Incumbent Gov. Sean Parnell and independent challenger Bill Walker tangled over energy, budget and leadership issues Tuesday at a debate sponsored by the Fairbanks Chamber of Commerce.
Regarding the state budget, both men said cuts are needed but offered few specifics.
Walker said the state is running a $7 million daily deficit and needs to trim spending. He criticized Parnell for not making cuts.
"We need to look across the board, not just in one particular area," he said.
Parnell said the deficit would have been $150 million bigger had Walker had his way. He said the SB 21 tax cut on the oil companies amounted to a tax increase at the lower oil prices the state is now seeing.
"At lower oil prices we're collecting 150 million more dollars for the state coffers under my leadership," he said. "And when it comes to reducing spending, I know how to get that done."
Parnell said he vetoed record amounts in 2010-11 and has cut the budget since then. This year, by spending $3 billion to help pay down the $12 billion unfunded state pension liability, it will reduce annual operating costs by hundreds of millions of dollars.
"Moving that money over sounds good," said Walker, but he said it amounts to extending state obligations into the future.
"We need to grow our way out of this deficit we're in," Walker said.
Walker said it is far too soon to say whether the SB 21 tax cuts are working and that the real evidence will be what happens over the long term. He said he was concerned about the BP job cuts announced after the August primary vote and the statements over the summer from oil company executives to the Regulatory Commission of Alaska that they didn't expect production increases.
Parnell said the decline in oil production has stopped, more production and jobs are on the way and the companies would be held accountable for pledges of greater spending on their operations in Alaska.
About state spending, Parnell said Walker has been telling different things to different audiences across the state. He claimed that Walker said on an Anchorage radio show that he favored a 16 percent one-time, across the board budget cut, while he told the National Education Association he favored an increase in education spending.
"You cannot have it both ways," Parnell said.
"I have worked my butt off with the legislators to reduce spending. I did it smartly. I did it by addressing the single biggest cost driver in the operating budget—that's the unfunded pension liability."
He said he had agencies absorb salary increases and adopted new standards for office space that he said would save $100 million over a decade.
Walker said that Parnell continues to misquote Walker's remarks about a 16 percent budget cut. In a transcript of those remarks, provided to reporters later, Walker said the 10-year Parnell budget plan is for continuing deficits and shrinking savings.
"It's going to take an adult to come in here and say, 'Look, we can't do this. We need to cut the budget by about 16 percent.' I haven't said in the past, we have to lop 16 percent across budget, but that might be where it ends up," Walker said on the Anchorage radio show.
Walker added in that interview that the cuts would be over two or three years and "it's not going to be Byron and me with a red pen," he said. "I typically look to people who are running their departments and divisions." He said the 10-year plan from the governor shows the state running out of money in about five years.
Energy costs are one of the top issues in Fairbanks for both candidates.
Parnell pointed to the proposed natural gas trucking effort to Fairbanks as a short-term solution to high energy prices, saying it has made "incredible progress."
The governor and lawmakers championed a loan and grant package for the project designed to provide liquefied natural gas to Fairbanks from the North Slope.
"We're making progress and we need to continue the course," Parnell said.
Parnell said that Walker and his supporters "appear to be trying to kill" the gas trucking plan. Walker is suggesting that the state should also look at shipping gas to Fairbanks from Cook Inlet on the railroad.
Walker said he supports anything that would bring down the cost of energy.
"I would be the most aggressive governor in the history of this state on the cost of energy," he said.
The idea of trucking natural gas to Fairbanks from the North Slope first emerged as a way of dealing with the natural gas shortage in Cook Inlet. Increased drilling activity has turned that situation around and the state should consider the lower-cost option of moving natural gas to Fairbanks by rail from Cook Inlet, Walker said.
Walker said that numbers on the trucking plan are to be released after the election. What remains unclear is whether the state grant and loans for the project will be enough to attract the private financing necessary to make it a reality.
"Think about that as you go to the polls -- the information is going to be released one day after the election," Walker said.
For the long term, Parnell said that the proposed trans-Alaska natural gas pipeline has moved forward and he is optimistic about its prospects.
"Everybody's laid down their money to do real engineering, real design work," he said.