For plenty of Alaska residents, Bill Walker’s effort to reclaim the governor’s office comes down to “you gave us smaller PFD checks, the current governor gave us bigger ones.”
He acknowledges, “I threw myself on the permanent fund grenade” and it might hurt his current chances. But his hope is a majority of voters take a more nuanced and long-term view following a couple of years that illustrate how much turmoil can result from instability.
“When I explain to them what I did and why I did it I’m impressed with the number of folks that have said, ’I didn’t realize why you did that, now I understand why you did what you did,’” Walker said during an interview Wednesday in Juneau that was joined by his running mate Heidi Drygas, a local Democrat.
What the former Republican did, as an independent governor from 2014 to 2018, was lead the effort during the last year of his term to fund government by drawing money from the Alaska Permanent Fund for the first time in its then 40-year history. The plan drew opposition from lawmakers on both sides — Republicans who wanted more spending cuts and Democrats who favored hiking taxes on the oil industry — as well as from a huge number of residents who saw their dividend checks affected.
This year, in one of current Gov. Mike Dunleavy’s biggest political victories of his first term, eligible residents got a $3,280 dividend, the second-highest in state history when adjusted for inflation. However, it was smaller than a “full” PFD under statute, something Dunleavy was a proponent of in his first gubernatorial campaign. While the incumbent was subject to criticism from political opponents about the size of the dividend harming the fund’s growth and spending on state programs, getting a majority of voters to return to smaller future dividend may be a tough sell for Walker despite his willingness to explain unpleasant fiscal details.
“With a $4 billion hole in your budget and oil at $26 a barrel it became obvious that we needed to shift over to a percent of market value to fund government out of the earnings of the permanent fund,” he said, referring to his time as governor. Continuing “full” dividend checks as calculated until then would have resulted in the total outflow exceeding the fund’s earnings and “if we overdraw the permanent fund we’re spending somebody else’s (future) money.”
Walker said his goal is to follow that approach to achieve a total fund value of $100 billion to $120 billion, which will be sufficient to fund state government from earnings and pay fair dividends on a sustainable basis.
“Someone had to step up and show leadership, and that’s what I did and knowing full well the backlash I was going to receive,” he said. “But to me having a second term was insignificant verses the next generation having a permanent fund.”
Even if Walker does beat Dunleavy, who has led every poll in this election cycle, he will likely face a significant number of lawmakers who are largely in line with the incumbent’s thinking. But Walker said he believes it may be easier to get them to accept current fiscal reality than was the case with a similar Senate when he was elected the first time.
“When I was in office there was a safety net of $20 billion,” he said. “That’s virtually gone away. We have been drawing down that savings during the past 10 years.”
Walker said he is also focusing on a “holistic shift” for other sources of state funding — necessary since current earnings of the permanent fund (worth $72.2 billion as of a week ago) are far short of what’s needed to fund government and oil prices are dropping from dizzying highs earlier this year.
“We certainly need to take a hard look at various industries, particularly the oil industry, on what we do with tax credits and various things,” he said.
Trying to get more taxes from oil companies is pushing against the tide of lawmakers’ actions in modern times, since $7 billion in such tax credit subsidies were provided during the pre-pandemic years from 2013 to 2019, according to the state Department of Revenue. It’s one of numerous policy areas where Walker shares similar stances with one of two his two major opponents — Democrat Les Gara — but the former governor is less definitive than Gara, who is seeking to recoup all such funds for the state and then evaluate a tax based on companies’ profits.
“I would sit down with the industry and talk about needing a bigger share like we’ve done with natural gas,” Walker said. He said the state now has a 25% stake in natural gas revenues and, while not sure what level would be appropriate for oil, “I want to see if that same model is available with oil. Let’s just increase our share … so we’re in line with that resource development.”
Walker noted he was also open to considering other revenue sources, including income and revenue taxes during his term as governor.
Collecting income and other taxes from residents requires a healthy workforce, which has been another dominant problem the past couple of years due in large part to effects of the COVID-19 pandemic. But Drygas, the former commissioner of the Alaska Department of Labor and Workforce Development under Walker, said the problem extends beyond the pandemic to a series of shortfalls that are causing people to leave or not seek work in the state.
“You have to fix some of those systemic problems if you want to build a workforce,” she said, citing as her first example “you’ve got to tackle affordable housing.”
Walker and Drygas, in another alignment with Gara, said they support concepts such as a land trust in Sitka that helps provide low-income housing. Another frequently stated issue of both campaigns is boosting child care, with a subsidy to such workers by Juneau’s municipal government cited as a potential model for wider implementation around the state.
“As the state government has shrunk significantly we have a lot of state vacancies and office spaces, things like that, that are not being utilized,” she said.
Vacancies are also a concern on Alaska Marine Highway ferries which Walker — aside from agreeing with other candidates needs modernizing using the huge one-time infusion of federal infrastructure funds — said should rely on a different method of year-to-year operational funding. Specifically, he is advocating for an endowment that separates the ferry system from the state Department of Transportation and Public Facilities.
“I think it’s time it’s a standalone entity at this point,” he said.
The state’s new ranked choice voting means he needs to finish in second place for a face-off with the incumbent to happen, but Walker said he’s hoping to get there by getting convincing enough voters to embrace his pragmatic approach if they’re opposed to the incumbent.
“Knowing what I know about the potential for the future of this state I can’t not do what I’m doing now because I do take risks,” he said.
Contact report Mark Sabbatini at firstname.lastname@example.org.