On their way to Andrews Air Force Base, the three U.S. hostages released by North Korea touched down briefly at Ted Stevens International Airport for refueling, before continuing on their journey on Wednesday evening.
The plane landed after 2 p.m. Alaska time and left two hours later. It had arrived in Anchorage from Kadena AFB in Japan.
The three freed Americans released a statement: “We would like to express our deep appreciation to the United States Government, President Trump, Secretary Pompeo, and the people of the United States for bringing us home.”
They arrived at Andrews Air Force Base at 10:40 pm Alaska time, where President Donald Trump is greeting them. The men were heading for Walter Reed Medical Center.
REMEMBERING A HOSTAGE WHO DIED
Last June, after 17 months in North Korean captivity, Otto Frederick Warmbier was released to the United States, although he was comatose and died just six days after his reform.
He was arrested in North Korea in January, 2016 for attempted theft, after allegedly attempting to steal a propaganda poster. Warmbier had been traveling as a student when he took a guided tour of North Korea.
One month after being imprisoned, he suffered a neurological trauma that has never been fully understood. He fell into a coma and was repatriated to Ohio, where he died June 17, 2017.
Gov. Bill Walker is asking for another 41 employees in the Department of Health and Social Services because the overwhelming number of “Medicaid expansion” applicants has meant those applying for food stamps can’t get the help they need from the department.
“[Monica] Windom says her staff has been overwhelmed by Medicaid cases since the 2015 program expansion. Now, it can’t keep up with the food stamp program either,” KTVA reported.
Gov. Walker promised in 2015 that Medicaid expansion was essentially free. So Must Read Alaska reviewed the timeline:
1. In August, 2015, Walker expands Medicaid by executive order. He says it will save the state money. In August of 2015, he wrote:
“If we act now, we can expect to bring in $1 billion in new federal health care dollars over the next six years, and save more than $100 million in state general funds. Medicaid expansion also means up to 4,000 new jobs. In the first year that we expand Medicaid, the state will save $6.6 million. This will provide a much-needed boost to our economy and relief to our budget. We can’t afford not to expand Medicaid,” Walker wrote in the Alaska Dispatch News. “We anticipate $240 million in savings over the next six years as a result of initiatives to improve and streamline the program, and my administration is working with a consultant to identify further opportunities.”
2. Republicans in the Legislature sue to stop him because the Legislature has appropriation power and, besides, they don’t believe this will save the state money.
3. Walker wins the lawsuit and immediately expands Medicaid to adults without children who are earning 138 percent of the federally established poverty level. Superior Court Judge Frank A. Pfiffner said in his ruling that legislators had not proved that expanding the program would cause the state “irreparable harm.”
4. By 2017, over 184,000 people in Alaska are covered by Medicaid.
5. By February, 2018 Alaska’s Medicaid and public assistance applications are backlogged at 20,000. Caseworkers are falling behind.
6. In March, 2018, the Legislature approves $45 million in supplemental spending that the Administration needs to keep Alaska’s Medicaid program from imploding before the end of April.
7. In May of 2018, the Public Assistance Division says it can’t process the paperwork fast enough, and are so busy signing up able-bodied adults without children for Medicaid, that workers cannot process applications for food stamps or electronic benefit transfer cards (EBT cards). And people are now starving, according to news reports.
8. In May of 2018, Walker blames Senate Republicans and wants to hire 41 new state employees to process paperwork for the food stamp program.
9. By 2018, more than 200,00 Alaskans are enrolled in Medicaid due to its massive expansion.
10. Local media outlets blames Republicans for starving people.
Alaska state flags are lowered to half-staff in honor of the passing of Avrum Gross, Alaska’s attorney general from 1974 to 1980 under Gov. Jay Hammond.
Gross was a lifelong liberal who oversaw the Department of Law during the heady years leading up to the pipeline boom in Alaska, including the creation of the Alaska Permanent Fund, the passage of Alaska National Interest Lands Conservation Act, and other measures.
“Av Gross was a remarkable man, who helped set the course that would define Alaska for decades to come. As a leader, we’ll miss his vision, and as a friend, we’ll miss him,” Walker said. He was 82.
Gross had been living primarily at a home he owned near Chatham Strait with AnnaLee McConnell, former Office of Management and Budget director under Gov. Tony Knowles.
Gross was a regular at the Southeast Alaska Folk Festival, playing fiddle. The name of his band was “Honest Attorney Two Flights Up.”
Flags will return to full-staff at sundown on Thursday, May 10, 2018.
In the final year of a governor’s tenure, it’s not uncommon for people in politically appointed positions to find a safe landing spot for their career.
John Hendrix, the governor’s oil and gas adviser, has done just that, heading to NANA Corporation after serving for nearly two years in the Walker Administration.
Hendrix will be the president of NANA’s commercial group, including its subsidiaries in the oil field and mining support services, construction, and other capital projects.
Hendrix has been in Walker’s cabinet for nearly two years at a wage of $185,000 per year. He has attempted to advise a headstrong governor on matters relating to oil and gas development, as it occurs in the real world, outside the Third Floor of the Capitol. Observers say that the job has been challenging at times, as Gov. Walker has been nearly obsessed with bringing his LNG line to fruition, while oil production has taken a back seat.
In a media release, Walker’s office congratulated Hendrix on the new position. The governor timed the announcement to come a few days after he announced he had joined the Democratic primary, according to sources in the administration.
Hendrix is an experienced oil and gas executive who worked for Apache Corporation as general manager and managing director in Egypt.
Earlier this year, Commerce Department Commissioner Chris Hladick left for a job as the administrator of Region 10 for EPA; other high-level appointees are said to be shopping around their resumes.
Both House and Senate today approved Senate Bill 26, limiting the use of the Alaska Permanent Fund’s earnings, while using a rules-based portion of the fund for government services, and ensuring qualifying Alaskans a dividend.
The House voted 23-17, and the Senate 13-6 to concur with the substitute version developed in conference committee.
Gov. Bill Walker issued an immediate press release declaring victory, although SB 26 had been changed substantially from the version he introduced last year. It is still a rules-based approach to tapping the Permanent Fund Earnings Reserve Account, and he indicated he will sign the bill. He sat in the House gallery as debate occurred before the final vote was taken.
Gov. Bill Walker, far left, along with his chief of staff Scott Kendall, deputy chief of staff Grace Jang (hidden), Rep. Gabrielle LeDoux in green, and Revenue Commission Sheldon Fisher, during an at-ease in the Alaska House of Representatives, prior to the vote on SB 26.
A sticking point for some Alaskans is the change from a simple word — “shall” to “may,” referring to how the Permanent Fund dividend is calculated. The word “may” was dropped from the final version.
But in fact, after the legal case brought by Sen. Bill Wielechowski, the State Supreme Court has already decided that the dividend is and always has been subject to appropriation, and so the wording simply reflects that reality, some senators said.
“Failure to act would have jeopardized the survival of the dividend,” said Sen. Hoffman of Bethel, co-chair of the Senate Finance Committee. “This bill establishes a responsible draw from the earnings reserve to preserve the dividend program, while helping fill our budget gap during these difficult fiscal times.”
The bill adopts an endowment management approach and caps the amount of money legislators may withdraw each year from the Permanent Fund Earnings Reserve Account, keeping the original dividend formula intact.
The Permanent Fund Board of Trustees has asked for this rules-based approach for over a decade, to allow fund managers to make prudent decisions, be more nimble, and get greater returns on investments. Without such a rules-based approach, the fund was forced into shorter term, more risk-averse decisions.
SB 26 limits, for three years, the annual draw from the Permanent Fund to 5.25 percent of the fund’s market value for five of the last six fiscal years (effectively 4.35 percent this year).
The Permanent Fund Corporation says this rate of drawdown is sustainable. After three years, the draw decreases to 5 percent.
The law allows lawmakers on an annual basis to decide how that drawdown is split between the dividend program and government spending.
Using the original formula, 2018’s dividend would have been $2,700 this year, but was reduced to $1,600 through earlier legislation. But by leaving the formula in place, future lawmakers could fully fund the dividend according to the original formula when the fiscal outlook gets better or when a new governor takes office.
ELECTIONS HAVE CONSEQUENCES
Many well-intentioned conservative voters may have voted for Bill Walker in 2014 because he promised to cut government spending right away and not take away the people’s dividends.
But Walker has been unwilling to use his veto pen for anything other than the dividend itself and tax credits to small oil exploration companies, both of which have been harmful to the economy.
Must Read Alaska reached out to thought leaders in the Senate and learned that for Senate Republicans, at least, the hope is that voters will send a conservative governor to Juneau who will actually use his veto pen next year, and that voters will also restore the House to Republican leadership.
With SB 26, some conservative legislators are looking at it as a temporary crisis, while in the future, the dividend could go back to the traditional formula when the state comes under “new management.”
Over in the House, this is an election year, and cutting the dividend is not popular with many conservative voters. The vote today will send about $2.7 billion into the State’s general fund.
The House votes crossed the political spectrum, with Rep. Harriet Drummond, one of the hardest left of the Democrats voting the same way as Rep. David Eastman, who anchors the far right:
DIVIDEND THROUGH THE YEARS
Established in 1976 after oil started flowing through the Trans-Alaska Pipeline, Alaskans voted to amend the state constitution to set aside a share of oil revenues in a sovereign wealth fund that would help pay for government in the future. Later, after the Fund was established, the dividend program was added as a way to share oil wealth with Alaskans and protect the Fund itself from irresponsible spending schemes.
The largest dividend was in 2015 at $2,072 and the smallest was in 1984 at $331.29. It has historically been based on a five-year average of the Alaska Permanent Fund’s earnings performance.
President Donald Trump today announced the U.S. will pull out of the Iran deal signed by President Barack Obama in 2015, and will reimpose stringent economic sanctions against the country.
CNN headlined the story, “Trump announces withdrawal from Iran nuclear deal, isolating him further from world.”
But Must Read Alaska reached Bob Gillam, chief executive officer of McKinley Capital Management, to get his view on how the decision will impact financial investment decisions around the world. McKinley is a privately-held investment company specializing in global and international growth equity strategies, and is focused on targeting risk factors.
Gillam, who manages billions of dollars of investments around the world, favored the president’s decision, in spite of the uncertainty it causes.
“This deal was one-sided, and allowed Iran to get nuclear weapons at the end of the agreement,” Gillam said. “The reality is that Iran having nuclear weapons is not in the long-term best interest of the U.S. or Europe.”
Bob Gillam
Gillam said he had dinner with Trump last month and the topic came up. He said Trump didn’t confide in him exactly what he would do, but was concerned the Iran deal was executed without the approval of the U.S. House or Senate, and clearly needed to be addressed because it was not a good deal.
“He wants a better deal for the world,” Gillam said of the president.
But for the short term, restoring sanctions will create a lot of volatility in the price of oil, something that matters to Alaska’s economy.
“Volatility impacts investment decisions. The higher the level of volatility, the less willing investors are to make investments — that’s true in the oil field or the cereal factory,” he said.
Gillam said oil prices are rising but he expects volatility in both directions as a result of the president’s decision. The price of Alaska North Slope crude hit $75.26 on Monday.
There are other forces impacting oil, however: “The world economy is on fire,” said Gillam, who had just returned from Europe and described the boom he witnessed “with construction cranes everywhere. Even with domestic shale production up, that has to make up for the increase in world demand, which is everywhere. You can’t point to a country in the world not doing better than it was two years ago.”
Many leading Democrats in Congress criticized the Obama deal with Iran back in 2015, “but it was a way of Obama kicking the can down the road. There was always going to be a day of reckoning, but it would come for the next president,” Gillam said.
Alaska petroleum engineer Randy Ruedrich said the sanctions — if they curtail Iran’s oil production — coupled with Venezuela’s current economic condition, could produce a spike in prices in the short term. But he added that OPEC and Russia can replace Iran’s oil fairly quickly.
Sen. Dan Sullivan
DAN SULLIVAN, LONG A CRITIC OF IRAN DEAL
Sen. Dan Sullivan, a critic of the Iran deal when Obama signed it in 2015, was in meetings and not available for comment today, but told NPR in October that he still had issues with the deal put together by Obama and then-Sec. of State John Kerry:
“It’s not just the violations that I’ve had problems with with regard to the agreement. It’s the overall structure of the agreement. Remember; even if Iran is completely abiding by all elements of this nuclear deal, by the end of the decade, even less if they’ve complied with it, the agreement almost allows them to legally be on the threshold of being part of the community of nations that have nuclear weapons. I think having another rogue terrorist regime on the verge of having nuclear weapons is not in the interest of the United States. It was one of the big flaws of the deal. And right now they’re showing that they’re not in compliance with it,” Sullivan said.
President Donald Trump
TRUMP, IN HIS OWN WORDS
Trump said the Iranian regime is the leading state sponsor of terror.
“We will be instituting the highest level of economic sanction. Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States. America will not be held hostage to nuclear blackmail,” he wrote on Twitter.
In his statement today, he said:
“[Iran] exports dangerous missiles, fuels conflicts across the Middle East, and supports terrorists’ proxies and militias, such as, Hezbollah, Hamas, the Taliban, and al-Qaeda. Over the years, Iran and its proxies have bombed American embassies and military installations, murdered hundreds of American service members and kidnapped, imprisoned and tortured American citizens. The Iranian regime has funded its long reign of chaos and terror plundering the wealth of its own people. No action taken by the regime has been more dangerous than its pursuit of nuclear weapons. And the means of delivering them. In 2015, the previous administration joined with other nations in a deal regarding Iran’s nuclear program. This agreement was known as ‘Joint Comprehensive Plan of Action’ or JCPOA.
“In theory, the so-called ‘Iran deal’ was supposed to protect the United States and our allies from the lunacy of an Iranian nuclear bomb, a weapon that will only endanger the survival of Iran to continue enriching uranium and over time reach the brink of a nuclear breakout. The deal lifted crippling economic sanctions on Iran in exchange for very weak limits on the regime’s nuclear activity. And no limits at all on its other malign behavior, including its sinister activities in Syria, Yemen and other places all around the world.
“In other words, at the point when the United States had maximum leverage, this disastrous deal gave this regime — and it’s a regime of great terror — many billions of dollars. Some of it in actual cash. A great embarrassment to me as a citizen and to all citizens of the United States. A constructive deal could easily have been struck at the time. But it wasn’t. At the heart of the Iran deal was a giant fiction, that a murderous regime desired only a peaceful, nuclear energy program. Today, we have definitive proof that this Iranian promise was a lie. Last week, Israel published intelligence documents long concealed by Iran conclusively showing the Iranians’ regime and its history of pursuing nuclear weapons. The fact is this was a horrible one-sided deal that should have never, ever been made.”
It wasn’t until Anchorage Daily News reporter Nat Herz caught wind of irregularities in the 2016 General Election that the Division of Elections admitted its computers had been hacked not once, but twice.
The second attack was at 5:37 am on Election Day, 2016.
In what could be viewed as a cover-up by the Division of Elections, Election Division Director Josie Bahnke said she didn’t disclose it because the attack had no effect on the outcome of the elections.
Emails uncovered by Herz support that assertion but do not explain why no report was made to the public in the year and a half that followed, especially after the September, 2017 notification of Russian intrusion into Alaska’s Election Division data, which had also occurred in 2016.
REPUTATION MANAGEMENT FIRST
Yet there were other factors at play in 2016: The division, which operates under the supervision of Lt. Gov. Byron Mallott, had been under criticism after the primary because division staff had allowed some rural voters to vote two ballots — the Republican primary ballot and the “other” ballot. The double voting in Shungnak was first identified by Must Read Alaska.
The rural voting irregularities likely led to the narrow defeat of Rep. Ben Nageak of Barrow, replaced by Rep. Dean Westlake, the Democrats’ favored candidate. (Westlake was forced to resign in January of 2018, after allegations of harassment were made against him.)
The extent of failings in the 2016 Primary process were significant. Westlake won by just 8 votes, and at least 50 people in Shungnak were given both Republican and “other” ballots. Through a challenge by the Alaska Republican Party, a Superior Court judge reversed the election and gave Nageak the win, but the Supreme Court upheld the election of Westlake.
Division of Elections Director Josie Bahnke / screen shot of KTVA interview
After the stain of election irregularities and having to have the election decided by the Supreme Court, Bahnke was under pressure to have a clean General Election.
Bahnke is sticking to prepared statements now, most likely heavily vetted by the Department of Law.
A MISSED OPPORTUNITY TO BE TRANSPARENT
On Feb. 27, 2018, Bahnke responded to media reports of the 2016 Russian cyber scan of the Election Division, saying, “Many businesses and governments have had threat actors scan systems, which is like a robber rattling the door knob or trying to peek in the windows. But scanning a system, versus breaking and entering, are two very different scenarios. We have extensive procedures to secure our information, with multiple layers of security which include a combination of people, processes and technologies to help us conduct secure, trustworthy and accurate elections.”
By the time she made that statement, she had known for more than a year that there had been a second attack, but did not reveal it, instead reassuring the public of the “secure, trustworthy and accurate elections.”
Former Lt. Gov. Loren Leman read the story and said, “My reaction was one of surprise when I read that story. Of course, when things like that happen, we have to decide if releasing the information helps the bad guys. In this case, I would have asked Laura Glaiser and Whitney Brewster at the Division of Elections to discuss this with IT and Risk Management staff and then direct them to be as candid as they could that a system attack occurred, but we were able to defend against it. We wouldn’t have revealed details about the protections we use, but would want to give the public confidence that we are on top of our game in protecting the integrity of elections.”
The Elections Division website has a devoted a section on its front page relating to the Russian attack, which was revealed by the Department of Homeland Security, but makes no mention of the second attack.
Bahnke is sticking with her account of the 2016 election and saying there was no need to inform the public because the election was not “impeded” by the attack. Still not known is what Lt. Gov. Byron Mallott knew and when he knew it, or whether the governor himself was informed.
WAS THE ELECTION WORK GROUP INFORMED?
Mallott convened an election work group last year to advise him and the Elections Division on changes to the way Alaskans vote, including the possible move to a mail-in ballot.
The issue of hacking has not been on the group’s agenda, and has not been discussed at any of its meetings. It appears this high-level working group, which includes a representative from the Department of Law, has not been made aware of the Election Day hack of state computers, or the subject has been kept off of official minutes by Mallott and Bahnke.
The group is meeting today and tomorrow in Anchorage to review vendors for a new ballot system.
Tuckerman Babcock, chair of the Alaska Republican Party, said that members of the working group are reviewing vendors without knowing what they need to protect against.
“Here she and Byron Mallott have had ongoing meetings about changing the election system. You can’t have an ongoing discussion about changing the election system, while you are not telling people what the problems are. You have to go overboard with transparency and honesty when you run elections,” said Babcock, who started his career working at the Division of Elections in high school.
When Sean Parnell was lieutenant governor, he convened an election security project, which was an ongoing study of Alaska elections, done in cooperation with former Lt. Gov. Fran Ulmer, who was the chancellor of the University of Alaska Anchorage. Later, Lt. Gov. Mead Treadwell kept the project going.
The focus during those administrations was on security of the elections, a focus that has shifted under the Walker-Mallott regime to expanding voter turnout in rural Alaska.
‘THE BINDING DEAL’ MAY HAVE OBLIGATED THE STATE FOR BILLIONS
Gov. Bill Walker has been courting China for the past year. Through the Alaska Gasline Development Corporation, he is preparing to sign loan agreements with the Bank of China to finance a $40-60 billion gasline project.
In November, he signed a joint development agreement between AGDC, Sinopec, CIC Capital, and Bank of China, and large LNG buyers in China, Korea, and Japan.
He only needs a few things in place, such as the Legislature’s approval of AGDC’s authority to borrow $1 billion of “stay afloat” money. Senate Republicans have balked, while House Democrats have given their blessing.
Walker also was told by Goldman Sachs and the Bank of China, the global capital coordinators for the project, that he needed to have some gas to sell. He didn’t own the gas. This was going to make it hard to sell the project to investors.
It was time for a good-news press release.
WALKER SIGNS TO BUY GAS AT A PRICE
Today, Walker says he has a binding agreement with BP to buy their share of North Slope and Pt. Thomson gas. The press release issued by his office says AGDC and BP Alaska have agreed to the “key terms” as they relate to price and volume in a gas sales agreement.
The volume is unknown. No one even knows how much BP has in gas in Pt. Thomson.
The price? Also unknown. No one has revealed the price AGDC President Keith Meyer has agreed to pay for that gas, and what the variables might be for cost overruns, or the multitude of risk escalators. Part of this is because there are two other producers who must sign off on any agreement — ConocoPhillips and ExxonMobil. Along with BP, they have complicated gas balancing agreements between them that must be factored in.
The timing of the news release, 10 days before the end of the legislative session, shows both a political purpose and a commercial one, because if AGDC and BP were close to an actual gas sales agreement, they would have said so. That agreement will be truly binding, whereas this “precedent agreement” is “binding lite.”
The carefully worded “precedent agreement” is a bit of progress, and Walker needed to get it out there to keep the project alive.
STILL A FRAGILE PROJECT
Not even the appropriating body, the Alaska Legislature, knows today what the agreed price is or the terms that surround it; legislators will have lots of questions in coming days. The Senate has yet to sign off on AGDC’s ability to borrow $1 billion from China to continue.
Governor Walker made an announcement in March of 2016 that things were not going that well on the gasline. The partners stood by stoically as he said he would take it over from the producers.
Alaskans recall that in 2016, Walker made it impossible for ExxonMobil, BP, and ConocoPhillips to remain as the lead partners in the project, which was advancing slowly due to an unfavorable market, one flooded in natural gas. They were shown the door by the Walker Administration, which chose to go it alone.
But BP remained as a technical adviser to the project, and continues in that role today, which makes it no surprise that the company would also be the one to step forward first and say: “Give it your best shot, Gov. Walker, and we’ll sell you gas.”
With Walker’s campaign season in full swing, AGDC has been in the field polling Alaskans about what it would take for them to get back on board with the gasline. The agency has sifted through polling data and come up with ways to court public opinion. Alaskans told AGDC that they hope the project pennies out, but they have their doubts as to whether it’s viable.
Because Gov. Walker needs some good news to get the wind in the sail of his re-election campaign, now was as good a time as any to announce an agreement to keep working toward an agreement.
A MOVE TO ALLOW FELONY DUI CONVICTIONS TO NOT MATTER AFTER 10 YEARS
Monday is Day 112 in the Alaska Legislature; the constitutional deadline for sine die is next Wednesday. Not much of interest is on the calendar today, as most negotiations are going on in fits and starts behind the scenes.
But one item caught the attention of Must Read Alaska. It’s the “LeDoux Hour of Power,” House Rules Committee on Monday at 9:30 am.
The bill comes from the governor and makes some changes to background checks for the Department of Health and Social Services. It’s a normal cleanup bill, with this title:
An Act relating to criminal and civil history record checks and requirements; relating to licenses, certifications, appeals, and authorizations by the Department of Health and Social Services; relating to child protection information; and providing for an effective date
But now it’s in LeDoux’s hands. Rather than add her amendments in the Judiciary Committee, where the changes are supposed to take place and be debated under Chairman Matt Claman, LeDoux has saved her changes for her own committee, the last stop before the House floor.
What does she want to do to SB 81?
She wants to remove driving restrictions for people who have been convicted of multiple felony DUIs.
In her own words, “The House Rules Committee substitute (CS) for SB81 (version U) would affect persons who have had their driver’s license permanently revoked for a felony DUI conviction and who also had a post-revocation driving-related criminal offense. Under current law there is no pathway for anyone with this set of convictions to ever have their driver’s license restored unless they were to reoffend. The House Rules CS would allow for persons who did not kill or seriously injure another person in connection with the felony DUI conviction or in any subsequent driving-related criminal offense(s) to have their driver’s license restored if 10 years have elapsed since their last driving-related criminal offense.”
There appears to be something wrong with the committee substitute, however: “Under current law there is no pathway for anyone with this set of convictions to ever have their driver’s license restored unless they were to reoffend.” It does not make sense.
But more to the point, this amendment has nothing to do with the purpose and intent of the bill. Why LeDoux is making major, substantive changes in the last-stop committee, a place where she has been known to squelch other amendments or discussion, is curious.
Politicos have offered two theories:
1. She is doing a favor for a donor to her Gabby’s Tuesday PAC. A scan of her donors might reveal that information.
2. She is trying to kill the bill for some unknown reason, because even if it passes the House, when it gets back to the Senate, they’re likely to take a dim view of it due to the “single subject rule.”
It’s not the first time LeDoux has made bills into Franken-bills as they came through the Rules Committee. Last year, she bruised up a simple resolution for Sexual Abuse Awareness Month and provided drama for viewers on 360North.org.
