The following Q&A was conducted with Gov. Bill Walker on Dec. 23, 2015, at the Juneau Empire. This is part two of the interview. Part three will publish Tuesday. Responses have been edited down in some parts due to space.
Are you optimistic, unless something like ANWR were to open up or in 10 to 15 years there’s offshore drilling, we will see oil production go up, based on existing fields?
I think we can see the decline flatten out, I’ll put it that way. Offshore of course, if Shell had been successful, it wouldn’t have brought $1 to our revenues, for the state anyway, because all the royalty goes to the federal government on the offshore. I’m very bullish on the 1002 section of ANWR, and I’ve been very vocal about that with the (Obama) administration. To see it increase in throughput, if there’s some scenario that that would work, if we had access into the 1002 section on the coastal plain, it definitely would go up. There are now the independents we’ve been working with on the slope, … I’m very pleased with the kind of activity they have. So I think we’re going to see some significant flow from those at development, but whether that’s actually going to increase in throughput or if it just flattens it out is yet to be seen.
Do you think that as Shell and other companies continue to explore offshore drilling, that Alaska’s going to get a similar cut like the southern Gulf states do?
Perhaps. I’m less optimistic when it involves Congress than when it involves the Legislature. I’m much more optimistic about the Legislature doing something. Unfortunately, it’s a federal question, not a state question. But I think what happened with Shell, their cost, it was so expensive for them, … the permitting process took so long. I just think it sort of has a chilling effect on others that want to jump out there and do the same thing. Although, what it does on the positive side is that I think it, for me, it brings more attention on shore where we … (don’t) require an act of Congress to have the revenue sharing associated. … I will never give up on the 1002 section (of ANWR), which is somewhere between 6 billion barrels and 16 billion barrels … 10 billion is probably the right number. So there’s 10 billion barrels there on shore that we need to determine a way to get access to.
In your budget proposal there’s about $150 million in cuts. There’s some members in the majority, in the House and Senate, that are saying that there should be $750 million in cuts and no taxes. What would you say to the lawmakers that are trying to avoid having any kind of tax in Alaska?
What we’ve learned about this process, we have one slide that shows where we are in the scale of things as far as the lowest in the nation in personal taxes, and Connecticut I believe is the highest. And ours is so low I think there’s actually an arrow that points to where we would be, to where our color would be, because there’s almost no color because it’s so small. If all the things went through that we’re going to submit, we’d still be the lowest. We’d still be at that bottom, maybe there’s one other state with us, but we’d still be the very bottom of that chart. That’s something to be aware of.
None of us want to make these changes, but it’s much less painful than what happens to our state if we don’t. Cutting another $500 million, $700 million, … the first wave of cuts is one thing, the next wave — things become very different as far as cutting programs and what not. I expect that there will be more cuts. We’re not done looking at cuts ourselves. That’s an ongoing process. My concern is as we wrestle with that, what I hope we don’t do is spend the whole session arguing about $200 million, $100 million, $300 million, whatever the number is, and we borrow $3 billion to have that discussion.
Let’s make sure we’re having the discussion about what’s the biggest impact of change in this … “hole in the boat.” This hole’s been in the boat for a long time. We haven’t had a balanced budget since 2012. Throughput in the oil pipeline has been dropping since 1988. Our answer has been to throw in another pump rather than fixing the hole in the boat. Our deficit is costing us $400,000 an hour. That’s a lot of money. That’s a lot of pumps. We need to put the boat up on the grid, fix the whole and get on with it. $3.5 billion a year, $300,000 million a month, $400,000 an hour, they all feel equally bad. For me the $400,000 an hour is the one that sort of gets my attention the most and that’s what we’ve got to realize.
I’ve had some meetings with the legislative leadership this week, and I’m the ultimate optimist, and I think there’s no question they recognize the severity of the situation. How we resolve it — someone had to put a plan together. We felt that was our obligation to do that. I was warned heavily about what the impact would have on me and my future if I talk about the Permanent Fund Dividend, if I talk about taxes. I said, “You know what, I didn’t run for this job to keep a job; I ran for it to do a job and it’s my job to step up and say here’s what we need to do.” Here’s some options and I’ll stand by those options. If there’s better options, we will celebrate the better options. If there’s some way somebody can make the plan better, we will celebrate that. Is this etched in concrete, that it has got to be this or nothing? Absolutely not.
… It’s really hard to come up with a litmus test of fair for everybody, but we took all the different groups — rural Alaska, the urban folks, the different regions and what not — and have we disproportionately impacted any group of people? That’s what we really tried to emphasize, it’s not a perfect plan, it’s a good plan, it works, it gets us to not just a balanced budget by 2019, but a sustainable budget that we know 50 years out Alaska can be doing just fine because we made that shift from living off of one commodity.
Do you believe the majority of Alaskans are going to be fine with paying their share to keep the state running?
Most the people that we have spoken to, that just come up on the street, on the airplane, on the flight today, do say, “Hey, thanks, we like your plan. We don’t like everything about it, but we like that there’s a plan. We feel better that there is a plan.” People used to ask me all the time, “Why is it when you were running, we were at a $1.6 billion deficit and you called it a ‘crisis,’ and now we’re at $3.5 (billion) and you don’t use the ‘crisis’ word as much anymore. Why is that?” I said because we’re talking about it. That was the problem before, is that we’re at a $1.6 billion deficit and no one was talking about it, no one knew it. You could figure it out, but it wasn’t up on the marquee. Now it is.
I’ve seen some interview stuff where at restaurants they asked 10 tables the biggest concern they had about Alaska. Nine of them said the budget. I was glad to hear that because if you don’t acknowledge there’s a problem you sure aren’t going to be able to get your arms around the solution. I think Alaskans are realizing some things have to change. This last drop down to $37 oil, … $10 either way it doesn’t make a huge difference. We sort of get the same amount either way — it’s not a big trigger point, but it does get people’s attention. I say, every governor get’s to spin the oil wheel. Gov. (Sarah) Palin was at $147 and we’re at $37. Maybe the silver lining is we make this shift. We’re going to have to at some point, we got there a little quicker because of the price of oil, but we’re going to get there at some point and have to make this shift. I think it’s probably helpful to be nonpartisan. It’s not like I’m on one team and trying to bring others onto my team. I don’t have a team other than just everyday Alaskans. This isn’t going to be a partisan solution, it’s bigger than the partisanship. I’ve got that sense from legislators as well, that we really need to fix this. We’ll see.
• Paula Ann Solis contributed to this report. Read part three in Tuesday’s Juneau Empire.
