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OPINION: Alaska has made progress toward righting its financial picture

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OPINION: Alaska has made progress toward righting its financial picture


By Luke Welles

Updated: 1 hour ago Published: 1 hour ago

The State of Alaska’s financial outlook is not entirely negative. Serving as a volunteer commissioner on the State of Alaska Municipal Bond Bank since 2008, I have engaged with all major credit rating agencies, including Fitch, S&P, Moody’s and Kroll. The primary objective of these interactions has been to secure the most favorable and realistic credit ratings possible. Achieving this goal is crucial, as it directly contributes to minimizing the interest rates on general obligation bonded debt. This financial prudence directly benefits Alaskans, particularly those in communities and rural health entities that utilize the bond bank.

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Moreover, a strong credit rating does more than just lower interest rates. It offers a thoroughly analyzed perspective on the future economic outlook of the State of Alaska. This analysis is a valuable tool for investors considering the allocation of substantial capital investments in state projects. Thus, maintaining a good credit rating is a strategic measure that underpins both fiscal responsibility and economic development in Alaska.

I’m concerned about the perception of our state’s finances and economic outlook due to static, mandated fiscal reports like the 10-year forecast. A significant source of the problem lies in the rigidity of a few of our statutes mandating static reports which do not consider reality. Alaska Statute 37.07.020(b)(2) requires that the state “must balance sources and uses of funds held while providing for essential state services and protecting the economic stability of the state” which is the guiding light for the 10-year forecast. Also required, AS 37.13.145(b) states that: “At the end of each fiscal year, the corporation shall transfer from the earnings reserve account to the dividend fund established under AS 43.23.045 , 50% of the income available for distribution under AS 37.13.140 ” which drives the projected “statutorily defined” permanent fund distribution in the 10-year forecast. The result is a significantly misleading 10-year forecast; especially given what has occurred in the past decade.

In 2016, an impactful decision by Gov. Bill Walker to veto half of the funds allocated for the Permanent Fund dividend, which had been approved by the state Legislature, led to significant legal and fiscal implications. Sen. Bill Wielechowski initiated legal action, challenging the veto on the grounds that it contravened the constitutional amendment which established the Permanent Fund. He contended that funds dedicated to the Permanent Fund dividend should be immune to gubernatorial veto. However, Anchorage Superior Court Judge William Morse upheld the governor’s veto, stating that any alteration to the governor’s veto power necessitates explicit and formal legislative action.

Without a statute change, the governor is mandated to include a “full” dividend in the state budget forecasts, a requirement that constrains the presentation of a balanced budget meeting the requirements of AS 37.07.020. It is, therefore, prudent for the Legislature to consider amending the statutory language governing the Permanent Fund earnings distribution language. Such an amendment would grant the governor greater leeway to formulate more realistic budget forecasts that are aligned with projected balanced budgets. This change is crucial for fostering transparent communication with the public regarding the state’s financial outlook, considering the necessity for the governor and legislators to balance actual income against expenditures.

The current fiscal situation of the State of Alaska must be realistically presented to the public in context of the past decade. The state’s 2013 unrestricted operating and capital budget stood at $7.9 billion, which declined to $4.5 billion in 2017 and 2018, and is estimated to be approximately $5.2 billion by 2025. This represents a significant decrease of 34% in unrestricted revenue over the past decade. Consequently, the state has struggled to meet its operational needs as per AS 37.07.020(b)(2) and unable to disburse a “full” dividend in line with current statute language (AS 37.13.140).

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The reality is that the past Legislatures and governors have ultimately made significant cuts in the past decade and adopted the percentage-of-market-value, or POMV, rule in 2018 and implementing it 2019, with a 5.25% subject to appropriation draw through 2021 and 5% thereafter. As a result, dependence on the projected petroleum revenues has decreased from more than 80% of the state’s budget in the past to 16% of the state’s projected 2025 total budget and 33% of the state’s 2025 unrestricted general fund budget. POMV has proven to be very effective in stabilizing state revenues in the past five years and combining the earnings reserve account with the corpus account with an “up to” draw of 5% for future legislators will add even more stability for Alaska’s fiscal future.

The State of Alaska’s current financial situation reflects a stable position, attributable in part to substantial budgetary reductions and the imposition of a cap on the growth of state agency expenses at less than 2% per year. This fiscal discipline is evident when comparing the fiscal year 2019 state agencies’ expenditure of $3.95 billion with the projected budget for fiscal year 2025, which stands at $4.32 billion. Additionally, the state’s fiscal health is bolstered by the full funding of Public Employees’ Retirement System and Teachers’ Retirement System obligations.

Moreover, the state’s total debt service to maturity, inclusive of school debt reimbursement, is less than $1.5 billion. Notably, more than 71% of this debt is scheduled to be repaid within the next 10 years. This scenario underscores the state’s effective management of its financial obligations and its commitment to maintaining a robust fiscal framework.

Fiscal debates and discussions about expense priorities are vital components of good governance. Annual discussions are key to creating accurate, realistic, and transparent financial reports and projections. It is important that the fiscal documents conform to both the wording and the spirit of state statutes. My recommendation is for legislators to amend statutes related to the Permanent Fund dividend distribution during the current session and to enhance the accuracy of the 10-year forecast with associated financial reports.

Luke Welles is the chairman of the Alaska Municipal Bond Bank Authority’s board of directors. He is the Senior Director of Business Development & Strategic Partnerships for the Alaska Native Tribal Health Consortium. Prior to this position, Welles served as Vice President of Finance for the Arctic Slope Native Association.

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The views expressed here are the writer’s and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser. Read our full guidelines for letters and commentaries here.





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Alaska

Record heat wave killed half of this Alaska bird population, and they aren’t recovering | CNN

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Record heat wave killed half of this Alaska bird population, and they aren’t recovering | CNN


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A marine heat wave has killed approximately half of Alaska’s common murre population, marking the largest recorded die-off of a single species in modern history, research has found. The catastrophic loss points to broader changes in marine environments driven by warming ocean temperatures, which are rapidly and severely restructuring ecosystems and inhibiting the ability of such animals to thrive, according to a new study.

The Northeast Pacific heat wave, known as “the Blob,” spanned the ocean ecosystem from California to the Gulf of Alaska in late 2014 to 2016.

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The event is considered the largest and longest known marine heat wave, with temperatures rising by 2.5 to 3 degrees Celsius (4.5 to 5.4 degrees Fahrenheit) above normal levels, said Brie Drummond, coauthor of the study that published December 12 in the journal Science.

Common murres, or Uria aalge, are known for their distinctive black-and-white feathers, resembling the tuxedoed look of penguins. These predators play a critical role in regulating energy flow within the marine food web in the Northern Hemisphere.

While murres have experienced smaller die-offs in the past as a result of environmental and human-induced factors, they typically recover quickly when favorable conditions return. However, the magnitude and speed of the die-off during this heat wave was particularly alarming to Drummond and her team.

The researchers determined the scale of this catastrophic population loss by tracking extreme population declines at 13 colonies across the Gulf of Alaska and Bering Sea that have been monitored long-term. By the end of the 2016 heat wave, Drummond and her team counted more than 62,000 common murre carcasses, which only accounted for a fraction of those lost since most dead seabirds never appear on land.

From there, biologists monitored the rate at which common murres were dying and reproducing and found no signs of the colonies returning to their previous size.

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“The only reason we had this data and were able to detect this (event) was that we had these long-term data sets and long-term monitoring,” said Drummond, a wildlife biologist at the Alaska Maritime National Wildlife Refuge. “(Monitoring) is the only way we’ll be able to continue to look at what happens in the future.”

A common murre census plot at the Semidi Islands, Alaska, before the 2014–2016 Northeast Pacific marine heat wave had 1,890 birds (left). In 2021, the plot had 1,011 birds.

Before the 2014–2016 Northeast Pacific marine heat wave, a common murre census plot at the Semidi Islands, Alaska, had 1,890 birds (left). In 2021, the plot had 1,011 birds (right).

As temperatures in Alaska rose, the murres’ food supply dwindled, with one of their primary prey, Pacific cod, plunging by about 80% between 2013 and 2017, the study revealed. With the collapse of this key food source, about 4 million common murres died in Alaska within the period from 2014 to 2016, the researchers estimated.

“There are about 8 million people in New York City, so it would be like losing half of the population … in a single winter,” Drummond said.

Before the start of the 2014 heat wave, Alaska’s murre population made up 25% of the world’s population of the seabird species.

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However, when comparing the seven-year period before the heat wave (2008 to 2014) with the seven-year span following (2016 to 2022), the study found the murre population in 13 colonies spread between the Gulf of Alaska and Bering Sea declined anywhere from 52% to 78%.

Drummond and her colleagues continued monitoring the murres from 2016 to 2022 after the end of the heat wave but found no signs of recovery.

While further research is necessary to fully understand why murres are not bouncing back, Drummond’s team believes the changes are driven by shifts in the marine ecosystem, especially those associated with food supply.

Reproductive challenges and relocation difficulties also may be contributing to the species’ lack of rehabilitation, according to Dr. Falk Huettmann, an associate professor of wildlife ecology at the University of Alaska, Fairbanks, who was not involved in the study.

Unlike some other species, seabirds such as murres take a longer time to reproduce, making repopulation a slower process, Huettmann said.

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Additionally, Huettmann noted that murres are bound to the colonies they reside in, and as they are forced to relocate, it can be more difficult to adjust to new conditions.

While temperatures continue to rise in areas such as Alaska, tropical or subtropical waters are moving into different areas, Huettmann said, which creates conditions for an entirely new ecosystem.

With these environmental shifts, animals will either adapt or be unable to survive in the new climate.

Murres are not the only species in Alaskan waters undergoing significant changes. Huettmann noted the tufted puffin, a sensitive marine bird, has been seen migrating north because of poor conditions in southern areas of the North Pacific, including California, Japan and Russia, yet it’s struggling to adapt to its new home. King salmon, whales and crabs are other species grappling with finding their place, he said.

While heat waves have affected many species, other populations aren’t substantially impacted, Drummond said.

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Half of the data collected from organisms such as phytoplankton and even homeothermic top predators presented “neutral” responses to the heat wave. Twenty percent of these apex predators even responded positively to the abnormal heat exposure, according to the study.

Homeothermic animals, including birds and mammals, have stable internal body temperatures regardless of the environmental temperature.

“That gives us perspective on which species might more readily adapt to these kinds of warming water events in the future and which will not,” Drummond said.

Although rising temperatures are the primary factor affecting animals like murres, other elements also may be contributing to marine life changes.

“From an ecological perspective … microplastics, ocean acidification, sea levels rising and chronic oil spills … are other massive mortality factors at play,” Huettmann said.

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However, studies tracking the long-term effects of climate events on marine life are limited, so scientists are still uncertain about how these animals will continue to be impacted in the future.



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Alaska Airlines flight returns to San Jose airport due to mechanical issue

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Alaska Airlines flight returns to San Jose airport due to mechanical issue


FILE PHOTO: An Alaska Airlines Boeing 737 MAX 8 approaches San Diego International Airport for a landing from Palm Springs on December 20, 2024 in San Diego, California. (Photo by Kevin Carter/Getty Images)

 An Alaska Airlines flight had to return to San Jose Mineta International Airport on Wednesday after a mechanical issue.

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Alaska Airlines Flight 1130 departed San Jose at 10:01 a.m. bound for Seattle; however, the aircraft turned back, landing at the South Bay airport at 10:50 a.m.

A spokesperson for San Jose Mineta International Airport said they were notified around 10:41 a.m. that the plane was returning after experiencing mechanical issues.

Alaska Airlines said there was a mechanical issue indication in the flight deck of the 737-900 aircraft.

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“Pilots followed appropriate procedures and requested priority landing. The aircraft was evaluated by our maintenance team, who were able to repair the issue,” the airline said.

The plane landed safely without issue, according to the airport and airline.

“Our pilots are trained for situations like this and we thank them for their professionalism in handling the situation,” said Alaska.

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Alaska Airlines Flight 1130 was rescheduled to depart San Jose at 12:27 p.m. and land in Seattle at 2:45 p.m.

San Jose Mineta International Airport



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Alaska legislators, citing some citizen complaints, investigate management of 2024 election

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Alaska legislators, citing some citizen complaints, investigate management of 2024 election


Alaska’s elections chief defended her division’s management of the 2024 elections at a legislative hearing last week, but she acknowledged that logistical challenges created problems for some voters.

Carol Beecher, director of the Division of Elections, reviewed the operations during a more than two-hour hearing of the state House Judiciary Committee. She fielded questions from the committee’s chair, Rep. Sarah Vance, R-Homer, and other Republicans about election security and possible fraud, and she answered questions from Democrats about problems that led to rural precincts being unstaffed or understaffed, which presented obstacles to voters there.

Vance said she did not intend to cast blame, but that she hoped the hearing would lead to more public trust in the election process.

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“The purpose of this meeting is to discuss the process of the 2024 election, not the results. It’s not about the outcomes, but about making sure that every legal vote gets counted in a timely manner, and asking what improvements can be made in the process,” she said.

“A lot of the public has reached out to me and expressed a lot of frustration and concern around a lot of the activities of this election,” she said. “So this is an opportunity for us to have a conversation with the director of elections and the public so that we can gain an understanding about what happened and how the actions that we can take in the future.”

Beecher responded to Republican committee members’ queries about safeguards against fraud and the possibility that non-citizens are casting votes.

“We often get asked about U.S. citizenship as regards elections, and we are only required and only allowed to have the person certify and affirm on the forms that they are a citizen, and that is sufficient,” Beecher said. “We do not do investigations into them based on citizenship questions. If there was a question about citizenship that was brought to our attention, we may defer that to the department of law.”

Residents are eligible to vote if they are a citizen of the United States, age 18 years or older and have been registered in the state and their applicable House district for at least 30 days prior to the election. Eligible Alaskans are automatically registered to vote when they obtain their state driver’s licenses or apply for Alaska Permanent Fund dividends.

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Beecher said the division investigated and found no evidence of non-U.S. citizens being registered through the PFD system. “This is not happening where somebody is marking that they are not a citizen and are receiving a voter registration card,” she said.

Vance said many Alaskans remain worried, nonetheless, about non-citizens casting votes. “I think people are wanting a stronger position regarding the ability to verify citizenship for the people wanting to vote,” she said. “So can the division take action to verify citizenship on its own, or does it need statutory authority?” Beecher confirmed that the division does not have the authority to verify citizenship.

Tom Flynn, a state attorney, advised caution in response to Vance’s suggestion.

“We should be also wary of the limits that the National Voter Registration Act and its interpretation can place on citizenship checks and the federal voting form requirements,” said Flynn, who is the state’s chief assistant attorney general. The National Registration Act of 1993 prohibits states from confirming citizenship status.

In response to questions about opportunities for fraud through mail-in absentee voting, Beecher said the state relies on the information voters provide. “If an individual applied for an absentee ballot, and all of the information was in our voter registration system that you were eligible to vote, etc, and you had a legitimate address to send it to, then you would be mailed an absentee ballot,” she said.

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Each ballot is checked for appropriate voter identification information. Ballots are coded by district, and then given another review by another group of election workers, including an observer, she said. “The observer has the opportunity to challenge that ballot. If they challenge a ballot, a challenge is sent to me, and then I review the information based on what the challenge is, and I’ll often confer with [the Department of] Law,” she said.

Alaska has notably low voter turnout, but also a steadily changing voter roll as it’s one of the most transient populations in the nation, with voters moving in and out of state.

Alaska has a mix of districts with ballot scanners and hand count precincts, usually in rural areas with a small number of voters, as well as voting tablets for those with disabilities. Ballot scanners record ballot information, which is encrypted before being sent to a central server in Juneau. All voting machines are tested ahead of time, Beecher said. For hand count precincts, ballots are tallied up and poll workers call in the results to the division’s regional offices, she said.

“We had about 15 people on phones to take the calls that evening, and the phone starts ringing immediately, and all of the different precincts are calling in,” she said. Division workers also helped poll workers properly read rank choice ballots, she said. “And so there’s a lot of discussion that can happen on that phone call. It’s not necessarily just as simple as going through the list.”

The division of elections has 35 permanent staff who are sworn to remain politically impartial and who work in five district offices to administer the elections in the 60 legislative districts.

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Beecher said the division reviews its processes, systems of communications, challenges and improvements needed in each election cycle. “The division has lists and lists and checklists and handbooks, and is very good and diligent about making sure that process and procedures are lined out and checked,” she said.

Rural Alaska problems

Administering elections in rural communities is an ongoing challenge in Alaska. Beecher answered questions on several incidents, including voters in Southwest communities of Dillingham, King Salmon and Aniak receiving the wrong ballots that had to be corrected. In August, a mail bag containing a voted ballot and primary election materials from the village of Old Harbor on Kodiak Island was found on the side of the road, near the Ted Stevens Anchorage International Airport.

“We don’t have control over the materials when they are in the custody of the post office, in this case, it was one of their subcontractor carriers,” she said. “We weren’t told [what happened] specifically, but I know that the post office has processes when mail is lost like that, and they do deploy their processes with that contractor.”

Vance said the incident was serious.

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“I hope the state is pursuing further accountability, because this is a matter of public trust that something so important was dropped out of the truck along the roadside,” she said. “It looks extremely negligent.”

Beecher said training and retaining poll workers is essential for running elections smoothly. “So one of the challenges that we run into, and frankly, it’s not just in our rural areas, the turnover of poll workers is a reality,” Beecher said. The division conducts in-person poll worker trainings, and provides support with video tutorials and by phone.

This year, in the western Alaska community of Wales, the designated poll worker was not available and so the division of elections located a school teacher late on election day to administer the polls. “It was not ideal,” she said, but they had trained back up poll workers ready to deploy this year.

“We had trained people who were situated at all the various hubs, so Anchorage, Fairbanks, Utgiagvik, Nome, and they were trained and ready to be deployed to some of these polls should we run into a situation where we didn’t have poll workers on the day,” she said. “So we weren’t able to get them to Wales only because of the weather. They were there at the airport ready to head out there. But we did send them to Egegik, and there were polls there.”

Responding to Rep. Cliff Groh, D-Anchorage, Beecher said one thing she would have done better would have been to ensure that the official election pamphlet was more carefully reviewed and checked for errors.

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A notable error in the published pamphlet was the misidentification of Republican House candidate Mia Costello as a Democrat.

“Secondly, I would have made sure that our advertisement that had a name in it would not have used names,” she said, referring to a rank choice voting education materials giving examples with fake elector names, including “Odem Harris” which Republicans pointed out filled in a first choice vote for “Harris,” also the Democratic presidential candidate.

“And thirdly, I wish that I had done a better job of anticipating the level of communication that was expected and needed,” Beecher said.

In response to a question about the ballot measure seeking to overturn the ranked-choice system, Beecher said there was no evidence of fraud. The measure failed by just 743 votes.

“We did not see something that would indicate that anything untoward happened with ballots. That simply was not something that was seen in the results,” she said.

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Beecher suggested some improvements for legislators to consider this next term. Those included an expansion of mail-only precincts, paid postage for ballots and a requirement that mail-in ballots be sent earlier rather than postmarked by Election Day. “On ballot counting, doing it sooner,” she said. “So potentially changing the time frames of receiving absentee ballots to having everything have to be received by Election Day.” The latter would be a big change for Alaska, which has long counted mail-in ballots as long as they are postmarked by Election Day.

Some changes may be warranted, she said.

“We are not perfect. We know that,” she said. “And we really look to doing better, and [are] wanting it to be better, and that people are confident that it is managed in a way that they have trust in the integrity of the process.”

The next Legislative session starts on Jan. 21. Under the new bipartisan majority, Rep. Andrew Gray, D-Anchorage, is set to chair the committee in the coming session.

Originally published by the Alaska Beacon, an independent, nonpartisan news organization that covers Alaska state government.

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