changed that he could add the new class unilaterally simply by virtue of taking the federal money? The answer is nothing, and it should have been adjudicated all the way to the Supreme Court after the case was initially dismissed in Superior Court by a judge with past professional ties to the governor that weren’t disclosed at the time. But the Senate Majority weaseled out of the case and left the House Majority holding the bag. Unable to present a unified front, the case died with the question unanswered. The Legislature then made it moot by funding the expanded class, which we learned in a report in this paper in August have exceeded initial cost estimates by more than $30 million just in the first 11 months of the program of which the state will eventually be responsible for 10 percent. Both Wielechowski’s and the Republican majorities’ challenge of Walker’s unilateral actions are and were worth pursuing. It would have been nice if both were treated with equal respect. Andrew Jensen can be reached at [email protected]

Asia is nice, but the best bet is closer to home

Let’s just get it out of the way that there’s nothing inherently wrong with Gov. Bill Walker heading off on a 10-day sales junket to pitch the Alaska LNG Project to Asian markets. This is the kind of thing governors are supposed to do. Sure, it’s going to cost money to send an eight-person delegation overseas, but that’s miniscule in the overall budget deficit. The big question is what is he going to say? As the Alaska Gasline Development Corp. moves to take over AK LNG from our producer partners, there is still nothing close to a firm outline of how the project will take shape, how it will be financed and whether it can be cost competitive. Walker, who desperately wants to put a happy face on the project despite its enormous challenges, is already issuing press releases about meetings that don’t do much if anything to advance the effort. The governor still believes the market that existed four or five years ago is still there, despite the fact that the Japanese came to their senses and restarted the 20 or so nuclear power plants it took offline after the 2011 earthquake, tsunami and Fukushima disaster. Just ask Walker, and he’ll point to 2012 when he continues to assert that he brought “twice” the market to a possible Alaska LNG export project. That claim didn’t hold up then, and it doesn’t hold up now. Read the letters of intention that Walker submitted to the Federal Energy Regulatory Commission in search of an export permit for the Alaska Gasline Port Authority he led in an effort to bring a pipeline to Valdez and it’s clear why the application was dismissed not once, but twice. First off, one of the “letters” is an email, and another is actually an article from this newspaper published in 2012 about Resources Energy Inc. opening an office in Anchorage and seeking as much as 2.7 billion cubic feet per day from a gasline. As an interesting aside, REI actually submitted its own letter to FERC saying it had nothing to do with Walker’s export application and for the agency not to consider it a letter of interest. The other letters of interest have another thing in common: they all demanded some kind of break or discount from the prices they were currently paying. So even if the market is there, and it still is to a lesser degree than five years ago, it is conditioned on a competitive price that Alaska LNG was going to struggle to achieve under the best of circumstances. Walker is also encouraged by the report from Wood Mackenzie that determined AK LNG could possibly break even $45 per barrel, but only if financing could be achieved in the range of 8 percent. Well, you can put any low number in the financial model and it is going to make it look better. The issue remains whether there is a pool of capital out there that would take 8 percent on the risks of a $45 billion project. Indeed, AK LNG, should it ever come to fruition, would be a game-changer for Alaska. But Walker would be well served to pay more mind to the game-changer that’s happening right now at the Pikka Unit on the North Slope where Armstrong Energy is advancing a $5 billion project in partnership with Repsol that could produce 120,000 barrels per day by 2021. Armstrong should be Walker’s dream come true: an independent wildcatter who’s made the most significant discovery since Alpine and is the only company planning to explore this winter. At a time of layoffs and drilling reductions at Prudhoe, Armstrong is currently employing about 750 people between his staff and contractors. Yet Walker’s official policy is to render Armstrong’s project less economic by raising his taxes. Walker wants to raise the minimum tax, and make it kick in as prices climb. A worse policy is hard to imagine for a state facing multi-billion deficits for years and an uncertain outlook at best for an LNG export project. Beyond the desperately needed revenue, the implications for Armstrong’s project are enormous. It would add 25 percent or more to the trans-Alaska Pipeline System throughput by the time it is online. Each new barrel brings down the transportation costs for every barrel, not to mention alleviating the nightmare scenarios Alyeska Pipeline Services Co. has been trying to avoid as production has declined and more and more engineering feats are needed to keep the oil moving. Most heartening of all is that Armstrong thinks the discovery he’s made is repeatable. Walker likes to say that the best way to get more oil into TAPS is to build a gasline. Not to put too fine a point on it, but the best way to get more oil into TAPS is to, you know, drill for oil. That’s what Armstrong did, and that’s what a lot of other people are going to do if he proves successful. Nobody is going to go exploring for gas when there’s 35 trillion cubic feet of proven reserves on the North Slope. Continuing to pitch the gasline is fine, but there is something terribly wrong with making it more difficult for the state’s best prospects for jobs, oil production and revenue.  

State joins defense of a witch hunt

The home of the Salem witch trials has birthed another effort to hang the imagined heretics, and the State of Alaska is seeking to supply the judges with the rope. Massachusetts Attorney General Maura Healey, along with 19 other attorneys general from 17 states, the District of Columbia and the U.S. Virgin Islands, have mounted an inquest against ExxonMobil seeking as much as four decades worth of internal documents and communications with independent groups in an effort to prove the company “knew” its fossil-fuel based products were going to destroy the planet and hid the evidence. Under the guise of consumer protection backed by the threat of law enforcement, the thin veil on this masquerade was pierced almost immediately in April through uncovered emails obtained in a Freedom of Information Act request that showed climate change activists not only colluding with the AG offices from New York and Vermont about their strategy to bury ExxonMobil under a flurry of subpoenas but to also conceal their participation in the effort. Unbelievably, Alaska’s brand new Attorney General Jahna Lindemuth is siding with those undertaking this blatant abuse of government power. Lindemuth joined 16 other attorneys general — nearly all from the so-called “Green 20” group who launched this effort March 29 alongside carbon footprint hypocrite and former Vice President and Al Gore — in an amicus brief filed Aug. 17 in opposition to ExxonMobil’s complaint against Healey filed in federal court that seeks to quash her crusade against the company. ExxonMobil took its case to federal court in North Texas, where it is headquartered, alleging that the Massachusetts AG is leading an interstate effort against it rooted in no law but rather in a purely political shakedown aimed at putting the company out of business and silencing those who diverge from the Green 20’s dogmas.  Because make no mistake about it. These AGs and their supporters who sought to conceal their involvement in this case want to put ExxonMobil into the same place it drills for oil and gas: the ground. Also make no mistake about this: The same people who Lindemuth lined up with also want to put Alaska out of business. Oh, Lindemuth has tried to defend her action as a “states’ rights” issue in a pathetic attempt to separate the amicus brief from the underlying action against ExxonMobil, but there is no differentiating the two. While there is certainly a sound argument to be made that an entity subject to a state inquiry shouldn’t be able to go to federal court to halt the action, that is far from the case here. The brief cites the undisputed authority of state attorneys general to investigate “fraudulent, misleading, or deceptive practices” within their jurisdictions, but there is no squaring that circle against the bogus charges being leveled against ExxonMobil. Attorneys general do not have the authority to use the power of their offices to pursue political advocacy or to target people and organizations with differing perspectives. Yet that is the practice that Lindemuth is attempting to secure through her joining this case as a friend of the Massachusetts AG’s defense. The examples cited in the brief include 46 attorneys general who successfully litigated against the tobacco industry and the 50 who joined the investigation into fraudulent mortgage practices. Were this such an obvious states’ rights issue, it is more than a little telling that the amicus brief was joined by so few attorneys general. The refusal of more to sign on is a glaring indication that the vast majority of states’ chief law enforcement officers see this effort for the transparent sham that it is. Other cases cited included a Toyota recall, “four nationwide sham cancer charities,” and a telecommunications company based in New Jersey that was successfully sued by the State of Texas for fraudulent promises of service. “These joint efforts have greatly enhanced the ability of state Attorneys General to uncover and halt widespread practices that harm individuals and businesses across the nation,” according to the amicus brief. That’s all well and good, and rooted firmly in legal precedent. It also has absolutely nothing to do with what the Green 20 are doing to ExxonMobil. Considering that ExxonMobil is being targeted across multiple states with AGs and judges sympathetic to the Green 20 effort, it is laughable that Lindemuth would accuse the company of “forum shopping” in her letter to House Speaker Mike Chenault and House Judiciary Chair Gabrielle LeDoux. If ExxonMobil is to be forced to defend itself in as many as 20 courthouses around the country it is only fair play for the company to seek any advantage it can, including taking these rogue attorneys into federal court. Lindemuth told Chenault and LeDoux that “bad facts make bad law.” Bad lawyers make bad law, too, and allowing these AGs to debase the law for their political aims will do far more damage than stopping this injustice in its tracks. Andrew Jensen can be reached at [email protected]  

EDITORIAL: Walker gives up, reverses himself on land trust case

Gov. Bill Walker’s decision to not appeal a federal court’s ruling in an Alaska Native lands trust case is as disastrous as the ruling itself. It was a year ago that the state, in taking over a lawsuit against the federal government brought by Alaska tribes in Akiachak, Chalkyitsik and Tuluksak, made a compelling case that the Department of the Interior erred terribly when it changed its rules to allow Alaska Native land to be accepted into trust by the federal government. The department’s action came after a federal District Court judge in the District of Columbia in 2013 ruled that the Alaska Native Claims Settlement Act of 1971 didn’t bar land from being taken into trust. The Interior Department had been relying on its own interpretation of ANCSA, as seen through the department’s implementing regulations, as requiring that Alaska be exempted from provisions in the Indian Reorganization Act of 1934 that allowed for land to be held in trust by the government. Rather than appeal the court ruling, however, the department changed its regulations to comply with the lower court. Putting lands into trust appears as though it would benefit tribes greatly, but it also brings great risk and responsibility. There is no guarantee that the needs of residents on such lands would be improved. Allowing lands to be put into federal trust will come at a fundamental cost to state sovereignty. For example, tribes will gain greater authority to implement their own criminal and civil laws on the land, affecting any Alaskan who would venture onto the trust land and be accused of violating tribal law. Federal funds for a variety of functions, including law enforcement, will become available when the government essentially owns the land in the trust. That’s why the state entered the case a year ago, on Aug. 24, 2015. It was that important. The administration of Gov. Walker appealed the lower court ruling once the Interior Department opted not to. The state argued that the so-called “Alaska exception” was actually mandated by ANCSA itself, and not just through department regulation, and that the exemption therefore superseded the Indian Reorganization Act. The state made crisp, bold points in its appeal. Among them: “Alaska has a major stake in the issue of whether ANCSA remains viable and how millions of acres of land within its borders will be governed.” “Injury-in-fact has occurred here because the district court judgment prevents the state from getting what it bargained for in ANCSA.” “Trust land in Alaska would diminish the state’s authority by creating islands of land within its borders potentially controlled by 229 competing sovereigns, thus harming Alaska’s sovereign and proprietary interests.” “The state has no authority to tax trust land. Furthermore, the Secretary (of the Interior) has stated that trust land in Alaska would be considered Indian country, which means the state could also lose authority to impose on it land use restrictions, natural resource management requirements, and certain environmental regulations. Exercise of police powers and regulation of state resources are fundamental elements of state sovereignty.” “New trust land in Alaska thus harms the state by abrogating its authority over land within its borders and creating widespread uncertainty over governance. Trust land and Indian country could confuse Alaskans and nonresidents who could be subject to a patchwork quilt of legal and regulatory authorities, depending on where they are and whether they are a tribal member or nonmember.” The state’s tough position continued for many pages, and the point was clear: This decision was damaging to Alaska and must be overturned. A three-judge panel of the U.S. Court of Appeals for the District of Columbia sided with the tribes, however, though in a split 2-1 decision. The dissenting judge, Janice Rogers Brown, seemed to share the state’s view when she noted the lower court judge acknowledged that Alaska could be severely harmed. Judge Brown, in her dissenting opinion, wrote “Specifically, the district court enjoined the department from taking any Alaska lands into trust while this appeal was pending because such an action would cause ‘irreparable harm to state sovereignty and state management of land’ in Alaska.” Would the state ask for a hearing before the full appeals court so as to avoid this damage? Surely Gov. Walker would do so given the strong claims made a year ago when the state entered the case. No. Instead, the governor simply gave up and said the state would be attentive and comment as necessary as individual land trust applications were presented to the federal government. The governor stated in news release Aug. 22 that “it doesn’t make sense to use the state’s limited resources pursuing this litigation that has already dragged on for ten years.” Yes, governor, it does make sense — especially if you believe the points your administration raised just one year ago.  

AJOC EDITORIAL: House heads for shakeup, but do Alaskans care?

Much like Usain Bolt in the 100-meter dash, contests for the state Legislature in November figure to be races in name only. What drama could be found took place on primary night and ended up decided by a tiny fraction of Alaskans even in the contested elections. Democrats succeeded in toppling one of their top targets within their party — Rep. Bob Herron of Bethel — and Republicans did the same by taking out one of their own as George Rauscher defeated Rep. Jim Colver in the Mat-Su Valley. The Democrats may go two-for-two in their efforts to knock off members of their party from Bush Alaska who caucus with the Republican-led Majority of the state House. Rep. Ben Nageak was leading by just nine votes against Dean Westlake with 87 percent of the vote counted as of this writing. GOP interests failed to take out Rep. Paul Seaton of Homer, another prime target from their ranks, and saw influential members of their House delegation fail in their bids to elevate to the Senate with the losses of Reps. Lynn Gattis of Wasilla and Craig Johnson of Anchorage. Seaton and Colver are members of the self-titled “Musk Ox” caucus that coalesced late in 2015 when the Republican leadership, frustrated with Democrats holding out votes to reach the magic 30 of 40 to draw from state savings in the Constitutional Budget Reserve, introduced a measure that would have emptied the Permanent Fund Earnings Reserve into the CBR in order to remove the requirement for a three-fourths vote to fund the budget. The Musk Ox caucus continued to draw party ire in 2016 as they joined with Democrats on bills sharply curtailing the state’s oil and gas tax credit program, creating an embarrassing situation for House Speaker Mike Chenault, R-Nikiski, who couldn’t wrangle his majority and had to pull bills from the floor once it became apparent he didn’t have the votes. Chenault, who served a record four terms as Speaker, is stepping down from that role although he is headed back to Juneau with no opposition either in the primary or general elections. With only half of the body up for reelection, the Republican-dominated Senate shouldn’t look much different in 2017. That can’t be said for the House after the primary shakeups and the entry of a yet undetermined Speaker. No matter what happens in Nageak’s race, there is a strong possibility for a bipartisan coalition of some kind that could end up controlled by Democrats, who already succeeded this year in determining votes by linking with the Musk Ox Republicans and a couple other stray members of the Majority. The Democrat minority had 13 members last year including independent-in-name-only Dan Ortiz of Ketchikan, who will face a Republican challenger in the general election. If Ortiz returns, Nageak loses, and other districts maintain the status quo, the Democrat caucus would number 15. The five remaining members of the Musk Ox group could create a caucus of 20, which still isn’t enough to control the House. That would leave the Musk Ox Republicans with a choice of being a minority within their own party, or a minority among their supposed opposition party. Seaton, who’s opposed the oil and gas tax credit program and proposed a state income tax, aligns well with the Democrats on their favorite means of closing the budget gap. Attacking the state’s No. 1 industry and going after the state’s federal taxpayers are bad policies but make for good politics, and they also happen to jive with Gov. Bill Walker’s revenue strategies even though they’ll diverge sharply on reducing the PFD to completely close the deficit. This is probably a good time to recall that when 10 Democrats and six Republicans formed the Bipartisan Senate Majority they passed the most bloated budgets in Alaska history from 2006-2012. In the end, it’s difficult to tell if Alaskans even care who goes to Juneau. The highest turnout in any district on primary night was 21 percent in Herron’s race vs. Zach Fansler, followed by 18 percent in Seaton’s race. While it’s understandable that uncontested primaries had pathetic turnout with no statewide ballot initiatives to draw attention, seeing turnout of 15 percent to 17 percent in supposedly competitive elections in the Valley, Eagle River and South Anchorage sends a pretty clear message to legislators: We don’t give a flying you-know-what. It’s bad enough that districts have been so gerrymandered as to render nearly every race uncompetitive. It’s worse when even in races that matter more than 8 in 10 Alaskans didn’t bother to register an opinion. An old axiom is that we get the government we deserve, and Alaskans’ nonchalance in the face of serious times means we’re going to get it good and hard. Andrew Jensen can be reached at [email protected]

EDITORIAL: Legislators need to join real world to address deficits

A report from the U.S. Energy Information Administration earlier this month contained a small but — from the Alaska view — telling notation. The July 11 report, “EIA projects rise in U.S. crude oil and other liquid fuels production beyond 2017,” projected a continued decline in Alaska’s output. “Production in Alaska continues to decline through 2040, dropping to less than 0.2 million b/d (barrels per day) in 2040,” according to the report. This is not good news for anyone hoping that increased oil production or an increase in oil prices, or both, is going to help Alaska out of its precarious fiscal situation. To think either of those occurrences is going to materialize to help Alaska is folly. Alaskans, and especially those campaigning for a seat in the Legislature, are making a grave mistake if they choose to reject major deficit-reduction efforts in favor of such wishful thinking. Some people, unfortunately, do argue that our situation will be saved by an oil price and production renaissance. Alaska had a $3.1 billion deficit for the current fiscal year, a gap that was covered through Gov. Bill Walker’s $1.29 million in vetoes and by drawing on savings accounts. Those savings accounts are going to run dry in about two years unless the Legislature approves significant legislation to straighten out the state’s finances. Gov. Walker put forward solid ideas in December, but legislators repeatedly balked. Nothing got done. Once upon a time, not too long ago, revenue from Alaska’s oil fields accounted for about 90 percent of the state government’s general fund revenue. Now it’s a fraction of that amount. Massive and sudden change would be needed in the oil world to return to the good ol’ days. The Energy Information Administration report is but one of several that constantly come out about the global oil market, of which Alaska is but one of many players. Those reports have a variety of differing projections based on various price and production scenarios, adding to the uncertainty. Alaska’s own report, from the Alaska Department of Revenue — it issues two reports annually — gives a pretty grim near-term and medium-term outlook about the amount of oil income the state can expect. The cover letter from Revenue Commissioner Randall Hoffbeck spells it out: “The revenue forecast is based on a revised oil price forecast of about $40 per barrel versus $50 in the fall,” he wrote. “The forecast prices over the next 10 years have also been reduced to reflect anticipated future lower prices. The average price is now not forecast to reach $60 until FY 2021. However, with the global contraction on investment in production, and spare capacity that represents less than three percent of global demand — we also recognize the potential for significant price volatility over the next few years.” Oil revenue collapsed several years ago, and there’s little sign of improvement. The year-to-year change in the amount of the state’s oil income is staggering, from $1.69 billion in fiscal 2015 to $801 million in fiscal 2016 to a projected $705 million for fiscal 2017, the current fiscal year. And the fiscal 2015 number is down sharply from the days when oil exceeded $100 a barrel; it’s now about $40. That’s catastrophic. It isn’t going to change anytime soon. And what that means is Alaska urgently needs its residents and its elected officials to live in the real world and not in the world of fantasy.  

AJOC EDITORIAL: Walker completes transformation of AGDC to AGPA

Gov. Bill Walker likes to talk about his background in construction and how much he loves building things, but so far after a little more than 18 months in office his most successful project has been demolition. The effort to undermine and eventually dismantle the Alaska LNG Project that began within days of Walker taking office in December 2014 culminated July 22 with the official announcement that his former law partner and Attorney General Craig Richards had been signed to a $275-an-hour contract barely a month after he resigned citing personal reasons. With his man Keith Meyer heading up the Alaska Gasline Development Corp., a compliant board of directors and a contracted legal hit team in place, Walker is ready to go it alone on the project and to war with the producers. It is important to recall what Walker said while campaigning for the office about the Alaska LNG Project that was orchestrated under former Gov. Sean Parnell. “I’ll follow the process in place now, you bet I will,” Walker said on Oct. 28, 2014, at an Anchorage Dowtown Rotary Club debate. “But at the first sign of delay, or someone says ‘we’re going to slow this down,’ that’s when the state needs to have a governor who understands what to do and has the guts to say, ‘we’re going to finish this project as Alaskans.’” Having created the circumstances himself that threaten to delay the project, Walker now has what he planned for all along: a state takeover of AK LNG and a break with Alaska’s North Slope partners. The shadowy effort to execute this plan began with Walker’s hiring of Jim Whitaker, the former executive director of the Alaska Gasline Port Authority, as chief of staff and Richards as his AG. The AGPA was Walker’s effort to build a pipeline from the Slope to Valdez to export LNG, but it failed because the group never had access to any gas, which, ironically, is where the state finds itself once again. In early January 2015, Walker unceremoniously sacked two members of the Alaska Gasline Development Corp. board of directors on the eve of a regular meeting. One of the members didn’t find out he’d been dismissed from the board until he got off the airplane in Anchorage. Walker then instructed his new commissioners and new board appointments at AGDC to not sign confidentiality agreements, setting up his first of many unnecessary fights with the producer partners. A month later, Walker wrote an op-ed in which he put forth a plan to create a parallel pipeline effort to AK LNG as a backup in case one or more of the producers pulled out of the project despite no evidence such a decision was even under consideration. In June 2015, Walker sent a letter to the producers asking them to study a 48-inch pipeline rather than the standard 42-inch pipeline, which added additional time to the preliminary engineering process and cost $20 million. The study and expense ended up a total waste of time and money as the project team maintained the design at 42 inches. Around that same time, Richards hired Mark Cotham, a Houston-based attorney who’d done contract work for the Port Authority and penned an op-ed in the Juneau Empire in 2005 that advocated threatening producers’ leases as a means to spur development of the Slope gas resource. Also that month, Richards issued a legal opinion concluding that a constitutional amendment was needed to set fiscal terms for the state’s share of the gas over long-term contracts. As it turns out, this legal opinion requiring a general election vote in 2016 on a constitutional amendment to keep the project on schedule was the most clever of all Walker’s strategies to drive a wedge between the state and the Slope producers. But we’ll come back around to that. That September, Walker called a special session of the Legislature to buy out TransCanada’s share in the project and make the state responsible for 25 percent of the costs. Not only did Walker put the buyout on the call, but he also resurrected the gas reserves tax that his chief of staff Whitaker authored in 2005 that was voted down in 2006 by a 2-1 margin. Much like his idea for a parallel pipeline effort, the idea was panned roundly by legislators and the producers as counterproductive and Walker — after his usual, doe-eyed, “What’s the big deal?” routine — ended up not even introducing a bill. He did, however, later extort written statements from BP and ConocoPhillips that they would sell gas to the state if they chose to exit the project. The Legislature then, rather gullibly, voted to give Walker the keys to the state portion of the project. With the state’s 25 percent share acquired, Walker kept moving with his plan, declared that “We’re TransCanada now” and fired another two AGDC board members including chair John Burns and the CEO Dan Fauske. Of course he wasn’t even close to done. Two events then took place in January. Richards had Department of Natural Resources Commissioner Mark Myers send out a letter to all the unit operators in the state demanding detailed gas marketing information. Disguised by the apparent equal treatment of all operators was the true target: the Prudhoe Bay Unit operated by BP and the source for three-quarters of the gas for the AK LNG Project. Walker then sent a detailed demand letter to the producer partners laying out a heavy schedule of commercial and gas balancing agreements he said were necessary to be completed by April in order to meet a June deadline to place a constitutional amendment on the November general election ballot. Here is where the decision to require a constitutional amendment was the master stroke of the plan. In February, Myers resigned as commissioner at DNR about a week after his Deputy Commissioner Marty Rutherford told Journal reporter Elwood Brehmer that agreements would not be complete in time for a November vote. Securing fiscal terms is a critical component to moving to final engineering and design, and not getting it on the ballot — again, a situation created by Walker and Richards — achieved its purpose by throwing up a roadblock to the producers moving forward and gave Walker the opening to portray the companies as not committed to the project. On the same day Myers’ resignation was announced and a week after the Journal story was published, Walker called what can only be described as a hostage video of a press conference on Feb. 17 dragging up BP Alaska President Janet Weiss and ConocoPhillips Alaska President Joe Maruschak to announce that progress had stalled on AK LNG. By now, oil prices had dropped to less than $30 per barrel compared to the $80 range when Walker took office and started tearing down the project he inherited. With the bonus of collapsing prices along with the artificial timeline of a constitutional amendment working as intended to derail negotiations — there was no reason talks couldn’t have continued absent a need to seal all the deals in time for a November vote — Walker instructed his team to break off discussions with the producers. At this moment, Walker was pursuing Keith Meyer to take over AGDC, and he made his splash immediately after taking the job in mid-June by asserting the state could lead the project with or without producer participation, draw investors from around the world by selling off pieces of the project and do all of this with almost no risk to the state treasury. Part of selling this idea to legislators required creating the perception that the producer partners were “shelving” the project and had no desire to go forward. It didn’t take long for Meyer to keep putting words in their mouths before ExxonMobil fired back with a strongly worded response that Meyer was issuing “inaccuracies” and mischaracterizations about the company’s belief in AK LNG. So here we find ourselves with the state’s best hope for future petroleum revenue drenched in uncertainty and Walker’s legal team preparing to litigate with the producers over unreasonable demands for confidential information tied to a unit that supplies half of Alaska’s unrestricted general funds and is still the largest field in North America. Walker’s lack of transparency and honesty over his true intentions for the AK LNG Project have been borne out by his actions. He’s paid lip service to the project and our partners all the while taking every step possible to crater the effort. What Walker wants is clear. What makes him think he’ll be successful other than a circle of like-minded people rooting him on is impossible to decipher. This kind of litigation will take years upon years. Years the state doesn’t have to waste. Years that will extend well beyond one or two four-year terms for Walker. Walker’s attempt to divorce the state from its partners and lead the way on a project that will cost $45 billion or more is doomed to fail, and will cost Alaska dearly. The governor likes to say he ran to do the job, not to keep the job, but it’s questionable how many voters would give him the job again if they knew his ulterior motive was to blow up AK LNG and start a legal war with the Slope producers. Alaska has a few brick-and-mortar testaments around the state to the government’s inability to execute mega projects, or even simple ones. Walker’s Quixotic quest to build the gasline himself gives him a chance to be the state’s first living boondoggle. Andrew Jensen can be reached at [email protected]  

EDITORIAL: Comey decides some animals are more equal than others

Editor’s note: On the day after celebrating the birth of a nation founded on the still-unperfected ideal that all are created equal, FBI Director James Comey declined to recommend charges against Democratic presidential candidate Hillary Clinton despite overwhelming evidence she violated numerous federal laws while Secretary of State regarding the preservation of official records and the protection of classified information. Begging pardon for the pun, it behooves us to publish the following passage from Chapter 10 of the novel “Animal Farm” by George Orwell. The Republic of the Animals which Major had foretold, when the green fields of England should be untrodden by human feet, was still believed in. Some day it was coming: it might not be soon, it might not be with in the lifetime of any animal now living, but still it was coming. Even the tune of Beasts of England was perhaps hummed secretly here and there: at any rate, it was a fact that every animal on the farm knew it, though no one would have dared to sing it aloud. It might be that their lives were hard and that not all of their hopes had been fulfilled; but they were conscious that they were not as other animals. If they went hungry, it was not from feeding tyrannical human beings; if they worked hard, at least they worked for themselves. No creature among them went upon two legs. No creature called any other creature “Master.” All animals were equal. One day in early summer Squealer ordered the sheep to follow him, and led them out to a piece of waste ground at the other end of the farm, which had become overgrown with birch saplings. The sheep spent the whole day there browsing at the leaves under Squealer’s supervision. In the evening he returned to the farmhouse himself, but, as it was warm weather, told the sheep to stay where they were. It ended by their remaining there for a whole week, during which time the other animals saw nothing of them. Squealer was with them for the greater part of every day. He was, he said, teaching them to sing a new song, for which privacy was needed. It was just after the sheep had returned, on a pleasant evening when the animals had finished work and were making their way back to the farm buildings, that the terrified neighing of a horse sounded from the yard. Startled, the animals stopped in their tracks. It was Clover’s voice. She neighed again, and all the animals broke into a gallop and rushed into the yard. Then they saw what Clover had seen. It was a pig walking on his hind legs. Yes, it was Squealer. A little awkwardly, as though not quite used to supporting his considerable bulk in that position, but with perfect balance, he was strolling across the yard. And a moment later, out from the door of the farmhouse came a long file of pigs, all walking on their hind legs. Some did it better than others, one or two were even a trifle unsteady and looked as though they would have liked the support of a stick, but every one of them made his way right round the yard successfully. And finally there was a tremendous baying of dogs and a shrill crowing from the black cockerel, and out came Napoleon himself, majestically upright, casting haughty glances from side to side, and with his dogs gambolling round him. He carried a whip in his trotter. There was a deadly silence. Amazed, terrified, huddling together, the animals watched the long line of pigs march slowly round the yard. It was as though the world had turned upside-down. Then there came a moment when the first shock had worn off and when, in spite of everything — in spite of their terror of the dogs, and of the habit, developed through long years, of never complaining, never criticising, no matter what happened — they might have uttered some word of protest. But just at that moment, as though at a signal, all the sheep burst out into a tremendous bleating of: “Four legs good, two legs better! Four legs good, two legs better! Four legs good, two legs better!” It went on for five minutes without stopping. And by the time the sheep had quieted down, the chance to utter any protest had passed, for the pigs had marched back into the farmhouse. Benjamin felt a nose nuzzling at his shoulder. He looked round. It was Clover. Her old eyes looked dimmer than ever. Without saying anything, she tugged gently at his mane and led him round to the end of the big barn, where the Seven Commandments were written. For a minute or two they stood gazing at the tatted wall with its white lettering. “My sight is failing,” she said finally. “Even when I was young I could not have read what was written there. But it appears to me that that wall looks different. Are the Seven Commandments the same as they used to be, Benjamin?” For once Benjamin consented to break his rule, and he read out to her what was written on the wall. There was nothing there now except a single Commandment. It ran: ALL ANIMALS ARE EQUAL BUT SOME ANIMALS ARE MORE EQUAL THAN OTHERS

AJOC EDITORIAL: Legislators have only selves to blame for vetoes

The 29th session of the Alaska Legislature is starting to resemble the final scene of Reservoir Dogs when everyone ends up dead. Gov. Bill Walker dropped the veto hammer on $1.3 billion worth of state spending on June 29 after the House Finance Committee refused to even allow a floor vote on using part of the Permanent Fund earnings to bridge a budget deficit of almost $4 billion. Democrats and Republicans alike howled at the $666 million cut to the Permanent Fund Dividend appropriation — setting it at $1,000 this year versus a projected $2,000 — and the House Finance co-chairs Mark Neuman and Steve Thompson issued a whiny press release about Walker vetoing $430 million in oil tax credit payments that no one disputes are fully owed to companies who’ve already spent that money in the state. What, exactly, did these people think was going to happen? It is rich that Rep. Chris Tuck, leader of the House Democrats, would put out a statement that Walker is “playing politics” with the budget after his caucus has done nothing but play politics over oil tax credits this entire session. To read their press release that contains Tuck’s statement, you’d think the oil tax credits are a discretionary expense. They aren’t, and the Democrats know it. To celebrate the state sticking it to companies that invested in the state in good faith tells you all you need to know about how seriously they take their responsibility to create a stable financial climate for the companies they expect to pay for everything. The state cannot get out of paying this money. Period. Full stop. We can pay it now or we can pay it later, but the amount isn’t going to change. It’s a rash and destructive action by Walker as well, who is trotting out his new CEO of the Alaska Gasline Development Corp. to attempt to convince legislators the state can go into the private markets and finance a $45 billion LNG export project. Really? How does the state convince investors that Alaska is a good place to put their money when for two years running the state has failed to make good on what it owes? Some of that money is no doubt owed to Furie and to BlueCrest, who began producing gas and oil, respectively, within the last year. Surely the state isn’t collecting its royalty share of that production while it is reneging on paying tax credits. That would only be fair. The guess here is that Furie and BlueCrest wouldn’t be operating for very long if they refused to make their royalty payments to the state, but it’s becoming crystal clear that Walker and his fellow Democrats think this is a one-way street. Absent from Walker’s vetoes were the automatic “merit” pay raises for state employees. The absence becomes conspicuous when considering that the amount due for raises next fiscal year is larger than what Walker vetoed from K-12 funding and the University of Alaska System. Neither the governor or the Legislature comes off well here, and like the end of Reservoir Dogs, it doesn’t matter who shot first or who killed Nice Guy Eddie. Nobody walks out alive. Andrew Jensen can be reached at [email protected]

AJOC EDITORIAL: Gov. Walker gets chance to bite the bullet on the PFD

Gov. Bill Walker has said repeatedly he’s willing to take the hit for reducing the Permanent Fund Dividend as a partial solution to the state’s budget deficit, and it looks like he’s going to get that chance. The Alaska House of Representatives adjourned the latest special session on June 18 one day after the Finance Committee failed to advance Senate Bill 128 for a floor vote. SB 128, which passed the Senate 14-5, would have ensured a $1,000 dividend for the next three years and contributed about $1.8 billion toward reducing the fiscal year 2017 deficit. The version that failed in House Finance would have guaranteed a $1,500 dividend the next two years and $1,000 in the third, but even that sweetener wasn’t enough to get six votes. So Walker has called the Legislature back once again for a fifth special session to begin July 11, but it is hard to see anything that will change attitudes toward a reduced PFD in the House between now and then. Walker doesn’t have a lot of good options, but he’s not up for reelection until 2018. That gives him a chance to put his veto pen where his mouth is. If the governor wished to leverage funding that is important to the House minority Democrats, he could begin by line-item vetoing budget items dear to their hearts such as increases in the Base Student Allocation, pay raises for state employees, the University of Alaska System and the like. “We can’t afford x, y and z if we’re going to spend $1.4 billion on dividends every year,” Walker could say, and put it on them to explain why they would rather keep the PFD at an unsustainable level than support education or health care or their union constituency. Walker has said, though, that he’s not interested in those kind of games and his lack of acuity for deal-making has already become self-evident during his first two years as governor. A simpler fix, one that would allow the House to become the heroes of the dividend and allow Walker to make the fiscally responsible call, would be for the governor to veto the PFD appropriation down to a level that would pay his preferred amount of $1,000. With the Senate on his side, the House could not override the veto on its own even if the members could muster 30 votes. Walker wouldn’t get his plan, but at least he’d be saving about $750 million the state is going to need sooner or later. That would leave the House with a choice. Pass the House Finance version with the $1,500 PFD for two years while incorporating the annual draw from the Earnings Reserve, or go home and campaign against a governor who isn’t up for election for cutting the PFD. The problem with the latter choice is House members would have to explain why they didn’t vote to increase the PFD when they had a chance and let the mean ol’ governor take their hard-earned money instead. If the House finally passes the modified SB 128, they would be able to at least campaign on standing up for the PFD, and achieving a smaller cut than the governor and the Senate proposed. They’d still be free to rail against oil tax credits and megaprojects and all the other Democrat bogeymen lurking under your bed, which is all they really care about, but at least the state would have done something to get its fiscal house in order. And in the end, cutting the PFD to $1,000 or $1,500 isn’t going to hurt the state economy very much, if at all. Consider that in 2015 the PFD appropriation of $1.2 billion represented 2.2 percent of the Gross State Product of $52.8 billion. If the GSP is relatively similar this year, cutting the PFD by either $375 million or $750 million would represent 0.7 percent to 1.4 percent of the total state economy. The only peaceful solution to this standoff is one that lets everyone save a little face. Allowing the House to vote to increase the PFD after a veto may give both sides what they want. Andrew Jensen can be reached at [email protected]  

AJOC EDITORIAL: Democrats’ ghoulish response to Orlando attack

President Barack Obama was unsure of the motivations of a man who yelled “Allahu akbar” as he opened fire on hundreds of defenseless people at an Orlando nightclub, but he was certain what the real problem is. “This massacre is therefore a further reminder of how easy it is for someone to get their hands on a weapon that lets them shoot people in a school, or in a house of worship, or a movie theater, or in a nightclub,” he said. “And we have to decide if that’s the kind of country we want to be. And to actively do nothing is a decision as well.” After presiding over, in succession, the worst terrorist attacks on U.S. soil since 9/11 from Fort Hood to the Boston Marathon to San Bernadino and now Orlando, Obama still believes the problem is guns and not the ideology of the people who pull the triggers. Rather than blaming the radical Islamic terrorists who are wantonly slaughtering civilians on a daily basis around the globe, Obama’s statement effectively blames Americans — “if that’s the kind of country we want to be” — for allowing the sale of semi-automatic rifles. Democrats were following Obama’s lead as bodies were still being identified at Pulse, pointing the finger at Republicans in Congress, Christian bakers, Donald Trump, the National Rifle Association, and just about anyone else other than the killer and the Islamic State that has flourished under Obama’s watch for the last four years. Obama and Democrat nominee Hillary Clinton are happily pushing the idea that Trump is “doing the work” for the Islamic State with his inflammatory rhetoric about Muslim immigration. It should take a new definition of chutzpah to blame Trump for the Islamic State when he was nowhere near the national stage in 2014 when Obama scoffed at the group as “the JV team” as it steamrolled across Iraq and Syria accumulating hundreds of millions of dollars in cash and American military equipment along the way. At that time, Obama made the decision to “actively do nothing” until the horrific images of American citizens being beheaded by the Islamic State that August forced him to interrupt his golf game momentarily and at least appear to be doing something. Three days after Orlando, the reliably left-wing New York Times came straight out and blamed “Republican politicians” for bigotry against minorities while claiming that the terrorist’s motivation “remains unclear.” For Obama, his fellow Democrats and his praetorian guards in the media, it’s all too simple. Their enemies aren’t the enemies of America who have demonstrated they will kill citizens of the West of all political persuasions and colors. Their enemies are their fellow Americans. Whether it’s Sarah Palin, Trump or the Dukes of Hazzard, Democrats are quite willing to assign the fault for every gun crime or terrorist attack to someone other than the perpetrator, unless that fault can be traced to radical Islam. It takes sick kind of mental gymnastics to witness a clear cut case of Islamic terrorism committed by a registered Democrat and turn around and blame Republicans. As this column is being written a Connecticut senator is filibustering a budget bill demanding some kind of action on gun control. Never mind that the FBI had every red flag it needed to deny a weapon to the Orlando terrorist, or that it was a clerical screwup that allowed the Charleston church killer to buy a .45 caliber handgun that isn’t even covered by the Democrats’ renewed calls for a ban on “assault weapons.” The FBI had warnings from the Russian government about the Boston Marathon bombers. Immigration officials had warnings about the female half of the San Bernadino terrorists. The Fort Hood terrorist had the acronym for “Soldier of Allah” on his business card for goodness’ sake. Yet for Democrats the Golden Calf of government is always the answer despite its repeated cases of butterfingers when it comes to carrying the ball in the fight against radical Islamic terrorism. Looking inward at whether their strategy — to the extent one exists at all — to combat the Islamic State is working, or what federal law enforcement could do better to prevent terrorists from acquiring weapons in the first place would be too hard. Blaming Republicans, on the other hand, takes no work at all no matter how high the body counts grow. As we’ve seen after Orlando, it gets easier every time. Andrew Jensen can be reached at [email protected]  

AJOC EDITORIAL: $1,000 is nothing to sneeze at

Only in Alaska could a guaranteed $1,000 to every man, woman and child be considered a rip-off. Only in Alaska could such an unrealistic attitude take hold fueled by widespread expectations that everything should be paid for by the federal government funded by U.S. taxpayers and the state government funded almost entirely by a single industry. Those who have opined that the Permanent Fund Dividend has created an unhealthy sense of entitlement among Alaskans have been proven more right than wrong over the past couple days as the howls of “raids” on the Fund and claims of outright stealing from people’s back pockets emanate from internet cowboys’ (and girls’) keyboards and legislators from both parties. For a state filled with people who endlessly espouse the refrain of “it’s our oil!” it’s a small wonder that in the 39 years of oil flowing through the Trans-Alaska Pipeline System many have not bothered to think about what being an owner state means. Owning the oil means owning the risk. If some Alaskans don’t want to ever feel the brunt of commodity price cycles then they should quit saying “it’s our oil!” and say what they really mean about the treasuries of the companies who produce it: “it’s our money!” That’s what it looks like when the state constantly moves the tax levers to take in more at high prices and then take in more at low prices as if the oil companies are nothing more than a money printing press for the government. The attitude of these Alaskans, reflected by a majority of the House and Gov. Bill Walker, are downright Venezuelan. To put things in perspective, ExxonMobil finished 2015 with $3.7 billion in cash on hand. Even if the state could seize it all Hugo Chavez-style, it wouldn’t cover this year’s deficit. ConocoPhillips, the state’s largest oil producer, finished 2015 with $2.3 billion in cash on hand. That would cover a little more than half of next year’s deficit. The state, meanwhile, has nearly $54 billion in the Permanent Fund and nearly another $8 billion in the Constitutional Budget Reserve. It will take in more than $1.1 billion this fiscal year from the oil industry despite the fact the producers spent a good chunk of this year losing money on every barrel. Since the Swanson River discovery in 1957, the state has taken in nearly $116 billion in unrestricted petroleum income and has paid out more than $21 billion in dividends since 1982. But to hear the loudest voices tell it, we’re getting hosed by the oil companies. You’ll never hear them talk about the 10 Democrats who controlled the Senate from 2006-12 and passed bloated budget after bloated budget and approved ever-escalating government union contracts that have raised the state payroll to some $1.4 billion. Yes, Republicans controlled the House back then as they do now, but maybe someday the Democrats will be called to account for their spending habits as well, which included billions of dollars in tax credits under ACES that dwarfed PFD distributions in several years while production continued declining by 6 percent per year. And what has the state done with that money? Alaska still has some of the worst education and health outcomes in the nation.Its state employees get generous raises every year for achieving nothing more than an “acceptable” review on their performance, if they’re evaluated at all. The damage that will be done to the state from loss of oil production and loss of jobs will far outweigh the damage from distributing the historical average from the Permanent Fund as the Senate voted to do. Media reports and Democrat talking points are that the PFD has been “halved” under this bill. Cutting it to $1,000 from a projected $2,000 is indeed cutting it by half. It would also be accurate to say that the PFD has been capped for the next three years near the historic average of $1,089 per Alaskan. The average total distribution since 1982 has been $621 million compared to the $700 million that will be sent out this year. To put it bluntly, the idea of spending $1.4 billion on PFD checks in the midst of a $4 billion deficit is insane, and those who advocate for the PFD being the No. 1 spending priority for the state are irresponsible. The PFD was less than $1,000 in 2004, 2005, 2012 and 2013. It was less than $1,200 in 2003, 2006 and 2011. In other words, the 2016 dividend will still be roughly equal to seven of the last 13 years even after being “cut in half.” The sky didn’t fall then, and it’s not going to fall now from a PFD reduced from an all-time high to its historic average at a time of historic deficits. Anyone saying different is probably trying to get elected. Andrew Jensen can be reached at [email protected]

COMMENTARY: When the economy gives you lemons, support Lemonade Day

The childhood experience of setting up a lemonade stand and engaging with customers brings back memories for many of us; perhaps it was your very first business transaction, customer service experience, or the first time you learned the correct lemon-to-water ratio for that perfect batch of lemonade. The lessons gained from an early introduction to business can provide young people with an enthusiasm for entrepreneurship that has the potential to grow with them, developing into a passion for business that could spark a dream. Now, more than ever, we need to help plant these dreams of entrepreneurship within our children. As most Alaskans are aware by now, our state is in an economic downturn, spurred by the plunge in the price of oil. We’re seeing the growing impact of this across industries. But as we move forward, addressing the economic challenges that our state faces, we must continue to advocate for programs that instill financial literacy and business skills that prepare Alaska’s future leaders. By making a long-term investment in Alaska’s future entrepreneurs, we are in turn creating new business opportunities, generating employment and a more diversified economy. Lemonade Day Alaska is an example of one such investment. On Saturday, June 11, more than 3,400 youth in urban and rural communities across the state will participate in Lemonade Day Alaska — a record number for our state. Children from all socio-economic backgrounds are currently learning how to build a stand, operate it and then determine what to do with the money they make. Lemonade Day — a free, experiential program with participants nationwide — encourages students to save a little, spend a little and share a little, giving a portion to the charity of their choice. An average of 80 percent of participants deposit a share of their earnings in a savings account while 60 percent also donate to a nonprofit. This year, the community of Bethel will join more than 30 other participating communities across Alaska, when it holds its Lemonade Day on July 4. I am encouraged and excited to see this program grow, especially among the state’s remote and rural communities. Inspiring entrepreneurship among our youth in rural areas of the state is known to foster economic development and healthy, sustained communities. Entrepreneurship can generate employment and can help encourage residents to remain in Alaska. Lemonade Day also instills community and civic mindedness — characteristics that are crucial for the next generation of business, local and state government leaders, and ultimately, all citizens. A 2007 study of businesses in rural Alaska, conducted by the University of Alaska Anchorage’s Institute of Social and Economic Research, found that many successful entrepreneurs learned about business as children, whether from commercial fishing or stocking shelves at their local store. This reinforces that entrepreneurship is a learned behavior; risk-taking as well as falling and getting back up again, in the business sense, are difficult behaviors to learn as an adult. The University of Alaska Center for Economic Development, which coordinates the statewide effort every year, not only encourages participation in Lemonade Day, but also assists children through all aspects of managing a small business. With the help of Wells Fargo, a Lemonade Day Alaska sponsor, the program offers financial literacy workshops that provide participants with a guide for managing their money—from pricing out raw materials to paying back investors to saving for the future. We all can agree that diversifying Alaska’s economy will require creativity, long-term thinking and action right now. The creation of new businesses, with the potential to grow quickly and create in-state jobs, must be part of our plan for a healthy state economy. And the entrepreneurial efforts of Alaska’s young residents could turn out to be the major employers in our state in the years to come. From small villages to the state’s capital, lemonade stands will pop up for one day, June 11, in most participating communities across Alaska. To see a map of locations in your area or to “Brand your Stand,” visit https://alaska.lemonadeday.org/stands-on-the-map. Not only should we encourage our youth to get involved, but all of us can support the program as Lemonade Day consumers, helping Alaska’s youth gain valuable life skills and experience in entrepreneurship that can set our children up for success and perhaps even spark a dream. And with the fiscal challenges our state faces today, that’s more important now than ever. Nolan Klouda is the executive director for the University of Alaska Center for Economic Development.  

COMMENTARY: Railbelt power utilities entering new era of cooperation

For 75 years, Matanuska Electric Association has provided our members with electricity as a platform for economic growth and community vitality. This year we have a new milestone to celebrate: May 1 marked one full year of producing, transmitting and distributing our own power thanks to MEA’s new Eklutna Generation Station power plant. For MEA, moving from a small distribution-only utility to a full-scale, integrated utility so that it was seamless to our members took significant teamwork, dedication and hard work from our staff and partners. I am proud of what we accomplished together. Similar to MEA, over the past decade, Chugach, Homer and ML&P all decided it was cheaper to build new efficient power plants than continue generating power from the older, inefficient power plants that used to provide power to almost a third of what we call “the Railbelt” stretching 500 miles from Homer to Fairbanks. This new generation allows us to produce power more efficiently. That means every kilowatt-hour produced burns fewer fossil fuels. When the cost of fuel is 50 percent of your annual utility expenses, the ability to reduce that by 30 percent pencils out pretty quickly for our members. The new generation mix also means the Railbelt has more options to serve our consumers. That flexibility has been the key driver of a new power market among the Railbelt utilities that is already achieving operational savings for our members.  MEA’s unique power plant design with 10 smaller engines provides a new product to the Railbelt market — small increments of power. When it is cheaper to buy our power rather than starting up a less efficient, larger generator, other utilities have bought power from MEA. This results in direct savings to our members so much so that we reduced the Cost of Power component of our rates for the last two quarters. It also results in savings to the purchasing utility’s members. As ML&P’s new Plant 2A comes online later this year, we look forward to the potential for cheaper baseload power, which will add even more opportunity for savings to the market. Over the past year, the collaboration has grown into an impressive number of power transactions — each one resulting in cost savings for our members. It has also ushered in a new era of transparency and trust and provides a mix of hope and certainty for future collaboration. I’ve worked in the Alaska utility industry for over 15 years and am fortunate enough to have been handed the reins of MEA just a few months ago. From what I’ve seen first-hand, the Railbelt is moving to a new era of cooperation. Yes, like any family we’ve had our share of disagreements in the past, but what most folks don’t get to see is that we have also been working together with our sleeves rolled up to keep the Railbelt electrical system humming for the better part of statehood with pretty impressive reliability numbers. The improvement in technology, efficiency, and partnerships between the Railbelt utilities in just one year is simply remarkable and unexpected as the entrance of new players shifted the economics. The Railbelt we were trying to fix a year ago is not the Railbelt that exists today — that old model of utilities working independently or against each other is now largely a product of a bygone era. I have been pleasantly surprised by the shift. More progress is on the way. The utilities have been working together over the past year to analyze other potential solutions. The right solution will be determined by the economics and the timing must reflect the economic reality of our state. Benefits are clear, but the question everyone is asking is “are the costs of the solution worth the benefits?” For example, the initial estimate of $900 million in transmission infrastructure upgrades is over-exaggerated and fiscally irresponsible. It is essential to determine a more realistic number that balances the need and value of the upgrades with the capacity of our consumers who will ultimately pay the cost. We want solutions that will benefit Railbelt consumers for decades to come so it is important to take the time to check the facts and do the numbers to ensure one group isn’t harmed to benefit another and any unintended consequences are mitigated. Some of the best minds I’ve met in this state are currently sitting around the table with each other trying to figure this out and I have no doubt they’ll do it. While I wish the annual benefits were going to be anywhere close to the $50 million to $150 million dollars that was initially stated, we’re optimistic there are more savings out there for our members. We look forward to working closely with our colleagues to evolve the Railbelt into something that can meet the needs of Alaska well into the future. Tony Izzo is the general manager of Matanuska Electric Association.  

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