Seventeen candidates are running to be Alaska’s next governor. Alaskans are already heading to the polls for early voting in the Aug. 18 nonpartisan, pick-one primary, which will narrow the field to four.
It can be tough to pick a favorite in a crowded field, so as the primary nears, Alaska Public Media is conducting interviews with some of the top candidates in the race. We reached out to every campaign that raised $50,000 or more as of the mid-July deadline to report fundraising, and nearly all responded.
Today, we’ll hear from former Gov. Bill Walker, an independent who led the state from 2014 to 2018. He appeared alongside his running mate, former Revenue Commissioner Randy Hoffbeck.
This transcript has been lightly edited for clarity..
Gov. Walker, this is your fifth time running for governor, and running for governor, of course, is difficult, expensive, and can be a painful exercise. And I'm curious, first of all, what keeps you coming back for more?
Bill Walker: The situation Alaska is in, quite honestly.
Knowing what we know collectively, Randy and myself, because of our time in office, we see the problems clearly, and we also see the solutions clearly. And so we're very much solution-oriented on the financial situation Alaska's in. We've been in a deficit for the last 10 years or so, ever since Senate Bill 21 was passed. So we see the financial situation. We have a gas and energy crisis in the state — actually statewide, quite honestly, the cost of energy — those need to be addressed, absolutely.
And it takes making hard decisions, and not someone that's going to be looking at a second term, someone who's looking at solving them today.
And you haven't raised tons and tons of money. I believe your fundraising numbers are in the five figures, while most of the other well-funded candidates are well into the six figures, some in the seven figures, and a lot of your campaign money has come from yourself and your running mate, Mr. Hoffbeck.
So my question there is, are you running to win? Are you running to get your message into the conversation? What's success look like for you?
BW: You know, we're clearly running to win. And our campaign is different this time. We have a lot of volunteer time from volunteers that believe in us, and we believe in ourselves. We put our own money up in this race. A lot of the effort has been — in this race for 17 people, a lot of them just trying to get their name out there, and that takes a lot of money to do that. And we've polled pretty high in the name recognition, up in the 90s.
So we've been focusing on our message and getting our message out there and putting out solutions and having a dialogue with Alaska about some of the challenges we have. The Permanent Fund dividend is one. Energy is another. So we've been focused really on solutions, not necessarily slogans or a lot of media campaigns. So we just are running a very efficient campaign. We're polling in the top four in some polls, and so I think we're doing fine. And I never have liked going out and raising money from people. I really never ever liked that. I've been very uncomfortable with that concept, so I'm very comfortable with the way we're running our campaign.
When we talked in May, as you were getting into the race, and you've talked a lot about it since then, a fiscal plan was the main reason you were running, Alaska's need for a fiscal plan. You talked about the deficit. You've said that during your first term as governor you made some progress, but you were looking in a new term to “finish the job,” as you put it. Can you sketch that fiscal plan out for us?
BW: Yeah, maybe Randy wants to jump in on the fiscal plan.
Randy Hoffbeck: Yeah, so we started this whole campaign with the fiscal plan, because the idea is we can't promise you what we can provide if we don't know how much money we've got to provide the services.
And so we sat down. We looked at oil and gas taxes. We looked at mining taxes. We looked at the structure of the Permanent Fund dividend. We looked at the business entity pass-through tax issues. We looked at whether we can tax internet commerce, e-commerce. We looked at all of those issues to try and build out what exactly is our profile for revenue for the state, and we laid that out first, with the idea that once we knew what we could achieve, then we could look more at what we can provide for services that frankly people demand, and we don't have the revenues right now to provide.
BW: And you know, Eric, our philosophy is this. A lot of people talk about a broad-based tax, and if that needs to be, we'll certainly address that. But Alaskans have already paid twice toward the deficit.
One is with the lower dividend, and secondly with the POMV, the percentage of market value draw, earlier than we probably wanted to have it drawn, but we had to because of the financial situation. So Alaskans have given twice, and so we want to take a look at revenues from resources, making sure we have that right, and not just going to arbitrarily raise taxes on anything. But let's get it right. Make sure that — we don't want to be the highest in the nation, but we don't want to still be the lowest in the nation like we are now.
And almost nobody does it on a net basis like we do. It's complicated. It's inefficient. It involves six years of audits, of litigation, of confidential settlements. We want alignment with resource development, and the best way we think to do that is on a gross (basis) — very simple to do, and not wrought with uncertainty and audits and litigation. So if you want to make government more efficient, make the systems more efficient, make the systems simpler, so that we're not going through all that we've been going through for the last at least 10, 12, 15 years. And certainly since Senate Bill 21 passed, it's been pretty contentious.
RH: Yeah, and I think just to add on to that even more, we've identified about a billion and a half dollars in revenues from resources that would largely close the fiscal gap that we have in our budget right now.
And people say, well, you can't tax your way into prosperity, but this really isn't — this is different. This is about getting a fair return on our resources. Right now, we aren't getting a fair return on our resources.
In low-price years, we were as low as 1.7% of the gross value of our resources from oil and gas. In 2024, the minerals sold in the state of Alaska were about $4 billion. That is what was reported, the value of the minerals sold from the state of Alaska. Our mining license tax brought in a negative tax that year. It's just simply not working the way it's structured right now. And so the idea was to let's make it actually work, make it simple, make it competitive. We're not asking for anything that puts us at the highest rate, as Bill said, or at the lowest. We're just in the middle. We're competitive, and I think that's a good place for us to be.
BW: You know, Eric, we get questions from people saying, “Well, are you anti-industry, anti-development?” Couldn't be further from the truth. We're very much pro-development, pro-industry, pro-resource development.
In fact, our concept is that the state of Alaska should be the applicant for an environmental impact statement for resource development. Right now, if you get a tract of land, say up on (the National Petroleum Reserve — Alaska) or on the North Slope on state land, it takes 10 years to get a permit to drill. About 10 years. Willow, I mean, I worked on Willow back when I was in office. So it takes about 10 years to get that permit. And what we want to do is have the state be the applicant for the first time.
We're an owner state. We have to act like an owner, and so we get the EIS so when someone comes in and leases a tract of land, it's ready to go. They don't have to wait the 10 years. That's the biggest deterrent in Alaska for coming and developing Alaska. That's why we don't have 30, 40, 50 companies up here, because they can't wait the 10 years. We have some companies we're lucky to have, the larger companies that can have that staying power, ConocoPhillips being the best example of that. But the smaller companies can't. We need more.
We have a pipeline that is three-quarters empty, and so it's time that we have more companies come up. And the best way is to remove that 10-year impediment, and that's our plan on aggressively growing resource development in Alaska.
I was intrigued — there's a lot there I want to address — I saw that proposal about having the state do the EIS, the environmental impact statements, for NPR-A and for the 1002 area in the Arctic National Wildlife Refuge.
I was curious: do you see that as exposing the state to a lot of risk? I mean, it costs money to write these EIS statements, and the state would profit from production tax and other revenues that it gets from oil development. But I'm curious why you see that as a financial risk worth taking, or if you see it as a risk.
BW: Well, it's a financial risk worth taking because clearly it will remove the biggest risk of companies coming to Alaska to explore and to develop. And also you can recoup that, of course, in the bidding process. When you put a tract out, you can provide a share on that to recoup those investments. But I think it'd be the best investment we could make, quite honestly.
I believe that the 1002, which I have pushed for for decades, of ANWR — it should be an education endowment. I would call it the Don Young-Ted Stevens education endowment. Just like for steady funding from pre-K through the university. You know, Texas has the largest education endowment in the country. They started theirs in the late 1800s. All their education, it just comes from an endowment. We should do the same thing.
And if we do that with the 1002, I think it protects us a bit from the next — you know, we've got a two-year window now with this administration. We don't know what the next administration might do. We've seen it whipsawed back and forth from one administration to another. That might protect it some if we have it as an education endowment. And that’s what I’d do. I just think that would be the first thing we would do, is begin the EIS process there.
And people don't bid on the 1002 largely because, as a longtime oil lobbyist told me in D.C. years ago, you couldn't drag big companies into ANWR because the microscope, the telescope, the lens on that is so powerful, if they spilled a cup of coffee, their stock would go down 10%. So they're afraid of those kinds of impacts, whereas we aren't.
And I'm glad (the Alaska Industrial Development and Export Authority) has done what they've done. I applaud them going in and bidding on those leases. Gov. (Frank) Murkowski and I both did an opinion piece encouraging them to do that. So I'm very pleased they did that. So nothing we're talking about is anti-development at all. It's all pro-development. But I think we just need to make sure that we're getting an appropriate share of the profits, and you don't do that on a net basis. You do it on a gross basis.
RH: And just following up on that a little bit. I can't remember who it was we were talking to, and probably if I knew, I wouldn't say. But it was an industry person, and they basically said if we didn't have that 10 years of uncertainty on these big projects, the tax issues wouldn't be that big a deal to us, because that 10 years where they have no revenue and it's uncertain whether they'll even make it to the starting line is where their biggest risk is.
BW: That's right, and I remember that comment. He said, “Yeah, that'd be a game changer for us.” And that came actually from one of the larger companies. So I think we're on the right track on that.
I think that the biggest risk we do is doing nothing, and that's a risk we can't afford. And so sitting back, hoping another giant comes along that can withstand the 10 years and can sell it to their board — we're competing for money and projects all over the world, where they wait a few months to be able to explore. And to come to Alaska and wait 10 years is not a level playing field. We need to level the playing field for those companies' benefit.
Speaking of reducing the risk for resource projects, you've also called (to) “move the gas line across the finish line.” So, of course, Gov. Dunleavy, the state House and the state Senate are currently at odds over a bill that would cut taxes for the project, with the main sticking point appearing to be the inclusion of a tax on pass-through entities, which you said earlier that you support.
So one question about that is, do you support the version of the bill that was passed most recently by the state Senate, which does include that tax? And what do you say to the criticism that that pass-through entities tax would necessarily increase the cost of gas from that project and threaten the economics of it for that reason?
BW: Yeah, I'm going to let Randy Hoffbeck take that. He negotiated that very issue under two different administrations, that very issue.
RH: Yeah. So the pass-through tax issue is kind of interesting, and I've asked people to put a number on it. Tell us just exactly what that would really mean. And so I just did a back of the envelope.
So if we assume that they could net Henry Hub price for gas, which I believe is about $2.40 or $2.50 right now, our corporate income tax at its highest rate is something just slightly less than 10%. So just making the math as easy as we can, let's say it's 10%.
So that means that of that $2.40, 24 cents would be taxed through that pass-through entity tax. Well, but Exxon and ConocoPhillips already pay the corporate tax. Hilcorp is only about a 30% owner, so you take 30% of 24 cents. You're at 8 cents (per 1,000 cubic feet) is how much it would change the price of gas delivered. That's not a game stopper. So I think we really need to put numbers on the table.
And when we negotiated these issues before, with Murkowski’s pipeline through Canada and with the producer pipeline during our first administration, we had numbers. We had real numbers. We were able to really put a pencil to paper and figure out what works and what doesn't work. And I think that's what we're missing in the process right now. They've negotiated a number. People have agreed on the number of what the property tax substitute should be. I think we need to put a number on the pass-through entity tax so people can really see what it means, and then really decide whether that's a game stopper or not.
And also, supporters, even, of the tax break bill say that it's not a guarantee that if that bill passes without the S corp tax, without the pass-through entities tax, that it's still not a guarantee that the line would be built. A gas pipeline has, as you know, from the North Slope been a dream for decades, and it's never moved forward to actually digging trenches and welding pipes together in the ground, including under your administration.
And I guess, why do you think it's realistic that you can help get this across the finish line this time?
BW: You know, great question, Eric. We've almost been there in the past. We had a process under (the Alaska Gasline Inducement Act), under Governor Palin, open public process, competing projects. And I put together a consortium of Bechtel, Sempra Energy, Williams Pipeline, the largest pipeline company in America, Mitsubishi, and a handful of others. I put together a consortium, and we bid on that. And she selected TransCanada, down into Alberta into the AECO trading hub down there, and so that didn't happen.
And then later on, after quite some time, it came back over to what we were proposing as far as an LNG project. And this time it was coming to Nikiski, which is fine. So when we came into office, we continued on what was in play, with Exxon, BP and Conoco as our partners. And then on the infamous day for me when they said, you know, “We're done. We're not going to do this anymore. We'd like to put the whole project on the shelf unless you want to take it over.” And I said, “Absolutely, we'll take it over.” And we did. We continued the permitting along, so we had a lot of momentum and a lot of MOUs, a lot of relationships with the market. The president of Tokyo Gas came to Juneau and stayed — not at the house, but stayed in Juneau for a week. Brought his wife, his key senior people in Tokyo Gas, to talk about this project and how much they wanted to be involved.
And then we had an election, and every governor gets to choose what to do, and we went into a seven-year sort of hiatus of nothing happening until about a year ago. And so we missed a tremendous window of opportunity. But none of it had to do with the project. It had to do with politics. That's the unfortunate part. And no, I'm not trying to criticize any former governors or the current one, but just the way it is.
So what we will do is what we did before. We will not start over. We will not throw out what's there and say we're going to do it our way and do something different. We'll continue the momentum that's there. I can't sit here and guarantee you there's going to be a pipeline, but I can guarantee you that we will continue the process that's in place. And if for some reason it doesn't continue on — as the case was, we found, with Exxon, BP and Conoco — and if Glenfarne says, you know, we're not going to do this, then we'll be ready to say, well, we'll take it over.
And the first thing we'll do is look at the economics. Actually, the first thing we’ll do is make things very public, and we'll look at the economics and see if it's economical. If it's economical, it's financeable, and it's not on the backs of Alaskans, we'll continue it on. Of course we will.
So that’s what we’re saying when we say we'll finish it. We're saying we won't start over. There won't be any hiatus of time involved. We'll do exactly what we did last time. We'll play whatever hand we're dealt. We'll play that hand until there's not any reason to play it any further, and then we'll decide the other options. Hopefully, we'll be able to play it all the way to the finish line, with the companies that are there, and that would be our first choice.
So I also want to talk about mining. I don't recall whether it was you or Randy who mentioned it earlier, but your campaign talks about Alaska's mining license tax not working. There's obviously been a lot of interest in new mines here in Alaska, and I'm curious if you can explain what you propose as a new approach to getting state revenue from mines, which currently contribute a very small fraction of the state budget, if anything.
RH: Yeah, and mining is never going to even approach oil and gas as far as revenues to the state, so we're not trying to emulate what we have on the oil and gas side. But we did look at what other jurisdictions are doing as far as taxing the production of minerals, and they are all using a gross tax. I don't think there's anybody else in the country that uses a net tax.
So we proposed a gross tax, which, depending upon the mineral, would be 2% to 3% of the value of the produced minerals would be paid as tax rather than a net tax. So we're actually valuing production. We're not valuing the accounting process that is happening right now, where people are writing off investments and various other things against the value of their production, and coming up with some very low numbers for tax that just simply don't reflect the value of what they're producing.
BW: But you know, Eric, we'd also do the same for mining as we're talking about for oil and gas as far as the EIS. Again, they're waiting 10 years for a mining EIS. And currently the way it works is if you do a large EIS for large tracts of land, you can do sub-projects within that EIS coverage and don't have to start over again. So I think that this would be a boon to the mining industry as well, as far as our concept of the state being the applicant. Typically we'll send a letter of support in the process. But again, it goes on and on and on, and we as a sovereign, I think, have better leverage. And we have a phenomenal secretary of the Interior right now, someone who I know personally. I got to know him when I became governor. He was elected the same year, governor of North Dakota, and so we exchange Christmas cards. We communicate. I would welcome an opportunity to work with Doug Burgum on this process.
RH: And to be clear, too, we're not trying to vilify the mining industry or the oil and gas industry. They're playing by the rules that are out there right now. What we're saying is those rules need to reflect what is more a standard way of getting value from our resources.
BW: The current rules were set in 1955, when gold was at $35 an ounce. (It’s now) over $4,000 an ounce. And again, we're the only state in the nation with a net arrangement. Everybody else has gone to gross, and the average is about 5% to 6% on the gross. So at 2% to 3%, we're in the lower end. So we're not trying to make things difficult for anybody. We're trying to simplify. Quite honestly.
So is it fair to talk about this proposal as both increasing the amount that companies would have to pay — I mean, for oil and gas and for minerals, increasing the amount that companies have to pay in taxes — but at the same time providing a subsidy or a risk reduction in terms of doing those EISs, going through the regulatory process? You're putting weight on both sides of the scale — is that how you see it?
BW: It is. It absolutely is. We want to reduce the risk, and that's certainly a great value to them. And so yeah, it's a balance. I mean, again, we're not going after anybody. We're going after more resource development, is what we're going after.
I also want to talk about the Permanent Fund dividend. This has obviously been a big source of interest for a lot of Alaskans in this race. Shortly after you entered the race, you proposed ending the Permanent Fund dividend with a one-time $10,000 payout. Mr. Hoffbeck, you said it was an attempt to “take the gorilla out of the room” in terms of the annual debates over the PFD.
Now, as I was preparing for this interview, I went on your website and I saw a very different proposal that looks not like a proposal to end the PFD, but a new approach. Can you walk me through what you're calling the Alaska Resource Dividend?
BW: Yeah, let me talk a little bit about it, and I'll turn it over to Randy to go into the details a bit.
We started this campaign and said, you know what? Let's talk about the hard stuff. Let's talk about the stuff that no one's going to talk about. Let's walk right into this issue. Because you cannot begin a fiscal plan, really quite honestly, until you resolve this issue. So we said let's take it on. I'm sure if we had a lot of high-paid advisers, they would say run from this issue, run from it. And we don't have those advisers. We're just a couple of Alaskans that want to do what's best for Alaska. So we ran to it.
So we put something out there that we said, try this and see. And people didn't like it. Some did, but the majority did not like it. So we said, OK, well, we learned from that, and we learned from the feedback we got, and we said, OK, that's not going to play. Let's try this. So, Randy, you want to explain that?
RH: Yeah. So the three components of the feedback we got that were very strong were, one, that people want the dividend to survive. They don't want it to end. Secondly, that people really believe that the dividend is tied to our resources and the value of our resources. And the third part was people wanted the annual arguments over the size of the dividend to end. They're just tired of the fight.
So we said, what can we do with those three pieces and come up with a dividend approach that would work into the future? And we said, what if we just tie it to our resource value? Sever it from the Permanent Fund earnings. Leave the Permanent Fund to do what it was originally established to do, which is to fund government services when oil and gas taxes could no longer carry the load, and just let the Permanent Fund earnings do that. And we take the dividend and we move it over to the resource side, the revenue from resources.
And so what we proposed was that we would take 50% of all of the tax revenue we receive from resource development in the state. That's oil and gas. That's mining. That's fishing. That's timber. Anything, any resource in the state. We take that, and at the end of the year we divide it up 50-50. Fifty percent goes to pay the dividend. Fifty percent would go into funding government services.
We put the volatile side of the equation on the dividend side, the stable side on the government services side, because you need to have a stable revenue stream to fund government services. But we're going to take some of the volatility out of the dividend side by guaranteeing a $1,000 minimum. So if we have a low-price year, low price in commodities, where the dividend would drop below $1,000, we would guarantee a $1,000 dividend in those years. And so far the polling on that's been pretty strong.
BW: Yeah, they definitely favor that. In fact, they even favor that over a full dividend, because most people know that a full dividend means we go out of business on the dividend program pretty darn quickly.
So I was pleased with the strong response and favorability of that. The other part that's good about it is that it gives the Permanent Fund dividend opportunity to grow.
As resources are developed in Alaska, more mines are developed and more oil is developed, and the dividend grows. And if you have a spike because of a war in the Middle East, and suddenly the price of oil goes over $100, and at the gas pump you're paying $5, $6, or in some parts of Alaska, $10 and $15 a gallon, the dividend will be higher then, because the resource revenues will be higher then. So it's a better match, I think, of what people want, and it goes on into — we're going to have resource development in Alaska for generations and generations. So there would be alignment. It would create alignment between resource development and the dividend every year. It would just take the fight out of it in Juneau. It would be calculated prior to the session. Coming into session, you’d know what the dividend would be. It's just a simple calculation.
So part of the idea is that it puts more of Alaskans' skin in the game when it comes to resource development.
BW: Yeah, absolutely, absolutely. And you know, some people have complained about certain resource development in their area, and they see a truck going by. They wish it wasn't going by.
If they looked at that truck and said, “My dividend's in that truck of ore,” maybe they'd look at it a little bit differently.
More on that, the polling that you mentioned. Taking a look at that polling that you mentioned, I believe it said 39% of folks asked about this supported your Alaska Resource Dividend proposal. Another 30%, the second-place choice, was that full statutory dividend.
And I guess what is your message to that 30% of Alaskans, according to that poll, who think that Alaskans should receive a statutory dividend?
BW: Well, it's pretty clear you can't have a full dividend without broad-based taxes, and we’d have to pay some pretty heavy taxes, either income tax or sales tax, to pay a statutory dividend. And we haven't found many that want to pay a tax to receive a dividend. So we're trying to do everything to prevent paying the taxes. So I don't know, Randy, do you want to add anything?
RH: And just to put some numbers on it — we haven't really calculated the amount, because it's kind of a difficult calculation to make. But people are saying that if they'd gotten full statutory dividends from 2016 to now, they would have gotten $16,000 more in dividends than they currently have. $16,000 in dividends is roughly $10 billion, it would have cost to pay those. We only got $3 billion in our savings account, so we would be $7 billion underwater right now, which means those dividends would have stopped being paid several years ago if we had the full statutory dividend. The math just simply doesn't work.
BW: Yeah, and that's why we like the idea of pulling out a different sort of revenue stream for the dividend. You've got too many things happening over here on the earnings side, and so that's what we like about (the resource dividend). In that way, it's more predictable, and it will grow.
A full dividend is great for a campaign stump speech, but the numbers just absolutely do not work, and probably never will.
Moving to another topic, I wanted to ask about public safety. You signed Senate Bill 91 (a criminal justice reform bill) in 2016, and it was largely repealed after a public backlash about three years later. And I'm curious, looking back on that, what you think you might have gotten wrong, and what you still think was right.
BW: You know, I think that we did get some things wrong in Senate Bill 91. In fact, the following year we introduced legislation to modify it, and it was not passed. They wanted it to be passed on somebody else's watch, and so we were not successful in getting modifications made, just for pure partisan reasons, that they wouldn't allow it to be changed. So that's politics and whatnot.
So yeah, we got some things wrong about that, and there's no question about that. And I think we got some things right, and I think that's true with any large revision of anything. There's going to be some good and some bad. And so while our efforts to repeal parts of 91 were not successful for partisan reasons, ultimately they were.
I have always been concerned about Alaska's high recidivism rates, one of the highest in the nation, and so always looking for ways of reducing that. Corrections is one of the highest budget growth departments, not that they’re doing anything wrong, just that they have a lot of people to take care of, and prisons are expensive.
So I still believe that there can be, should be, ongoing efforts on recidivism to bring that down, and I think you do that through training. One concept that we put in play was getting folks that are incarcerated out — you know, they're in the last six months of their sentence, they’re white-collar stuff, not ax murderers, so to speak, no domestic violence folks — but to get them out in the processing plants around the state.
And we've done that. I was just down in Kenai a couple days ago, and there's a plant down there that receives them. They're out in Dutch Harbor. We sent a group out there. We sent, I think, 30 of them to Kenai. So that when they come out of their time incarcerated, they have something they wouldn't otherwise have. Most have paid off the restitution. Maybe they have a 401(k), have maybe $4,000 or $5,000, and most importantly, they have a job, and that's the most critical thing. The most important job when they come out of incarceration is the first job, and they've got to do really, really well on that first job so they get a recommendation for the next job.
So I think there's things that we can do to bring down recidivism. You bring down recidivism, you bring down crime. And so I think that's an area that needs continued attention. I'm glad that the Dunleavy administration continued that program on. I applaud them for doing that, because I've spoken to several that have been in that program and said it was a big boost for them to come out of incarceration and have a job.
RH: Just to follow up on that a little bit. Bill and I used to go into the prisons when Bill was governor, from time to time. And I remember going in one Sunday afternoon, and I was talking with one of the inmates, and he had been in prison for almost 20 years, and he said, “I'm scared.” And he was getting ready to get out. He was going to get out in a couple of weeks. He says, “I'm scared to death.” He says, “I don't know anybody. I don't know where I'm going to go. I don't know where I'm going to live.” You know that doesn't work. That just doesn't work. And so this transitional period is just so critical for bringing people out of prisons and into society in a productive way.
So — making kind of a hard turn here — but you mentioned the fact that costs are rising in the prison system, and costs are rising for families across the state as well. It's difficult to live and raise a family here, especially given how expensive everything is in Alaska compared to the Lower 48 and elsewhere. And we see a lot of young families leaving the state for greener pastures, better jobs, lower costs. And I'm curious how you would try to stem the tide of outmigration.
BW: You know, I think that's a great question, Eric. I think that's the result of not having a fiscal plan. When you don't have a fiscal plan, I think people don't see an end in sight.
They pick up the paper and they see 12 more schools have closed. You see an op-ed from a teacher, an educator by the name of Ben Walker, who was the teacher of the year. His wife was teacher of the year as well, the year before, and they both wrote letters and said, “We're done. We don't have a pension here. There's no reason to stay.” Deferred maintenance is about $1.4 billion, and there's nothing. Deferred maintenance does not have a constituency. There's no ribbon cutting or parades on deferred maintenance, and it doesn't get done.
We're circling the drain in some respects from a financial standpoint, and that's why we're running. Knowing that and seeing what's happening, and people are running, talking about, “Elect me, I'll give you a full dividend.” Man, we've got to take care of what we have. We have to take care of what we've got, and we have to give people a reason to stay.
The cost of energy is a huge issue in this state. The most energy-rich state in the nation, who has the highest cost energy in the nation — there's something wrong with that. I say what I have said many times: Alaska is not broke. We're broken. We're broken in some ways. We need to fix some of these things.
We should have much lower cost energy in the state. We have many options on renewable resources. Our geothermal opportunities are phenomenal. We've got over 40 active volcanoes in the state of Alaska. The next highest is Hawaii with about four, and so we should be the leader on geothermal. We should be the leader on some of these things.
We pay, through our deductions, we pay for our oil to be shipped down to refineries in the Lower 48, and then most of our fuel we bring into Alaska comes from Korea. So we pay for the fuel from Korea to Alaska. We're paying both ways on our fuel costs. We need more refining capacity in Alaska so that when we go to the gas pump or get the diesel to fuel our homes, we're not paying the transportation both ways, because we are right now, and that makes no sense at all. We need to be aggressive on the energy issue.
On the housing issue, I applaud Sitka. I love local government, because they absolutely have to figure it out. They can't live with a deficit. But they have a housing trust in Sitka that is very impressive. Very impressive what they've done, and they've created 14 houses. Now I think they doubled — I think now it's 28 houses — for young folks. And they have a one-bedroom house that's affordable for somebody working at McDonald's. Can you imagine somebody working at McDonald's buying a house? You can do that in Sitka because they have a housing trust. We need a statewide housing trust to bring down the cost of housing so people can get into it. And it's not low-income housing at all, but it's a great program. Not enough time to go through it now, but I applaud local government that figures it out. And Sitka, I think, has done a brilliant job on the housing trust for their community.
That's very interesting. Are you familiar with other jurisdictions besides — like other states, I guess other large political organizations that have taken such an approach, like with the statewide housing trust?
Juneau was doing a housing trust as well, and so it's starting to take off. And I think the way it works is that the local government in Sitka, and I assume in Juneau, donated the land for housing development. Then they went out — and in Sitka they got the Rasmuson Foundation, God bless the Rasmuson Foundation, to do the underwater and underground utilities. So when they put the house up for sale. I think it was like, for a two-bedroom, three-bedroom, like $260,000 or something like that.
They're just selling the house. It's like in Hawaii, in a long-term lease. They sell the house, and the person can stay there as long as they want, but when they sell it, they don't get any upside. They get a little bit of upside based upon, I think, how much is paid down on the principal on the loan, but they don't get the big jump. So it always stays as an affordable house. It's not subsidized. They're beautiful homes, and they're built by local contractors. I love that a lot. It allows them to get started. And after someone's there for four or five years, they build up a nest egg and are able to go buy a house where they can build some equity in it. And they know going in that they're not going to get any equity out of it, and they shouldn't, because you don't want just a one-off. It sells at $260,000, they flip it at $340,000, and then it goes on from there, and it's no longer an affordable house. So that's, I think, the secret sauce of the housing trust. It always remains, and they take care of it beautifully. It's their home. They have ownership. So it's a great concept.
And there was somebody in Oregon, an individual, I don't remember his name right now, but he has come up with this concept. He travels the country helping set up housing trusts. I'd have him come up right away and say, “Let's get a statewide” — like we don't have enough land. I mean, we have plenty of land, but we need to do it in such a way that it's affordable for folks to be able to have a home.
And so I think there's many things we do on the cost of energy, obviously on agriculture. I mean, my gosh, when we were a territory, 50% of our food was raised in Alaska, and now it's 5%. So there's much more we can do on agriculture.
So I think there's opportunities, but it all starts really with a fiscal plan. There has to be — you know, I come from a building background. I built my house. Randy built his house. You have to have a plan. You have to have a set of blueprints of how you're going to get there. You don't get there on Day One, but you have to have a plan first, and then you work through that plan. And it's not perfect. You have change orders along the way. There's no question about that. But I'm a big believer in having a plan. If you have a plan, major things get done, and without a plan, you're just out there sort of winging it. And I don't think that's the way to go.
RH: And housing trust — my son and daughter-in-law live in San Francisco, and they were looking to buy a house, and they had the exact same program in San Francisco, in some of the downtown high-rises, where you buy it, but when you sold it, basically you sold it for what you paid for it, or maybe there was a small inflation component, but you were not allowed to build equity in it. But you could buy a property for less than half of what it cost if you bought one that was just on the open market.
BW: Yeah, it's a great concept, and we definitely need to do that in Alaska for sure.
In 2018, you dropped out of the race less than a month before Election Day, as your running mate was facing a controversy, accused of misconduct. You endorsed Mark Begich, and Gov.Mike Dunleavy wound up winning that race. I've heard some folks are still angry about how that all played out, and I'm curious what you would say to them.
BW: Well, that was an unfortunate situation, and I don't judge somebody by their worst day, obviously. And he made a mistake, and not intentionally. The plan was for him to meet the individual at the restaurant in the Captain Cook, the Cubby, but it was closed on Sunday, and he kept a suite there, sort of his Anchorage office, and they met there, and some unfortunate things were said, uncomfortable things were said, and that was it.
So I don't have any — I was certainly disappointed that Mark Begich made a three-way race, and that was his choice. Nothing to prevent that, and it was what it was. But he had nothing to do with my situation.
We made a decision about being transparent when we came into office, and when that situation came up a month before the election, could we have kept it under the rug for a month? Absolutely. Would that have been the right thing to do? Not at all. And so when Lt. Gov. (Byron) Mallott came to me the next morning, he said, “Look, I'm going to resign.” He made that decision all on his very own, and I admired him for doing that. He said, “Whatever I said made her uncomfortable, and that's how I judge my conduct.” And so he said, “I'm going to resign,” and he did.
At that point, I really had no choice. The names were already on the ballot. I couldn't substitute anybody, and so that's why I suspended the election (campaign), because we ran on transparency and we believed it. So he said we need to walk the talk. And so, yeah, it was not —
We had to step away from a lot of things. The gas line was probably the biggest disappointment for me in stepping away from that election, because the relationships with the markets are so critical. And I've always said there's no drive-up window for relationships in Asia. You earn them. You earn them one meeting at a time, one dinner at a time, and you earn them over the years. And that's what I've done long before I became governor.
So that was hard. That was a very difficult decision for me, but it was the right decision. I don't regret it, because I think that's part of the problem we have in politics in general, that there's not enough transparency. People don't own up to whatever it is that they probably should not have done. He did, we did, I did. I said, that's the way it is. It's the way it's going to be.
And I felt badly because I had a tremendous cabinet, absolutely a phenomenal cabinet, and that meant all of them would be out of work as a result of my decision to suspend the campaign. But I felt it was the right thing to do, and I've not looked back on that since.
I wanted to wrap up with a couple more questions, and one of them is basically — it's a very crowded field, more than a dozen candidates running for governor, many of them pretty well funded. And as Alaskans approach heading to the polls on Aug. 18, or before if they're voting early or absentee, I'm curious, what is your message? Why are you the candidate who deserves their primary vote?
BW: You know, Eric, I really think it comes down to experience. It comes down to experience as far as understanding what the issues are right now before taking office. Understanding what the pathway to a solution of those is right now, not waiting to figure it out once we get into office. With our financial situation, our energy situation, we need to hit the ground running on Day One, and we will do that. And so I think that's what separates us.
The other thing that separates us is, I mean, we're independent, we're nonpartisan, and having served as the only nonpartisan governor in the nation, having the relationships I had with a Democratic president, a Republican president, and with the Legislature.
We need the whole team. When you're in a crisis — I've been through many crises in Alaska. Certainly, the '64 earthquake was the most memorable for me, in Valdez. We didn't come together as partisans to fix it. We came together as Alaskans to fix it. The '67 flood in Fairbanks, another example when we came together as Alaskans to respond to that flood. We're in that situation again. We're in that crisis situation. We need the whole team on the field. I've always said no one party has a monopoly on good ideas, and should be sort of benched. No one does it that way in business or in sports or anything else, and it shouldn't be in government either.
So we think that with our backgrounds, our respective experience — and Randy's experience on the revenue side, oil and gas side, our respective backgrounds on the gas line issue — and being able to work, I mean, everybody talks about working across the aisle. For us, there's no aisle. It's just working with 60 other elected officials as equals.
The Legislature is a critical piece of the success of a fiscal plan, absolutely, because they basically approve it. We present it. We don't do it with an administrative order. We do it with the Legislature, so we have and we will work closely with them, and we have in the past. And we didn't have a bipartisan Senate or House when we were in office, we didn't, and we still met weekly with the various caucuses in my conference room to hear what their issues were, what their concerns were. So we'll do that again.
So I think Alaskans need a couple of folks that have been there before, have a fiscal plan that we want to finish. The fiscal plan took a long time to put together, and Randy was sort of the captain of that. We met at (the University of Alaska Fairbanks) for three days with hundreds of Alaskans. We insisted the press be there. We live-streamed it across the state to get input and whatnot. And from that, we came up with a plan and had over 500 town hall meetings around the state. And Randy was very much involved in that, and other commissioners, to get input on the plan and submit the plan. The plan will be different this time, because then we had about $15, $16 billion, and today we have a little over $3 billion in the (Constitutional Budget Reserve). So it'd be a bit of a different plan, of course.
But I think this is an election where experience really does matter. If we're going to really stop the outmigration, really stop the roughly billion-dollar-a-year deficit that we've been going through, I think experience really absolutely matters, and we wouldn't be in this race otherwise. We're not trying to buff up our resumes at this point in our life, but we are in to solve problems. And there's going to be some hard decisions. There's going to be some hard political decisions, and you've got to have someone that's been there, made hard political decisions before, that put solutions before politics. So having done that once, we'll do it again.
We'll finish the job, and we'll right the ship and plug the holes and get Alaska — I mean, just imagine an Alaska where the governor and the Legislature get along, an Alaska where education is not only fully funded but is forward funded. We should operate on a two-year budget in Alaska. We can do that if we have the revenue stability from the earnings that we're talking about. So we want an Alaska where Fish and Game is fully funded, so we're making decisions on openers and closures based upon science and not based upon politics.
So there's so many things that we can do, but you have to start with a firm foundation. You have to start with the footings first, then the walls, then the framing. And in this situation, the fiscal plan is the foundation. We have got to have that, and we build from there. So we're talking about it. Everyone can talk about how they'll have a fiscal plan. We're talking about what our fiscal plan will be. That may not be good politics, but that's the only way we're going to do it. And we're going to be transparent about it, and Alaskans will have a lot of say in that fiscal plan.
