Independent gubernatorial candidate Bill Walker argues that high salaries at the Alaska Gasline Development Corp. deserve a closer look by the state.
In his last debate with Gov. Sean Parnell before the election, Walker said one person at AGDC has a salary and benefit package totaling $600,000 a year.
"We have people making that kind of money, my goodness, that would be low-hanging fruit for me," Walker said.
Walker did not mention any names, but he was referring to Dan Fauske, the former head of the Alaska Housing Finance Corp., who is now in charge of the state gas pipeline efforts.
Walker based his assertion on a state budget document from late last year that listed Fauske's total salary and benefits package at $576,000. But those numbers are inaccurate, according to the AGDC.
Fauske's salary is $366,000 and his health and pension benefits total $150,000 for a combined total of $516,000 per year, the AGDC says. At that level, he was the highest-paid state employee in 2013, followed by UA President Pat Gamble at $330,000.
A budget document for the next fiscal year lists a proposed salary for Fauske of $384,000, a five percent increase, but whether any increase would be provided is up to the board of the AGDC.
The compensation calculations at AGDC took shape in its beginning as a subsidiary of the Alaska Housing Finance Corp.
That was largely because many lawmakers regarded Fauske, who headed AHFC for nearly two decades and was making $366,000 in that job, as something of a miracle worker. If he could handle the intricacies of housing finance, he could handle pipeline finance, they said.
Backers of AGDC have argued since then that it needs to pay enough to compete for skilled talent.
Parnell and Walker are competing to be governor, a job that pays $145,000 a year. The governor appoints commissioners to head state agencies. They are paid $136,000 a year.
Legislators unanimously rejected a bill this year -- proposed by an independent commission -- to raise the salaries of the governor and commissioners on the grounds that the state could not afford it. The governor said early on he didn't want the $5,800-per-year raise.
Legislators and governors are always reluctant to even hint that a pay increase is warranted for people in high-profile positions. Elected officials are loathe to argue that the pay level for a political job has to be "competitive," knowing that a statement like that will be used against them when they run for office.
That's one reason why the governor and commissioners don't earn as much as many people they supervise.
Parnell said that one budget-cutting approach he is taking is that agencies are being asked to absorb salary increases. This doesn't mean that pay rates will go down, but that costs have to be cut somewhere by eliminating jobs or cutting back on other expenses.
The pay for positions that are of a lower political profile, especially those in state-owned corporations, have not been subject to the same political pressures as other state jobs.
The gap between state executives in agencies and that in state-owned corporations, such as the Alaska Railroad, the Alaska Permanent Fund and AGDC, is notable.
AGDC has seven employees who make more than $190,000 and three vacant positions budgeted for $199,000, $273,000 and $325,000.
In launching AGDC in 2010, the AHFC board took existing salary schedules and raised them by 15 percent.
"This was done primarily to improve AGDC's competitiveness in recruiting and hiring within the oil and gas industry," Miles Baker, vice president of external affairs and government relations, said in an email.
A recent report on AGDC compensation said one reason for the 15 percent differential was "there was (and is) no guarantee of long term job security, yet the job ahead demanded the best available talent."
Since then the schedules have been adjusted with the same annual cost of living adjustments approved for the executive branch.
In 2013, the Legislature approved a bill making AGDC an independent public corporation. It was assigned the task of advancing work on a small-volume pipeline designed for in-state needs.
The bill proposed an expenditure of $400 million, close to $300 million of which would go for pipeline engineering and facilities engineering.
The bill exempted the corporation from the executive budget act, the state procurement code and the state personnel act.
With that bill, lawmakers approved plans that the AGDC president could have a salary of $375,000 a year, with a vice president earning $285,000.
Today, AGDC is budgeted for 38 positions, including six added by lawmakers this year for work on the large-volume LNG project.
With this expansion, the agency has to "administer and control two major projects and nearly $500 million in funding," wrote Bruce Tangeman, a former deputy commissioner of the Department of Revenue who is now an AGDC vice president, in the compensation report.
The Legislature appropriated $67 million to AGDC to help implement the provisions in SB 138, the gas pipeline bill approved this year, spokeswoman Kathy Day said.
One of the key employees hired for the LNG project is Fritz Krusen, a former chief facilities engineer for ConocoPhillips in Houston. Krusen, who spent 36 years at ConocoPhillips and was chief engineer at its Kenai plant for six years, is making $300,000.
Other key leaders in the corporation are: Joe Dubler, vice president of commercial operations, $248,000 a year; Bruce Tangeman, vice president of administration and finance, $192,000 a year; Greg Cashen, administrative services director, $140,000 a year; Kathy Day, communications director, $120,000 a year; Miles Baker, vice president of external affairs and government relations, $192,000; Frank Richards, vice president of engineering and program development, $234,500.
In its management plan for this fiscal year, AGDC lists 12 vacancies as of Oct. 14.
"Without a doubt, those who are employed by AGDC are risk takers as there is no long term job security and to be successful here requires an ability to produce," Tangeman wrote.