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Gov. Walker rallies business leaders in support of fiscal plan

  • Author: Nathaniel Herz
  • Updated: September 28, 2016
  • Published October 10, 2015

Last week, Alaska Gov. Bill Walker convened a group of business leaders at his Anchorage office building for sandwiches and a presentation by an investment expert from Harvard University's John F. Kennedy School of Government.

The room was not filled with Walker's allies.

Most of those invited had donated to the campaign of his opponent in last year's election, former Republican Gov. Sean Parnell. But after two previous meetings and handwritten thank-you notes from the governor, the bankers, lawyers and executives in the room listened attentively as the expert, Malan Rietveld, described one of the ideas that the governor hopes could pull the state out of its fiscal crisis -- a deficit so deep that Alaska is relying on savings to pay for more than half of this year's budget.

Walker's proposal to fix the problem isn't finished, and it won't be released for another week or two. For months, though, he's been trying publicly and privately to build support and understanding for its expected components — measures such as broad-based taxes or spending money from the Permanent Fund. Those are largely unpopular with the state Legislature, which represents a public that currently pays no statewide income, sales or property taxes.

It's not yet clear if Walker will be able to get legislative approval for his package or who might endorse it. But he's been working recently to enlist, hire and inspire the people and institutions that can help him apply the needed political pressure — including the group of business leaders, some of whom said Walker has presented a compelling case.

"You find yourself nodding your head," said Joe Beedle, the CEO of Northrim Bank, who participated in one of the most recent business forums in Anchorage, which was also attended by Alaska Dispatch News publisher Alice Rogoff. "Everyone at the close of the meeting says, 'Governor, how can we help you get this done?' "

Those meetings, which reporters were barred from attending, come as Walker has also made his case to the public through speeches, a fiscal conference in Fairbanks and a series of informational meetings his administration has held with chambers of commerce and civic groups around the state. Other organizations have been making parallel education efforts, led by the Rasmuson Foundation and also including Commonwealth North and the Institute of the North.

The private meetings with business leaders, Walker said, were an opportunity for participants to "provide input" since they'll likely be affected by the actions he's expected to take.

"We didn't bring them together to sell them a product," he said.

In an interview in his 17th-floor Anchorage office Thursday, Walker said he tried to make the state's dire fiscal position clear to the participants.

"They're certainly aware of that," said Walker, a Republican-turned-independent. "I think the one thing that did come through is that there needs to be a plan."

Additional budget cuts will be one piece of Walker's plan, he said. But the other pieces — particularly those that will generate new revenue — haven't been selected yet. It's also not clear whether Walker will ask the Legislature to implement his proposal at once or over two or three years, he said.

Taxes are under consideration as well as using some of the earnings from the Permanent Fund to pay for government services.

One new idea was pitched last week by Rietveld, an expert on state-owned investment funds, which a spokeswoman for Walker described as a way for Alaska to manage its assets to "create a more sustainable flow of revenue for state government."

That concept was developed with the assistance of Jack Ferguson, a former chief of staff to Sen. Ted Stevens and Rep. Don Young, who's now a federal lobbyist and who was hired by Walker under a contract capped at $50,000.

Walker said there's been debate within his administration about what pieces the final plan will include and how quickly it should be implemented. Those questions should be more settled after internal meetings this weekend, he added.

One thing that's already clear, however, is that whatever proposal emerges will almost certainly be met with deep skepticism in the Legislature.

Several members of the Republican-led House and Senate majorities this week said they would not entertain proposals to raise new revenue during the next legislative session, when they'll have to face voters a few months later.

Democrats, who have typically been more supportive of Walker's legislative agenda, are also distancing themselves from taxes or plans to spend earnings from the Permanent Fund. Anchorage Democratic Rep. Chris Tuck, the House minority leader, said in a phone interview that the only major fiscal measures his caucus would quickly approve are cuts to what he described as "boondoggle" megaprojects and reforms to the $500 million state program that pays tax credits for oil and gas exploration and production.

Anchorage Democratic Sen. Bill Wielechowski, meanwhile, issued a press release last week arguing that the Permanent Fund dividend program should be enshrined in the state Constitution. Asked how he thinks the fiscal crisis should be solved, he said in a phone interview that he's waiting for the state's new oil tax regime to spark an increase in production to 1 million barrels a day flowing through the trans-Alaska pipeline — a lofty goal set by Parnell, the former Republican governor, that would require a reversal of decades-long trends and a doubling of current production.

"I'm saying we were promised 1 million barrels a day — if you get 1 million barrels a day in the pipeline, that solves your fiscal problem," Wielechowski said, adding that any reduction to the Permanent Fund dividend would amount to an "extremely regressive tax."

To get his proposal through the Legislature, Walker will likely require some political assistance, which the state's business leaders could offer.

The governor first convened a group of them in Juneau in May for a meeting and a dinner at the governor's mansion, and there have been two subsequent meetings in Anchorage.

Participants have included oil company executives from ConocoPhillips and BP, construction company and banking leaders and representatives from the tourism industry.

Others include financier Bob Gillam and Ed Rasmuson, the board chairman of the Rasmuson Foundation, which in July approved spending up to $2 million on a public education campaign on state fiscal issues. Beedle, the Northrim Bank CEO, described that Rasmuson Foundation decision as a coup for Walker after the first business meeting in Juneau.

"You could never raise $2 million," Beedle said. "So for Ed to come back and go, 'I'm a believer and I'm going to help' — holy smokes, the governor has to be doing the jig."

Walker's agenda initially generated some skepticism from some participants, who mostly backed Parnell, but several said they're now on board.

"I will carry any water he wants me to carry, and I'm not one of his cronies," Bernie Karl, the owner of Chena Hot Springs near Fairbanks, said in a phone interview, noting that he had been a Parnell supporter.

Walker, Karl added, "has earned my respect, and I believe he has earned the respect of everybody sitting at that table in his conference room."

Business leaders played a big part in last year's successful campaign to defend the state's new oil tax regime, in advance of an August referendum. Walker, according to his events calendar, met privately in late August with three of the prominent players in that campaign: Jim Jansen, CEO of Lynden Transportation, Marc Langland, chairman of Northrim Bank, and former Democratic Gov. Tony Knowles.

Once Walker's fiscal plan becomes public, he'll also draw on the expertise of Art Hackney, a Republican political consultant who was hired last month. Hackney is being paid $200 an hour under a contract capped at $50,000.

"This is like a campaign in some respects, on changing, turning the fiscal ship," Walker said. "It's a very significant shift for Alaska, and we thought it would be helpful to have his expertise on the messaging side."

One other source of assistance will likely be the deep-pocketed Rasmuson Foundation. President Diane Kaplan said in an interview that her organization has so far spent only a small fraction of the $2 million it has authorized toward its public education campaign on the fiscal crisis.

The group had a big strategy session Thursday and may step up its campaign to include efforts like broader-based advertisements "if things are not moving along," she said.

Kaplan said the foundation hopes politicians are starting to think that inaction will cost them more at the ballot box next year than the alternative — voting to approve measures like taxes or spending from Permanent Fund revenues.

"We believe that waiting until after the 2016 elections should not be an option that the Legislature is considering," Kaplan said. "The longer we wait, the more difficult it becomes to get to a solution."

An earlier version of this story incorrectly stated that the 2014 oil tax referendum took place in November.

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