Candidates for governor talk economy

ANCHORAGE — Gov. Bill Walker and Mark Begich, who is challenging Walker’s bid for reelection, gave young business leaders and entrepreneurs in Anchorage their ideas for jump-starting the state’s ailing economy.

Mike Dunleavy, the Republican candidate, did not appear at last Thursday’s the “Accelerate Alaska” conference. Dunleavy was also a no-show at another high-profile gathering last week, the Alaska Municipal League’s fall conference, leaving that stage again to Begich and Walker.

Begich, a former U.S. Senator, is a Democrat. Walker, who is finishing his first four-year term, is running as an independent. Dunleavy is a former state senator.

At the conference Mouhcine Guettabi, economist at the University of Alaska’s Institute of Social and Economic Research asked what Walker and Begich would do to replace 12,000 high-paying jobs lost to the economy, mostly in oil and state government, since oil price and state revenues plummeted in 2015 and 2016.

“We are basically forecasting no growth or only slow growth,” of jobs, Guettabi said.

The candidates were low-key in responses. Walker argued his stewardship of the state through four rocky years of falling revenues and budget cuts, and passage this year of a major restructuring of state finances shows a solid record.

If the ship of state were kept on course with him at the helm the fiscal restructuring could be finished ¬– it is not yet done, Walker acknowledged – and restored business confidence would lead to new investment and the economy lifting itself.

One idea Walker offered up was to invest a small percentage of the Permanent Fund, like 1 percent, to help new Alaska business startups. The governor cited a small oyster farm he visited in Southeast where demand is exceeding the ability to supply, and yet the small company can’t see a path, or financing, to grow.

However, the most important thing needed now is economic stability, Walker said, and the fiscal restructuring enacted this year in Senate Bill 26 is crucial in reestablishing that. The bill allows the first-ever use of the Permanent Fund’s substantial earnings, which now equal or exceed the state’s normal revenues, to help fund the state budget.

Begich said he fears the economy is still foundering and that Alaskans are looking for better leadership in stimulating growth but also getting crime under control and ensuring a dependable Permanent Fund dividend paid to citizens.

He praised one idea for creative financing that has put forth recently that has gotten little support by the Walker administration – a “green bank” concept that would leverage financing to fund energy conservation and new development.

So-called green banks in the Northeast states have stimulated investment of several billion dollars of new investment in energy projects, Begich said.

Begich also cited his own early advocacy, as a U.S. senator, for Alaska becoming a leader in the development of aerial drone technology and testing. At the time drones were still considered a far-fetched idea in many quarters.

But an influential legislator, former Sen. Bill Stoltz, Republican of Chugiak, saw the vision and gave the University of Alaska the support it needed to become today a technology leader in this emerging industry, Begich said.

One specific proposal Begich now puts forth is a $6 billion state capital improvements program funded by general obligation bonds where the projects would be built over several years, but where the package would be given one approval by the Legislature.

Walker has not proposed a major general bonding program for state construction, although one is now being discussed, but the governor did put forth a program last year for $800 million spent on $2 billion deferred maintenance backlog on state and university buildings, but with repayment tied to a proposed wage, or employment, tax.

The tax went nowhere in the Legislature, so the deferred maintenance program did not advance.

Begich said tyhe state’s current capital budget approach is woefully inadequate and a more aggressive plan, like his $6 billion bond package, is needed. He cited his record as Anchorage’s mayor in pushing through a major city roads and infrastructure program funded by bonds.

Such plans risk becoming “christmas trees” in the Legislature with politically-popular projects being added but Begich said he’s tough enough to control this. “You have to be willing to say you’ll veto the whole package,” if its gets out of control, he said Thursday.

A more aggressive approach is needed on capital infrastructure, Begich said.

Begich’s most controversial proposal is to put the Permanent Fund dividend into the state constitution, which none of the other candidates have proposed, and to fund it according to a formula set out in a state statute.

Remaining Permanent Fund income could be used to fund schools, Begich said.

Putting the PFD into the Constitution is criticized because it could have the effect of putting the dividend payment ahead of other constitutional funding priorities, like education and public safety, from the state budget, and also because it would lock up two billion dollars-plus a year of revenue, making it unavailable in the event of a major disaster like an earthquake.

On Thursday Begich said he would be open to ideas of making exceptions for emergencies.

“We have to do this because the PFD funding is uncertain (in current law) and as long as it is it will distract the public and the Legislature from other priorities. We have to just get this off the table,” Begich said.