Gubernatorial Debate - Walker, Begich, Toien, But No Dunleavy [UPDATE - Walker's Lt. Gov Resigns] [2nd UPDATE]

UAA, the ADN, and a few others sponsored a debate at UAA's Wendy Williamson Auditorium, Monday evening from 5;30pm to 7pm.


It was a pretty low-key affair with each candidate showing courtesy and significant agreement with each other.  My quick crowd estimate (counting people in a few rows and then counting how many rows) gave me a 200-300 estimate.  

Current Governor Bill Walker, Independent, was sincere, practical, sounding a bit frustrated that the legislature wouldn't do the responsible thing and create an overall fiscal plan including new revenues.  He was critical of the fact that they had used up, I believe he said, 80% of the budget reserves in the last four years.

Former US Senator and Anchorage Mayor Mark Begich, Democrat, had similar themes though he also argued strongly that the Permanent Fund needs Constitutional protections or politicians will use it up.  He also called for new revenues.

Libertarian candidate Billy Toien's take was a little different.  He pointed to stacks of documents - 30 years of budget data he claimed - and said there is no crisis.  He argued that there were various special funds - I think he said about 50 - that should all be put into the general budget and the deficit would go away.  Some were mentioned - like the Alaska Aerospace Corporation and the Alaska Railroad.  I'm skeptical that moving them all into the general budget would solve our fiscal problems, but it raises the issue of whether these units get considered for cuts during budget time in the same way that regular government agencies do.

Toien, unlike Walker and Begich, was opposed to all new taxes and existing taxes and seemed to believe that the additional revenues generated by putting the independent units' funds into the general budget should be distributed to the people of Alaska.

Republican Mike Dunleavy, we were told, had a conflicting engagement and wasn't there.  His presence probably would have added some lively debate.  And he was criticized by the other three - they said he was making short term promises with no eye on the future and that all the things he promised - maintaining the permanent fund and current services, plus cutting the budget, and no new revenues - were impossible to achieve.


I thought Begich and Walker treated Toien with the sort of condescending respect one would use for a little kid who participates in an adult activity.   But everyone was very cordial.

There were three ADN journalist who were given a chance to ask question.

Tegan Hanlon.

Annie Zak and Tom Hewitt.  I wasn't taking notes, but all the questions were pretty routine.  Things like, what is on the top of your list of things to cut?

I was waiting for one of the candidates to mention KABATA (the Knik Arm Bridge And Toll Authority), but no one did.

Toien came across to me as the kind of guy who has latched on to a couple of ideas that may, by themselves, have some merit.  But that they were utterly untethered from the bigger picture.

Walker is sincere and has 'the adult in the room' sort of tone.  He takes his job seriously but it seemed all process - we have to do things reasonably, take the revenues seriously - and little content, and he didn't spell out why he would be more successful with the next legislature than he has been so far.

Begich was able, as he always has been, to talk fluently about facts on all sorts of issues and tie things together.  He has the enviable ability to smile and respond with humor to anyone, even those whose ideas he is totally opposed to.  I would have like to see how he interacted with Dunleavy.

Dunleavy appears to believe, as do many Alaskans, that he has the election in the bag because Begich and Walker will cut into each others' vote count.  So he can just skip forums like this one.  If that's true, Alaska is in for a rough next four years.  Begich's strategy on entering the race - that he or Walker would drop out after the primary when it was clear which had the better chance against Dunleavy - hasn't worked out.

[UPDATE Oct 16, 2018 4pm:  Walker's Lt. Gov Byron Mallott resigned last night, apparently due to comments made about women or to a women.  The Governor has replaced him with Valerie Nurr’araaluk Davidson, Director of Rural and Native Affairs.  See ADN for more details.  It's amazing how quickly many Democratic men step down after an incident like this compared to Republican men.]

[UPDATE Oct. 16, 2018 5pm:  A FaceBook post 15 minutes ago::
Kate Laird: This is the most interesting bit: Asked whether Democratic gubernatorial candidate Mark Begich could replace Mallott on the lieutenant governor ticket, akin to the formation of the 2014 “unity ticket” between Mallott and Walker, Heckendorn [Walker's campaign manager] said, “We have been in conversations with Begich about the best way to move forward for Alaska, and those conversations will continue. We’ve been in conversations before we had any idea of what had happened with Byron. We’ve been in conversations with Begich for a few days about how to move forward in a way that’s best for Alaska.” <nevermind my minor question about why they couldn't have had that chat before ballots were printed ...>]

Trump's China Deals And Alaska's Liquid Natural Gas Pipeline

NPR had a report on Trump's visit to China the other day and the story essentially said China was eating our lunch.  I'm going to offer you a fair amount here, because it's all relevant, but the key points are:

1.  Trump has sidelined the professionals who know China and replaced them with political hacks.  

2.  Even with seasoned professionals at the table for the US, China is one of the most restrictive countries for foreign businesses and the US is one of the most open, giving China great advantages.

3.  China has regularly supported its private companies so they could compete with an unfair advantage overseas.

4.  China, when it does work with foreign companies, requires partnerships with Chinese companies and access to all their technology advances.  

OK, here's from the NPR piece, just before this point there's a discussion about American beef having a much higher tariff than Australian beef.

"James McGregor, president of the greater China region for the consulting firm APCO, says China's lifting of the U.S. beef ban in May is the latest case of too little, too late. And he's not optimistic the Trump administration is focused enough to improve business for U.S. companies in China.
"There is no strategy and professionals are not involved," he says. "The people from [the U.S. Trade Representative's office] and Commerce and State are sidelined."
McGregor says instead of representatives from the U.S. Trade Representative and other government staff who typically deal with China, President Trump has political appointees with little to no trade experience engaging with the Chinese.
"It's really been a farce," says McGregor. "And if it continues like this, it's really going to hurt American business. The Chinese are pros. They know what they're doing. Anybody sitting on the other side of the table as Chinese negotiator has been doing that subject for 20 years."
McGregor says Chinese negotiators have called friends of his in Beijing to see what the Chinese side could give to Trump during his Beijing visit to please his base. He calls these "Twitterable deliverables," and he puts the lifting of the Chinese ban on U.S. beef in this category: an easily promotable gift that, because it has come so late, may not have a meaningful impact on the U.S. economy."

What would have an impact, says William Zarit, chairman of the board at the American Chamber of Commerce in China, is forcing China to open its markets to U.S. business and to stop giving preferential treatment to Beijing's own so-called "global champion" companies. Tech giants Baidu, Alibaba and Tencent, as well as telecommunications company Huawei, have all received generous support from Beijing. 

"These global champions are being nurtured in the domestic market with protection and with strong state support, so that in some ways, when these companies go international, it's tantamount to a Western company competing with the country," says Zarit. 

And when U.S. companies come to China, they're often forced to hand over their technology and enter into joint ventures with Chinese partners. U.S. companies in at least 10 sectors — including automotive, healthcare, tech and entertainment — have investment caps preventing them from competing with Chinese companies on a fair playing field. Chinese companies in these sectors have no such caps in the U.S. market.

I thought about this as I read  the Alaska Dispatch New account of the an Alaska deal signed with China's Sinopec, two large Chinese financial institutions, and the Chinese government to move along  the governor's pet project, the one he ran for governor to accomplish, a liquid natural gas pipeline.  

Are we once again the colony having our resources exploited by wealthy Outsiders?  Is the governor making too many concessions because this project is so important to him?  Are the Chinese giving Trump some empty fluff he can use to show his base how successful his trip was?  The ADN article said that nothing was really final and that "senior Sinopec executives weren't aware of the gas pipeline deal with Alaska."

Our governor is smarter and more pragmatic than most of our politicians.  He spent time as a lawyer in court over oil and gas issues.  That's a good way to learn to understand a business and the players in it.  

Maybe the best thing for the state is to just be able to use the gas we have to raise revenue while we can.  There don't seem to be any details available and we probably don't have that much leverage anyway.   Though I have wondered, with global warming, whether we might spare the $43 billion price tag for the pipeline (which experience suggests will be considerably higher in the end) and just wait a few years until tankers can pick up the gas directly from the North Slope.

But for now, we're part of Trump's evidence of what a great negotiator he is.  And maybe it's a show of Governor Walker's smarts, that he's willing to let Trump get the credit.  Stay tuned, this is going to be a long process.

Gov Wants Special Legislative Session To Do Three Things

Alaska's governor has sent the legislature an 'agenda' for the special legislative session that begins in Juneau on Saturday.  Here are the three key things he wants:

"The three items for consideration in this special session are: 
(1) passage of legislation lifting the tax holiday on real property leased from the State containing threshold volumes of gas in order to ensure that producers are incentivized to commit their gas to Alaska LNG, or to make gas available for purchase if Alaska LNG does not proceed with all current project participants on previously established timelines; 
(2)  an appropriation to pay TransCanada its development costs and terminate its participation in Alaska LNG, so that AGDC can take over TransCanada’s current equity position in the gas treatment plant (GTP) and pipeline;  and
(3) appropriations for the State to make cash calls on the GTP and pipeline components of Alaska LNG to continue pre-front end engineering and design (FEED) work necessary to reach a FEED decision, and for the other State agencies involved in Alaska LNG to fund the work to continue efforts to negotiate and reach final agreements necessary to reach a FEED decision."

He offers a little more detail in the rest of the letter, but no numbers.  That's coming later, the letter says.  If I were a legislator, I'd want as much time as possible to read all the numbers and try to figure out the implications, though in today's political climate, from the governor's perspective, that means more time for opponents to attack.  But really, we want all the questions to be asked and then answered. 

Item #1:  I think ending the tax holiday is easy to understand.  The gas is in the ground, but the oil companies don't have to pay property taxes.  The initial exemption from property taxes was that the oil companies would pump the gas.  But the governor argues, as have others in the past, that without the tax, they have no incentive to do anything.   

Item #2:  I generally like the idea that the state acts as a real partner in this and I guess buying out TransCanada's share is part of doing that.  But, how much does TC want to sell?  If they are happy to to get rid of it, shouldn't we be able to get a discounted price?  Are there any other potential buyers?

I also like that unlike Parnell and Murkowski, Walker seems to represent Alaska and not the oil companies.  That doesn't mean he's making good decisions, but it does mean he's not playing patsy to the oil companies. 

This is going to be big money.  And you need big money in the oil and gas business.  But the state has a history of bad investments in enterprises from the Matsu Dairy to the Seafood Processing Plant in Anchorage.   Is this different?  If so, what can the governor tell us to convince us?  How long will a pipeline take before gas flows?  Will it come on line before ice melts enough for tankers to just fill up directly on the North Slope? 

And, I for one, need assurance that Walker plans to run for reelection, so all this doesn't fall apart.  Should another oil company lackey become governor again, this would all be for naught. 

Item #3:  Some specifics and some numbers would help out here.


Now, the Republican majority in the legislature is full of oil company supporters, even some oil company employees.  Walker has to entice them to vote his way.  The special session on Medicaid expansion earlier this year wasn't exactly a show of bi-partisan support. 

But let's all remember that this is precisely what Walker campaigned on.  A politician who is keeping his promises.  From the EnergyWire last December:

During the campaign, Walker suggested that, if elected, he might renegotiate the gas line contracts to give the state a leadership role. Industry supporters warned that such a step could set the project back by a decade (EnergyWire, Nov. 6).
Continued tensions over the pipeline issue were apparent last month when Walker's team held a town-hall-style transition meeting in Anchorage to draft recommendations for the new administration.
During oil and gas panel discussions, industry representatives called for Walker to endorse the Alaska LNG contracts that Parnell signed with BP Alaska, ConocoPhillips Alaska, Exxon Mobil Corp. and TransCanada Corp.
But Walker supporters protested that the incoming governor shouldn't be asked to sign off on contracts that neither he nor the public has seen in their entirety. Instead, they wanted Walker to push the oil companies to guarantee they'll build the pipeline.
"We'd like to achieve a commitment to build because the agreements we have right now aren't binding," noted Anchorage energy attorney Robin Brena, who served as chairman for the transition conference's oil and gas panel.
Despite their differences, Walker spent the days after the final votes were counted reaching out to Alaska oil industry groups. He held private meetings with the Alaska Oil and Gas Association and the Alaska Support Industry Alliance.

My Plan To Save The State Of Alaska At Least $700,000

Before I offer my plan to save all that money, let me offer some background

Decision to sue governor
The Alaska Legislative Council - 14 legislators who represent the other 46 legislators when the legislature not in session  - voted to authorize $450,000 to pay an expensive DC law firm (plus some Anchorage attorneys)  to file a court challenge of the governor's decision to expand medicaid coverage for Alaskans.  (I posted the names of the Legislative Council members and the law firms here.)

I figure the state of Alaska will have to expend at least another $300,000 to defend the decision.  (The Legislative Council leaders are the same folks calling for budget cuts because of the revenue drop.)

Public Opinion supports governor, not the legislators
The Legislative Council is doing this despite the fact that a March poll by Ivan Moore found that 65% of Alaskans favored medicaid expansion then.

Chart from Ivan Moore

Will the suit against the governor win in court?
In any case, these legislators are taking a pretty big risk of losing.  But it's not their money.  It's Alaskans' money, and, as I mentioned, 65% of Alaskans were with the governor on this decision.  So they are spending this money in defiance of what is a pretty large majority in politics these days.

I'll bet they wouldn't take this action if this was their own money.  Or even if they only had to reimburse the state if they lost.  And those 65% of Alaskans (the number could be higher now) probably want them to lose because they feel we're better off squandering the $450,000 than NOT expanding Medicaid.

I looked at the section of the statute that they say the governor violated, the part that says the governor needs a vote of the legislature.

I'm not a lawyer and I don't know the larger context of the law,  but I'm guessing the governor wouldn't make this move without feeling confident of his legal standing and an opinion from Legislative Legal Services for example, to Rep. Andy Josephson, concludes:

"For the above reasons, the governor likely has authority to accept additional federal funding to provide expanded Medicaid coverage.  If insufficient state funds are available, he could also request supplemental state funding.  A request for supplemental appropriations would be subject to legislative action."

The ADN has a link to AS 47.07.020 as the basis for the lawsuit.  Here is a section from the statue in question:

"(d) Additional groups may not be added unless approved by the legislature."

 But that comes after (a) and (b) which state:

"(a) All residents of the state for whom the Social Security Act requires Medicaid coverage are eligible to receive medical assistance under 42 U.S.C. 1396 - 1396p (Title XIX, Social Security Act).

(b) In addition to the persons specified in (a) of this section, the following optional groups of persons for whom the state may claim federal financial participation are eligible for medical assistance:" [emphasis added]

It goes on to list 15 'groups' of eligible Alaskans. I'm guessing that there aren't any additional groups not already listed in the 15.  As I understand this, there aren't any additional groups, but the income level for eligibility for federal Medicaid is higher to include people who can't afford coverage, but I'm not sure. I contacted my representative, attorney Andy Josephson, because he requested the opinion above from the Legislative Legal Office.  He's writing a piece for the ADN on this, so look for that for more detail.  He wrote that besides the legislature's legal office, the attorney general's office also said the governor's move to expand medicaid was legal.   Sam Kito, the only legislator on the Council to vote against suing the governor, also cites both opinions favoring the governor's action.   
Josephson's piece will go into a bit more legal detail.  He also talks about the mandatory/optional distinction.  He starts his opinion piece with a quote from US Supreme Court Chief Justice John Roberts from the Sibelius decision on Medicaid expansion and Josephson concludes:  

"Chief Justice Roberts’ quote . . . makes it plain and unmistakable:  once a state opts to expand Medicaid under the Affordable Care Act, the expansion population becomes a mandatory group that enjoys coverage.

My bet is the suit against the governor is going to lose.   

My Plan 

So, here's my simple plan:  If the suit is going to lose anyway, why pay so much?   I'm willing to lose this suit for only $1000 instead of the $450,000 they've allocated and that would also save the governor's legal costs defending his action.  After all, if you're going to lose a case, why spend $450,000 if you can do it for just $1000?
An extra note on this:

Why are the legislators spending all this money to thwart the governor and public?
Why is this group (there's only fourteen because the Leg Council takes care of business when the full legislature is not in session) doing this? They tend not to answer questions like this publicly,  but I'm guessing  there are some pretty influential folks who want to keep Alaska (and other states) from doing anything that might make Obamacare more successful.  And these folks seem to have influence over key people in the Legislative Council.  I'm assuming Americans for Prosperity, the Koch funded group that set up an Alaska office last year, is somehow involved.  Their website has this note:

AMERICANS FOR PROSPERITY ALASKA REACTS TO LEGISLATURE’S LEGAL ACTION AGAINST GOV. WALKER

August 19, 2015

Following Governor Walker’s attempt to unilaterally expand Obamacare’s Medicaid, Legislature will Sue ANCHORAGE — Americans for Prosperity – Alaska, would like to applaud the members of the Alaska House and Senate for deciding to sue Governor Walker over his unilateral decision to expand Medicaid under Obamacare. Upholding the rule of law is vitally important to Alaska’s future; […] 

 But this is merely speculation.  Rep. Chenault and Sen. Meyer (the leaders of the two Alaska legislative houses)  offer us far more principled, but hard to believe, reasons.   They tell us, for example, at the end of the linked opinion piece, they are doing this "for checks and balances."  These are the folks who kept the minority voice pretty much silent and prevented legislation they opposed - including medicaid expansion - from getting to the floor when it stood a chance of getting a majority of votes.  Pardon my skepticism, but this seems more like a protest that there now is a governor who checks and balances the legislature.