Business Intelligence

Business Intelligence

Despite austere times, state nurtures strategic developments
Despite austere times, the state is still nurturing the South Denali Visitors’ Center in Denali State Park south of the more well-known Denali National Park. Phase one for the project, which involves access improvements, is now complete and $25 million for more work is in the governor’s FY 2020 state capital budget. Federal and private funding are also being solicited. In a briefing, legislators were told that one of the smaller cruise companies would like to build a hotel near the South Denali center. Administration officials believe the project could generate up to $1 million in annual revenues for the state when fully developed. Tourism is one of the state’s bright spots, with 2019 likely to be another record-setting year.

Permanent fund now surpasses oil in contribution to state budget
It’s no surprise to those following the state budget but Alaska’s Permanent Fund now pays more to the state treasury to support the budget than do state oil and gas taxes and royalties. Under a new state law, 5.25 percent of realized, or cash, earnings of the Fund are withdrawn from the Fund’s Earnings Reserve account and deposited into the general fund. In the current FY 2019 fiscal year this amounted to $2.7 billion in contrast with $2.26 billion in oil and gas revenues. In 2020, the fiscal year starting July 1, about $2.9 billion will be paid from the Fund’s earning reserve compared with $1.97 billion in expect- ed oil revenues. Permanent Fund earnings will increase as the Fund grows larger while oil revenues are expected to remain static for the next few years, according to the state Department of Revenue.

Anchorage will spend $33.6 million in repairing quake-damaged schools
The Anchorage School District will spend $33.6 million to repair Eagle River schools damaged by
the November earthquake in a plan approved by the school board. Gruening Middle School and Eagle River Elementary School have been closed since the Nov. 30 quake. Gruening Middle will need a new roof and stairwell, seismic upgrade and other repairs that will cost $24.2 million. Eagle River Elementary will need a new roof, seismic upgrades upgrade and other repairs for $12.1 million. The repairs are expected to take two years. Some teachers at Gruening Middle pushed back on the decision to repair, arguing that the aged school really needs a complete replacement to be safe.

Rural school district to send students to anchorage for tech-ed

The Lower Yukon School District has purchased the former Long House Alaskan Hotel for $2.7 million to house rural students who will be able to attend technical and college-prep classes in Anchorage. Students from 10 small villages in the Southwest Alaska District will attend nine-week residences in Anchor- age, taking classes in electrical, medical, aviation and other occupational classes at King Career Center, operated by the Anchorage School district. Lower Kuskokwim will pay the Anchorage School District under the arrangement, and ASD will lengthen operating hours at King Career to accommodate the rural students.

Despite uncertainty, mat-su steps up emergency response
Despite fiscal uncertainties over future state funds the Matanuska-Susitna Borough Assembly voted to add 25 new emergency medical technicians and two more ambulances. Mat-Su is dealing with continued population growth, estimated at 2,500 additional persons a year, and emergency calls to the borough have doubled since 2010. The borough now has 18 ambulances stationed across a wide geographic area the size of Ireland with only four of them staffed at any given time.

Juneau’s dispute with cruise companies is settled
A contentious dispute between cruise companies and the City and Borough of Juneau is laid to rest, at least for now. Cruise Lines International Association, representing major cruise operators stopping in Juneau during the summer tour season, filed a lawsuit over Juneau’s construction of a $10 million park and downtown walkway as an illegal use of cruise passenger fees, which are supposed to be used to benefit cruise ships. The agreement allows the city to continue to collect the tax but with agreement from cruise companies on projects to be funded. The city said it will pursue projects aimed mainly at enhancing cruise visitor safety as well as those that provide direct benefits to cruise vessels.

Juneau studies supplying power to more cruise ships
One project being proposed, to be funded by the local passenger tax, is constructing shoreside infrastructure in Juneau so that Alaska Electric Light & Power, the local utility, can provide electricity to cruise ships while they are in port. In doing this the vessels would shut off engines and reduce local air pollution while also drawing on Juneau’s hydro power. Princess Cruises has been connecting with AEL&P while in port since 2001, paying the utility about $1 million per year. Juneau’s city manager has requested $250,000, also from passenger tax revenues, to study the idea, but the city’s assembly did not act on the proposal.

National parks see a new record in visitors
A record 2.9 million people visited national parks in Alaska during 2018, up from the previous record of 2.7 million set in 2014, the National Park Service said. Klondike Gold Rush National Historic Park in Skagway, had the most visitors, at 1.01 million; Denali National Park had 594,660; Glacier Bay National Park and Preserve had 597,600, and Kenai Fiords National Park in Seward had 321,600. Denali National Park actually saw a decrease in 2018, dropping from 642,800 in 2017 to 594,660 in 2017. Year-to-year shifts aren’t unusual, tour professionals say, and are typically influenced by changes in group excursion procedures.

Dubious first? Alaska allows on-site marijuana use
Alaska will be the first state in the nation to allow marijuana consumption in marijuana retail establishments. New state regulations go into effect April 11 allowing the consumption. Retail establishments will still have to apply to the state for an endorsement allowing the use. State officials said it will probably be mid-July when the on-site provision becomes effective. Some Lower 48 cities allow on-site use but Alaska will be the only state allowing it statewide. Advocates say it will be a boon for tourism.

New battle over an independent power producer in the interior There’s a new battle brewing between Golden Valley Electric Association, the Interior electric cooperative and an independent power producer, Colorado-based Eco Green Generation. The company’s plan is to generate power in Interior Alaska in a wind project at Delta and dispersed small propane systems within the Interior communities has been rejected, prompting a protest from the company. Eco Green had offered power under the Public Utility Regulatory Act, or PURPA, which is set up for independent power producers within a regulated utility area. The company is now claiming bad faith on the part of Golden Valley Electric Association, the intended utility customer. GVEA asserts that Eco Green’s plan, involving 21 separate components, would have a disruptive effect on its system.

State regulatory commissioner orders Prudhoe wells plugged The Alaska Oil and Gas Conservation Commission ordered BP to “plug and abandon,” (permanently cement) 14 wells that were previously shut in by the company because of potential problems with permafrost thaw and leaks. The 14 wells, all drilled in the 1970s, used an obsolete well design replaced early on by BP. However, problems with thaw and damage to surface facilities resulted, so the shutdowns and now permanent plugging of the wells is being taken as a precaution. The commission also asked BP to gather information on whether permafrost thaw might cause problems on wells with other designs. BP said it is now monitoring the shut-in wells in real-time.

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