Business groups prepare to reshape details of Walker's budget plan

Alaska industries' response to Gov. Bill Walker's proposal for averting a fiscal crisis ranged from condemning the plan's industry-specific taxes to willingly making concessions -- provided other industries would be required to do the same.

The proposal would raise taxes, eliminate tax breaks, or both for many of Alaska's major business sectors: oil and gas, mining, fishing, tourism, alcohol, tobacco and fuel vendors.

While no one wants the state budget deficit to send the state into economic freefall, industry groups are, predictably, staking out positions that best protect their interests.

Dale Fox, president and CEO of the Alaska Cabaret, Hotel, Restaurant and Retailers Association, objected to the proposed 10-cent per drink increase to the alcohol tax.

"The industry's position is that we pay some of the highest alcohol taxes in the nation," Fox said. "Unlike other industries who are in the lower quadrants when compared to other states, we feel that we are already paying our fair share."

Fox said he's not worried that demand for alcohol will drop should the Legislature approve any tax increase next session. Rather, consumers will likely purchase libations of a lesser caliber.

"You still drink the same number of beers, but you buy down in quality," he said.


The Alaska Oil and Gas Association's response similarly focused on the piece pertaining to industry. The governor proposed a $400 million cut to the state's $500 million oil tax credit program; adding a state program that would provide loans to the industry; and making other changes to the oil tax structure that would result in raising $100 million more.

"I'm not trying to throw rocks at the governor at all, but we just have a responsibility to let policy makers and Alaskans know that changing the tax policy will change investment decisions," said Kara Moriarty, president and CEO of the Alaska Oil and Gas Association. "We believe the status quo is working."

The State Chamber of Commerce advocates making deeper cuts to state government and using the state oil wealth account, the Permanent Fund, to cover the budget.

"We want another half-billion in additional cuts to state spending before we look at taxes. That's going to be our message," said Curtis Thayer, president and CEO of the State Chamber, which represents businesses from a variety of industries.

Thayer suggested reducing health care costs and doing away with unspecified duplicative services in state government. He said he sees Walker's proposal as "a starting point" to discuss additional changes.

John MacKinnon, executive director of The Associated General Contractors of Alaska, said he supports "one hundred percent of what the governor is proposing, but the exact mix is going to be a result of the Senate and House agreeing to the package."

For the industry MacKinnon represents, raising revenue is one way to keep the economy and budget healthy enough to buoy the construction sector.

"I think it's time Alaskans step up and start paying their own way through an income tax, higher sin taxes and user fees like the motor fuel tax, which is the lowest in the country," he said. "You may not agree with everything the tax dollar is going for, but it's part of what we do to live in the society we live in. If private investors have confidence in what the administration and Legislature are doing, they'll invest in new buildings, existing buildings, communications and all the elements you need for a stable society."

United Fishermen of Alaska vice president Matt Alward said the organization supports a broad-based revenue proposal.

"If we need to pay, we're fine as long as it's not just us," Alward said.

Alward and the heads of mining, tourism, economic development and Native regional corporation associations said they and their boards will need more time to digest the governor's draft budget legislation, scheduled for release later this month, before taking stances on the specifics.

"There's general agreement that it's not fair to single out one or a few industries," said Karen Matthias, executive director of the mining industry's Council of Alaska Producers. "My members really need to evaluate it and are not ready to comment."

Shipping company Matson also said it's too early to opine on the five-cent increase on marine fuel contained in Walker's proposal, according to spokesman Keoni Wagner.

But most Alaska business groups plan to have representation in Juneau, either through lobbyists, by holding board meetings there or by flying constituents there during the legislative session.

"I'm a registered lobbyist and I will be in Juneau more than Anchorage this session," Moriarty said.

MacKinnon said he plans to start communicating with his association's 650 members and impress upon them the importance of informing their employees about the scope of the fiscal problem and its potential effect on the economy as a whole.

"It's going to take everyone giving a little bit because there's hardly a tax or budget cut that's not going to affect someone," he said. "What we're going to see out of this session is who's looking out for the best interest of Alaska and who's looking out for their own political interests."


He said he lived through the state's recession in the late 1980s and would "hate to see the state go through that again."

"The most popular candidate back then was 'For Sale,'" he said. "That's what most of the yard signs said during elections."

Correction: An earlier version of this story incorrectly stated that the Alaska Oil and Gas Association advocates making deeper cuts to state government and using the Permanent Fund to cover the budget. AOGA does not have official positions on those options.

Jeannette Lee Falsey

Jeannette Lee Falsey is a former reporter for Alaska Dispatch News. She left the ADN in 2017.