There may be no perfect solution for bridging Alaska's growing fiscal gap, and state lawmakers, the administration and the general public shouldn't wait for one to come along, Lt. Gov. Fran Ulmer said in Soldotna Tuesday.
"Remember that old saying, "Don't let the perfect be the enemy of the good?" Ulmer asked. "You know, sometimes if you keep looking for the perfect answer, sometimes you just can't get there from here. I want to say in regards to the fiscal gap, we have got to craft a solution that may not be perfect, but is a compromise so that we can have a stability in our economy that allows businesses, big and small, as well as individuals to feel confident about where we are headed as a state."
Alaskans have lived for 20 years without paying state income or sales taxes while enjoying the luxury of divvying up annual oil-revenue dividends. That's likely served to make the job facing lawmakers even tougher, she said.
Speaking to a packed room at the Soldotna Chamber of Commerce luncheon, Ulmer said state lawmakers will soon be sifting through a host of proposals for matching revenues to expenditures when the legislative session opens Monday.
She said the challenges facing the Legislature have been made more intense by the times in which we live and the economic recession.
"The call to action for this session is pretty dramatic," she said.
Ulmer noted that hard times have hit Alaska's fishing industry, particularly when it comes to salmon.
"We have been under a great deal of pressure from farmed salmon from Chile and Norway for the last five years, driving down the price of our beautiful, wild salmon and really changing the economics worldwide of that industry," she said. "I think for a long time here we were a little bit in denial about the extent to which the problem would go away, that somehow some miraculous solution would occur and the prices would go back up. I think the last two years have convinced us that isn't going to happen."
Alaska must focus on marketing its wild product better, she said, by explaining to consumers why wild salmon is superior in terms of health benefits and taste to the farmed product. However, Ulmer also said she thinks the Alaska Seafood Marketing Institute is underfunded.
"We're being totally outspent by the Chileans," she said.
She said the fishing industry must find ways to remain competitive. In the 1970s, the answer was limited entry. It worked, she said. But now the economics have changed and new ways to lower costs must be found. She suggested that might include experimenting with partnerships between harvesters and processors, between people in the industry and the regulators, and allowing cooperatives, among other things, if the industry is to survive.
"Frankly, I can't imagine coastal Alaska without a salmon fishing industry," she said.
Alaskans are feeling the recession, but in many ways are faring better than their counterparts in areas of the Lower 48, Ulmer said. The good news in Alaska, she said, includes a 5.6 percent unemployment rate, which is below the national average.
"More than 285,000 Alaskans were at work last fall, an increase of over 5,700 jobs over the same time the year before," she said.
She noted that foreign trade with Alaska's largest trading partner, Japan, remained strong in 2001, despite the effects of recession on the Asian nation's economy.
"We held at $2.5 billion (in trade) in 2001," she said. "That's an important thing, because our state is a trade state."
She also said Alaska continues to have the lowest tax rates in the country, having neither a statewide sales tax nor an income tax while giving every man, woman and child a permanent fund dividend each year.
Although Alaska has dealt with deficits for years, those shortfalls have not reached the levels of some other western states. California, she said, faces a $12 billion deficit, Washington a $1.2 billion gap and Oregon at least $900 million.
"We do share a lot of challenges with a lot of other states as we try to find ways to not only strengthen our economy, increase the quality of our education ... balance our budget, and also deal with some of the safety and security issues."
On other issues, Ulmer said there is a consensus in Alaska that the state's natural gas resource needs to be developed in a way that produces jobs, puts Alaska companies to work building and operating the pipeline and provides a portion of the gas for use within the state. Alaskans, she said, must share in the long-term fiscal pie.
Ulmer said the Kenai Peninsula's economic diversity, its healthy fishing, oil and tourism industries is promising.
"You get a sense there is a lot going on here," she said.
Her campaign for governor is going well, she said. The Democrat has raised $350,000 so far, $100,000 more than she had expected by this time.
She is not concerned that candidates are not yet lining up to run for her current job. The Republicans have three so far, but that's because they were eyeing the governor's job until Sen. Frank Murkowski officially announced his candidacy.
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