Walker against Pebble and EPA, suggests 5% agency cuts

Independent gubernatorial hopeful Bill Walker said he is skeptical of Pebble and that he would deal with the state’s shaky fiscal situation by suggesting 5 percent cuts in agency budgets as well as prioritizing the state’s growing laundry list of major infrastructure projects.

“Based on what I know at this point I’m not in favor of Pebble,” Walker said during an Oct. 10 sit-down with Journal editorial staff.

Despite years of exploration and study and more than half a billion dollars of investment, little is known about how the controversial copper-gold mine would ultimately look, he said. Walker noted, as many on both sides of the fight have, that Pebble Limited Partnership has not released a formal plan for how it would safely develop one of the world’s largest porphyry copper and gold deposits at the headwaters of the Bristol Bay watershed.

When discussing Pebble, Walker used it as a way to distinguish his leadership style from that of Republican Gov. Sean Parnell. Concerns about the proposed mine voiced by Alaska Native and commercial fishing groups earlier in the exploration process fell on deaf ears in the Parnell administration, Walker claimed, forcing the groups to turn to the Environmental Protection Agency.

Since 2011 the EPA has been involved in an information-gathering process on Pebble that has led it to propose a ban on surface mining of the Pebble deposits northwest of Iliamna.

The Parnell administration joined the Pebble Partnership in a since-dismissed lawsuit against the EPA earlier this year, alleging the federal agency’s action would violate the state’s right to develop its land. Pebble is challenging the dismissal in federal appeals court.

With his background in local government as a former mayor of Valdez and president of the Prince William Sound Regional Citizens Advisory Council, Walker said he would be more attuned to what Alaskans say about what’s happening in their backyards.

“I think we’re seeing the results of withdrawing input from local regions, local people impacted by development,” he said. “We’re a resource state and the best decisions come when we have the best input and I don’t think we have that now.”

Despite being against Pebble, Walker also said he is not pleased with the active role the EPA has taken in the controversy.

By using its Clean Water Act power to preemptively block projects based on their purported impact on wetlands, he said the agency could expand beyond Pebble.

“I’m concerned about the EPA’s role in Alaska; I’ll put it that way,” Walker said.

On the budget

Regarding the state budget and deficits, Walker accused Parnell of not taking the fiscal situation seriously.

“This administration has not admitted there is a problem,” Walker said of the state budget.

He emphasized that Parnell’s fiscal year 2015 long-term budget plan calls for continued deficit spending — approaching $3 billion in the red by 2022, the same year the state reserves would be drained if oil averages $100 per barrel.

Walker said he is sometimes criticized for not specifying how he would solve the current budget crunch or the worse one on the horizon, while at the same time Parnell has not offered a solution.

To start curbing the state’s exploding operating budget, Walker suggested department commissioners trim their expenses by 5 percent immediately.

“I will sit down with each department or have my commissioners (do it) and say, ‘Find 5 percent in your budget.’ My goodness, if you can’t find 5 percent. Lee Iacocca said in his book every department has 5 percent just laying around, so that can be found.”

Overall, the state needs a combination of spending cuts and revenue growth, he said, “but we can control spending a whole lot more than we can control revenue,” given that upwards of 90 percent of state income is tied to the oil industry.

Walker said the leadership in his administration that he would ask to cut spending could include individuals in Parnell’s camp — if they have the right skill set. Without naming names, he said he is aware of some folks in the Parnell administration that have not been allowed to reach their full potential because of what he called a “lack of leadership.”

“There may be some people that are campaigning for Parnell — in fact there are — that I would like to have in my administration,” Walker said. “It’s about putting together the best team there is, not the best political makeup.”

Project priorities

Whether it’s the proposed Juneau access road, the Knik Arm Crossing or one of the numerous other capital projects the state is investigating, they all need to be put to an economic benefit test, according to Walker.

He said Parnell recently criticized him for not taking a stand on the Juneau road, which the governor has championed. The $574 million, 48-mile pavement extension north of the capitol city would shorten trip time from Haines-Skagway and increase vehicle capacity to Juneau, but would still require ferry service.

Walker called it a “road to reelection,” and said it is fiscally irresponsible to take a position on such a project without evaluating it against other infrastructure projects in need of dwindling state dollars.

“To me, capital project have to have some sort of tie to the economy cause that’s what it’s all about; we’ve got to make our economy work,” he said.

“We will have to prioritize some things and some things that we’ve studied forever — there comes a point when you say, ‘It’s not going to happen.’ We need to stop studying things that are not going to happen.”

The Interior Energy Project could be one of those projects.

Walker said the state has “put blinders on” when alternatives have been presented to the state-subsidized effort to provide the Fairbanks-North Pole area with lower-cost natural gas for heat and power generation.

“My highest goal is to get energy costs down in Alaska,” as quickly as possible, he said.

To accomplish that bold decision will be required, according to the gubernatorial candidate.

Senate Bill 23, the legislation passed in 2013 that gave the Alaska Industrial Development and Export Authority a $330 million-plus public financing package to advance Interior Energy work, specifies the money must go towards a project that trucks North Slope gas south.

He said a presentation the Alaska Railroad Corp. gave to AIDEA in December 2013 about the prospect of transporting Cook Inlet gas north by rail was “summarily dismissed.”

“I’m still convinced you could probably (get gas to Fairbanks) cheaper coming out of Cook Inlet and going up the railroad,” Walker said.

As the Interior Energy Project has progressed over two years the prospect of a Cook Inlet natural gas supply for the Interior has gone from suspect to substantial. One company, WesPac Midstream LLC, recently announced it is working on a Port MacKenzie-located gas liquefaction facility for in-state sales regardless of whether the Interior Energy Project moves forward.

WesPac estimates it could provide privately financed Cook Inlet LNG to Fairbanks by rail for roughly the same price the Interior Energy Project team projects it can get it from the Slope, which is about half the energy equivalent price of fuel oil.

Walker noted that the unveiling of the Interior Energy Project’s final gas cost has been pushed back to Nov. 5, a day after the gubernatorial election.

“Need I say more?” he said.

At the same time, Walker said he wants to be the governor that finishes the projects that are worthy of funding. He highlighted the rail spur from Houston to Port MacKenzie, a $303 million project that still needs $119 million for completion, and a key component to WesPac’s LNG-by-rail proposal.

Deciding which projects take precedent will take unpopular decisions, Walker said, but will be necessary given the state’s increasingly limited fiscal resources.

Elwood Brehmer can be reached at [email protected].