Welcome, Governor-elect Dunleavy

Oil prices, production both decline; could PFD plan imperil budget?

Call it the curse of the newly-elected: In 2015, just as Gov, Bill Walker took office, oil prices and state revenues collapsed. Now, as Gov.-elect Mike Dunleavy prepares to assume office Dec. 3, oil prices are again falling and, more troubling, oil production is trending down after three years of stability (see page 8). A new factor is that Dunleavy’s campaign pledge to “fully fund” Permanent Fund dividends and restore PFD payments for three years of underfunding, from a formula set in state statute, could return the state to running big deficits. This time, however, the state’s Constitutional Budget Reserve is essentially drained except for funds needed for the state’s month-to-month cash requirements.

Still, the new governor comes in on a wave of goodwill and his comments since the election, still mainly off the campaign script, are on rejuvenating the state’s economy, principally through its natural resource industries. That will take time, and the new governor is benefiting from an upsurge in new North Slope activity and discoveries. There’s optimism in the mining industry, too, with big projects like Donlin Gold having cleared federal hurdles. Dunleavy is likely to have an open mind on the big Pebble copper/gold project also, which Gov. Bill Walker has opposed.  

Election aftermath:

Dunleavy set to take over; cliffhangers on House, Senate organization

Governor-elect Mike Dunleavy’s first cabinet appointment – Corri Feige as Commisioner of Natural Resources – is getting high marks, although current Commissioner Andy Mark is well regarded, too.  Dunleavy’s appointment of Tuckerman Babcock as Chief of Staff has raised eyebrows, however, because of Babcock’s track record as a political operator (he is Republican Party chair).

Meanwhile, the House and Senate organizations await the final outcomes of two nail-biter close races, one in the state House and the other in the state Senate. Depending on the final outcomes the House could be in a 20-20 deadlock in electing a leadership. The Senate contest is over whether GOP Sen. Pete Kelly will survive. Kelly is now the Senate President. If he winds up losing it will change the chemistry of the Senate.

What business is telling Gov.-elect Dunleavy

 Here’s a sampling of what business groups want incoming governor Mike Dunleavy to know, drawn from remarks at the Resource Development Council annual conference Nov. 14 and 15 in Anchorage. The new governor takes office Dec. 3.

Tourism, from Scott Habberstad (Alaska Airlines)

The state needs to reinvest some of the revenue received from tourism in marketing and, most important, infrastructure such as port improvements that will support newer and larger cruise ships. The outlook for near-term tourism growth is bright but Alaska must help promote its product because there is big competition including from other northern destinations like Scandanavia, and even New England, which markets similar products.

Minerals groups, from Karen Matthias (Alaska Producers Council)

Make the regulatory process more efficient by attracting and retaining good professional staff. This would demonstrate the quality of Alaska’s mining regulation and give the public confidence. Defending, and promoting, the state’s mine permit system will attract investors as well as competent staff.

Timber, from Owen Graham (Alaska Forest Association)

Keep up the pressure on exempting the Tongass National Forest from the national “roadless” rule, now being negotiated with the federal government. There is a possibility that the exemption might wind up being only partial, Graham warned. If this happens, half the Tongass could still be “roadless” (with no harvesting) while the other half would be available for harvest. Gov.-elect Dunleavy should push for the federal agency to stay on track with its management of the Tongass.  Graham also suggests the state simplify its timber sale process, now complex with overlapping requirements, to get more supply to the small number of remaining sawmills.

Fisheries, from Ricky Gease (Kenai River Sportsfishing Association)

Help ease the perennial Cook Inlet “fish wars” between commercial and sports fishing groups by supporting state Sen. Peter Micciche’s proposal for a voluntary buy-down of setnet permits on the Inlet’s east side, which have soared in number in recent years putting pressure on sockeye and king salmon runs. Gease also hopes the new governor will support capability of the fish and game department to gather data and use it. Data is key to good management in keeping Alaska’s fisheries sustainable.

Oil and gas, from Karen Moriarty (Alaska Oil and Gas Association)

Alaskans need to gird for a fight from environmental groups who want to slow an upcoming Department of the Interior lease sale in the Arctic National Wildlife Refuge. She urged that the “Stand for Alaska” business and labor coalition that defeated Ballot Measure 1 stay intact to help keep ANWR lease sales on track. More Alaskans are coming to oppose ANWR as well, Moriarty told RDC. Last year a resolution in the Legislature supporting ANWR drew 10 “no” votes, more than similar resolutions in previous years.

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