Rashah McChesney

Just after midnight on Friday, fire crews were called to a house fire on Cascade Street.

Chief Rich Etheridge of Capital City Fire/Rescue said the one-story, single-family home belongs to one of their own.

Property records show the home belongs to firefighter Kim Mahar who retired from the department in 2009.

“So this is not the way we wanted to do a little reunion. But he’s doing really well,” Etheridge said.

Etheridge said everyone escaped and there were no injuries, but the home has extensive fire, smoke and water damage.

“The initial crews arrived on scene and found heavy fire in the back half of the house. Several rooms were on fire and the back porch area,” Etheridge said.

Mahar’s experience fighting fires may have helped contain the blaze.

Etheridge said all of the doors and windows were closed after the family escaped from the home, a key in limiting the oxygen supply to a fire.

The retired firefighter also helped pull fire hose from the scene as crews gathered their gear when the fire was put out.

It took crews less than 20 minutes to get the fire under control. By 12:30 a.m., they were searching for embers in the rear of the home.

Etheridge estimated there was about $100,000 in damage to the home.

It was not immediately clear what started the fire. Etheridge said inspectors would seek the cause of the burn after it had been fully extinguished.

One of the budget vetoes announced Wednesday would eliminate $430 million in funding for oil tax credits. It’s the second year Gov. Bill Walker has used his veto power to cut funding for the program.

Walker is now under fire from industry representatives and lawmakers who say the state is backtracking on payments it already owes and still must pay.

The credits were designed to encourage companies to explore and develop new oil fields in the state. But Walker said Alaska simply can’t afford it right now.

“In some cases we’re paying as much as 85 percent of the cost of some of the projects. That’s a pretty heavy lift when you’re basically borrowing money to pay those costs on that,” Walker said.

The veto doesn’t let the state off the hook for the credits it already owes, it just delays the payments.

Benji Johnson is president of the small Texas-based company BlueCrest Energy that’s developing an oil field in Cook Inlet.

“It’s basically just like tearing up your credit card bill. ‘Oh, I don’t want to pay it this month, just tear it up,’” Johnson said. “… the state can bully their way through, but it’s not saving one penny by doing this.”

Johnson said his company has received about $25 million in tax credit payments from the state in the last few years. But, according to Johnson, the state currently owes another $35 million and he anticipates filing for $15 million more by the end of the year. Now he doesn’t know when he’ll see those payments.

“While we were aware … this veto could happen, everything we heard from the administration during this last session was that ‘Oh, that’s not going to happen again. We’re going to make sure that it’s fully funded.’ We were told that by pretty much everyone that we talked to.”

Johnson said BlueCrest has been relying on the credits to help fund its drilling operations. He said the company has the money to get started, but may not be able to continue if oil prices stay low or drop further.

Some companies have used the promise of tax credit payments to bring in outside investors. Johnson said the veto makes that option less likely for his company.

“In the past, banks have been willing to loan that money at fairly low interest rates because they could be absolutely certain that the state is going to pay that. Now that certainty has absolutely gone away. The state has no credibility at this point.”

Lawmakers were also swift to criticize the veto.

House Speaker Mike Chenault, R-Nikiski, said the state looks unreliable when it doesn’t make payments it guaranteed to companies.

“I think it probably hurts independents. I think it hurts development of Alaska, whether it’s in Cook Inlet or Prudhoe Bay and I think it’s, it’ll probably have detrimental effects into the future.”

Lawmakers are scheduled to reconvene for a special session on the budget in mid-July when they could, in theory, override the vetoes.

Voters in the United Kingdom have decided to leave the European Union on Thursday.  Nearly 52 percent of the U.K. electorate voted in favor of leaving. The move that shocked investors and traders around the world.  The economic fallout from the vote is already being felt in Alaska, from the price of oil to the Permanent Fund.

Last night, the CEO of the Permanent Fund Corporation, Angela Rodell, her chief investment officer and a few other staff watched the votes roll in on the U.K. referendum, also known as Brexit. They were trying to get a figure out a strategy for trading on the stock market today.

When the corporation’s traders started the day at 5:30 a.m. as the U.S. markets open, they were ready to go with strategies to cope with the the drop in the stock market. She said the polls had been close, but most experts expected the vote to go the other way:

“… and so when the vote came in the opposite direction, that’s why you’re seeing the tremendous sell-offs in all the global markets. Overnight in the foreign markets and then today now in the U.S. markets,” Rodell said.

The Dow Jones industrial average plunged by 600 points, down about 3.39 percent.

The corporation is responsible for managing the investment of the $52 billion permanent fund and earnings on its investments determine the size of the PFD.

While managers at the corporation were prepared this morning for the global shock, Rodell said the fund is still going to take a hit.

“When we post the returns for today on Monday, on the website and stuff, when we look at the daily market movements and sort of the value of the fund  we are definitely going to be down on Monday, we are not escaping this shock,” she said.

But, Rodell said, the fund managers have confidence in the market and are using the opportunity to invest.

“There are opportunities to take advantage of this dislocation and to get into arenas and take advantage of the drop in pricing so that when the short term shock wears off and the market moves back to what we think is more normalized, we will have that gain in place then that will have countered some of the losses we’re taking today,” she said.

Other Alaska analysts have also watched the economic fallout of the voter referendum, including Department of Revenue Assistant Chief Economist Dan Stickel. He’s an 11-year veteran of the department and is involved in oil price forecasting.

He isn’t too worried about the short term impact of the five percent drop in the price of oil. He says the vote isn’t likely to have a large immediate impact on the fundamental supply and demand-driven oil market.

But there could be long-term impacts on oil prices.

“I think oil prices, gasoline prices, natural gas prices, LNG prices, over the long term, those are going to be determined by supply and demand and so if the impacts of what’s going on in Europe have impact on global demand, then yes, those could impact energy prices across the board,” Rodell.

Lower oil prices will make it more difficult for the state to close the $4 billion budget deficit.

In the second major shakeup to his cabinet today, Gov. Bill Walker announced a new DNR commissioner.

Andy Mack, an Arctic policy and development adviser and manager of Pt Capital, a private equity fund based in Anchorage, will take over the agency. Former Commissioner Mark Myers retired in February.

Reached by phone early in the day, Mack said he did not want to discuss the new position without confirmation from the governor’s office. Mack did not return phone calls by deadline.

Walker’s announcement came after acting DNR commissioner Marty Rutherford told Walker she plans to retire in June, according to a media release.

She won’t be leaving the public eye, however, as Walker announced he is appointing her to the board of the Permanent Fund Corp. in July.

Rutherford did not immediately return a phone call seeking comment and a DNR spokesperson did not return messages requesting an interview with Rutherford. 

Anchorage Democratic Sen. Bill Wielechowski said Rutherford’s exit will be a blow to the department’s institutional knowledge.

“It’s a loss for the state, you know, she’s someone who’s been through a number of different iterations on gas line policy and on oil tax issues and so, yeah I hate to see her go,” Wielechowski said. 

The DNR commissioner is heavily involved in the state’s effort to build a massive natural pipeline to bring gas down from the North Slope.

A Walker spokesperson said he is traveling and not available to talk about the cabinet shakeup and his new appointments.

More than a dozen former military leaders jumped into a fight over offshore drilling in the Arctic yesterday, asking the Department of the Interior to allow lease sales in Alaska’s Arctic.

The deadline is Thursday for groups to weigh-in on the interior department’s plan.

The military leaders say the U.S. is lagging behind other nations and could lose its economic and political foothold in the resource-rich region without new investments.

Gen. Joseph Ralston, formerly of the U.S. Alaskan Command, joined 15 other military veterans, and a former Secretary of Defense, asking for the Arctic leases to be kept in the plan. It covers the next five years.

“The idea that we would somehow take leasing from the Chukchi and the Beaufort Sea off the table while Russia is investing heavily, while Norway is drilling, while Canada will be drilling, just does not make sense from a national security perspective,” Ralston said.

The Interior Department has been deluged with comments. Nearly 200,000 have been logged since the agency first requested them in mid-March.

Some industry and pro-exploration groups fear the administration might drop the Arctic from its leasing plan. The agency is already proposing to drop similar lease sales in the Atlantic.

Michael LeVine is the Pacific Senior Council for Oceana, an ocean conservation organization based in Juneau.

He said private companies shouldn’t be responsible for the nation’s geopolitical ambitions.

“Certainly, all of us in Alaska and in the environmental community are sensitive to the needs of national security and a sustainable energy future. If, however, we are depending on Shell and other companies for national security, we’re all in trouble,” LeVine said.

In the past six months, several companies, including Shell, have abandoned the leases they already hold in the region.