Rick Koch is basing his run for the Alaska House of Representatives on the premise that the state’s budget deficit can be shrunk with a state spending cap.
After holding several public and private management and administration jobs — including Alaska Department of Transportation project manager, North Slope Borough engineering manager, owner of Koch Construction, Public Works director of Palmer, and his current 10-year position as Kenai’s city manager — Koch is making a run for public office. His name will appear on its first ballot as one of the four Republican candidates for the State House District 30 seat in the August 16 party primary.
There are seven candidates currently running for the State House seat being vacated by sitting Representative Kurt Olson in the district including Kenai, Soldotna, Ridgeway and Kalifornsky Beach. Olson, who has declined to run again this year, has donated his old campaign signs to Koch — valued at $200 in a Alaska Public Office Commission filing — which Koch has painted over with his logo.
A central element of Koch’s campaign has been his proposal to control state spending with legal maximums for the yearly operating and capital budgets.
“This year, before (Gov. Bill Walker’s vetoes), the unrestricted general fund contribution to the operating and capital budget was $4.36 billion,” Koch said. “… Something in the range of a half billion needs to be reduced from the operating load.”
Koch calculated that this year’s $3.2 billion state budget deficit could be reduced to around $600 million with a cap that sets state spending somewhere between $500 million and $800 million below current levels, by paying off the remaining oil and gas tax credit debt and by recalculating the Permanent Fund earnings as a percent of market value. From there, he believes the budget could be brought to balance by carefully considering new revenue sources such as the taxes proposed by Walker in the past legislative sessions.
“I don’t have specific recommendations on (reducing) that last $600 million dollars,” Koch said. “I think we have time to figure that out, because until this year there was $7 billion in the Constitutional Budget Reserve. We can take a few years at a $600 million-a-year hit against those billions of dollars to determine precisely which of those nine or 10 taxes that the governor put forth — an income tax, a statewide sales tax, alcohol tax, tobacco tax, mining tax, fish tax — are most effective and cause the least amount of distress to the citizens of Alaska.”
Buying time with a spending cap would also allow a period in which revenue-generating oil prices may rise again, Koch said. Koch said he didn’t “have a specific slice to take out” of the operating budget to to reach the spending cap limit, but noted that the Alaska Department of Health and Social Services and Alaska Department of Education and Early Development were significant spenders, being the only two departments with budgets over $1 billion in state spending this fiscal year.
Speaking of the Department of Education, Koch said he would be looking for cuts to the “significant administrative loads at the state level and at the local school levels that are part of that overall budget,” rather than to classroom spending. He has also advocated in his campaign for increasing vocational education in high schools.
“I’d certainly like to see programs in high school where, if you don’t roll out as a full-fledged apprentice, you’re at least exposed to the trades,” Koch said. “Whether it’s plumbing or pipe-fitting, electrician, mechanics, surveying — trades that pay well that don’t require a four-year degree, that are challenging, and provide enough income to raise families and have a productive life.”
Although he acknowledged that vocational education, with the equipment and operating costs it requires, is “pretty spendy compared to a normal classroom,” Koch said he would look for opportunities to provide it at low cost through public-private partnerships between schools, organized labor groups, and private companies.
While he advocated for cuts to the state’s operating budget — which funds the activities of state agencies and received $4.2 billion of unrestricted general fund money in this fiscal year’s budget — Koch said he’d hope for a larger capital budget — which funds infrastructure maintenance, construction, and improvement and received $96 million from the unrestricted general fund.
“That was a low use of unrestricted general funds over time,” Koch said. “We’ve had some incredibly high capital budgets, as much as $3 billion — not all state money, but well over a billion of state funding has gone in there. That’s too high. Looking back historically, $200 million of state contribution into the budget has provided a fairly robust capital budget.”
He said increasing state capital spending would be a good investment in part because it would draw federal funds to Alaska’s infrastructure. In addition to the capital budget’s $96 million in state money, it received a federal match of $1.3 billion — the operating budget, for comparison, was supplemented with $2.2 billion from the federal government.
Though difficult, Koch said Alaska’s fiscal problems are far from unbeatable.
“I’m absolutely convinced that we have the tools in the toolbox to put in place a sustainable budget,” Koch said. “That doesn’t mean it’s going to be easy. It’s going to take courage on the part of the legislators who are willing to open the toolbox up, reach in, and take out the tools. Because you’ll not make everybody happy when you’re trying to reduce budgets and create new sources of revenue.”
Asked whether he believed the general political will exists to open the budget toolbox, Koch replied that “it exists with me.”
“I’m not running to think that I have to make all my decisions looking toward a re-election in two years,” Koch said. “If I do the right things, listen to the constituents, and it results in not being elected to a second term, then so be it.”
As of the end of July, Koch’s campaign has raised $20,155, of which he has contributed $7,000, according to campaign filings with the Alaska Public Office Commission. Other donors include fellow members of Kenai’s administration and government — Planning and Zoning Commissioner James Glendening, council member Tim Navarre, and mayor Pat Porter — as well as Kenai Central High School principal Alan Fields, Homer Electric Manager Brad Janorscke, sportfishing activist Robert Penney, and Alaska Salmon Alliance consultant Arni Thompson.
Reach Ben Boettger at ben.boettger@peninsulaclarion.com.
