Page 1615 – Must Read Alaska

Governor was able to make cuts after all

Politics

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June 29, 2016

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BIGGEST CUT IS NOT TO GOVERNMENT

IT’S TO ALASKANS

GOVERNOR BILL WALKER — *Governor Bill Walker answers a reporter’s question during media availability.*

After claiming for seven months he cannot cut government, but that taxes are essential to Alaska’s survival, Gov. Bill Walker made good on his word today.

His choice was to barely touch government spending. There are still more than 16,000 filled positions and a travel freeze that never quite froze.

He chose to trim around the edges in education and commerce, but not touch the lavish labor contracts or ask employees to cover some of their own health insurance premiums.

Instead of program cuts, Walker chose instead to slash the Permanent Fund dividend and various road projects — projects that are completed by the private sector.

The cut to the Permanent Fund Dividend equates to a 50 percent or more tax. (The IRS will take another $300 (plus or minus), leaving taxpayers with roughly $700 in actual benefit from oil royalties).

The governor’s unilaterally imposed dividend tax will give him another $700 million to work with.

YOU’RE A STATE TAXPAYER NOW

Alaskans, by having their dividends garnished, have become state taxpayers without a vote.

This, however, is not a hard hit to the Alaska economy, as the cash goes from your pocket into that of a public employee, and it will still get spent in the Alaska market.

But if you’re an air carrier with a route to Hawaii, you’re already re-calculating the coming winter travel season.

Walker also made cuts to projects under way and on the planning table. They include the Knik Arm Crossing, Susitna-Watana Hydro, and various roads being built or planned with state funds.

He did not cut the Juneau Access Road today, although that fully funded project is still in peril under the Walker Administration. If he was smart, he’d let that project go through.

As predicted, Governor Walker cut cash credits due to the smaller oil and gas producers, chopping them from $430 million down to $30 million. Those are bills he’ll have to pay later; he did the same thing in his first budget.

WALKER: BLAME LEGISLATURE FIRST

Walker began his morning by breathlessly blaming the Alaska Legislature for not giving him a fiscal plan. He glossed over his responsibility in providing his own prudent plan first. The plan he presented earlier was panned by the public, but Walker insisted that all components worked together, and must be passed together.

At a March news conference, Walker said he would call a special session if the Legislature didn’t pass his multiple tax proposals. He wrote to legislators that taxes, spending cuts and a restructuring of the Permanent Fund are “written in pen.” But he could not bring Democrats to the table to agree to cuts, and their vote was essential.

The Legislature, closer to the people, dug in. Sen. Pete Kelly, co-chair of Finance, said taxes would not be considered before budgets came down.

CERTAINTY ABOUT ONE THING: THE SIZE OF YOUR DIVIDEND

Has there ever been a time in Alaska Permanent Fund history when the amount of the dividend was announced in June? Not that anyone can remember. The announcement is usually made in the fall after an extensive calculations — and the amount has been a well kept secret until its unveiling.

At least Alaskans know and can plan accordingly.

The governor’s vetoes, as leaked

Uncategorized

Suzanne Downing

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June 29, 2016

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$1.6 BILLION IS THE HIGH END OF THE TARGET

The talk of the town in Juneau is which state programs are being cut when Governor Bill Walker announces his vetoes on Wednesday at 9 am. Because vetoes are straight ahead as the fiscal year starts July 1.

Walker will hold a press conference on the First Floor Conference Room of the Atwood Building in Anchorage to announce his vetoes, and they are believed to be up to $1.6 billion.

The cuts may include $700 million to the Permanent Fund Earnings Reserve Fund, which cuts Alaskans’ Permanent Fund Dividends down by $1,000, or roughly in half.

Cuts also are said to include $300 million in oil and gas tax credits, which would be cashable credits to the smaller companies, possibly pushing off the liability that Walker began building last year when he refused to pay the owed credits.

Another $500 million would be from the budget itself. Not from employee contracts, not from education, and not from Medicaid. But the wheel is spinning and something will have to go.

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Surprise: Jahna Lindemuth for AG

Politics

Suzanne Downing

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June 28, 2016

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Governor Bill Walker named Jahna Lindemuth his new attorney general. Lindemuth is an attorney in private practice with Dorsey and Whitney LLP of Anchorage.

Her areas of practice includes Appellate; Class Action Litigation; Construction and Design; Energy; Health Litigation; Indian and Gaming; Insurance Law; and Professional Malpractice.

She is a graduate of University of California, Berkeley School of Law, and Drew University.

Gasline czar Keith Meyer to face panel

Politics

SENIOR CONTRIBUTOR

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June 28, 2016

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SUMMER IS GRILLING SEASON

The new head of the Alaska Gasline Development Corporation will on Wednesday get his first chance to meet with the Senate Natural Resources Committee.

The committee convenes at 10 am (Anchorage Legislative Information Office) to receive its mandated update on AK-LNG, the Alaska Gasline project. The last time the committee held an update session, it went for six hours, with presenters wilting under the pressure of senators’ questions.

During the winter update, the simmering tension between the Walker administration and Alaska’s oil producers

Committee chairwoman Sen. Cathy Giessel sent a list of questions to AGDC President Keith Meyer, who at this point is expected to be the sole presenter on behalf of the state.

ON THE GRILL

We obtained that list of Senator Giessel’s questions:

Honorable Presenters,

The Alaska Legislature’s Senate and House Resources Committees (Committees) have been engaged in the second half of the 29^th Legislature. Now that the most recent special session draws to a close, the Committees turn their attention to the Alaska LNG Project (AK LNG). Under the enabling legislation for AK LNG, Senate Bill 138, the project participants are to give an update every quarter to the Legislature.

Since the last update in January, there have been several potentially new developments. In February, Governor Walker and the project participants held a joint press conference that alluded to possible changes to the structure in AK LNG. In addition, legislative offices have received inquiries from members of the press and the public regarding articles covering speculative changes to AK LNG.

Given the timeliness of the upcoming AK LNG update on June 29, 2016, I am providing questions with the expectation that responses will be provided by the date of the update. This is similar to the request made before the update in September, 2015. Unless otherwise stated, the questions are directed to all project participants.

The Pre-Front End Engineering and Design Phase (Pre-FEED) has been indicated to be completed by the fall of 2016.
1. Please describe what is envisioned, from the perspective of each participant, as to what will occur after the completion of Pre-FEED
2. Please describe what is the envisioned, from the perspective of each participant, as to the management structure after the completion of Pre-FEED. If possible, provide an organizational chart with names and job descriptions
3. To the State of Alaska Gas Team (State Gas Team), what is the expectation for the role of the Alaska Gasline Development Corporation (AGDC) and the Department of Natural Resources (DNR) after the completion of Pre-FEED
4. What is the funding source effort to proceed after the completion of Pre-FEED
5. What is the anticipated Work Plan & Budget (WP&B) for the 2017 calendar year
6. How does the State of Alaska (SOA) plan to fund activities after the completion of Pre-FEED

Does the (SOA) still intend to pursue a liquefied natural gas (LNG) project as proscribed in the AK LNG Heads of Agreement (HOA) and Senate Bill 138? In the event it does not:
1. Is the SOA still pursuing an LNG project that is not proscribed by the AK LNG HOA and Senate Bill 138? If so
  1. Will the SOA pursue a project pursuant to the authorizations proscribed in Senate Bill 138 or House Bill 4? Does the SOA foresee authorizations that can be interchanged between the enabling legislation
  2. What is the structure of the venture

Has an analysis from a consultancy been conducted on that new structure that show potential revenues and risks to the SOA, such as the study conducted by Black & Veatch for Senate Bill 138

Will the SOA experience any increase in liability under the new venture structure
Does the SOA intend to purchase property in the Matanuska-Susitna Borough or the Kenai Peninsula Borough for the new venture structure? If so, who will manage those properties
Is there a reason the Legislature has yet to be briefed on the details of that structure by the State Gas Team

Has any company, government entity, or investment group, been identified as potential participants in the venture structure? If so
1. Has an assessment been conducted as to the cost or charge fees of those participants
2. Has an analysis been done for government take for the SOA under the venture structure
Has the SOA engaged in any discussion related to pursuing an LNG project with a company or government entity besides the AK LNG project participants? If so
1. Has the SOA signed confidentiality agreements with anyone other than the AK LNG project participants? What is the purpose of those agreements
2. Has the SOA signed a Memorandum of Understanding (MOU) that has not been publically announced
3. Do the project participants reaffirm their commitment that any agreement that has a term in excess of two years will come before the Legislature for approval? If not
  1. Please describe the type of agreements, to the extent possible, that may bypass the Legislature, and the reason that action is necessary.

It is my intent that, by having these questions presented to the project participants in writing before the update, there is sufficient time to provide responses. If responses are not possible, there is sufficient time to have an explanation as to why that is the case. Should there be any questions, please do not hesitate to contact my office.

I sincerely thank each and every one of the project participants of AK LNG. This is potentially one of the largest infrastructure projects in the world, and Alaskans have waited generations to commercialize their North Slope natural gas. It is through this venue that the Alaskan public can see the progress of a venture that, thanks to changes made in 2015, gives each resident a one-quarter share in AK LNG.

DETAILS

Joint Resources Committee to Hear LNG Status

ANCHORAGE – Senator Cathy Giessel (R-Anchorage), Chair of the Senate Resources Committee will convene an information session of the Joint House and Senate Resource Committees to review the progress of the Alaska LNG Gasline Project.

Who: Senate Resources Committee & House Resources Committee

What: Update on the Alaska LNG Gasline Project

When: Wednesday, June 29 at 10:00 a.m.

Where: Anchorage LIO – Auditorium A, 716 W. 4th Ave., Anchorage, AK 99501 – Live Stream available: http://akl.tv

Why: The joint meeting of the Resources Committees will receive an update on the AKLNG project from the following stakeholders:
Steve Butt, AK LNG Project Manager
AK LNG State Gas Team
AK LNG Fiscal Team

For more information or to schedule an interview, contact Jane Conway or Kari Nore in Sen. Giessel’s office at (907) 269-0181.

Decision points led to commissioner’s exit

Suzanne Downing

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June 28, 2016

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LEASES, TERMINATED AND TRANSFERRED?

The Alaska Department of Natural Resources commissioner has been dealing with a certain lease that has been terminated, and what to do with it.

Everything involving the oil patch is complicated, but this question is not complicated at all:

Should the department do what the Division of Oil and Gas usually does, which is to take terminated leases back and put them out to bid, or do what the governor says to do, which is to let the leaseholder sell the leases directly to another company?

The implications are enormous.

The answer is: The leases in question go back into the pool for independent bidding.

Outgoing Commissioner Marty Rutherford thought so, anyway. Former Commissioner Mark Myers thought so. And Parnell Administration Commissioner Joe Balash, who started the process, also probably thought so.

But Gov. Bill Walker has other plans. No one seems to know why except his Deputy Chief of Staff Marcia Davis.

At the time that DNR took action to terminate these leases, sales on the North Slope were the biggest in history.

The leases are not junk, according to our sources. Not junk at all. They are in the same geography where Armstrong and Repsol found oil. The leases could be soaked in oil and competitively bid at millions, perhaps tens of millions of dollars.

When the leaseholder (we’ll call them XYZ) hit financial challenges, the State began the lengthy termination process. That was under Commissioner Balash in 2014.

Today, the State could surely use the money and by state constitution, the State is required to get the most money it can for it.

XYZ, in an effort to get some value from the leases to satisfy debt, wanted to sell the leases to another company, one we’ll call ABC.

That would have been a usual practice if the leases were active, and if such a lease sale was approved by the Division of Oil and Gas.

But once leases are inactive, it’s a whole other ball game. They get re-bid.

This, we are told, is one of the ethical challenges over which Commissioner Rutherford had to stare down the governor.

Marcia Davis got in the middle of it, trying to steer the leases to the second company. Rutherford, already facing other dilemmas with this governor, had to make a decision to stay or go. She had won the battle, but lost the war, because there were even bigger ethical challenges just on the horizon.

SIDELINED ANYWAY, OVER AK-LNG

Rutherford, once part of the inner circle of Gov. Bill Walker, had found herself in outer orbit for the past few months. It was widely thought that since she came in with Mark Myers, former commissioner, the two would also leave together. They worked together to keep Walker from going off the rails continually. And leaving together is how it is shaping up. Mark left in March. Marty in June, at the end of a very difficult fiscal year, and the beginning of an even worse one.

This Wednesday, the State Senate Natural Resources Committee will convene to hear its scheduled update on the AK-LNG project, the $55 billion gasline for which the Alaska Gasline Development Corporation is representing the State’s interests.

Giving testimony all by himself will be the new head of the AGDC, Keith Meyers, who has been on the job for a few short weeks.

Sitting on the side but not participating will be Rutherford, who will know more than anyone in the room about the project, and her replacement, Andy Mack, who becomes DNR commissioner upon her departure Thursday afternoon. Andy comes from PT Capital, an investment firm. He will need to come up to speed before taking the microphone in a Senate hearing.

GASLINE PARTNERSHIP FALLING APART?

Currently, AGDC, BP, ConocoPhillips, and ExxonMobil are partners in the AK-LNG Project, which is in the preliminary front-end engineering and design phase. To advance to the next stage, the partners must each commit $500 million.

But that’s not likely to happen soon. The industry partners have told the governor they are too strapped to commit.

ConocoPhillips’ Natalie Lowman told a reporter last week that the governor through AGDC “has proposed a state-controlled project, and conversations to better understand that proposal are under way.”

Conversations are indeed being had all across the oil patch regarding the governor’s proposals. He’ll have to move carefully now that everyone is watching him, and conversing about him.

New AG: Beth Kerttula or Marcia Davis?

Suzanne Downing

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June 28, 2016

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Screen Shot 2016-06-27 at 6.17.57 PM — *Beth Kerttula*

Kerttula: Obama loyalist and oil industry foe

Former House Rep. Beth Kerttula is being discussed by Juneau insiders as Governor Bill Walker’s next pick for attorney general for Alaska. An announcement will be made Tuesday afternoon at the governor’s press conference.

Kerttula, a lifelong Democrat, served as Juneau’s representative from 1998 until she resigned in 2014 to accept a fellowship at the Center for Ocean Solutions at Stanford Junior University, her alma mater. She had been passed over by then-Gov. Sarah Palin when a Senate seat opened up. That seat was awarded to now-Sen. Dennis Egan.

Kerttula left the Stanford fellowship after just a few months to become the Obama White House ocean czar.

Her father is former state senator Jalmar “Jay” Kerttula.

When she was in the legislature she was the only legislator who voted against a resolution in support of opening the Arctic National Wildlife Refuge.

Davis: Engineered the win for Walker

The other top choice being discussed throughout the Capitol is Marcia Davis, currently the deputy chief of staff for the governor.

The Alaska Public Offices Commission filed a complaint against her for hiding sources of money to help Bill Walker win in 2014.

The complaint, dated Nov. 3, 2015 alleged Your Future Alaska Inc. was created specifically “to ‘sanitize’ campaign money.

It is illegal under state statute and regulation to use a third party to hide the source of a campaign donation.

The complaint stated that YFA gave $21,000 to Alaskans First, which had the same officers as YFA.

There were a tangle of other offenses in the case, which Davis was able to settle with the Alaska Public Offices Commission.

The Republican Party of Alaska called for Davis’ firing because of her unethical behavior. However, Grace Jang, the governor’s communications director, said her past actions had no bearing on her role in the governor’s office.

RICHARDS LEFT QUICKLY

Gov. Walker’s first attorney general left quickly last week, with one day of notice. Craig Richards said he needs to spend more time with his family.

“With great reluctance, I have accepted Craig’s resignation,” Governor Walker said in his press release. “When I appointed Craig in December 2014 as Attorney General, I knew Alaskans would benefit from his deep respect for the law and his vast knowledge of finance. As the state’s top attorney, work has pulled him away from his 3-year-old son, and I am grateful for the sacrifices he and his family have made in service to Alaska. Given Craig’s knowledge of gasline issues, I’m certain the state will continue to benefit from his oil and gas expertise as we push toward completion of a project.” (Underline ours)

“It is with a heavy heart that I announce my resignation as Attorney General,” said Attorney General Craig Richards in the governor’s press release. “I support the Governor and was honored to serve as the head of the State’s legal team. My reasons for leaving are personal. I feel I need to re-focus on my family, which is impractical given the travel and workload requirements of the job. The Department of Law has top notch lawyers, and I know the State is in good hands with these devoted public servants.”

Jim Cantor, who is Deputy Attorney General, is acting Attorney General until the appointment is made on Tuesday.

P-Fund will lose money this year, thanks to Brexit

Politics

Suzanne Downing

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June 27, 2016

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*Your Permanent Fund dividend by the year.*

TELLING IT STRAIGHT

Angela Rodell, executive director of the Alaska Permanent Fund, told the editorial board of the Fairbanks NewsMiner last week that Senate Bill 128 might be a tad too optimistic in its premise of how much the Permanent Fund can earn year after year.

Rodell was prescient: She said all that before Brexit happened.

SB 128 is Gov. Bill Walker’s attempt to restructure the Permanent Fund and start spinning off more earnings than it currently does to cover state programs. Not a bad concept, we agree.

However, a consistent draw of 5.25 percent of the market value of the Permanent Fund, as proposed in the governor’s bill, is aggressive. It would yield about $2.5 billion per year for state spending, which sounds like a lot, but 5.25 percent is what Democrats wanted, led by Rep. Les Gara.

But you never know about the markets, as Brexit has shown. The fund would have to earn more than 7.25 percent year after year to be safe under this scenario.

The current global events in Europe show why the Legislature was wise over the past many months to take a cautious and questioning approach to the proposed changes to the Permanent Fund; while the governor said we need to take volatility out of our revenue picture, the actual degree of Permanent Fund stability is exactly what legislators were questioning.

GOVERNOR IS FURIOUS, FUND IS SLIGHTLY DOWN

Gov. Bill Walker is livid, according to those around him. Livid that anyone would question the math on SB 128.

Walker seems to believe that conservative-minded Rodell has given Fairbanks legislators the cover they need to vote against SB 128.

But it’s not Rodell who gave them cover. It was Great Britain.

The Permanent Fund’s current losses may have come just in time to give Walker a wake-up call. The P-Fund was only up 1.2 percent in the third quarter, trailing its performance benchmark return of 2.3 percent. With Brexit roiling the global markets, there is no way the fund can recover enough by Thursday’s close of business to make up the losses.

The balance stands at $52.8 billion right now, slightly down for the year. But check back on Thursday, when the fiscal year ends and the serious number crunching begins.

Rogoff clock is ticking

Suzanne Downing

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June 27, 2016

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CASE INVOLVES COCKTAIL NAPKIN

Cofounder of the Alaska Dispatch, Tony Hopfinger, has a piece of Alaska history written on a cocktail napkin. It’s a piece of old Alaska, when your word was your bond.

Hopfinger needs to keep that napkin safe in a bank vault. Seriously: It’s the contract that Alaska Dispatch now-owner Alice Rogoff signed, saying she’d pay him $1 million for his 5 percent part of the publishing property. It will be in a museum some day, mark our word. Perhaps even in the Newseum in Washington, D.C. if this thing plays out.

In case you missed the first telling of it, Hopfinger filed a complaint against Rogoff for nonpayment on June 15. For him, it’s a lot of money: $1 million, plus some expenses. For her, it’s a nuisance payment.

The bar napkin contract was, it is alleged in the complaint, witnessed by her attorney. If so, it joins others; we found a genuine plethora of bar napkin contracts online that are click-worthy.

LOOKING FOR ALASKA

Alice Rogoff’s deal-gone-wrong is not yet as screen-worthy as the breakneck speed of Arbitrage, starring Richard Gere, where a deal on a cocktail napkin, a few temporary bridge loans, and some fast talk combine to patch together the fictional hedge fund operator Robert Miller’s finances from a cascading series of catastrophes.

Still, it’s a bit of a thriller. This is the woman who arranged for President Obama to come to Alaska last August to dine with her in her home. She’s kind of a big deal. She served him caribou she killed with her bare hands. And berries she picked with her bare hands. And some other things she made with her bare hands.

She’s the woman who engineered Governor Walker’s victory in 2014, after holding a grudge against Gov. Sean Parnell for not properly acknowledging her role in securing the Kennedy Center for Ted Stevens’ funeral.

She’s the woman who has met with Gov. Walker many times over to convince him to use the Permanent Fund in a totally different way, possibly with some kind of arbitrage play.

Sovereign wealth funds, we have learned, can be subject to all kinds of woes, ranging from corruption to mismanagement. The Alaska Permanent Fund has escaped that fate so far, but there are sharks circling. With David Rubenstein managing a part of the Permanent Fund, there could be a movie in this yet.

The Washington Post found the story intriguing and reported about the napkin contract a year ago on July 8:

Rogoff had already tried to establish an Alaskan arts television network and was musing about starting a Web site that would focus on underreported stories about the 49th state when she was introduced to the three journalists behind a year-old online news organization named the Alaska Dispatch. An hour of conversation over buffalo burgers, a handshake and an agreement inked on a napkin led to Rogoff’s purchase of 90 percent of the Dispatch in July 2009. “She gave us this amazing opportunity to open offices and hire … a team of people willing to take a risk,” said Tony Hopfinger, who had been running the site out of a spare bedroom. Over the next five years, about 30 reporters and sales staff came onboard.

TWENTY DAYS IS NEXT WEEK

According to Alaska law, Rogoff has 20 days to respond to the complaint. That gives her until the first week in July, if you exclude weekends. The judge assigned to hear the case is Andrew Guidi, who has a good reputation in Alaska.

Has Alice ever been sued before? Not that we can find. She may need some technical assistance; we’re here to help.

Will Alice counter-sue Hopfinger? She has her reputation to consider. If she doesn’t settle soon, the we can expect a civil trial between now and the election of the next governor, an event for which she has shown keen interest. And there’s still the matter of the still-owed bridge loan that she took out from Northrim Bank, which is no doubt watching her closely.

A lawsuit, with its uncomfortable depositions that would be made public, could throw a wrench in Rogoff’s plans for Arctic domination, or at least legacy.

And there is the question as to whether David Rubenstein, her husband and one of the richest men in the world, will let her hang out there with her first true comeuppance in 64 years? We talked to someone close to the family who said that if he had planned to bail her out, he would have done so by now.

Is the story dead? Not hardly. Word is out the Los Angeles Times is now poking at the coals, and that Bloomberg is blowing on the embers.

Following up, the Washington Post had this. Not the kind of greenhorn legacy that Rogoff was seeking, but good material for a documentary.

Juneau’s myopic response to cruise lines’ lawsuit

Suzanne Downing

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June 25, 2016

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WHALE OF A COMPLAINT COULD BE SETTLED

By WIN GRUENING

After the City and Borough of Juneau was served with a lawsuit by the cruise industry in April, it seemed both sides would reach an amicable agreement. After all, the industry was merely trying to achieve certainty in how marine passenger fees are spent and only resorted to federal court after its pleas to resolve the issue were largely ignored by the city.

City Manager Rorie Watt promised to “keep the lines of communication open” and appeared to be open to negotiation. Since then, however, Watt has been openly dismissive of industry concerns that unbridled taxes make the city a less competitive cruise destination. The CBJ Law Department has taken a series of actions signaling unwillingness to compromise and discouraging efforts at reaching a settlement. This is a mistake.

For readers who haven’t followed the issue, the cruise lines contend CBJ is spending fees collected from its passengers on projects and services unrelated to any direct benefit to passengers and their ship — a violation of state and federal law and the U.S. Constitution.

Their lawsuit asserts the city has collected and misspent over $41 million in fees since 2001, including $22 million on general governmental operations and another $2 million on city bus service. Further, CBJ has allocated $10 million to build a man-made island, elevated walkways, a city park and infrastructure to support a whale sculpture over a mile from the cruise ship docks.

City officials point to a recently completed state audit as proof that passenger fee proceeds are being spent correctly. However, the audit doesn’t mention or examine the use of fees that are the subject of this lawsuit.

While it is puzzling the city had not secured an independent legal opinion before this, the Assembly took the correct action in initially authorizing the expenditure of up to $50,000 for this purpose.

BRING IN THE LAWYERS

Then things starting going awry. The CBJ Law Department hired a law firm to represent them and invited former mayor Bruce Botelho to become part of the defense team. This represents a huge conflict as Botelho in his previous position as mayor was arguably the prime promoter of the current policy that led to the lawsuit.

While Botelho’s knowledge of the history may be useful, it’s difficult to see how the city will receive independent legal advice when one of the defense team members will be naturally predisposed to staunchly defend the city’s past policy, rather than negotiate a settlement.

Next, in a highly questionable move, the city decided it could pay for legal defense costs with marine passenger fees — suggesting if the city loses the lawsuit, cruise passengers will be deprived of the use of future parks and walkways “created” for them. Therefore, the cost of defending this lawsuit “benefits” them. This convoluted reasoning sets up a situation where the city’s legal team has no incentive to settle and feel they can litigate this to the Supreme Court, if necessary, since it isn’t their money they are spending.

Next, in a procedural ploy that will only delay resolution of this matter, the city filed a motion to dismiss the lawsuit claiming federal courts lacked jurisdiction and the matter should be adjudicated in state court. This seems pointless since, regardless of the outcome, the decision will surely be appealed and eventually end up back in federal court. However, in order to accomplish this, the city was forced to argue in their motion that marine passenger fees are not actually “fees” but a “tax” collected “for the general benefit of the community.” The argument undercuts the city’s own lawsuit defense and bolsters the industry’s contention the fees are not specifically benefitting cruise passengers and their ship as legally required.

This kind of legal mumbo-jumbo and maneuvering is hard to understand. The city could fight this for years and, at best, in the unlikely event they win every argument, they will have only preserved the status quo. Is that worth the risk of losing the use of all passenger fees?

Legal arguments aside, there’s so much more at stake here. Disputes between business partners that end up in court rarely result in one side or the other really winning. In the real world, it usually means the business and relationship are damaged beyond repair and any legal victories seem hollow in the bloody aftermath. Gearing up for a long, expensive legal battle with one of our largest and most important community economic partners is short-sighted.

Everyone’s interests are best served by an expeditious and mutually agreeable out-of-court solution to this dispute. A similar lawsuit between the state of Alaska and the cruise industry was wisely settled out of court in 2010. It is perplexing why our city leaders cannot see the wisdom in doing likewise.

• Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is active in community affairs as a 30-plus year member of Juneau Downtown Rotary Club and has been involved in various local and statewide organizations.

Governor was able to make cuts after all

BIGGEST CUT IS NOT TO GOVERNMENT

IT’S TO ALASKANS

YOU’RE A STATE TAXPAYER NOW

WALKER: BLAME LEGISLATURE FIRST

CERTAINTY ABOUT ONE THING: THE SIZE OF YOUR DIVIDEND

The governor’s vetoes, as leaked

$1.6 BILLION IS THE HIGH END OF THE TARGET

Surprise: Jahna Lindemuth for AG

Gasline czar Keith Meyer to face panel

SUMMER IS GRILLING SEASON

ON THE GRILL

DETAILS

Decision points led to commissioner’s exit

LEASES, TERMINATED AND TRANSFERRED?

SIDELINED ANYWAY, OVER AK-LNG

GASLINE PARTNERSHIP FALLING APART?

New AG: Beth Kerttula or Marcia Davis?

Kerttula: Obama loyalist and oil industry foe

Davis: Engineered the win for Walker

RICHARDS LEFT QUICKLY

P-Fund will lose money this year, thanks to Brexit

TELLING IT STRAIGHT

GOVERNOR IS FURIOUS, FUND IS SLIGHTLY DOWN

Rogoff clock is ticking

CASE INVOLVES COCKTAIL NAPKIN

LOOKING FOR ALASKA

TWENTY DAYS IS NEXT WEEK

Juneau’s myopic response to cruise lines’ lawsuit

WHALE OF A COMPLAINT COULD BE SETTLED

By WIN GRUENING

BRING IN THE LAWYERS

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