OPEN AIR CONCERT – From left, musicians Ross Venneberg, Brian Neal, Wade Demmert and Roger Schmidt perform an outdoor brass concert for residents of the Pioneers Home Monday. The professional musicians, who are hunkered down in Sitka, are regulars at the annual Holiday Brass Concert. The Pioneers Home has been closed to visitors during the pandemic. (Sentinel Photo by James Poulson)

Low Oil Price, Virus Threaten Alaska PFD

The Associated Press

JUNEAU (AP) — Alaska has no income or statewide sales taxes, and it cuts residents a check every year from its oil wealth.

But the future of that unique payout is in question amid low oil prices and an economy battered by the coronavirus pandemic. The size of the check — expected to be about $1,000 this year — has become a political battle in a state that already struggled to pay its bills. 

Many of Alaska’s 730,000 people see the money as a right. For some, the checks go toward vacations, vehicles or college savings. For others, they’re a key part of their income, especially in rural areas where staples like milk, soup or laundry detergent have to be flown or shipped in and can come with luxury price tags.

Without sharper budget cuts, new revenue from taxes or other measures, “it’s a very real possibility” the program “would either completely or very substantially go away,” economist Gunnar Knapp said.

Fights over the size of the payout have distracted lawmakers, said Mark Desinger of Anchorage, a retired oil pipeline worker. 

In “the rest of the nation ... people pay taxes to their government and the government provides some kind of services, and I think that we should do the same,” he said.

A massive state with fewer people than Seattle, Alaska isn’t the only energy-dependent place reeling from low prices and demand for fuel on top of the pandemic’s fallout. In Wyoming, another sparsely populated state, lawmakers used savings to help cover costs amid low gas prices and slumping coal production but still face school-funding deficits. In Louisiana, which had surpluses after years of budget problems, economists have warned the hit could be worse than during Hurricane Katrina and the recovery even slower. 

But no other state gives residents an annual check like Alaska, whose fortunes have been inextricably linked to oil. 

In 1976, less than 20 years after statehood and shortly before oil began flowing through the trans-Alaska pipeline, voters approved a constitutional amendment creating a nest-egg oil wealth fund. With investments, the fund is now valued around $60 billion, though it’s largely constitutionally protected. Earnings, traditionally used to pay the checks, is the portion that’s easy to spend.

Leslie Dodge, who lives outside Anchorage in Big Lake, said the state should live within its means, even if that means larger budget cuts. She said she supported Republican Gov. Mike Dunleavy’s push for deeper budget cuts last year. Outrage over the proposed cuts helped fuel an ongoing effort to recall Dunleavy.

Dodge says the oil checks are “the people’s money” and the public should be able to vote on any changes to the program.

The state, which for years built feast-or-famine budgets, is at a crossroads. Oil revenue used for the budget fell from $8.9 billion in 2012 to $2 billion in the last fiscal year, with the state projecting it will drop to around $720 million next year. Oil prices, in the $70-a-barrel range this time last year, have fallen below $30 a barrel. 

The state has hit a point “predicted by everybody,” said Pat Pitney, Legislative Finance Division director.

The oil fund’s market performance determined the size of the checks for decades. In 2016, then-Gov. Bill Walker roughly halved the amount available for checks, which the courts allowed. Since then, the payout has become politicized. 

It’s angered some, while others say they would give up some of the money for state services.

Sara Dykstra of Anchorage said she and her husband haven’t had to rely on the oil money, but she knows others do. She said the state should diversify its economy.

“We’ve got to get a side job, Alaska,” Dykstra said.

The state faces an estimated $970 million shortfall for the coming year. Lawmakers have been using savings and oil fund earnings to fill the gaps, and some worry taking too much from earnings could threaten the fund itself.

If oil prices stay below $35 a barrel, Rep. Zack Fields, an Anchorage Democrat, sees no checks “in the foreseeable future, period. There’s no way around that, unless you want to burn our state to the ground in the next five years to pay a short-term dividend.”

Lawmakers have passed a budget, but proposed revenue generators — a state lottery, a $30 tax on wages — stalled. Some lawmakers question adding taxes as many Alaskans and businesses struggle.

Republican Sen. Mike Shower said the state faces painful decisions but that should not justify ending oil checks. He said the government needs to cut more and he wouldn’t consider any taxes without tightening spending limits. 

Knapp, the economist, wonders how Alaska’s troubles sound to other states. 

“If you go and you say ... things are so bad that next year the government might stop sending out money to people in the state and they might even ask us to pay taxes. And other people will go: ‘Excuse me, what’s your problem?’” he said.



Report: DOT Not Using Fed Funds On Ferries

JUNEAU (AP) — A state plan to use federal transportation funds prioritizes highways and bridges over fixing Alaska’s aging ferry fleet, critics said.

The Statewide Transportation Improvement Program does not include plans to use federal money for improvements to the fleet beyond what is required by the funding guidelines, CoastAlaska reported Tuesday.

The state Department of Transportation program approved April 28 leverages nearly $500 million in federal funding to pay for state needs over the next four years.

Under the program, the federal government pays about 90% of each project whether improvements are made to roads, bridges or ferries.

The award includes about $16.8 million annually for the Alaska Marine Highway System, although additional money from the federal funds could be budgeted to maintain the ships.

David Kensinger, a member of the Alaska Marine Highway Reform Project steering committee, said the state’s use of federal dollars does not prioritize the aging vessels.

“When you have a fleet where the majority of the vessels are between 45 and 58 years old, if you want to keep them running, you have to have an active maintenance program,” Kensinger said. 

After the fleet’s last operating mainline ship broke down in February and caused what became a nearly six-week closure of regional service, Republican Gov. Mike Dunleavy said his administration was “doing everything we can to work on fixing this issue.”

Data provided by state transportation planners show the ferry system received an average of $21.2 million annually in federal funding between 2010-19. 

The latest Statewide Transportation Improvement Program projections show the state putting less into ferry repair for the next four years at a time when breakdowns and mishaps have become more common.

The drop is due to other critical highway projects across the state, transportation department Program Development Director Ben White said.

“We have more needs in the state for infrastructure than we have available federal funding so we’re having to stretch the federal dollar further and further,” White said. “But there isn’t a policy that’s roads first.”

The state can redirect federal funds to specific needs and White’s agency is working on an amendment, but details will not be available until summer, he said.

Judge: Delay in Tribes’ Virus Aid Not Too Long

The Associated Press

FLAGSTAFF, Ariz. (AP) — The U.S. Treasury Department is not unreasonably delaying the release of coronavirus relief funding to Native American tribes, a federal judge ruled this week.

The department is tasked with disbursing $8 billion to tribes that was included in a relief package approved in late March. The payments didn’t start going out until more than a week after the April 26 deadline set by Congress, and 40% of the money is being withheld. 

Despite that, U.S. District Judge Amit Mehta in Washington, D.C., rejected an assertion that Treasury Secretary Steven Mnuchin was “twiddling his thumbs.” Congress required Mnuchin to consult with tribes and the Interior Department before sending any payments, making the job more difficult.

The Treasury Department estimated it has spent about 2,200 hours so far on the effort. 

Mehta said that amount of work should have produced better results but doesn’t justify court intervention.

“’Egregious’ delay is the governing standard, and the secretary is not there quite yet, even in the midst of a public health crisis,” Mehta wrote in his ruling.

The tribes can renew their motion to force the distribution of the entire $8 billion if the Treasury Department takes more than twice the time Congress mandated, Mehta said.

“Treasury indicated as recently as last Thursday that it might not disburse the remaining funds for two months, a delay that the court’s order explicitly says will not be acceptable,” Keith Harper, an attorney for the tribes, said in a statement Tuesday. “We agree, and we, along with the court, will be closely following Treasury’s progress and will not hesitate to renew our motion for immediate relief if Treasury continues to drag its feet.”

States and local governments received funding under the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act, largely based on population data.

The Treasury Department also used existing population data in issuing $4.8 billion in payments to tribes. But the department plans to gather more data from tribes on spending and employment numbers before releasing the rest. It also is holding back an undisclosed amount calculated for Alaska Native corporations until a separate lawsuit is resolved.

Mehta has limited the distribution of the funding to tribal nations in that case while he settles the question of eligibility. Attorneys hope to have a final decision by the end of June, according to a court document filed Tuesday.

The Treasury Department and the tribes disagree over whether the corporations, which own most Native lands in Alaska under a 1971 settlement but are not tribal governments, qualify for a share of the funding.

In other related developments:

— The Interior Department’s Office of Inspector General said it is investigating allegations that the federal government improperly released data that tribal governments had submitted in applying for the relief funding. A spokesperson for the Interior Department said Tuesday it requested the review. Tribes and members of Congress also had called for an investigation.

— The Inspector General’s office also is looking into whether any Interior official violated ethics rules relating to the funding. 

Some tribes have suggested that Tara Sweeney, who oversees the U.S. Bureau of Indian Affairs, has personal motives in ensuring Alaska Native corporations receive funding and have sought her resignation. Sweeney worked for nearly two decades for one of the regional corporations before taking the BIA job and remains a shareholder as a birthright.

The Interior Department said Sweeney is “upholding her ethical responsibilities and complies with all laws and regulations,” relying on the advice of career ethics officials.




Alaska COVID-19
At a Glance

(updated 7-7-20)

By Sentinel Staff

The state Department of Health and Social Services has posted the following update on the number of confirmed COVID-19 cases in Alaska as of 11:15 p.m. Tuesday.

New cases as of Sunday: 19

Total statewide – 1,184

Total (cumulative) deaths – 17

Active cases in Sitka – 8 (3 resident; 5 non-resident)

Recovered cases in Sitka – 12 (10 resident; 2 non-resident)

The state says the cumulative number of cases hospitalized is 78.

To visit the Alaska DHSS Corona Response dashboard website click here.



Welcome to the Sitka Sentinel's web page. In order to make the Sentinel's news more easily available during the COVID-19 pandemic, we have taken down the paywall to access articles on this page. Just click on an article headline to read the story. 

March 23, 2020



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