Governor’s proposed budget may trigger new credit downgrade
Alaska may face another downgrade in its credit rating due to Gov. Mike Dunleavy’s continued quest for a “full” Permanent Fund Dividend at the expense of traditional public services in the state budget, Fitch Ratings said. Last September credit rating agencies including Fitch lowered ratings on Alaska debt from AA to AA–. Depending on how the Legislature deals with the governor’s new push for a larger dividend, and a related push for a constitutional amendment to guarantee PFDs at the higher level, debt ratings could again be lowered, Fitch warned in an advisory to investors. A rating downgrade for the state would also affect state-backed bonds issued by subsidiary institutions like independent state corporations and some municipal debt.

Third quarter results: Alaska commercial banks do well
Commercial banks in Alaska reported healthy growth in the third quarter of 2019, according to Federal Deposit Insurance Corp. reports. Northrim Bank, based in Anchorage, saw a 7.5 percent growth in earnings compared with third quarter 2018, a result of a mini-boom over the summer in refinancings due to low short-term interest rates; First Bank of Ketchikan reported 5 percent growth, boosted by the strong tourist season in Southeast Alaska; First National Bank Alaska saw a 2.3 percent growth boosted by a stabilizing Alaska economy and the sale of a building in downtown Anchorage, which boosted income for the quarter.

Setback for University of Alaska in securing lands
The University of Alaska may face another setback in efforts to get more lands under an entitlement dating from the university’s establishment in 1917 as a federal land-grant agricultural college. UA has been stymied by various political and legal barriers since that time, although it has received some lands. The university has been working with the state Dept. of Natural Resources on a plan for the federal government to designate some lands in the remaining 5-million-acre state land selection entitlement for a direct transfer to the UA. This would avoid a legal problem if the lands first went to the state. It was hoped that the direct “transfer” could be done by the Department of the Interior under existing authority but it now appears that won’t work, and that legislation by Congress will be needed. There shouldn’t be opposition to this but anything involving Congress will take time and risk complications.

Josh Kindred a shoo-in for U.S. District Judge?
Alaska attorney Josh Kindred appears headed for U.S. Senate confirmation for his appointment to the Alaska U.S. District Court to replace Judge Ralph Beistline. Kindred is now the U.S. Interior Department regional solicitor and was previously counsel to the Alaska Oil and Gas Association as well as a state prosecutor. Kindred’s appointment was approved by the U.S. Senate Judiciary Committee, a step toward confirmation by the full Senate.

Settlement on Alaska-hire lawsuit; state AG opinion not relevant
The state agreed to a $50,000 settlement over a contested violation of an Alaska-hire statute by a Juneau-based contractor, SECON. Alaska law requires hiring 90 percent of workers on state-funded projects to be Alaska residents when the project is in an economically disadvantaged area. SECON’s project was at 85 percent but the company said it had to import workers to provide certain skills not available locally. The settlement was only a partial win for the company, however. SECON had asked that $158,670 in fines issued by the state be vacated, but that was not done. The decision did not affect questions raised by state Attorney General Kevin Clarkson in October that the resident-hire statute might be unconstitutional.

New effort for alcohol tax in Anchorage
Anchorage assembly members are again proposing a municipal tax on alcohol similar to a ballot proposition imposing a tax that was defeated by local voters. The latest proposal would raise $11 million to $15 million per year in new revenue and it differs from the previous proposal in being more specific in the allocation of funds to public protection and social programs. The proposed tax rate is 5 percent. If passed it would add 40 cents to an $8 sixpack of beer and $2.50 to a $50 purchase of wine or spirits. In the ballot proposition that failed last April 53 percent of local voters cast votes against the tax.

Battery storage for Homer Electric will allow more use of renewable energy
Homer Electric Association will install a Tesla battery storage system at its Soldotna generation plant that will have a capacity for storing 93 Megawatt hours, and that will be capable of delivering 46.5 Megawatts per hour to the regional electric grid. The project is expected to be operating by fall 2021. HEA says the battery will allow it to rely more on renewable energy and to reduce dependence on gas-fired power.

New dredging to deepen harbor at Unalaska, allow bigger container ships
The U.S. Army Corps of Engineers plans new dredging at Dutch Harbor, the port at Unalaska, to allow larger container ships to call at the port. The harbor will be deepened across a 3.37-acre area near the American President Lines terminal. About 42,900 cubic yards of dredged soil will be stored onshore for use.
Southeast communities split on Tongass “roadless” rule
Southeast Alaska communities are split on changes to the U.S. Forest Service “roadless” rule in the Tongass National Forest. Sitka’s borough assembly voted to retain the current roadless rule. Peterburg’s assembly said it will remain neutral, rejecting requests from proponents as well as opponents of a changed rule. The rule, applied nationally in old-growth areas of national forests, prohibits development of new roads by the forest service. Advocates for the change, which would be for the Tongass only, say that it will allow the forest service more flexibility in managing harvests but will not really result in expanded logging. It’s a divisive issue, however, particularly in communities dependent on fisheries.

Wrangell will subdivide large industrial tract located on waterfront
Wrangell plans to subdivide a 39-acre industrial property that was the former sawmill site after failing to sell the entire tracts. Plans are for 11 lots of one to three acres. The site has improvements as well as waterfront access to a deepwater harbor. The site would be good for seafood or fisheries-related development.

Fairbanks is aggressive in tackling building maintenance
Fairbanks North Star Borough assembly members want to hike the percent of the borough tax revenues designated for building maintenance from 7 percent to 9 percent. Borough Mayor Bryce Ward argues that is too high and that 8 percent might be more appropriate. The 7 percent share would allocate about $8.5 million per year but studies have shown that to be insufficient. The assembly went above the designated amount to appropriate $10 million this year. Fairbanks has been aggressive in getting ahead of its deferred maintenance. The state, meanwhile, lets deferred maintenance continue to grow at an estimated $100 million a year. The state’s backlog is now at about $2 billion.

Alaska Airlines retrofits on three of its 737 all-cargo aircraft
Alaska Airlines is having to do retrofits to its three Boeing 737 cargo aircraft after Israel Aerospace Industries, the contractor that had converted the planes from passenger to all-cargo, told the carrier that the barrier wall protecting pilots from shifting cargo needed strengthening. Alaska said it would shift cargo to some of its 737-800 and 737-900 passenger aircraft. The all-cargo aircraft are important to Kodiak, Bethel, Kotzebue, Utqiagvik and Deadhorse.

Limit on sole-source federal contracts to Alaska Native corporations is lifted
The new National Defense Authorization Act, now on President Trump’s desk after having passed the U.S. Senate and House, contains a provision increasing the limit on no-bid, sole-source federal contracts for Alaska Native corporations from $20 million to $100 million.