Putting our fiscal house in order is a priority as is creating a pro-Alaska policy environment to allow us to pivot to expand and shore up our economy.

Currently our state government’s size and cost is disproportional to our small population and economic output. We must fix both sides of this equation: 1) we must restructure government so it serves us well and is affordable and sustainable; 2) we must unleash the potential of the private sector by reducing obstacles, increasing responsible resource development, providing necessary capital infrastructure, and opening opportunities for economic diversification and emerging industries.

On the fiscal side to close the gap, first, we need to fix the spending cap in the constitution. We then need to put in place an independent sunset audit commission that can provide factual information and unbiased recommendations for restructuring agencies and funding formulas to better and more efficiently serve the people of Alaska. The legislature would be required to review and take action on the audit; failure to do so would cause multiple agencies to expire. This audit process would allow Alaska to begin a glidepath of operating budget reductions we have not yet realized.

Currently there is $2 billion in state dollars hidden in various funds, despite the fact that our state constitution prohibits dedicated funds. With prudent planning, these funds can assist in the glidepath to a sustainable budget without necessarily ending the associated programs.

It is incumbent upon the legislature to reconsider diverting at least some of the $400 million in petroleum property taxes (collected by a handful of municipalities) to the state.

Lastly, we must have an honest conversation regarding the revenues in the Earning Reserves Account (ERA). When individuals state that after obligated amounts are removed from the ERA, that there will just $5 billion remaining, this is disingenuous because it fails to account for the new incoming earned revenues. We also need to consider inflation-proofing the corpus of the Permanent Fund prior to the 50/50 split of the ERA draw between the people and the government (a draw based on the original PFD draw formula).

With the restructuring glidepath outlined above, revisiting the “hidden” $2 billion in various accounts, the diversion of petroleum property taxes to the state, inflation-proofing the corpus first before the draw split, we will take leaps forward to close the gap.

As we grow the economy (discussed below), depending on oil prices, new resource development, the rail connection, emerging affordable energy solutions, etc., we hopefully will come very close to closing the gap. That should be our goal.

If we restructure state operations to a good place of efficiency and take the other steps outline above, and oil and other revenues are still insufficient, economists recommend a sales tax with exclusions as being the least disruptive to the economy, the least apt to cause an outmigration of productive residents, the least amount out of Alaskans’ wallets and the most out of nonresidents’ wallets. Exclusions of groceries and health care would reduce the regressivity to make the tax quite fair. This step to a sales tax is a last resort only to be taken once the legislature has done due diligence to take the other actions outlined above.

The government cannot in and of itself  grow our economy. It’s the ingenuity of individuals, or teams working together in the private sector, of innovators, of investors, of hardworking men and women, that make it happen. The policies and behaviors of government do, however, either hinder or promote economic growth. By decreasing regulatory burdens and tax burdens on the private sector, by ensuring our youth are prepared to be productive contributors to society (not dependents on agency programs), by promoting innovation, and by improving and building needed infrastructure, our state government can open doors to new opportunities. 

In Alaska, first things first. At this critical junction with an economy struggling due to COVID shutdowns and restrictions and several years of low oil prices, we must recognize that although we are a resilient people, the state of our economy is fragile. It is more important than ever to provide stability to the already volatile oil and gas industry. Changing our oil tax regime yet again would be mistake. In fact, over the past twelve years, Alaska has made substantial changes to our tax regime ten different times! That is not business-friendly. We should be promoting investment at this time to increase development which will result in more oil in the pipeline which in turn will result in greater revenues. If Proposition One passes, we will be eating our seed corn. The very dollars the government would collect would be the very dollars that will not be invested, and that will mean less revenue in a few short years.

In addition to oil and gas, we’ve barely “scratched the surface” when it comes to mining. Alaska holds important keys to the US reducing dependence on foreign mines, such as for rare earth minerals. A renewed logging industry is a possibility too that exists in Alaska. Whether its fish in our waters or resources in the ground, Alaska is rich with potential.

Along with these traditional avenues, we can diversify our economy further by being attentive and open to emerging technologies. We are in a unique and strategic position on the globe in relation to the opening of the Arctic shipping routes. The Alaska Alberta rail line discussed in a different section below ties into this. So does the possibility of additional military personnel and missions. We’ve all heard of server farms; how about satellite farms, leveraging our position in the northern hemisphere? I championed unmanned aircraft in Alaska and although it’s not a huge industry, it has resulted in new jobs. The sky is the limit. My successful bill removed hemp from the criminal statutes; farmers are now experimenting with this agricultural crop. Hemp is a multi-billion dollar industry in China. Canada is the second largest producer. It’s time Alaska gets in on that market share.

I would be amiss if I failed to point out the significance of the annual PFD cycle to Alaska’s economy, especially to small and medium businesses in our state. While some businesses profit off government largess (and employ lobbyists to put pressure on legislators), most business in Alaska don’t. A dollar spent in the private sector has a higher multiplier rate than a dollar spent in the public sector.

I would also be amiss if I didn’t bring up the need to address healthcare costs in our state. It’s time to eliminate the certificate of need program like other states have done, fix the 80th percentile regulatory rule, and request the federal government lower Medicaid rates in Alaska (in line with other states) while at the same time then adjust Medicare rates up to match Medicaid rates. Not only would this help lower costs to our state to help close the fiscal gap, but it would improve seniors’ access to providers, and lead to lower healthcare costs for everyone (Medicaid rate schedules are used to set pricing schedules for all payers). It’s also time to tie an incentive to shop for healthcare providers to price transparency so consumers behavior will prompt free market principles to function which will in turn create competition and cause prices to nudge downward over time.

Many aren’t aware that when I was a young mother with small children, our family was under the poverty line. It was Alaska that gave my family the opportunity to break out of that situation through those first PFDs in the early 80’s, education, and hard work. That brings me to my final point. Transforming our education system (discussed in another section below) will be key to a strong economy in the future. Our youth must be prepared to be productive citizens, innovative entrepreneurs, smart investors. That ties into yet another, and vital point. The better we prepare our children for adult success, the fewer will be dependent on welfare, food stamps, and Medicaid; the fewer will engage in criminal activity and drive up law enforcement costs, state attorney costs, court costs, and incarceration costs.

Remember, governments do not create wealth; they drain dollars from the private sector that could otherwise be invested and grow the economy. It boils down to this: if we want a strong economy, we need less government (but one that serves us well) and we need to ensure that the government we have is affordable relative to our small number of residents and proportional to our private sector economy. Presently, it’s lopsided. We have restructuring work to do to bring things into balance!

In summary, for vibrant communities, it is vital that our small population is not burdened and overwhelmed by a state government we cannot afford. For successful families and individuals, it is critical that new economic and job opportunities open up, that we build needed infrastructure, improve education, reduce crime, secure the people’s PFD, and uphold the rights and liberties that make the pursuit of happiness possible.

As chair of the Judiciary Committee last year, I led the repeal of SB91, the infamous and very flawed criminal justice legislation. I am incredibly proud of the work my Judiciary Committee and my staff did as we took on and accomplished this monumental task. Along with the repeal, we also began the toughening up of certain sexual crime penalties (more work remains to be done in this area). In addition, under my leadership, we turned our focus on reducing the recidivism rate (revolving prison door) and secured a pilot project to tackle this issue. The data will help inform the legislature as to next steps. I supported and will continue to support funding for law enforcement. We were successful this past term in increasing funding for troopers as well as for prosecutors. Your safety is paramount. While I certainly don’t condone police brutality and support proper training and an accountability system, I will always be a strong advocate for law and order. When your safety is in danger, you need to know help will arrive.

As Transportation Chair last year and a member of the committee this year, my focus related to our district and area was to ensure consistent progress on certain life/safety road projects: the Glenn Highway from Palmer to Anchorage (Eagle River bridge, median turn-arounds, night lighting, and Palmer area project); Knik Goose Bay Road project; Old Glenn brush removal; and more. My focus continues to be on improvements to our corridor roadways to first help ensure safety and secondly to promote well-functioning communities. I am also championing the advancement of a transportation project which will be a statewide economic boon once it is complete: an Alaska to Alberta rail crossing, a private sector endeavor which will provide a route to/from both Canada and the lower 48 for the transport of resources and commodities. This project will generate new dollars and activities at various ports in the state, including at Port Mackenzie.

When more than a billion dollars of the state’s budget is directed to education (near the top per student spending in the nation) and our statewide academic achievement scores are abysmal (near the very bottom compared to the rest of the country), we’ve got a problem with accountability and results. I care about every single child, no matter where she or he lives in our great state. We are failing our children and it is wrong. It’s time for education transformation in Alaska. Students must master the objectives at each grade level prior to being allowed to pass on to the next grade level. All students should read by age 9 as reading is fundamental to learning all subjects after third grade. We must direct dollars away from administration and into the classroom (we have the worst spending ratio of classroom instruction to administration of the fifty states). Regional consolidation of administrative functions between small districts will free up dollars for instruction. Superb quality, highly interactive and live virtual education options (not a screen babysitting a student) should increase. The school formula should not incentivize poor performance but reward teachers who improve student mastery of learning objectives. Education is only the great equalizer – that will open up vast opportunities and upward mobility for children – if students actually learn and master the material and are inspired and motivated to pursue more after high school graduation. If we are brave enough to restructure education, we will open doors for our students that will not be open to them otherwise.