Economy

Alaska lawmakers overrode Gov. Mike Dunleavy’s veto of a bill intended to bolster the authority of the legislative auditor on Saturday, handing the governor a defeat with the first vote of a special session.

Along with an attempt to override Dunleavy’s veto of more than $50 million in public school funding, House and Senate leaders said the vote on Senate Bill 183 was a top priority for the special session. The state Constitution requires lawmakers to hold override votes within five days of reconvening.

The bill passed the Senate unanimously and by a 30-10 vote in the House. Lawmakers said it was necessary to address what the heads of the state House and Senate described as a “persistent pattern of obstruction within the senior ranks of Alaska’s Department of Revenue.” It came after a precipitous dropoff in revenue from so-called oil tax and royalty settlements, which the state negotiates with oil companies. In 2020, those provided $281 million for the state’s main savings account; in 2024, that number dropped to $3.1 million.

Legislative leaders said Dunleavy’s administration had not fully cooperated with an audit that seeks to examine the state’s collection of oil taxes by failing to produce a summary table outlining settlements that the governor’s administration provided as recently as 2019. Instead, in recent years, the administration has offered raw data that the legislative auditor said was unusable. The bill would have required the administration to turn over information to the auditor “in the form or format requested.”

Dunleavy vetoed the bill, saying it raised constitutional issues. He said any allegations that the administration had acted unethically or illegally were “baseless.”

The Legislative Budget and Audit Committee earlier this summer authorized a rare use of its subpoena power to compel the administration to turn over the data lawmakers are looking for.

The administration of Gov. Mike Dunleavy has signed a $28.5 million contract for work on a new ferry terminal north of Juneau, days after an oversight board said the state had not proved that the project is economically viable.

Dunleavy administration officials say the new terminal at Cascade Point, located 30 miles north of an existing terminal in Auke Bay, will cut ferry time from Juneau to Haines and Skagway by two hours.

But the chair of the Alaska Marine Highway Operations Board — which was created by Dunleavy four years ago — says the department hasn’t shared “some kind of business plan or feasibility study” to establish that the terminal is necessary and economically viable.

“The Alaska Marine Highway System has been plagued for 50 years with one-off projects that get foisted upon it, that create operational challenges, that then the system and the users have to deal with,” said Wanetta Ayers, chair of the board, during a Friday meeting.

“This is another one of those situations where it’s going to get foisted upon the system and we’re going to have to cope with it for 20 or 30 years until somebody admits it’s not going to work,” Ayers added.

The Cascade Point ferry terminal is planned on land owned by Goldbelt Inc., a Juneau Alaska Native corporation. It has been under consideration since Dunleavy took office in 2019. In May, his administration announced its intention to seek bidders for the first phase of the project.

After receiving two bids, the transportation department signed a contract Monday with K&E Alaska Inc., an Oregon-based company with an office in Sitka. The contract, which has a 2027 completion date, covers engineering and environmental permitting, a bridge over Cascade Creek, a gate, site preparation and retaining wall construction.

The contract does not include any funding for the ferry terminal itself, which is set to cost tens of millions of dollars. The state expects to pay for the terminal using primarily federal funds.

Ayers said Friday that the Dunleavy administration had not provided answers to board members’ previous questions, and she is troubled by “the pursuit of this project in what is a very unconventional process, where design and now construction are way ahead of operational feasibility and customer service.”

Katherine Keith, a deputy transportation commissioner, said during the Friday meeting that the department had commissioned an independent economic analysis of the project, but it was still in “draft form” and had not been released. She did not provide any specifics on when it would be available to members of the board or the public.

“We continue to believe that this is a strong benefit to the state, to the system and the public, which is why we’re moving forward with expenditure of public dollars, but understand we haven’t communicated that in a complete narrative document to make it more accessible and comprehensive,” said Keith.

Keith pointed out that the Cascade Point project had been recommended in 2020 by a marine highway reshaping working group commissioned by Dunleavy.

Ayers, who served on the working group, said that report and its accompanying recommendations “came together on a wing and a prayer at the last minute to meet the governor’s deadline.”

“To stand on it as a justification for Cascade Point is, to me, a pretty big stretch,” said Ayers.

One of the primary reasonings provided in the working group report for the new ferry terminal was that it would “avoid the need to modify the new Alaska Class ferries to add crew quarters” by allowing for trips between Juneau, Haines and Skagway to last less than the 12-hour crew day mandated by the Coast Guard.

But that reason is partially moot because the state has already committed to retrofitting the Alaska Class ferries with crew quarters, at a cost of roughly $30 million, and because the route length between Cascade Point, Haines and Skagway exceeds the 12-hour crew day, according to Marine Highway spokesman Sam Dapcevich.

The trip from Cascade Point to Haines and Skagway, as envisioned by transportation planners, would run up against the 12-hour work limit for crew, “requiring full staffing and accommodations,” Dapcevich said in an email last week.

“A more efficient service model,” which wouldn’t necessitate crew sleeping onboard, would require ferry trips from Cascade Point to go either to Haines or to Skagway, rather than visiting both communities on a single trip, Dapcevich said. The Marine Highway System would then have to use a yet-to-be-constructed “shuttle” ferry between Haines and Skagway.

‘Standing on a cliff’

Ayers wasn’t alone among board members to raise concerns about the process used by the department to advance the Cascade Point project.

Board member Paul Johnsen, a former Marine Highway engineer, said it seemed that the board was “being ignored” by the transportation department. Member Bob Horchover, who was appointed to the board by Dunleavy, agreed.

“I’m against this until we have more information,” said Horchover. To move ahead with the project “without even a reason for doing it is, to me, a boondoggle,” he added.

Anthony Lindoff, vice chair of the board, said the department had not provided enough information for him to form an opinion of the project.

“I certainly don’t have enough information regarding Cascade Point to be unequivocal, one way or the other,” Lindoff said. “I’m just eager for more information.”

While the Dunleavy administration is moving ahead with the Cascade Point project, it is also working simultaneously on a study of a possible new road-and-terminal project on the west side of Lynn Canal.

A $2.4 million study of the project is set to examine multiple options, all of which are predicated on the existence of the Cascade Point ferry terminal, according to a service agreement signed in May.

Keith told board members that the study, with initial findings expected in January, is set to examine connecting Cascade Point with new ferry terminals and road stretches on the west side of the canal, to better tie Juneau to the Alaska Highway. Keith said the “Chilkat Connector,” as the Dunleavy administration called it, would include construction of one or two new ferry terminals on the west side of the canal, along with several miles of new road.

Some board members said it appeared that Cascade Point would only be economical if paired with west Lynn Canal infrastructure, but with those infrastructure projects yet to be studied, moving ahead with Cascade Point was premature.

“If it was part of a larger infrastructure plan to build a road up the west coast of Lynn Canal, then that might have some more impact and be worth investing in that kind of a facility,” said Horchover.

“I’m a little concerned that we’re standing on the cliff and saying, ‘Why not? Let’s jump,’ ” he added.

Juneau Access

The Chilkat Connector study, like the Cascade Point ferry terminal, is funded using appropriations made by state legislators nearly 20 years ago for what is called the Juneau Access Project, a decades-old effort by the state to improve transportation options to the state’s capital that has been reimagined under each new governor.

Former Gov. Tony Knowles in 2000 nixed the idea of a 90-mile road north of Juneau toward Haines, saying its price tag — in the hundreds of millions — was too high. Former Gov. Frank Murkowski revived interest in the plan, and state lawmakers in 2006 approved $45 million for the Juneau Access Project, under a vision for a road from Juneau to the Katzehin River, allowing for quick ferry shuttles from there to Haines and Skagway and on to the mainland road system.

Former Gov. Sarah Palin paused the plan while she was in office, only for her successor, former Gov. Sean Parnell, to revive it, at a projected cost of more than $500 million.

The Parnell administration spent $5 million extending the Glacier Highway to the Goldbelt-owned land at Cascade Point. More than a decade ago, Goldbelt considered constructing a dock to transport Kensington Mine employees from Cascade Point to the mine. That hasn’t happened.

When Gov. Bill Walker was elected — and oil prices crashed — the Juneau Access Project was shelved again. Then came Dunleavy, who turned from the longer road to the Katzehin River to a plan that involved constructing the new Cascade Point terminal.

In 2023, the Dunleavy administration agreed to work with Goldbelt to study the feasibility of a terminal on land owned by Goldbelt. Members of the Alaska Marine Highway Operations Board wrote last year that “with the current information available to AMHOB and the public, we cannot see the merit of the proposed Cascade Point project.” The Dunleavy administration did not provide any further information to the board in response to their letter, members said.

A draft of the 20-year long-range plan for the Marine Highway System signed by Transportation Commissioner Ryan Anderson in February contains no recommendations regarding the Cascade Point terminal. It states that a feasibility study for the terminal was ongoing as of the time of the report’s publication. But department officials said this month that there is no ongoing feasibility study.

‘Rearranging the deck chairs’

Dunleavy vetoed a move by state lawmakers in May to reappropriate Juneau Access Project funding toward other transportation plans, stating the funds had already been obligated.

Since then, both the Skagway and Haines borough assemblies have formally expressed their opposition to the Cascade Point terminal.

“It is difficult to understand why the State is choosing to invest in the construction of a new marine facility rather than rehabilitating existing terminals, many of which — including those serving northern Southeast Alaska — are in urgent need of repair,” Skagway Assembly members wrote.

While Haines and Skagway leaders have bristled at the news that the Dunleavy administration is moving ahead with the terminal, one mining company celebrated the announcement.

Grande Portage, a Canada-based company with a plan to build a new gold mine near Juneau, said in a press release that it has an existing agreement with Goldbelt to cooperate on building a barge terminal at Cascade Point for transportation of ore.

Though the barge terminal is not contingent on the ferry terminal, “having the ferry terminal proceed first is highly advantageous as it would result in the development of infrastructure that will also be necessary for the ore terminal, particularly the new access road and bridge. This reduces the time and cost required for future ore terminal development,” Grande Portage wrote in its press release.

The work on Cascade Point comes as the Marine Highway System is wrapping up its work on a 20-year long-range plan. Ayers said work on that plan, and renewed focus on the system’s efficiency, have allowed it to move away from “just rearranging the deck chairs on the Titanic.”

“Here we are, spending lots of time and resources about planning and being strategic, and yet, the other hand is going to deliver us a one-off carbuncle,” said Ayers. “I feel like it’s undoing a lot of good progress.”

This story originally appeared in the Anchorage Daily News and is republished here with permission.

The Trump administration’s tumultuous relationship with China is proving to be a major issue for some companies in Alaska’s forest products industry. That includes in Haines, where a timber sale that was supposed to kick off this spring has stalled amid China’s ban on U.S. log imports.

China announced the ban in March, citing concerns over pests like bark and longhorn beetles in U.S. shipments. The move came the same day that China imposed retaliatory tariffs on certain U.S. agricultural products amid President Donald Trump’s global trade war.

The decision has had sweeping effects on companies that harvest logs in Alaska and ship them overseas.

“We’re severely impacted by it. There’s no doubt about that,” said Eric Nichols of Alcan Timber, a Ketchikan-based company. Nichols also serves as vice president of the Alaska Forest Association, a Southeast nonprofit.

Nichols said about half of his company’s volume typically would go to China. As a result of the halt on imports, he said, the company has had to shut down at least one of its operations and make a range of other changes.

Those include shipping to other markets, including Washington, South Korea and Vancouver, British Columbia. Alcan has also shifted its focus away from harvesting areas that are best suited for the Chinese market.

Those changes have come at a steep cost.

“We’re at pretty big losses on going to other markets, just because of the transportation differential from what we’re used to,” Nichols said.

In Haines, meanwhile, Oregon-based company NWFP Inc. had been planning to move forward with a sale in May that’s been under contract since 2021. The so-called Baby Brown sale would be the area’s first major timber sale since the 1970’s.

But the company could not move forward with the sale this spring due to the loss of the Chinese market, Haines State Forester Greg Palmieri said in an email. He added that the company is seeking other markets for the sale, both within the U.S. and overseas.

“I expect that as soon as they have the ability to market the timber, operations will move forward with the sale currently remaining under contract,” Palmieri wrote Tuesday afternoon. “They are continuing the processes to obtain the required permits from State and Federal agencies to move the logs to markets as originally planned.”

The trade disputes have also hit Canadian lumber company Transpac Group. The company in March largely shut down its site on Afognak Island, just north of Kodiak, citing the ban and failed efforts to divert its product to other markets.

“We’ve been trying very hard since the announcement,” Transpac CEO Charles Kim said in an interview at the time. “And it has all failed.”

A spokesperson confirmed this week that the situation hasn’t shifted in the time since.

Nichols, of Alcan, says his company will have to weigh similar decisions if nothing changes.

“We have to make decisions, you know, a little bit like Afognak, whether we’re going to stay in business or not,” Nichols said. “The question is how long can we hold these logs before we have to sell them and generate the losses they’re going to generate here.”

Juneau voters will decide whether the city should implement a new seasonal sales tax system. The Juneau Assembly approved the ballot question at a meeting Monday night. 

The city wants to take greater advantage of the 1.7 million cruise ship visitors that come to town every summer by increasing the local tax in those months. 

But, a handful of testifiers at the meeting, like Auke Bay resident Tom Williams, argued it’s not a good deal for year-round residents. 

“I have a question for you — what in the world are you doing?” he said. “I think you need to get back and start to go back and figure out who you work for, because all you’re doing with this seasonal sales tax approach is squeezing a balloon.”

Assembly members say the change is meant to capitalize on cruise ship tourism spending. Right now, Juneau has a fixed 5% local sales tax rate. It’s made up of both permanent and temporary taxes that help pay for general government costs, some specific voter-approved projects and community priorities like child care support. 

The proposed seasonal sales tax system would change that. It would bump the rate up to a 7.5% tax from April through September and then drop it down to a 3% tax from October through March. 

Nearby Southeast Alaska tourism towns like Ketchikan, Sitka and Skagway have already adopted similar seasonal tax structures. Deputy Mayor Greg Smith said he thinks Juneau would benefit by doing the same. 

“When we talked about doing this in December, it was to hopefully help people see and feel that ‘I’m going to be paying less in taxes, and my family will benefit due to tourism,’” he said. “A seasonal sales tax does that.”

Earlier this summer, Assembly members removed a part of the original proposal that would have used the additional revenue from the new system to offset the cost of removing local sales tax on food and utilities. That’s because an advocacy group called the Affordable Juneau Coalition gathered enough signatures this spring to put that question on the ballot already.

The coalition also got enough signatures for a ballot question asking whether to place a limit on the city’s property tax rate.

Angela Rodell, a member of the group, testified against the seasonal tax proposal on Monday. She argued it would financially hurt residents more than it would benefit them. 

“At a time when many in our community are already struggling with the rising cost of living, housing, food, childcare, and utilities, substantially increasing the sales tax for six months over the summer is not only ill-timed, it is fundamentally unaffordable for working families and individuals on fixed incomes,” she said. 

Assembly member Wade Bryson said the seasonal structure is needed to help recoup the estimated $9 million loss in annual sales tax revenue the city could face if sales tax is removed on food and utilities, which would happen if voters approve the measure. 

“Allowing the citizens to answer the questions at the same time gives the citizens — gives all the voters — a chance to say ‘yes or no,’ if they want a giant hole in the budget. Do they want all of our social services to go away?” he said. 

The city recently notified local organizations that receive city grants that it would be withholding a portion of their funding until the election due to “the potential of significant revenue loss” if the citizen initiatives pass. 

Those organizations include the Juneau Community Foundation, Juneau Arts and Humanities Council and KTOO. 

Voting in this year’s by-mail municipal election ends Oct. 7. Ballots will be mailed to registered voters beginning Sept.19.

Haines is Alaska’s oldest borough. A recent survey of residents under 40 years old provides a clearer picture of why.

Haines Borough Mayor Tom Morphet sent out the survey this winter to gauge how young people are faring and what they need to succeed. After reviewing nearly 90 responses, he said they underscore problems that could have major implications for the town’s long-term well-being.

Respondents outlined a long list of factors that make it increasingly difficult for younger people to live in the small Southeast community, ranging from scant housing and child care options to polarized local politics.

“The lack of progress on these issues — daycare, child care, housing — are starting to breed resentment among our younger population,” Morphet said. “I think it’s something the government should be aware of.”

State data indicates that Haines’ population has dropped between 1% and 2% on average each year between 2021 and 2024. At the same time, Haines has the highest median age — 49.8 years old — of any borough in Alaska.

Morphet paid for the survey via the mayor’s discretionary fund. The Chilkoot Indian Association and Haines Chamber of Commerce sponsored the effort. For now, there aren’t plans to use the survey aside from capturing sentiment among younger residents, a demographic Morphet said is “not always present or prominent at our government meetings.”

“What gives some weight to the responses, in my opinion, was that the respondents were in Haines in February,” he added in a June email to members of the Haines Borough Assembly. “These are folks who want a stake in our town.”

Housing and child care shortages send young people Outside

Dacotah Russell is 33 and has two young kids. She said in an interview that Haines’ limited child care options are the number one challenge that her family — and nearly all other young families — contend with.

She said the shortage became even more dire last year, when one of Haines’ few preschool options, a nonprofit, shut down. It’s set to reopen this fall, but the closure underscored the dearth of options, particularly as her toddler approaches preschool age.

“If the preschool wasn’t going to open, I’m not sure what we would do. I probably would have to quit my job,” said Russell, who works as an accountant for the borough. Her husband, Travis Russell, is a local police officer.

She was among those who said the child care shortage — combined with a lack of well-paid, full-time jobs — has left most families no choice but to operate on one income.

“A lot of people are moving out because they can’t afford to live off one income here and still raise children,” she said.

The survey suggests that housing is another top issue for younger residents. By Morphet’s count, nearly half of the respondents mentioned housing and rent.

Joe Aultman-Moore was among them. He came to Haines in 2014 as an outdoor tour guide but settled here full-time in 2017. He’s 35, and he says he and his friends have consistently struggled with housing whether they’ve hoped to rent, build or buy.

“I have been in the situation of being like, days away from basically living, you know, in a tent surrounded by boxes of my stuff because I could not find anything at all,” Aultman-Moore said during an interview this week at the local library, where he works.

The Haines Borough Assembly recently considered addressing the issue by allowing homeowners to build small apartments on their properties that could be used as rentals. The proposal generated pushback from some homeowners concerned about overdevelopment.

The assembly ultimately tabled the proposal, the Chilkat Valley News reported early this month.

Aultman-Moore says that’s just one example of a relatively straightforward policy change that would seriously benefit young folks and the borough writ large.

“We need to have more diverse ages around here in order to really have a healthy workforce and a healthy community,” he said. “And we are moving in the opposite direction right now, and that’s going to hurt us economically and socially.”

Respondent and resident Sarah Elliott spoke to the value of government funding for community services and assets that benefit families — things like the local pool, nonprofits and school. She was born in Haines in the 1980’s, is 40 now, and has two teenage kids.

She said all of the above are crucial for families’ well-being but often get caught up in annual budget talks and political crosshairs.

“I just think that if you want young families to stay in town, then you need to support the things that young families want,” Elliott said.

Morphet, the mayor, said many respondents also raised concerns over a lack of inclusivity, including toward the LGBTQ community, and voiced desire for a more functional local government.

“The drivers of the community, the people that take chances, the people that build the community, are younger, and we need them,” he said. “We absolutely need them, and we can’t afford to be losing good ones.”

The Environmental Protection Agency is sticking with its veto of the proposed Pebble Mine project in southwest Alaska.

Northern Dynasty, the parent company behind the Pebble project, is still suing to get the veto overturned. A document filed in that lawsuit early this month said the company and the EPA were in settlement talks, and that the Trump administration said it was open to reconsidering the Biden-era veto on the controversial mining project.

But on July 17, attorneys in the case filed another document to update the judge. It says that negotiations between the company and the EPA did not reach a resolution, and that the Trump administration will continue to back the veto.

The proposed site for the copper and gold mine is upriver from Bristol Bay, home to the world’s largest sockeye salmon fishery. The mining project is unpopular in the region, where many people believe the open-pit mine would put the salmon run at risk.

Karla Jensen is an environmental specialist from Pedro Bay. Her village is close to the proposed mining site. She says that after the veto of the project in 2023, many of the mine’s opponents felt relieved but remained wary.

“It reminded me of a cancer,” Jensen said. “Some people were like, ‘We don’t have to worry about that… I don’t have cancer anymore.’ But you always have that nagging in the back of your mind that it can always come back.”

The Pebble Limited Partnership is now asking the court to rule on whether the veto is lawful.