Lieutenant governor candidates discuss LNG, taxes, Stand for Salmon in Kenai

Lieutenant Governor candidates Debra Call (standing), Edie Grunwald, Sharon Jackson, Byron Mallot, Kevin Myer, and Stephen Wright answer questions at a Kenai and Soldotna Chamber of Commerce candidate forum on Wednesday, August 1, 2018 at the Kenai Chamber of Commerce and Visitors Center in Kenai, Alaska. (Ben Boettger/Peninsula Clarion)

Editor's note: This story has been changed to correct the monthly spending of the Alaska Gasline Development Corporation.


Six of this year’s eight lieutenant governor candidates answered questions on Wednesday about ballot initiatives, potential state taxes, the Permanent Fund Dividend, and the Alaska LNG Project in a Wednesday forum before members of the Kenai and Soldotna chambers of commerce. Voters will choose from these candidates on Aug. 21, in the primary elections that will determine which will move on to party tickets in the general election Nov. 6.

The two candidates absent from Wednesday’s forum were state Sen. Gary Stevens (R-Kodiak) and Lynn Gattis, a former state representative from the Mat-Su Valley, both running for the Republican nomination.

Four of those present were Republican: Sharon Jackson, a constituent liaison for U.S Sen. Dan Sullivan (R-Alaska); state senator and ConocoPhillips Investment Recovery Coordinator Kevin Meyer (R-Anchorage); retired U.S Air Force Colonel Edie Grunwald; and 22-year U.S Air Force veteran Stephen Wright. Wright is the only Republican candidate already attached to a runningmate, Republican gubernatorial candidate Michael Sheldon.

Candidate Debra Call, who has worked in various small business development positions and been an executive for Alaska Native organizations including the Calista Heritage Foundation and the Knik Tribal Council, is running with Democratic gubernatorial candidate Mark Begich. Incumbent Lt. Gov. Byron Mallott, a Democrat, will share the independent ticket with incumbent Gov. Bill Walker.

At the forum, the candidates responded similarly to some questions.

All said they disagree with the provisions of Ballot Measure One — commonly known as the Stand for Salmon initiative — which would tighten the Alaska Department of Fish and Game’s fish habitat protection regulations and has provoked intense conflict between supporting conservation interests and opposing industry groups.

The lieutenant governor’s office is responsible for certifying ballot initiatives that Alaskans submit via petition. When the Stand for Salmon initiative was submitted in September 2017, Mallott rejected it on the grounds that it made an unconstitutional appropriation of state assets, though a court overturned that decision in October 2017. After the state appealed, the Alaska Supreme Court is set to announce a decision which may allow the initiative on the ballot if it’s issued before Sept. 5.

The prospective sale of drilling leases in the Arctic National Wildlife Refuge — allowed after decades of controversy by an amendment that U.S Senator Lisa Murkowski (R-Alaska) introduced to the December 2017 Tax Cut and Jobs Act — got unanimous support from the candidates. However, Jackson called the legislation “a double-edged sword” because it would split ANWR lease revenue 50-50 between the state and federal governments, while the 1959 Alaska Statehood Act gives the state government 90 percent of lease revenue from federal land. Wright agreed, saying “we need to make sure we’re not losing when we think we’re winning.” Meyer, however, said “50 percent is better than zero percent.”

The candidates were more divided in response to another question submitted by the chamber members: ““What will need to be done to further the AK LNG Project and terminus in Nikiski?”

“I love way you word your question — it isn’t ‘Do we want it or not?’ It’s ‘How do we fast-track it?’” Grunwald responded. “Right now there’s a glut in the market for gas — we’ve got Texas and Lousiana and also Russia is selling tons of gas to China … And we definitely don’t want to deal with the Chinese. Sorry, but they’re communists, and they want to get a hold into our country, and we would be a part of that process. So we want to get private industry involved in partnership with the state.”

Jackson described the gasline plan — on which the state-owned Alaska Gasline Development Corporation has spent about $3 million a month since January 2017 and which has an estimated final cost around $40 billion — as “a very expensive project for hopes, and whens, and ifs.” Wright said “the project is not profitable as it sits” and that “it’s something that at this point we need to back off on.”

Mallott and Meyer, on the other hand, agreed that the project “needs to continue on the track that it’s on,” as Mallott said.

“The market will ultimately determine the reality of this pipeline,” said Mallott. “All forecasts so far show that with the state in control and the gas supplied by the owners, with the investment potential already being finalized, that this is the final project and should be strongly supported by all Alaskans.”

Responding to those who said the project needs more private sector involvement, Meyer said the savings from tax deferrals justify a state-led project.

“The Legislature is supportive of this project, and we think it will work,” Meyer said. “But we haven’t seen the financial numbers to know yet if it will work or not. We don’t know who the investors are… But the reason it makes sense for the state to do this instead of the oil companies is because the state gets some tax advantages, federal tax advantages, that the private sector doesn’t. If this project’s going to work, I think the current proposal the governor has is the one that’s going to work.”

The Republican candidates all declined to support an income tax. Grunwald and Wright emphasized the need to review and cut present government spending, Meyer said the state needs to focus on attracting capital from outside, and Jackson advocated a sales tax targeted at tourists rather than an income tax.

Mallott, who for the past four years has been part of an administration that pitched a controversial sales tax proposal in the struggle with deficit budgets in the aftermath of the late 2014 oil price crash, said the state government isn’t out of the red yet and a tax could still be called for despite the capped 5.25 percent draw from the Permanent Fund earnings reserve the Legislature allowed in May’s Senate Bill 26.

“With Senate Bill 26, we have moved a tremendous way to removing completely the budget deficit,” Mallott said. “Depending on oil prices, which are forecast relatively flat for as long as we’re able to forecast, we will still have a deficit. Depending on oil prices, we will still have a deficit that could range anywhere from $200 million to $700 million that needs to be filled.”

Call neither supported nor renounced the idea of state income tax, saying such a decision should happen as part of a broader look at what state spending should accomplish.

“We need a fiscal plan, and one of the things we need to go forward with is to ask what level of state services do we want?” Call said. “What is the quality of education that we want? Set our priorities as a state. Because once we determine those priorities and figure out how much it’s going to cost, are we wiling to invest in our state, and how are we going to invest?”

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