The commissioner of Alaska’s Department of Commerce, Community and Economic Development is making rounds of the state, advocating for a stable fiscal plan.
Mike Navarre, who immediately stepped into the commissioner role after his term as mayor of the Kenai Peninsula Borough ended in November, has been advocating for the Legislature to pass a fiscal plan for the state for several years. Previously, he did it as mayor, but in his new role as commissioner, he’ll make rounds of the state hammering the point home again.
“It’s a message that the governor actually recruited me to help communicate across Alaska, and I think it’s important,” he said.
In a presentation at the Kenai Peninsula Economic Development District’s Industry Outlook Forum on Wednesday, he reiterated many of the points he explained to the Kenai Peninsula Borough Assembly and in talks at other forums as mayor.
The state needs a stable tax environment and fiscal plan to attract industry investment, he said. There may be businesses out there with interest in the state, but unpredictability deters them.
“We need stability in Alaska to encourage investment — not just in oil and gas, but in everything else,” he said.
Although oil prices are on the rise, it’s not just a matter of attracting development to the state, Navarre said. Production is down and Alaska now has to compete with the Lower 48 shale oil fields, which are cheaper to develop and closer to market, keeping prices lower. Though oil and gas development like the Alaska LNG Project is good for the state’s economy, it’s not going to be the sole solution to the ongoing economic crisis, he said.
Additionally, without restructuring the tax regime, the state has no incentive to attract new businesses, he said. Because the state has no broad-based taxes but still contributes to social services like education and roads — drawing from a general fund in large part supplied by royalties paid by oil companies — new companies technically bring no fiscal benefit to the state. Local governments benefit through sales and property taxes, but the state does not.
Not fixing the overall structure for the state could have long-term implications for its economic health, Navarre said. He called for political cooperation despite the upcoming election to reach a solution.
“The question isn’t really where we want to be after the next election,” he said. “… Whether the governor that I currently work for is re-elected or not, this problem doesn’t go away.”
Navarre said he’ll be making the rounds of communities in Alaska, including to the joint Kenai and Soldotna chambers of commerce and to the Kenai Peninsula Borough Assembly, later this year to talk about a fiscal plan.
Reach Elizabeth Earl at firstname.lastname@example.org.