Q and A with Anchorage Downtown Rotary
Governor Sean Parnell
May 29, 2012
Good day and thank you. Thank you, Lieutenant Governor, for that kind introduction. The Lieutenant Governor’s job is one I know a lot about, since I was there at one point. We certainly learned the necessity of having a Lieutenant Governor in that line of succession.
It’s not often easy being the Lieutenant Governor. Our lieutenant governors, from Mead on back, have been capable of far more than they are permitted in that position, and that’s just the nature of the job. So Mead, I appreciate you doing the work in that position.
Also want to say thank you for allowing me to be an honorary member of the Downtown Rotary. It is an honor.
But I have to tell you that I’ve noticed a few changes. I was once a member of South Anchorage Rotary, and there used to be happy bucks. And I’m hearing high 20s and high 10s, and I’m thinking, “What has changed around here? Inflation has gripped everybody!” So I came with a buck in my pocket I thought, no that’s just cheap, I can’t do that!! But I’m going to raise a “high 20” here. I understand as an honorary member I don’t have to pay any fines, but I still want to give thanks and praise when needed, and in this case my wife, Sandy, and I successfully launched our youngest daughter from high school, as she graduated about a week ago, so here is a $20 for Rachel and all other high school graduates this year.
Today I’m not going to stand up here and read a speech at you. I’m going to have an interactive dialogue with you. It’s something I know we’ve enjoyed before, this organization and me. And it’s something I’d like to do today.
While you’re thinking of your questions, I just would like you to stand up and identify yourself and ask a question. Let’s have an interactive dialogue. I’m used to having the press do this. This is designed for me to hear from you, to permit you the accessibility to your Governor that you deserve. It also sharpens me in terms as what’s important to you and helps me serve you better in this role.
The Lieutenant Governor was great about spotlighting some of our good news, some of our achievements in this administration. I think Alaska is well-positioned economically. You go anywhere else in this country, people are out of work, people are mad about it, can’t find work.
In this state there is opportunity for work. And you might say we’re flat economically or we’re only slow growth, but if you go anywhere else that opportunity isn’t there.
We’ve got immense resources that we own and have the potential to access to utilize and grow our economy. We’ve got educational opportunities. We’ve got Village Public Safety Officers now, by the end of this fiscal year, we’ll have funded 116, where three years ago we had 48 positions. That means about 50 more communities have a law enforcement officer in them, which means that the cost of assaults and abuse go down because the numbers go down when you can call someone and actually get help in a village where there was none before.
I think about our children and I think about the runaways in this town, 48 percent of who, if you use national statistics, become trafficking victims and get locked into a life of prostitution at 13 and 14 and 15 [years of age]. This year, we have signed into law some tougher penalties for trafficking for sex and human trafficking.
So when I think about serving you as Governor, I think about the economic side, I think about making sure that our budget is restrained and we are actually pushing the growth of government down and increasing private sector opportunities.
And I think about strengthening our families and giving families more opportunities, whether in the education arena, public safety arena, health arena, those are all areas that we focus on.
Finally, another priority is our military – our military support. The Lieutenant Governor mentioned I was in Dillingham yesterday and attended a Memorial Day ceremony there, probably one of the more touching Memorial Day ceremonies I’ve been to. They actually gave an American flag to every family in Dillingham who had lost somebody in a war. They gave about 90 flags, in a community that size. An honor guard gave military honors to each family – one, by one, by one.
And we also honored our Alaska Territorial Guard. We heard stories of 1942, when the Japanese Empire was on a roll attacking our shores. Nazi U-boats had sunk about 500 of our ships off our North American shores. Nobody was able to help stop those wins by our enemies of the time. Governor Gruening got in a floatplane, I’m told, and flew into about 100 villages and raised up the Alaska Territorial Guard. Flew into Dillingham as his first stop out of Anchorage, is how the story went, got off there, contacted one of his friends in that community, gave him a sign-up sheet, and said, “We need to raise up a Territorial Guard to guard our country.” … And in short order about 6,400 men, women and teenagers answered the call.
They were never given veterans status, even though they served our country, until about 12 years ago. We have spent the last four years or so working to get the surviving members of the Alaska Territorial Guard their discharge papers because they, too, served our country and deserve that kind of recognition and benefits that flow from that, as do their families.
So it was our honor to provide those discharge papers and certificates to four Alaska Territorial Guard members in Dillingham who had not received them, nor received honor for their service.
So that’s just a snapshot in terms of where we are in the cycle…The Legislature, as you know, is done for the year…There are some things we worked well together on, and other things that were really tough.
We worked well on the budget. The Lieutenant Governor mentioned the spending limit. It took us three years to get there, but we worked well together on limiting State spending and the growth there. Difficulties, of course, with oil, and trying to incentivize production and bringing that back on line.
But some huge successes with our administration in resolving Point Thomson; getting alignment on a large-diameter gasline, the all-Alaska gasline through our state to tidewater, with the three producers and TransCanada; resolving long-standing litigation, such as the Moore case and Kasayulie case, education-related cases to bring equity to rural Alaska when it comes to education funding and opportunity.
Lots of good news, but instead of me preparing a text for you, let’s have some interactive dialogue.
Question: Could you comment on things you are interested in or excited about in the technology sector?
Governor Parnell: For me the Broadband Initiative is one key area. I appreciate the fact that telecommunications enables business and enables our lives to be better. And also just assuring our rural communities have access to telecommunications networks. That is one way they can survive economically, they can utilize that for commerce.
Question: About four years ago we agreed, as State and federal government to build a visitor center at Mile 136 of the Park Highway. The State has funded about $12 million in road construction. Where are we with building that facility?
Governor Parnell: That’s a good question, and it’s one I don’t have an answer for, but I do have some good people here with me who will get back with you on that.
Question: Can you bring us up to speed on the Susitna-Watana dam project?
Governor Parnell: From an energy perspective, this will bring relief and long-term economic growth opportunities for the entire Railbelt and probably beyond, as well. Two years ago, with the Legislature, we set a statewide policy that said, as a state we want to see, by 2025, 50 percent of our electricity generation and transmission come from renewable sources.
Susitna-Watana is a key ingredient to reaching that goal. If we don’t have Susitna-Watana, we will diminish our opportunity to have that renewable energy and that affordable energy across a lot of years. A year ago we provided two years’ worth of funding to the Alaska Energy Authority to their project team for Susitna-Watana. They are engaged in the design aspect right now and in licensing with FERC. So this is a project that is very important to us as an Administration, but it is resident now in AEA, and we’ll continue working it hard.
Question: I’m excited to hear about Choose Respect, and many of us know domestic violence and violent crime have been a huge problem. And I’m wondering if in the Choose Respect program there is anything innovative or different, or are we doing what we’ve been doing, but more so.
Governor Parnell: I think we are writing a new page in history for our entire northern hemisphere. Let me describe that: The Choose Respect Initiative has prevention components, intervention and enforcement components, and support services components.
Let’s talk about prevention for a moment. I really think this is going to start with us as individuals. Government is not going to be able to solve this, this is going to be up to Alaskans to step forward and be the answer.
In 2010, 18 communities participated in Choose Respect rallies, in March of that year, to raise awareness and take a stand for Alaskans. And to show some courage, that we’re willing to talk about this, that we’re willing to give permission to speak about this epidemic among us.
Last year, in 2011, about 64 communities joined that same effort.
This year, over 120 communities.
There is nowhere else that I’m aware of in North America, where anything like this has caught fire, at least in the last 40 years. The last time I can think of when something like this happened was the civil rights marches in the ‘60s. Really, it’s us standing up for our fellow citizens saying, “You deserve dignity. You deserve respect. You don’t deserve abuse.” Those of you who have experienced it in your own homes, you don’ deserve to carry that shame and that guilt. And as Alaskans we are opening up and giving permission to speak about these things because they are so harmful to individuals and collectively to our communities.
There’s also the government funding on the prevention side. There’s about $12 million more in pilot projects in Dillingham and Bethel and throughout other areas of our state.
The enforcement side of it: I touched on a little bit before when I talked about our communities in rural Alaska. Many don’t have access to law enforcement. You pick up the phone to get help and it’s three days or four days away, because there is no officer in the community. There is no VPSO, VPO, or Trooper. Nobody.
When I came into office I said we are going to fund at least 15 [additional] VPSOs per year, plus the trooper support to put them into communities, because objectively we know from studies that if you have a law enforcement presence in a community, the number of assaults diminishes and the safety of that community increases. So we’ve kept our promise and we’ve moved 15 per year, plus the trooper support behind them.
I just spoke yesterday in Dillingham with the new VPSO in Manokotak. He received 10 weeks of training at the Sitka training academy for public safety, and is now on the job.
I asked the Dillingham trooper yesterday, in the public safety office, “Tell me what your biggest concerns, your most reported reasons for having to respond to the public.” And he said: Alcohol and domestic violence, in tandem.
So we’ve got prevention efforts, increased law enforcement efforts. And we’ve also increased our shelter beds and services. But it is going to take a comprehensive approach to end the epidemic. I am not naïve enough to think we will ever get rid of this crime, but I am idealistic enough to believe in the power of Alaskans to make a difference other people’s lives, when we’re willing to step up and step in.
Question: How optimistic are you that Shell will be able to proceed with drilling in the Chukchi Sea this summer?
Governor Parnell: That is one of the few bright spots in our economy. I am much more optimistic this summer than in prior years. I’m always cautious, though, because we’ve been here before. We’ve been in this place where ships have been on the way, the drill ship is on its way, contractors are on the way, then we’ve been turned back by a lawsuit, or by a federal agency’s inaction, or opposing action.
This year I am cautiously optimistic that they’ll be able to move forward. And when I look at the North Slope, I see that huge economic opportunity for Alaskans. And when I look at Point Thomson, I see it as a huge economic opportunity for Alaskans. That settlement we negotiated requires that billions of dollars are spent within the next one to three years.
My real desire is also to move forward in our own oil patch on State lands, and turn the production decline to an incline to a million barrels a day. That’s what this whole effort has been about in terms of changing our tax structure at these high oil prices.
It’s something I have hope for, for the future. Obviously it was dashed this year by those who prefer to just manage for status quo decline and say “we’re just fine, thank you.” I’m not willing to accept that. I think we’re on a path where Alaskans are better informed and where our legislators are better informed, and we are going to come back next year and continue to fight.
Question: Going back to the Susitna-Watana dam, I’ve been troubled by the lack of detailed economic analysis. [Dams this size in the Lower 48 they stopped building 40 or 50 years ago, as they didn’t really pay out. My concern is this is an enormous project that can only be built with State money, is that really where we should be spending State money?]
Governor Parnell: These are serious questions. The need for long-term renewable energy source in this Railbelt is important. And I think those are questions I’d be happy to tell AEA to get up here and provide some response to. It’s not about the State writing a check for billions of dollars. It’s about writing a check for a portion of it and financing the rest, and how that gets recovered. And those are the questions you should be asking, but until we have a design and a public process, it’s hard to know exactly where that will fall, but I’m happy to have them come give a briefing on it.
Question: I have a question on Arctic policy. We heard from Fran Ulmer recently, and she gave us a primer on some of the key issues we should be aware of, such as the Law of the Sea. How should we as a state be organizing ourselves, as just a state of one nation that is considered an Arctic nation. How do we avoid the party politics and do what’s best for Alaska?
Governor Parnell: Every policy we implement here is part of our Arctic policy. There’s not one policy, like erosion of our shores and the corresponding threat to our communities, that can be stated as anything less than an Arctic policy. So our oil policy is an Arctic policy, our housing policy is an Arctic policy. Everything we do is focused on life in the Arctic for Alaskans and maximizing the benefit of those resources for Alaskans.
I can tell you we interact with Arctic considerations in places like the Arctic Council, where our Lieutenant Governor is the liaison for the State of Alaska. I can tell you there is nothing that we do in this state that is not geared toward the Arctic because that’s where we live. And we’ve done a good job of educating Washington to turn to us when they have Arctic issues. So the Lieutenant Governor and I have each testified about the need for a new ice breaker, and put money into the budget to study and figure out about where a new Arctic port should be… So there are policy items that are individual and specific, but they’re within the umbrella of everything we do reflects the Arctic policy of our state. I never want to lose sight of that. If you have suggestions on how we might specifically move differently, please let us know.
Question: On the Alaska Performance Scholarship, I wanted you to recap where it stands now.
Governor Parnell: That is one of our significant wins for Alaska, and Alaskans will win for generations at this point.
Two years ago we passed criteria for the Alaska Performance Scholarship, that said if you young people are willing to take more rigorous coursework than the minimum that is required to graduate from high school, then you can earn these scholarships.
Depending upon your grades, the scholarships vary from about $4,700 at the top end, to $2,300 at the bottom end of the scholarships.
I’ve seen more young people being able to take advantage of having earned these scholarships and using them here in state.
This year we were able to complete a funding mechanism that is sustainable on a long-term basis for these scholarships. It’s called the Higher Education Fund.
We put $400 million into the fund, and we will live off the interest and earnings. We now have criteria established and a sustainable funding mechanism for the Alaska Performance Scholarship.
As part of the compromise to get the Higher Education Fund through the House and Senate, we had to coordinate and cooperate and allow not only the APS scholarships to come from there, but the AlaskAdvantage program, which is the needs-based program, as well. What’s left, perhaps, is is a smaller infusion into that fund, but there is enough money for the performance scholarships at this juncture.
The class of 2011 – that class made use of those performance scholarships, and the university reported they had less need for remedial coursework on a percentage basis among the entering class.
So this year you’ll have the 2011 cohort in the university system, and job training as well, and you’ll have the 2012 cohort of students, all who are using those scholarships and who have taken more math and more science, etc. It will raise the level of academic achievement and will raise the quality of employees you get in your companies.
For example, one company told me last week they have to take in 12 applications to find one person who is really qualified, just for basic reading, writing, and math skills. That should not be; that should not be what our schools are turning out. This performance scholarship is already lifting the bar and incenting young people to take more rigorous coursework than the minimums required.
Now also something else is happening. Our administration, in coordination with the board of education, is increasing the high school graduation requirements. That should be in place in June.
Question: I wanted to go back to the topic of domestic violence. About 20 years ago, I was on our AWAIC (Abused Women’s Aid in Crisis) Board, and at that time there was a lot of misunderstanding about the violence. First of all, it was believed it only happened in low-income places; and also that it only happened with men abusing women. Since then, the whole discussion has changed, and it has changed partly because of people like you showing leadership and making it a topic of conversation we can all talk about, so people’s level of awareness is raised. Twenty years ago, when you were a legislator, you were one of our biggest supporters and one of the people who helped us change the dialogue and raise the level of awareness, so I want to thank you for a very long commitment to this.
Governor Parnell: Thank you. It was my legislative service that made me first aware of the issue here in Anchorage. It was my ride-along with Anchorage police officers that did that. I realized this issue is not limited, as you said, to any gender, any economic status or group.
And it is something that I don’t find comfortable to talk about. I don’t like to talk about it. But we must.
It’s almost akin to what is an easier topic to talk about now than it was: Forty years ago, had you tried to take the car keys away from your friend after they’d been drinking at a party, you probably would have been punched. But today you designate drivers, you take the keys away from your friend, get somebody to drive you. It’s an accepted behavior.
I’d like that to be an accepted conversation to have among friends and family, to say, “Can I get you some help.” Like I said, I don’t like talking about these issues, but we must, if we’re going to stop the cancer that’s eating us from within.
Question: I’d like to ask you about public pension funds and some of the other endowments. There have been some things written lately about how these funds are all predicated on the idea they will get returns of 7 or 8 percent. And for all that we love having low-cost consumer loans, and business loans, is it really realistic, and can we budget based on the idea that these funds won’t have to be subsidized because they really won’t earn that much?
Governor Parnell: Well we already are. Let me describe something that happened here. Our pension system, particularly the Tier I, (we’re now at about Tier IV Plus,) the earlier State pensions and local government pensions, as well, effectively dug a hole through, in part, stock market, [results] that [were] lower than expected, in 2008 and beyond. The bottom line is those pensions accrued a liability of about $11 billion, is where that liability stands now. So every year as a State we’re writing a check, this year it’s about $610 million, just against that unfunded liability.
In addition to that, we’re having to make payments for existing employees’ pensions, for the State’s contribution.
So the question for us is how do you manage that $11 billion unfunded liability. Because it’s in our Constitution – that pension is a promise. We’ll make good on the pensions, but how do you do it in a smart fashion?
Right now that $11 billion liability, which we’re helping municipal governments with as a State [and the State is paying for its own,] that $11 billion liability is being paid off on an annual basis.
And it’s going to increase on an annual basis from $610 million. it is going to climb to over $1 billion dollars and then will decrease as our pensioners pass on. That’s one way to meet that unfunded liability.
Another way is to increase that annual payment to almost $900 million and pay it like a flat mortgage.
Another way to do it is to say we’ve got billions in the bank. Let’s take a few billion and dump it into pensions … and then we get to your problem: If you dump it into a pension plan, you lose that flexibility with that cash, to hold it as cash, and if they invest it in the stock market poorly, it’s gone. We saw that with the judicial retirement system. We put $49 million into it a couple years back, and the value of the pension plunged and we still owe the same amount.
So far we have taken the approach that we will make the annual payments, maintain the flexibility with our cash. But we’re still going to make good on those pensions.
I will tell you that the Legislature in 2003 or 2004 changed that pension program so that it is no longer a defined benefit. For new employees coming in, it’s a defined contribution plan. We’re paying for past liability, accrued liability, and we won’t have that going forward unless the retirement system changes again.
If you think about the federal government having issues with Social Security and Medicare, our financial issue is going to be that pension unfunded liability.
Question: A long-range transportation plan, where are we on that? Our roads are deteriorating, there are more people, and the same amount of roads, and we’re not funding our roads or maintenance. Can you speak to that?
Governor Parnell: Sure. First off, we are funding, but probably not to your satisfaction. When I came into office I said we need to take care of the assets we have. So we’ve never set aside money for deferred maintenance before. I said here’s our five-year plan. We’re going to put $100 million toward deferred maintenance, about $37 million of that will go to maintain roads and streets. Another chunk goes to the university. Another chunk goes to public buildings, trying to keep our assets from deteriorating. In addition to that the DOT budget has a maintenance fund as well.
The bottom line is, can we do more, absolutely. Here in Anchorage, the roads, counting the Seward Highway, will see roughly $100 million to $110 million worth of maintenance, in town and headed out of town.
Winter and Construction will be the two seasons for the next few years. But can we do more? Absolutely we can. I encourage you at Rotary to invite our DOT Commissioner, Marc Luiken, to lay out the long-range transportation for you so you can see what that looks like.
Thank you, and I appreciate you having me here!
# # #
