Page 1626 – Must Read Alaska

Governor’s two-year road to getting an income tax

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April 16, 2017

A rather glum gaggle of tax advocates: The House majority voted to place an income tax on working Alaskans to pay for government services. They chose April 15, which is normally thought of as Tax Day, to pass their ***legislation.***

Gov. Bill Walker applauded the Democrat-led House majority on Saturday for passing an income tax, HB-115, which he and the House Democrats renamed last week. It’s now just an “education tax.” Except that, in spite of the name, the tax would pay for all state services.

The road to an income tax started shortly after Gov. Walker took office in 2014.

Gov. Walker convened a group of his trusted allies in Fairbanks that June. They all stayed in the dormitories, and they had break-out sessions and heard presentations about what was important in our state. Participants were specifically told: “Don’t think about how to pay for it. Think about what kind of Alaska you want.”

Tax advocate Robin Brena, who spent tens of thousands of dollars getting Gov. Bill Walker elected, speaks on behalf of higher taxes during the “Sustainable Future” conference in Fairbanks in 2015.

THE WAYBACK MACHINE — AT THE GOVERNOR’S 2015 TAX CAMP

Must Read Alaska was a brand-new newsletter in June of 2015, with only six editions under its belt. Editor Suzanne Downing drove to Fairbanks and attended the governor’s “Building a Sustainable Future” conference, and wrote this set of observations:

A high percentage of the 165 people invited to Gov. Walker’s Building a Sustainable Future conference in Fairbanks were government workers, retired state or municipal/borough government workers, education activists, academics, environmental activists, union representatives, and general left-leaning political activists.

Very few Republican activists were invited or present, but several Interior GOP activists attended as observers. No Republican legislators took an active part in the conference programs, but several Democrats did, including Reps. Adam Wool, Sam Kito, Geran Tarr, Daniel Ortiz (I-Dem), Harriet Drummond, and David Guttenberg.

The three-day conference was informative. From the outset, participants were led through an exercise to build a case for taxes. Breaking into groups of subject experts and interests, they were first asked to determine which government services were critical.

The HSS group, as shown below, determined that all HSS services were critical, although Pioneer Homes were determined not critical, but expensive. [Side note: Several people in the conference suggested closing the Pioneers’ Homes.]

Participants were repeatedly told not to worry about cost, but simply to identify whether various programs had value to Alaska. The breakout group voting sheets were posted in the dining hall at UAF’s Wood Hall, and an observer could easily see that every group reflected the same experience: Every government service is critical and we’re not spending enough on any of them.

An example of the voting from the HSS breakout session follows. On the left sheet of paper, green means it’s a critical program, on the right sheet, green means there’s not enough funding for it. Note there is one lone red dot against Medicaid expansion:

During one of the breakout sessions, participants put green, yellow or red dots on services they felt were critical. They were asked to ignore how to pay for those services, but only decide which were of highest importance.

The next exercise was to determine how to pay for these services. Many tax ideas were brought forward in this process.

The flawed design of the weekend agenda was that it led participants from their Christmas list of all that government should do straight into the wallets of Alaskans and companies doing business in Alaska: Miners, energy companies, fishermen, property owners, sales tax, out-of-state workers, and more. The old adage was brought to mind: “If it moves, tax it.”

There was no meaningful discussion on how to privatize, consolidate, or make efficient current services, or whether local governments should be picking up the costs so voters can have more say in the matter. There was no discussion of best practices from other states for making government more lean and responsive. Taxes were the solution, rather than for example, reducing the number of optional Medicaid services provided by the state.

The conference closing remarks reflected that many of the hand-chosen participants were satisfied with the results of the weekend, that it met their expectations, and that they would be honored to serve as (tax) ambassadors to continue the conversations in their communities, (which were mainly Anchorage, Fairbanks and Juneau).

FLASH FORWARD TO 2017

On Feb. 10, 2017, the House Democrat majority introduced HB 115, which they titled the “State Revenue Restructuring Act.” The bill summary described it:

“An Act relating to the permanent fund dividend; relating to the appropriation of certain amounts of the earnings reserve account; relating to the taxation of income of individuals; relating to a payment against the individual income tax from the permanent fund dividend disbursement; repealing tax credits applied against the tax on individuals under the Alaska Net Income Tax Act; and providing for an effective date.”

The public pushback was profound — polling data shows that Alaskans are still generally opposed to an income tax, unless the pollster frames it as an option between an income tax and a catastrophic alternative. The majority of Alaskans want additional cuts, according to credible polls. They might tolerate a sales tax, but they are likely to revolt politically against an income tax. The House Democrat majority, with HB-115, was going against the will of the people.

Last week, the version that passed had a new name: No longer a Revenue Restructuring Act, it’s now the “Education Funding Act.”

The new description is:

“An Act bearing the short title of the ‘Education Funding Act’; relating to the taxation of income of individuals, partners, shareholders in S corporations, trusts, and estates; relating to a payment against the individual income tax from the permanent fund dividend disbursement; and repealing tax credits applied against the tax on individuals under the Alaska Net Income Tax Act.”

On Saturday, the governor played along with the ruse, sending out a press release praising the House for passage of the sweeping income tax that will be placed on working Alaskans. Here’s his press release:

Governor Walker Praises House for Passage of Education Funding Act

New revenue would provide funding for essential state services

April 15, 2017 JUNEAU – Governor Bill Walker praised the Alaska House of Representatives today for passing the Education Funding Act, which would provide funding for essential state services like education, public safety, and road maintenance. Combined with continued budget cuts and the Permanent Fund Protection Act, SB 26, this bill would fill Alaska’s $3 billion budget deficit and put the state on a path to economic security.

“I commend lawmakers in the House for taking the bold move to pass the Education Funding Act and establish a new source of revenue for our state,” said Governor Walker. “We have seen far too many businesses close in recent years due to the uncertainty in Alaska’s economy. We must pass a complete fiscal plan this year and stop the draw on our precious savings. This includes continued cuts to the budget, a restructure of our Permanent Fund Earnings Reserve, and new revenue. My administration will continue to work with the legislature to pass a complete plan this session so we can move on to building Alaska’s future.”

Governor Walker introduced his FY 2018 budget in December, and stressed the need to establish a complete fiscal plan through continued cuts, restructure of the Permanent Fund Earnings Reserve, and the establishment of a broad-based tax. This bill would fulfill the need for a broad-based tax, and provide a steady source of funding for essential services like public education and state troopers.

NEW TITLE, BUT SWEEPING PROVISIONS

In a move right out of George Orwell’s 1984, the proposed income tax has been rebranded as an “education funding” mechanism.

But the truth is, there is no direct tie to education in the bill. It is simply a general fund tax with a name that proponents hope will make it palatable to the public. After all, it’s for the children.

But it faces tough sledding in the Senate, where the Republican majority has already signaled it is dead.

Senate President Pete Kelly of Fairbanks made this statement:

As I’ve said many times, the only thing standing between Alaskans and an income tax is the Senate. – Sen. Pete Kelly

“The House is a co-equal chamber of the legislative branch, therefore, we plan to give the income tax proposal a fair hearing,” Kelly said. “That being said, reaching into the pockets of working Alaskans – when the state is in the grips of a recession – is absurd on its face. The state lost 9,000 jobs last year, and is expected to lose thousands more this year. This is the worst possible time to penalize people for having a job.

“The Senate Majority’s solution solves the state’s fiscal problem without taxes, which begs the question: why would we impose an income tax on working Alaskans when we don’t need to?” Kelly said.

Alaskans might find it fitting that HB-115 was passed out of the House on April 15, normally thought of as Tax Day for the Internal Revenue Service. (This year that day falls on April 18 because of the Easter holiday weekend.)

Next week, on April 24, will be Tax Freedom Day, or 114 days into the year, when Americans will have paid $3.3 trillion in federal taxes and $1.6 trillion in state and local taxes — nearly $5 trillion, or 31 percent of the nation’s income.

Revenue Commissioner describes 2018 production forecast as ‘stale’

Suzanne Downing

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April 16, 2017

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Commissioner of Revenue Randy Hoffbeck explains why the Revenue Source Book was being presented so late to the Legislature, while Tax Division Director Ken Alper takes notes. (360north.org screen shot)

With somewhat stronger oil prices and increased production, the State of Alaska will have $191 million more dollars to patch the difference between its spending and its revenue, which even now comes mainly from oil.

The gap between those two is now $2.6 billion, down from the $2.8 billion hole the Legislature and the governor are attempting to bridge. That is what the Department of Revenue’s Revenue Source Book says.

The extra cash represents a 20 percent increase in oil revenues — from about $967 million to $1.16 billion — that goes into the part of the State’s budget available as undesignated general funds (UGF).

For Fiscal Year 2017, which ends June 30, the price of oil is projected to be seven percent higher than prior projections, and will remain in the same $50-a-barrel price territory for Fiscal Year 2018, the Walker Administration is predicting.

Production for this fiscal year is exceeding the prior forecast by 7 percent, but the Walker Administration surprised lawmakers on Friday by predicting a whopping 12 percent drop in production for 2018. That is a prediction that seemed to mystify any other credible observers of state oil output, including the Commissioner of Revenue.

ADMINISTRATION SAYS ITS NUMBERS ARE ‘STALE’

Commissioner of Revenue Randy Hoffbeck was quick to dismiss the state’s own numbers, saying that the production number for 2018 was a “stale number,” and should not be counted on.

Committee member Sen. Peter Micciche explained that stale (read: inaccurate) numbers were not helpful to a legislative body trying to find the best way to balance a budget for 2018.

“We are looking at a fiscal plan that is outlined in SB 26. Our assumptions are based on a set of factors that demonstrates that our plan is a [complete] fiscal plan, yet when you plug in numbers that are stale…” He looked exasperated.

In the past several years, the State has hired Dudley Platt, an oil analyst who provided the revenue forecast at a cost of between $50,000 and $100,000. But last year, the Walker Administration decided that the Department of Revenue can do its own forecast.

Now, that forecast is something neither Hoffbeck nor the Department of Natural Resource’s leaders seem willing to stand behind, even as they presented it to Senate Finance.

In addition to the unprecedented 12 percent drop it predicted for 2018, the Administration predicts a swift decline in oil, projecting the Trans Alaska Pipeline will carry less than 350,000 barrels a day in less than a decade. Experts say the pipeline will be unlikely to remain functional with that level of production. But few other experts believe that oil will decline that quickly, unless the State wants it to.

REVENUE REPORT COMES AT LAST MINUTE

The Senate Finance Committee received the Administration’s Revenue Source Book just minutes before the committee met on Friday, giving committee members inadequate time to review it.

Committee Chairwoman Anna MacKinnon made note of the tardiness of the report: “That’s not a lot of time to go through the information,” she understated to Commissioner Hoffbeck.

Notwithstanding the stale numbers it contained, Hoffbeck tried to explain that they were eager to get it right, rather than get it earlier. He denied that the report’s delay was a political ploy by the Administration.

“There was some speculation in the other body that we had withheld the information,” he said. “And that’s simply not true.”

The commissioner said the numbers in the forecast had needed refining. “We weren’t trying to hold them back,” he said.

More than “refining,” the forecast numbers need major rework, especially the short-term and longer term production assumptions. In the meantime, suspicions are growing that the days of an objective, rigorous and nonpartisan revenue forecast are a thing of the past, at least under the Walker Administration.

That the Governor has been looking for any sort of political leverage he can muster to pressure lawmakers into a wide array of tax increases and new taxes, only feeds those suspicions.

The Revenue Source Book was released one day before the Democrat-controlled House passed a massive income tax, which it has dubbed an “education tax” on working Alaskans.

Spring production forecast: ‘Catastrophic’ drop predicted by Walker

Suzanne Downing

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April 14, 2017

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*Commissioners of Revenue Randy Hoffbeck and Resources Andy Mack.*

Friday, the 88th day of the legislative session, will be historic, but not in a good way:

Income taxes: Rep. Paul Seaton of Homer will introduce income tax legislation onto the House floor for a vote. Democrats will insist HB 115 is needed to patch the fiscal gap. It will likely pass the House on a caucus vote after Republicans state their lengthy objections.

Oil taxes: Senate Resources is hearing HB 111, the House Democrats’ plan to scrape more taxes out of oil companies in Alaska.

Catastrophic oil prediction: But neither the income tax nor the oil tax hold a candle to what’s happening in Senate Finance.

The 2018 oil production forecast (Revenue Sources Book) will be presented by the Walker Administration, and legislators are now hearing that the Revenue Department predicts an unheard-of 12 percent drop in throughput in the Trans Alaska Pipeline System (TAPS) in 2018.

No one that Must Read Alaska spoke to tonight could ever recall such a year-over-year reduction in production.

“It’s a catastrophic prediction,” said one industry insider. “I don’t know how they could arrive at that number.”

The Walker Administration is predicting that Alaska oil production will drop to its lowest point in history.

Senate Finance convenes at 9 am, and at the microphone will be Department of Natural Resources Commissioner Andy Mack, and Revenue Commissioner Randall Hoffbeck.

The two will be presenting a forecast that predicts an actual swing of 14 percent in production from fiscal year 2017, which ends in July.

This is the second forecast produced in-house by the Department of Natural Resources. Prior to last July, it had been done by a third party contractor.

In 2016, the department predicted a 7 percent drop for fiscal year 17. The actual production is up by 2 percent, which means the department missed by 9 percent.

“What’s remarkable is that they were already several months into the fiscal year when they were forecasting that, and they still missed by 9 percent,” said one long-time analyst.

Now, the spring forecast for next fiscal year has a reduction never before seen in the history of the pipeline.

Kara Moriarty of the Alaska Oil and Gas Association was doubtful.

“We don’t expect to see that kind of drop and we will be keen to see what they are basing their prediction on,” she said.

OIL PRODUCTION HAS BEEN GOING UP

The first quarter for 2017 has been promising, with a four percent increase in production over the first quarter of 2016.

This month, throughput actually hit 570,000 barrels per day at one point. Yesterday, the throughput was 557,708 barrels.

In fact, the lowest throughput in the history of TAPS was in 2014, when oil production dropped to 513,441 barrels. That’s when Senate Bill 21 was passed and companies began investing again.

Now, the Walker Administration is predicting production at 459,000 barrels a day, nearly 100,000 barrels fewer than today’s production.

There are a couple of ways this radical forecast can be explained: Either the Department of Natural Resources doesn’t have good modeling capabilities, or it is cooking the books to show less revenue in order to push through HB 115 and HB 111, income taxes and higher oil taxes.

“This is part of a Walker pattern to manipulate the public consent and outrage, with numbers that literally defy reality,” one analyst said. “I remember when under ACES decline was 4-6 percent, and people were freaking out. Now it’s 12 percent? This is a political forecast, not an oil forecast.”

In just nine years, according to Walker’s forecast, the pipeline will need to be shut down because the flow of oil will be too low to move it safely.

Any amount below 350,000 barrels a day is thought to be untenable, and could lead to breakages in the portions of the line that are underground, due to pressure from frost heaves.

Must Read Alaska will be posting new information as it becomes available, so check back.

Bright, shiny objects: Congressional recess critics, Dunleavy, end of session

Suzanne Downing

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April 14, 2017

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Silliness: It’s the middle of congressional recess, which means lawmakers are back in their districts meeting with folks.

Alaska Democrats took the opportunity to go on social media and criticize U.S. Sen. Dan Sullivan, Congressman Don Young, and Sen. Lisa Murkowski for not holding town hall meetings at their Democrat-foot-stomping demands.

Uh, Sullivan is in uniform this week, training with the Marines, and next week he’ll be meeting with Inupiats up at the Fort Wainwright area. Rep. Young has been throughout Southeast Alaska meeting with constituents. He was spotted in Ketchikan, Wrangell, Petersburg and Juneau, last we heard. And Sen. Murkowski has been in Ketchikan, greeting the arrival of a Coast Guard vessel. It’s not that hard to keep up with our delegation, if that’s what Democrats really want to do.

In Juneau, the Glacier Valley Rotary Club will be hosting its annual Pillars of Freedom speaking series, and among the inspirational speakers this year is a hometown hero, bronze medal recipient Brandon Stone.

Stone is the son of the late David Stone of Juneau. Watch for a profile of Brandon on these pages soon. And get your tickets at Hearthside Books.

Join Americans for Prosperity Alaska and other supporters of bringing ride-share companies like Uber and Lyft to Alaska at a rally on Friday, April 14. The event is from 6-7:30 pm, location is 49th State Brewing Co., 717 West 3rd Avenue, Anchorage. They’ll have drink tickets and ways for people to send letters of support to our representatives, to encourage them to pass SB-14 as it stands, on the House floor. Contact Ryan McKee at 907-841-3274 or by email: rmckee at afphq.org.

Sen. Mike Dunleavy lost most of his staff when he cut himself out of the Senate Majority Caucus, and now he has fun ending every sentence with “because I’m running for governor,” which is all he is hearing these days at the Capitol.

Daniel George and Christa McDonald, two highly qualified staffers, are on the job market — but with their skills, they won’t last long, we hear.

Friday is Day 88 of the Alaska Legislature, and the House and Senate still haven’t appointed the conference committee for the budget. This is going to take a while.

The University of Alaska Board of Regents passed a resolution opposing the Senate’s proposed use of the Alaska Performance Scholarship, the Alaska Higher Education Fund. The vote was unanimous.

Like Must Read Alaska? Pop on up to the Donate box and keep us working. Or send a check to Must Read Alaska, 3201 C Street, Suite 308, Anchorage, Alaska 99503

The Senate majority cancelled meeting in joint session with the House today. The meeting was to confirm some of the governor’s appointments, such as Attorney General Jahna Lindemuth and Human Rights Commission nominee Drew Phoenix. If they are not confirmed by ajournment, the governor will have to start over. This is all about the budget, although these two nominees have unrelated problems with their confirmation.

A Fairbanks group called Gender Pioneers is having a rally for Mr. Phoenix tomorrow in Fairbanks at noon. Gender Pioneers describes itself as “a peer2peer support group for all transgender, genderqueer, genderquestioning or otherwise gender-bending folks in Alaska’s interior.”

That should help.

More Indian Country ahead — in downtown Juneau

Suzanne Downing

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April 13, 2017

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More Indian Country ahead — in downtown Juneau

Juneau Indian Village, with the white gable of the Governor’s Mansion peeking from behind the bluff above. The Central Council Tlingit Haida has applied for Indian reservation status for a parking area next to the council’s building.

A parking lot just a stone’s throw from the Governor’s Mansion is the most recent site of land that will likely be designated a reservation under the new “Indian Country” rules that apply to Alaska.

Three parcels that are subject to the change are owned by Central Council Tlingit and Haida Indian Tribes of Alaska, and are said to total one-fifth of an acre. The area is used for parking and as vacant land.

The council applied to the Department of Interior to accept the land “into trust”, which establishes it as Indian reservation land, subject largely to tribal authority over municipal authority.

According to a notice received by the State of Alaska and the City and Borough of Juneau, the three parcels are surrounded by other property either owned by the tribe or owned by members of the tribe. Two of the parcels are joined and the third is a vacant lot.

The council has announced no plans regarding the uses of the property, which is located in a part of town known as the Juneau Indian Village, directly across from the Driftwood Lodge, where many legislators live during the legislative session. Other parcels nearby are believed to be in application process, according to sources who spoke on the condition of anonymity.

The State of Alaska has 30 days to provide comment to the Bureau of Indian Affairs, which has set a May 5 deadline. The City and Borough of Juneau was notified just a week ago and have been in contact with the tribe to see if they can reach an agreement to get an extension on the comment period. Tlingit Haida Central Council has made no notice on its web site of the pending request for its land.

The City and Borough of Juneau may need more time to talk with the council about who will provide police, fire, and emergency protection, as well as other services.

The BIA is requesting comments on “the impact of the removal of the subject property from the tax rolls, and…. jurisdictional problems and potential conflicts of land use which may arise.”

Craig, Alaska was the first location of land being placed in federal trust status after the Walker Administration dropped its challenge of the Akiachak case last year. That relinquishing of State authority ushered in the ability of tribes to apply to the federal government for reservation status.

[Read: Indian Country just days away]

[Read: Craig is first tribe applying for federal trust status]

Citizens with opinions on the Juneau land-into-trust question may send them to [email protected]. The State’s deadline for public comment is April 21. Comments can also be sent to the BIA, Alaska Region at 3601 C Street, Suite 1100, Anchorage, Alaska 99503.

One opinion comes from Mary Bishop of Fairbanks, who is a subject expert on Alaska land access and Indian Country. She holds the view that Indian Country was extinguished in Alaska, and that the entire state is better off for it.

“The issue of importance is the future — think seven generations ahead. If these lands are placed into trust, adjacent lands can more easily be placed into trust. Assuming the land is accepted for trust, the tribe is a sovereign nation with trust land under tribal governance as Indian country. The BIA and the courts will provide them as much “self-determination” as Indian law can possibly allow. The tribe can ignore state and municipal zoning and regulations, put in a marijuana business or other business that unfairly competes with non-tribal, taxable and regulated businesses,” she said.

Agencies of the federal government have determined that Indian Country was extinguished by the Alaska Native Claims Settlement Act:

According to the EPA, “Generally speaking, land located in Alaska would not qualify as Indian country based solely on its association with, or ownership by, an Alaska Native Village. Much of the current Native landholding in Alaska has been established through the Alaska Native Claims Settlement Act, which extinguished the prior reservation status of most Native lands. Because Alaska Native Village lands also do not qualify as dependent Indian communities, they are generally not Indian country.”

But the Bureau of Indian Affairs, under former Secretary of Interior Sally Jewell, moved to change the terms of ANCSA. With applications rolling in now for Indian Country, Alaska has entered a new chapter of multi-jurisdictional challenges.

‘Fearless girl’ controversy has an easy fix: Turn her around

The 907

Suzanne Downing

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April 13, 2017

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ART CRITIC

I love this sculpture. “Fearless Girl” is me, all the way from the pony tail to the shoes and face turned upward, hands on hips.

But it doesn’t belong where New York City has put it — in opposition to “Charging Bull,” the iconic bronze sculpture that epitomizes Wall Street.

“Fearless Girl” changes “Charging Bull” — and that is not a subjective observation. The two are now in opposition to each other and because they are in relationship, they have become one piece of art. The girl is undeniably standing up to the bull, which is an existential threat to her. A viewer cannot unsee the relationship and view these works of art individually.

The meaning of that relationship may change depending on the viewpoint, but no one can deny that these sculptures no longer stand alone, but are communicating with each other. And that’s not fair to the original work that occupied this space.

“Fearless girl” has altered the meaning of “Charging Bull,” and the artist of the bull has something to say about it. He wants the girl removed. And he’s right.

Naturally this is going to become a raging controversy. She will become the face of feminism. The bull will be the face of sexism. And already Change.org and the progressives have made the girl their cause d’jour.

“Charging Bull” was originally a form of guerilla art, installed in 1987 by Arturo Di Modica, an Italian-American artist who was born in Sicily. It became beloved and was left in place. It remains on loan from the artist to the New York City Department of Parks and Recreation. If you go to New York City, you’ll want to see it.

Thirty years later, “Fearless Girl,” a sculpture by Uruguayan immigrant Kristen Visbal, was installed as a temporary statement by State Street Global Advisors. It was part of an advertising campaign by McCann New York and was bolted to the ground on the eve of International Women’s Day, March 8, as an advertisement for the company’s “Gender Diversity Index Fund,” which invests in companies run by women.

Now, the progressives, the leftists, and the Change.org petitioners want the statue to stay, and the artist of “Charging Bull” wants it to go. The girl has been channeled into their rage against capitalism and their residual anger at Donald Trump.

[Read: Bill deBlasio Shuts Down Charging Bull’s Artist’s Request to Remove Fearless Girl]

“Fearless Girl” was designed to send a message about workplace gender diversity. The statute was to be in place for just a few weeks. It was a commercial venture.

Then, Mayor Bill DeBlasio said the statue could remain until Feb. 18, 2018.

We know what will happen next — there will be protests and women chaining themselves to the statute of “Fearless Girl” to prevent her removal. There will be chanting and pink pussy-hats. It will get ugly.

Both of these works of art are wonderful. Both speak to the vision and power of art to communicate. But they don’t belong together because one artist is having his work fundamentally altered by the other artist, and without his permission.

But there is an easy fix: Put “Fearless Girl” on a swivel. Allow people to rotate her in any direction they choose. If they’d like to take a selfie photo with her in relationship to the bull, so be it, but she can also stand with her back to the bull, as though he’s on her team facing some unknown threat.

What are your thoughts on the controversy? Should “Fearless Girl” stay put, or find a new home?

House Democrat majority: ‘More than $1 billion in new taxes — or else’

Suzanne Downing

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April 13, 2017

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Income tax, oil tax: Rep. Louise Stutes, R-Kodiak, Rep. Paul Seaton, R-Homer, Rep. Jason Grenn, U-Anchorage, Rep. Gabrielle LeDoux, R-Anchorage, and Rep. Daniel Ortiz, R-Ketchikan, joined with Democrats in voting for SB 26, which requires an income tax.

Taxes — more than $1 billion worth — are now a game of chicken between the Democrat-controlled House and Republican-controlled Senate.

And the Democrat-controlled governor.

Senate Bill 26 came out of the House of Representatives today on a 22-18 vote — and its new tax language found immediate approval from Gov. Bill Walker.

The legislation lined up House lawmakers on one side or the other of a proposed income tax that would generate between $650 million and $700 million from Alaskans’ paychecks.

Another several million would be generated by new oil taxes.

Although Senate Bill 26 doesn’t deal with the income tax except as a condition, it was laden down with what senators called a “poison pill.”

“The House continues to attempt to find ways to pass an income tax and change our oil and gas tax structure, and their latest version of Senate Bill 26 is a poor attempt to do so,” said Sen. Anna MacKinnon. “We are part of a bicameral Legislature that should work independent of each other, properly vetting and improving ideas and concepts as we work through the processes laid out in our respective bodies.”

The bill says that either senators agreed to pass House’s Democrats’ $650 million in income taxes (HB 115), and $350-$900 million or more in brand new oil taxes (HB 111), or SB 26 dies. SB 26 restructures the Permanent Fund so earnings can be used more effectively to pay dividends to Alaskans, and pay for state services.

Democrats said: It’s all or nothing.

Gov. Bill Walker sat in the House Gallery while the bill was being debated this afternoon and smiled broadly, visibly pleased when it passed. His office issued a press release stating his satisfaction at the House’s “courage.”

The courage was that the majority caucus, with help from five non-Democrats, is holding the Senate’s feet to the fire on taxes. Walker has sent word to legislators that it’s all or nothing for him too — he wants an income tax and higher oil taxes. And that means using SB 26 as a high-stakes bludgeoning tool.

Except that this Republican-led Senate is as hard against an income tax as the Democrat-led House is in favor of one.

The $650 million in income taxes, which is the government take currently outlined in a bill that has not yet passed the House, averages to $2,600 per actual Alaska worker.

House members that voted in favor of the SB 26 income tax are now on the record. That includes some for whom such a vote will factor into their next election in 2018: Rep. Jason Grenn, an undeclared freshman from Anchorage, and Rep. Daniel Ortiz, an undeclared representative from Ketchikan. Also voting for income taxes were Rep. Louise Stutes of Kodiak, Rep. Gabrielle LeDoux of Anchorage, and Rep. Paul Seaton.

“You don’t wash down a glass of medicine by chasing it with two glasses of poison. That’s what Democrats did by linking passage of SB 26 to income tax and oil tax hikes,” – Rep. Dan Saddler.

It was a case of vote trading, said Lance Pruitt.

“I don’t trade votes,” he said. “This bill asks me to tie my support for Senate Bill 26 to two legally unrelated bills. That feels unethical and is not how I evaluate policy.”

“Topics of this magnitude should stand on their own merits and be considered and vetted independent of the others,” Sen. MacKinnon said. “The Senate believes a spending limit is necessary and we will evaluate the best course of action for that concept. We remain committed to cutting the budget, reforming government to operate more efficiently, and restructuring the Permanent Fund to help solve the majority of our fiscal challenge.”

The Senate has proposed $250 million in cuts to help offset the impacts of SB 26, which sets the Permanent Fund dividend at a level rate of about $1,200 per year.

Fish and Game says Kodiak ad misleads on sovereignty, fishing

Suzanne Downing

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April 12, 2017

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*Beach seining at the mouth of the Karluk River, (historic photo from Kodiak Maritime Museum)*

The Alaska Department of Fish and Game published a notice today setting the record straight after a paid advertisement showed up in the Kodiak Daily Mirror.

The advertisement claimed that federal regulation allows Native inhabitants of the Native village of Karluk and its vicinity to commercially fish without a license in certain waters of the Kodiak area.

The advertisement goes on to say that non-Natives may not fish there if it interferes or restricts fishing by Natives. Further, the ad states there is “no trespassing on Karluk Indian Reservation.”

According to the Department of Fish and Game, the “Karluk Indian Reservation” was revoked in 1971 by the Alaska Native Claims Settlement Act, “and there is no longer legal authorization for the cited regulation. Accordingly, the Department of Law advises that 25 CFR 241.5 is not valid or enforceable by federal authorities. Fishing in the Kodiak Area is regulated by the State of Alaska, and all persons commercially fishing within the Kodiak Area are subject to all applicable state statutes, regulations and emergency orders.”

The newspaper ad could very well be a legal set-up. This summer, when the salmon return to the Karluk River, some carefully chosen member of the Karluk tribe may be sent out to fish illegally. That’s when the State Troopers would have to intervene, a confrontation would ensue, and then the tribe would have a case to take to court to re-establish its sovereignty.

Access to the Karluk River has been a sore spot for some time, but the only place in Alaska where a tribe has anything like the authority that the Karluk Native Village is claiming is the Metlakatla Indian Reservation.

The “no trespassing on Karluk Indian Reservation” may also be a set up for confrontation this summer.

Under state law, the public has the right to use and have access to the Karluk River. The water is available for public use for the purposes of fishing, boating, and other activities.

This situation is similar in some ways to the conflict with Ahtna Corporation over access to the Lake Klutina area — i.e., there are disputes over easements and permitted uses, such as camping, without the Native Corporation’s permission.

The Klutina case is now factoring into the confirmation hearings for Acting Attorney General Jahna Lindemuth, who is trying to settle that case out of court and away from public scrutiny.

A few years ago, former Sen. Al Kookesh got caught fishing with a beach seine net and more sockeye salmon than was allowed in Kanalku Bay near Angoon. Prosecutors said he and two others caught 148 sockeye, but had permits for 60. He took the case to court and claimed the Alaska Department of Fish and Game has no authority over subsistence uses.

His wasn’t a protest issue, but a claim that he made after he was caught. He now works on the staff of Gov. Bill Walker.

A protest fishery took place on the Kuskokwim River in 2012, when the State closed the river to subsistence king salmon fishing to protect the dwindling stock.

About 60 elders went out to fish and many were cited. The case went to the Supreme Court, which upheld the State’s right to protect the fishery.

As for the Karluk, Alaska Department of Fish and Game’s web site treats the site delicately, with maps and detailed explanations of access points and private land. These efforts are an attempt to prevent conflict before it happens, a desire that may or may not be reciprocated by the Karluk tribe.

Jan Faiks, co-author of the Constitutional Budget Reserve, 1945-2017

Suzanne Downing

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April 12, 2017

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Sen. Jan Faiks of Anchorage, the first woman in U.S. history elected as presiding officer of a state legislative body, has died.

Faiks was Alaska Senate President in 1987-1988. She died April 10, 2017 after being diagnosed with brain cancer last year. The 71-year-old former lawmaker was living in Amelia Island, Fla. with her husband, former Alaska State Sen. Lloyd Jones, at the time of her passing.

The Constitutional Budget Reserve that the Alaska Legislature is depending on today to meet State spending during a period of lower oil revenues, owes its existence to her and a handful of other legislators who sponsored it in 1988. Faiks had actually introduced the legislation a session earlier, but it took a second try to get it through.

ELECTED IN 1982

Gov. Bill Walker ordered all Alaska flags lowered today and Thursday in Faiks’ honor.

Born in Long Island, New York in 1945, Faiks graduated from Florida State University with a math degree and was a teacher, cheerleading coach, and counselor for the Anchorage School District from 1968 to 1978. She was named the district’s Outstanding Secondary Teacher in 1977. She was elected in 1982 to the Alaska State Senate.

Cheryl Frasca of Anchorage, who was working for Rep. Al Adams of Kotzebue as a legislative aide on the Finance Committee, remembers why Faiks ran for office — Sen. Bill Ray of Juneau goaded her into it.

“She was involved in what was known as the Anchorage Women’s Club Free Committee, which was a committee that was working on recommendations for revising the uniform rules for how the Legislature did its business,” Frasca said. Members of the group included her good friend, Jan Bomhoff.

The changes the women wanted were procedures like how the conference committee on the operating budget would function. It had been a free-for-all, with legislators free to put anything into the budget during conference committee. The women also wanted notice of committee meetings to be published a week in advance. At the time, committees met with little notice.

“She and some members of the group went to Juneau to talk to legislators about the changes they proposed, and she met with Sen. Ray. He said something to the effect of, ‘If you think you’re so smart, why don’t you just run?’ So she did.”

Faiks served in the Alaska Senate from 1983 through 1990, and was also a businesswoman during her career as well as the proprietor of her own llama farm. She was a founder of the Alaska Zoo.

She was on the board of directors and chaired the legislative action committee for the Anchorage Chamber of Commerce, was president of the Anchorage Symphony, and was a member of World Affairs Council and many other organizations that continue to be part of Alaska civic life today.

“Jan was classy,” Frasca remembers. “She dressed gorgeously and decorated her legislative office with her own money. She really ratcheted up the professionalism during her freshman year, when she was Senate Rules chair.

Faiks also chaired the Finance and Judiciary committees before becoming president.

ORIGINAL CBR HAD APPROPRIATION LIMITS

As originally introduced, the Constitutional Budget Reserve had an appropriation limit built into it. The original legislation (SJR 40 in 1987) did several other significant things: It provided for distribution of the Permanent Fund earnings, with 40 percent to dividends; 30 percent back into the Permanent Fund; and 30 percent to a Constitutional Budget Reserve. The proposed appropriation limit was designed so that revenue that exceeded the limit would go into the reserve fund.

That bill had 13 co-sponsors — both Democrats and Republicans — including Rick Halford, Joe Josephson, Fred Zharoff, John Binkley, Mitch Abood, Willie Hensley, Jack Coghill, Bettye Fahrenkamp, Rick Uehling, Jim Duncan, Vic Fischer, and Lloyd Jones.

By 1989, however, it was pared down, and what came out of the final legislation, SJR 5, was the Constitutional Budget Reserve we know today.

“Just imagine how different the discussion would be today if this had been addressed nearly 30 years ago,” said Frasca, who noted that Sen. Faiks was not only great with numbers and llamas, but she was thinking far into the future for Alaska.

After serving two four-year terms, Faiks earned her law degree at Georgetown University School of Law in Washington, D.C. and began practicing in Maryland and the District of Columbia. According to an obituary written by Dean Fosdick, former Associated Press bureau chief for Alaska (and friend of Faiks), she also spent seven years as a congressional staffer and investigative counsel assigned to such high-profile projects as updating voting procedures following the George W. Bush vs. Al Gore presidential election.

Faiks served briefly as Assistant Secretary of Mine Safety and Health Administration with the U.S. Dept. of Labor, and was a lobbyist for the Pharmaceutical Research and Manufacturers Association until her retirement in 2013.

Faiks is survived by her husband Lloyd Jones and his three children, four grandchildren and three great-grandchildren. Survivors also include a sister, Nance Jo Ogozalek of Tennessee, and an uncle, Dr. Stan Carson, of Huntington Beach, Calif.

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Jan Faiks, co-author of the Constitutional Budget Reserve, 1945-2017

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