Seventeen candidates are running to be Alaska’s next governor. Alaskans are already heading to the polls for early voting in the Aug. 18 nonpartisan, pick-one primary, which will narrow the field to four.
It can be tough to pick a favorite in a crowded field, so as the primary nears, Alaska Public Media is conducting interviews with some of the top candidates in the race. We've reached out to every campaign that's raised $50,000 or more, and many have responded.
Today, we’ll hear from Republican candidate Adam Crum, who over seven years led two departments in Gov. Mike Dunleavy’s cabinet: the Department of Health and the Department of Revenue.
This transcript has been lightly edited for clarity.
One of the things that you've said, one of the reasons you've talked about why you're running is that you look at your daughters and you don't see opportunities that would bring them back to Alaska if they ever left. You've also talked about the state being in managed decline, and I'm curious, what, specifically, do you think has gone missing? What would you do differently?
I think as a state, we have really spent far too much time fighting and arguing about the size of the operating budget, while we've watched our capital budget decline year over year, to where it's essentially just now the match for (federal) highway dollars. So we're not building any key projects. We're not building infrastructure that shows people hope. We've got deferred maintenance on buildings across the state and the university that's in the billions, and there's no hope, right? Sometimes you see, like a measure of progress across cities in the United States is the number of cranes that are operating. What do we have going on across the state outside of industrial areas? It's very small.
You spent seven years in the (Gov. Mike) Dunleavy administration as the health commissioner and then as the revenue commissioner. And since you're running to succeed your former boss, I'm curious where you might break with him, what you might have done differently if you were governor these past eight years.
The issues that he had to face were unprecedented. Global pandemic, oil literally hit negative dollars. But the things that I would do differently in particular is actually really changing the way we tell the story of Alaska. It's getting Alaska set up.
So, when I was revenue commissioner, absent any new funding sources or new revenue streams, I was successful in getting the state's credit rating bumped three times. And the reason why that's important is, the better a credit rating is for a state, the more stable that financial environment is for investment for all industries and all other parties, and we were able to do that by just being active in the capital market. We didn't issue new debt, we took existing debt and we refinanced that to save the state millions in net present value. But it kept the state active in the capital markets. It kept people going while all of these other processes, like the Pikka project and Willow project, were going through all of these growth phases. It helped them with investors looking at Alaska overall, and it's this active approach as to what we're going to do.
You know, every time, every stop I've been at, whether in my professional career, whether that's in the private sector or as health commissioner or as revenue commissioner, I try to be a reformer. I step in and I say, "Why do we do things the way we do?" Sometimes there's a good case, but it needs to be reexamined. Is there a business case for the process that we have right now? But just doing something for inertia purposes is not a good reason. You have to continue to evaluate what we are doing. Are we still serving Alaskans in the best way possible?
And the things that I would do: I want to issue debt. I think we actually have quite a bit that we could build in Alaska through (general obligation) bonds as well as rate reduction bonds, including transmission lines to actually modernize our grid to allow for more power generation projects. There's massive road and capital projects that we actually have to hit in order to make sure, like, the Dalton Highway is completely falling apart. We need a ton of investment in that because that is our GDP. The people and the equipment and the materials that move north on the haul road actually make it so our lifeblood can flow south, and we have to make sure that that road is in tip-top shape. Because I drove it this spring, and literally, it was falling away in some places. It was down to one lane because half the lane had broken off.
More on that: Alaska has run structural deficits for a decade, and it takes money to build that to build things. It takes money even to borrow money. You believe that we could ... finance a billion dollars' worth of debt for $80 million a year, and we have about $1.5 billion in bonding capacity, is what you’ve said. And I guess, like, I'm curious, where would you get the $80 or $120 million it would take to do such a bond issuance, to pay for that debt service, for probably decades.
Yeah. We've got an increased funding coming in the door, right? Not only is the (percent-of-market-value transfer from the Permanent Fund) growing year over year — we're at a $4 billion draw this year — but it comes down with efficiencies of government.
One of the things that I actually really look at and make sure is, how we're doing procurement and IT services across the state, because it is hundreds and hundreds of millions of dollars that we pay and we flow out the door. When I was the health commissioner, we actually had the second most IT staff in the state, was at (the Department of) Health. And there were so many large scale projects that we had to do. We had to do an IT tech stack upgrade for our Medicaid payment system, which was almost $200 million. And you're maximizing these dollars via (federal) match. But it's also, how are we doing this purchase? How are we doing this procurement? Are we actually having a project management office that is doing this for the most efficient way possible? And so there are efficiencies that absolutely can be gained.
And it also comes down to a conversation of, how are we modernizing our tax stream? There's things like the highly digitized business tax, which Dunleavy has vetoed twice, which I actively lobbied him to — "No, this is actually OK."
We've talked to the groups, the lobbyists that represent them, the Netflixes, all those kinds of groups. They're not going to, this isn't going to affect their subscription prices for Alaska, but that's a revenue stream of, you know, $50 million to Alaska that other jurisdictions take advantage of. We're one of the last remaining states who doesn't have that.
Yeah, I was a little curious about that. How did that go when you were the revenue commissioner and that bill was coming through the Legislature? You said you were lobbying in favor of it. I guess you were not successful in persuading Dunleavy that it was a good idea. Or did you, you know, advise him that he should veto it? I guess, can you tell me more about that internal decision making process while you were revenue commissioner?
So the Tax Division was very clear about what this is. We have the existing infrastructure in place. It doesn't require any new investment internally to collect on this. It's really just a programming issue, and when you look at taxes like that, it doesn't actually come from individual Alaskans. This is just coming basically from the corporate income tax. The money that these digitized businesses make in Alaska, it's apportioned to Alaska, and we get to collect a tax off of that. So, it wasn't going to affect individual Alaskans because of our small population base. That small tax is not going to make Netflix with their hundreds of millions of subscribers increase the subscription fee. So that's one of those I was trying to lobby.
You know, the first time he vetoed it was because he did not like it. The second time, if you read it, it was because it was a standalone tax. He wanted to be part of a robust fiscal plan, so he wasn't outright opposed to it. So I think there was some success in getting them to understand how this tax could be beneficial as one step in our fiscal plan process.
And that has been something that has really been a mark of the Dunleavy administration, this aversion to new taxes without a full fiscal plan. And that makes me curious: Do you share that same objection? Do you think that any new revenue measures should also be tied to measures that constrain government spending?
I do think there has to be a balance, right, to the growth of government, as well as ... the resources we collect from Alaskans, when it comes to broad-based taxes.
If you look at our history, we have never had aligned at any one time a governor who was willing to have a fiscal plan and a Legislature. Either it's been one's against, one's for it, and it flips back and forth. So I think having an honest conversation with Alaskans, because they haven't really paid attention to it. We've had fiscal plan working groups out of the Legislature for a very long time, and we haven't shared, what do the actual numbers mean to Alaskans? If we do this amount of a sales tax, this is how much it could affect you. And just sharing that information and having a robust conversation with Alaskans, I think that is the time is due for that.
Because a lot of the time, by not having a stable fiscal plan in Alaska, it's driving away investment. We are not, we don't have a climate such that people are looking at it saying, "Hey, we're dying to dump money into here." Because if Alaska ever gets in a hurt box when it comes to revenue, they're immediately going to try to tax existing industries or change the rules midstream, and that's what we have to get away from. So I think that there's an opportunity set there. I really want to find a way to avoid having to do broad-based taxes on Alaskans because life in Alaska is expensive enough.
I think an opportunity set that we have to really robustly review is AI data centers. You look at what a group like Stack Energy is trying to do on the North Slope by doing energy generation, power generation of wellhead gas, using it in an environment that is cold, that has access to water.
And bringing in an AI data center, that actually could be an incredible revenue source to the state, even taxed just at our corporate income tax level of 9.4%. To give you some numbers as to what this could be, and I just throw this out because it was always anecdotal. But when SpaceX filed for their (initial public offering), they had to do financial disclosures to the (Securities and Exchange Commission), and it showed that their data center in Memphis — which is a massive one, mind you — but they did $1.25 billion a month in leased-out computing power. That's $15 billion annually.
If that much AI data center was in Alaska, there's other calculations that go into it, but roughly speaking, that would actually be $1.4 billion collected in corporate income tax. To put that into perspective, what that is to Alaska, my last year as revenue commissioner, I collected $1.8 billion in oil and gas production tax. So the amount that we could make off of AI data centers using our natural geographic advantages is pretty incredible.
That is quite a remarkable number. I wonder if you've talked to companies that see a large-scale data center like that as a realistic possibility in the near- or mid-term future.
I have. I've actually had conversations with Amazon Web Services' head of energy strategy. I have talked to hyperscalers, and the conversation has been amazing as it has evolved over the last three years.
Three years ago, they didn't want to look at Alaska unless they could have access to 100% renewables. Then six months later, that turned into, "Well, we can use natural gas as a bridge." Then a year after that, I was like, "Well, natural gas can do this," and now it's like, "Ooh, you've got abated coal? We could use that too." And there's just such a demand for energy that they're looking at what Alaska can provide.
And you know, in Texas, rough numbers: if you build an AI data center in Texas, 40% of your operating cost is the cost of power, so the cost of cooling. 25% is the cost of water. Well, in Alaska, we have 40% of the U.S.’s surface freshwater. We have got all of the things necessary in order to make this, and because they can do things like wellhead gas for power generation, it doesn't affect Alaskans as consumers.
I also wanted to ask about sort of the other side of the ledger in terms of expenses, and a big one that people care about a lot is the Permanent Fund dividend. It's always a top conversation here in the Legislature — I'm at the state Capitol right now. And you've said that there isn't enough money for a statutory PFD, that Alaskans deserve an honest conversation about what the future of the PFD should be and what a proper amount should be.
So I'm curious, like, what do you think is a proper amount for the PFD? Or is there an approach that you'd like to talk about? Like, what can Alaskans expect from a Crum administration, as far as the Permanent Fund dividend?
The dividend needs to be predictable and transparent. The fight that we have had over the last 10 years has really frustrated Alaskans. My conversations with people are not demanding a full dividend. They want to know, when's the fight going to be over?
Because Gov. Dunleavy has used eight years of political capital and political will trying to force this through, but it has really proven that it depends on funds available and depends on the Legislature. They are the appropriating body.
So I think Alaskans are tired of this fight because while they fight and argue over the dividend, and they draw lines in the sand with votes, it defers and delays key policy items and other budgetary talks throughout the legislative session. It consolidates power in a handful of key legislators, and then at the end we end up getting the same small-size dividend, and then the budget that is written by a select few of people.
I want to actually resolve this with a predictable, transparent formula. I don't know what that number is or what that should be. I think it's a discussion we have to have and just be honest with Alaskans about, this is what it is. But now we can move on. We can actually address issues that Alaska has from a policy standpoint.
And I've been honest about that, having conversations with people (across) the board. You know, if you want to have a full dividend, that's $2.4 billion. We could probably pay out one or maybe two of those, and then we never get a dividend again.
And I think that actually is a mistake, because one of my first board meetings on the Permanent Fund board of trustees, our investment consultant, Callan, actually made the comment that he believes the Permanent Fund has grown to the size it has because of the dividend. Not advocating for a size of the dividend, but because of the dividend, it allowed the Alaska public to pay attention to how it was invested, that you're chasing maximized risk-adjusted returns as opposed to sitting back and complacent. Other states actually have tried to do endowment programs, but with no public attention and pressure, they actually just continually let it sit, and they'll be getting subpar returns.
Speaking of funds with subpar returns, I did want to spend some time on your your record at Revenue. It's one of the things that I think folks have heard, maybe, a lot about. And specifically, I want to talk about the investment in DigitalBridge, or the investment, you know, in DigitalBridge-managed funds.
You pursued investments of up to $225 million from the Constitutional Budget Reserve Fund. That's Alaska's, you know, main savings account that the state taps in times of deficit.
You committed $75 million, according to the legislative auditor, for an investment period of no less than five years, and I want — can you walk me through that decision? Can you explain what problem you were solving by committing that money from the Constitutional Budget Reserve Fund to a private equity investment related to you know infrastructure and and you know digital capital, that sort of thing.
Yeah. If you look at the Constitutional Budget Reserve, we have a Legislature that actually hasn't gotten the necessary votes to tap into that for a number of years, and so it wasn't used as something that they're going to pull into because it takes, I think, it's a two-thirds vote in order to get access to it.
So I was looking at that, but then you evaluate the returns because as a fiduciary, you have to make sure that you're actually doing your job for the beneficiaries, which in this case, is the Alaskans. It's the Alaskan public. And so with this situation, I evaluated that, and it was going to get a projected long-term return of 3% against a projected long-term inflation rate of 2.5%, which means your real return is 0.5%. 50 basis points. If you have a high-yield checking account — not even a savings account — you're making more money than that. Just letting it sit there and not make anything for Alaskans was actually, I saw that was a failure. We were failing to actually service Alaskans. By taking a very small amount of the CBR, less than 10% you're not threatening the health of the fund at all, and so that was the overall plan.
So we (were) like, what does Alaska need? Alaska needs access to infrastructure. And infrastructure funds are things like toll roads, cell phone towers, utilities, railroads. These are the groups that really pay consistent dividends and they make consistent amounts of money. If we actually ever stop getting returns on infrastructure funds, that means that an EMP has happened, or war has occurred, and the world is probably ending, because these are the things we literally depend on for our daily life.
And so I wanted to say, like, OK, this is something that not only can Alaska make a consistent amount on, it's actually a higher risk, but it's still moderated. Because the subaccount (of the Constitutional Budget Reserve Fund) exists exclusively, saying if you move money from the CBR to the subaccount, the Commissioner of Revenue shall seek higher yield returns for funds that aren't going to be used for at least a five-year time horizon.
So we looked at that. I evaluated it. Worked on (it) a full year. Department of Law, governor's office, all sign off, agree that no, you can actually legally use these funds for that. Evaluated key groups and decision makers as well as like, who are the leaders in this field, and we put together a plan that was going to make a small amount of money for Alaskans.
And on top of that, there was an added benefit. Not only were we going to make money for Alaskans, but I got them to agree to a side letter that, (at) no charge to Alaska, their experts were going to be available to talk to the Alaskan leaders, vet projects that we had in state, like, "Hey, is this an investable grade project? Yes or no." Not for them to invest in directly, but just to give us their time and expertise to say what we can do better as a state to make ourselves more available for investment.
And so, we had that all set up, and so I executed the first of the deals, and it was sitting there, and then it got reevaluated, like, OK -- I left staff, kind of like, well, maybe we didn't follow all the policies. Well, it turns out (the legislative) auditor even agreed that the policy that I didn't follow was so poorly defined that they actually have to rewrite it, and so there's that. It was found that I did not break the law. There was no conflict of interest, and what I did was in the best interest of the state. That was very clearly agreed upon by all parties.
And so the next step was OK, the (Alaska Retirement Management) Board. They actually evaluated and said, "You know what, this isn't a bad investment." And it transferred. They bought the investment. If it was such a bad deal, it wouldn't have moved to another state agency. And then they decided ultimately that — I believe it was a little bit of a political job — to sell it, and it was also trying to show, you know, probably to try to do a hit on me. But they sold it.
But it was such a good investment that I made, it was immediately bought by another institutional investor. So that tells you step one.
Also, you can follow and you can track this, and you can pull up quarterly returns. This investment thus far is making about 10%. I continually try to track, and I access my leads in the private markets and try to have those conversations. And it is a good deal. It is still thriving, and Alaskans are hurt because of this. While we're still making virtually nothing in the CBR.
You say the selling of that was a political hit by your own former boss. Can you help me understand, you know, why?
You know, there's a lot of people that are tied up in the administration, and I don't know if it was because they believed it was — they wanted to get away from it and distance it, or it was an opportunity to do it. But selling that just literally made no sense from a fiduciary standpoint, and so that's about the only thing I can come up with.
And in the end, you know, $20.6 million went out the door. The state took a net loss of you know a little more than half a million dollars, unwinding it, and it sounds like —
Unwinding it because they paid the management fees, which were agreed to be paid in the future. It actually had appreciated. The appreciation of the investment actually grew to where it offsets some of the management fees. Private equity deals like that don't typically appreciate so rapidly. That shows you how good of an investment it was.
I also want to talk about your approach to state investment going forward. I mean, could you see the state taking equity positions in things like data centers, AI infrastructure, the kinds of things that you would like to see built in the state.
I think it's worth pursuing. I think actually, right now, unless it's direct state dollars involved in that, I think that is actually something that is worth pursuing for Alaska, as opposed to just being a colony where we're 100% resource extraction moving out the door.
If the state can take an equity position in some of these developments, or even doing a lot of pre-work — As an example, (the Alaska Industrial Development and Export Authority) has moved forward. They actually own leases. They've got a development program in (the Arctic National Wildlife Refuge). They're going to develop it, de-risk that, and then eventually that will be sold off to a developer. But AIDEA shouldn't sell out 100% of that position. They should actually get some equity carry going forward as money gets made on projects like that. So I would say it's worthwhile. I think that is a mature position for the state to take to look at and say, you know what, we can actually carry some of this risk because we want to see some of the upside.
I also want to talk a little bit about education. That's a top issue for voters. We've seen a number of schools close around the state. I believe (a) dozen this year alone. Many, many in the past several years. And I'm curious what you would do, if anything, to prevent schools from closing, or to better resource public schools? Or is there a different approach to education that you think the state should pursue?
Yeah. You know, education is really critically important. I grew up in a small town. My small town of Anchor Point had a school called Chapman. It's a K-8 school. That is essentially the community center. If there was a house fire, that next Saturday, there would be a pancake breakfast, raising money amongst the community. That was where there was adult gym at night. This is where we did all of our holiday fairs. Community schools in small towns in Alaska are absolutely critical. They mean more than just a school. The facilities mean something.
And as I've gone around the state, and I've talked to Alaskans, one of the frustrations in why people are pulling their kids out of school is a frustration level with the way school districts are acting. The BSA, or the base student (allocation), the state has very little control over how that's spent. Our constitution says education (is) at the local level, so they actually have full discretion over how those monies are spent.
Well, one thing that people really do want is they want to make sure that voc-ed, or career and technical education, CTE, is enforced. Because it's an expensive prospect, but a lot of times, you'll see school districts, one of the first things that's on the chopping block is CTE courses and programs.
Well, these are the things we need not only to prepare our kids for a workforce, but also it gives kids interest to stay in school. This is broad-based things from mechanics and welding to you know even art class and pottery class. Things where it's tactile learning. We know by all — education studies for decades show that it crosses the brain hemispheres, and (when) you get kids interested in that, that all of a sudden geometry and trigonometry mean something to them. It's a reason for them to stay and to graduate.
And I want to actually invest in CTE. I want to pull that out using the Perkins match of the BSA. I want to put it as a separate line item and invest in that directly. And I want kids to, actually in school districts — ideally, if I could get to, we're doing block grants. You know, I came from the health policy world, right? Block grants are how you actually do transformation. So it's a three- to a five-year program. But hey, here's this dollar amount. What are you going to do with this? How many kids are you going to train? How are you going to partner with your local industries? Because every small town in Alaska has a wood shop, mechanic shop, a welding shop.
Let's get kids' exposure in the industry, in the workplace, so they get to learn the things that matter, the soft skills, working with their hands. And we've got evidence that this program and investment in things like this work. The Alaska Excel program is a tremendous example of doing these one-week academies of 25 school districts. Around the state, they've got one school district that went from a 30% graduation rate to a 70% graduation rate, just by teaching these kids at this confidence level, the soft skills practice, and learning how to work with their hands. So that's a key focus for me.
There's also a trick that we have to figure out. While I do believe in parental choice and school choice, there has to be some means, particularly in small communities of, what are we doing to protect as much as possible some of these community schools? I don't know what that answer is.
I've had a lot of conversations with people about what that funding looks like, but it is something that has to be a part of the conversation. And you know, a lot of the time, it is very difficult in the really, really small communities, even the ones on the road system, if you don't actually have critical mass to keep that building open and to heat it. These are conversations — I know the Mat-Su Borough had to make some tough choices this year with I think it was three school closures. So it's something I want Alaskans to be involved in, but I also want them to understand that we're gonna have a plan to actually directly get some more money back into and stabilize funding and get programs going that we think schools can actually do this.
I would like it too, for the CTE program, that if it wasn't just school districts, that if you actually had some enterprising teachers and principals at some schools, they could actually compete for some of these grants to show the innovation in a good model. Because I think that what we have lost in our school system is an innovation approach. What are you doing better and differently in order to train our kids? Because we get national studies all the time, but guess what? Alaska's different. We've got different weather. We've got a different population. We have different concerns. So what works in Alaska? What are the models that we can use to innovate to train, prepare, and educate our kids?
When you talk about pulling CTE or career and technical education out of the BSA and making it, you know, its own sort of budget item, are you talking about reducing general-purpose funding for schools, or is this something that would be on top of the funding that schools already get?
Because I think — where I'm coming from with this question is, I think if you asked school districts why they are cutting these career and technical education fund programs, it's, you know, that they need the money to focus on reading, writing, and arithmetic, the basics. And so I'm curious how you would execute that sort of investment in CTE, is it something new on top of what districts are already getting, or is it a reallocation of existing resources?
It's a good question. It's a little bit of a reallocation of existing resources with some investment on top. You know, there's efficiency gains we need to have. We've got 50-plus independent school districts in the state of Alaska. That's a lot of overhead.
That's a lot of buildings, but they also have independent health plans. If we were to consolidate all school teachers, and school district employees, and they actually entered the Alaska Cares program, they would have better health care at (a) cheaper cost. And the latest projections would show like $150 to $200 million savings in the education budget across the state.
If we actually found that money and then re-injected that back into our system, what was the latest BSA increase? $180 million?
Something in that neighborhood, yes.
So, I mean, we're talking about another BSA increase if we just did efficiencies like that. But there's issues when it comes to collective bargaining with some of the teachers' unions and school districts. That's a chit they like to have, as opposed to how do we actually reinject this money back in and get better services for teachers.
I also want to talk a lot about energy. Energy is, obviously, one thing that's on a lot of people's minds, especially with the looming shortage of natural gas in Cook Inlet. And, in that vein, Southcentral utilities are heading into another winter. We just heard John Sims of Enstar, the natural gas utility, say he's concerned about gas supplies this winter.
And I'm curious, what would be your approach? You would be, if you're elected, taking office in December. What would be your approach to making sure Alaska has a secure energy future, both in the short term and in the long term?
You know, in the short term, we have to look at, have we done everything possible to maximize our exploration in Cook Inlet? That is a conversation that has to be had. Because that is how in the short term. How do we actually encourage exploration out there, make sure we're tapping new holes in order to find the most gas there?
For the mid-term and the long term, the first thing that I would do is actually a transmission line from Beluga to Healy, because currently, in Alaska, we're not (Federal Energy Regulatory Commission) regulated, so we have no redundancy in our system. And so what we need is actually not only to have a modernized grid that has capacity and redundancy, but also that has room for new power generation projects to come online.
Right now, (Anchorage utility) Chugach Electic, they've got a lot of ideas when it comes to solar farms, wind farms. The Terra Energy is an abated coal project out by Skwentna. Those projects, right now, if they came online, have nowhere to go, nowhere to ship the power because our grid is tapped out, and so, we have to do this.
And this is a project that could be funded using (what are) called rate reduction bonds. It's a tool that 33 other states have implemented. We can do that, and that actually is not a cost to the state. It actually is broken down to cents per month for each of the rate payers over time. It's amortized out over a very long time, and that's one of those plans. And it opens up. Because what the Terra Energy can bring online in power, right, in electricity, can offset quite a bit because, I don't know the exact number, but I think it's about 60% of the gas taken out of Cook Inlet is actually used for power generation, not just heating.
On what you said about spurring more development in Cook Inlet, I think we've seen the Legislature and the governor try to encourage that, with somewhat limited success. And I wonder what you would do differently.
We've seen a relationship with the current governor and the current Legislature that has been acrimonious at best, and so I don't really know how honest those attempts have been in working together. And I think getting in there with a fresh perspective about, OK, how do we solve this issue for Alaskans moving together? It's not so I get a win or you get a win. Well, we need to get a win for Alaskans. That changes the conversation, and that is my entire approach.
Obviously, the Alaska LNG project is a big hope for the long term future of Alaska's natural gas, Alaska's power needs and heating needs. But I wonder if you think that there's a scenario in which Alaska will need to import liquefied natural gas in order to bridge the gap, if the project is ever built. The main question I have is, is it inevitable that Alaska will have to import natural gas?
I really hope not. Some of the timelines change and they get extended. You know, the comment about what John Sims said at Enstar about the lack of gas this winter has is not about the total volume of gas, it's about the peak usage that occurs. We've had two winters in a row with really excessive cold spells in Anchorage, which have actually drained CINGSA (a natural gas storage facility in Kenai), in that we got very close to actually losing pressure in the system, which would then be catastrophic because it would take days to recover from. And it's making sure we've got the capacity to use to balance out those really big days. That's what the concern is.
And I think, you know, I really hope we never have to get to the point of importing. That's, what are we doing in earnest in order to actually make sure that we are exploring as much as possible in Cook Inlet? If the gas line does not go, OK, what are the possible options on a bullet line again, or do we do power generation on the North Slope and ship that power south via an HVDC line, high voltage direct current, in order to tie into the grid?
I did also want to ask about the Alaska LNG Project itself. It is not inconceivable that the next governor will have the same problem facing Gov. Dunleavy right now, which is that the pipeline developer, Glenfarne, is looking for a tax reduction in order to essentially make the project pencil out, or improve the economic case for it anyway, such that it can receive financing from investors and banks. And I wonder about how you would approach that problem. Is there anything different that you would do from what Gov. Dunleavy is doing or from the various solutions proposed by the Legislature?
You've talked about a tax on private oil and gas corporations, sometimes called the S corp tax or the pass-through entities tax, you've talked about that as short-sighted. But I wonder how you're thinking about it — how closely you're following that debate, and what sort of protections or what sort of conditions (under which) you would want to provide that tax relief to the pipeline developer in order to spur the construction of it. And I'm also curious if you think it's a realistic possibility within the next I suppose a decade or so.
You know, we've got as much federal support as we've have ever had for the gas line project, and issues that have occurred in the Middle East, especially with Qatar actually having issues of exports — it's one of the world's largest exporters of LNG — really shows what the risk premium value is on the gas exported from Alaska.
And you know, you talk about, like, what'd be different? One of my frustrations with what occurred in the Senate was they had one issue to deal with, and that was about oil and gas property tax. And they used the single subject clause to address other tax issues. It was an opportunity that was taken advantage of. It had nothing to do with the problem that they were trying to solve, and so I think actually we need to make sure that we are compartmentalizing and we're keeping the main thing the main thing. Are we addressing the gas line, or are we trying to solve something they failed to address in the past?
And I think going forward, one of the things that I would do is actually make sure I've got something, a possible solution, that the municipalities are on board with, that you're walking into the Legislature with the municipalities that are affected on this, that they say, "You know what, we can agree to this." Because I think that's much easier, then, for the Legislature to just move along quickly, as opposed to them trying to be in the middle and trying to arbitrate between mutual parties.
And I think we can do that a little bit better in our conversations to make sure, are the municipalities comfortable with where this is proposed at? Are they doing things like, do they have a possibility for a (payment in lieu of taxes) where a portion of the tax that would be collected by the state is instead paid directly to the municipalities, particularly the Kenai Peninsula Borough and the North Slope Borough, so they can actually have access to roads and infrastructure dollars without having to go through the the state general fund?
So those are issues that have to be considered. You know we've done that on a couple different areas and large projects across the state. An example being Red Dog with the Northwest Arctic Borough, they actually do that. And so, I think it's making sure those conversations have occurred, that you're walking in there with a unified group, and this is how we can move this along, as opposed to trying to debate this and do this all public hashing-out in the legislative session. (That) is always going to bring more and more politics into it, as opposed to less solution minded.
I wanted to ask about one more thing from your period as commissioner, this one as the health commissioner, I wanted to ask about the backlog in SNAP and Medicaid and some other aid programs. Alaskans waited, you know, months and months and months for food stamps, for other public assistance.
And one of the causes pointed to for that is workforce cuts in 2021. That happened under your watch. I'm curious if that's something you regret, or if there's something that you would do differently, or you know just generally like what's your account of what happened there? It's a problem that the state is still struggling with to a degree. Can you just sort of walk me through, from your perspective, what happened there, and how you would solve this problem if you're elected governor?
Yeah. The Division of Public Assistance has had a great number of issues for going about two decades now when it comes to eligibility determinations. It was a massive backlog and a very big issue that occurred even when I took over the Department of Health and Social Services. And we put a ton of resources into it. And actually, we were able to get the backlog knocked down quite a bit.
Then, when COVID hit, yes, there was, we did some basically — it wasn't workforce cuts, it was deleting of positions that we were unable to fill because we had gotten to a point that the backlog was under control. And then the federal government expanded eligibility rolls and limited our ability to actually clean up the rolls. So all access to all different public assistance benefits changed. And the timeframes for, are you doing this on a six-month basis, on a 12-month basis, it all was kind of like this perfect storm of these things came together.
And then when it timed out, it was OK. Now you've got to clean it. And, well, that's where Alaska's always struggled, because those are roles that typically aren't highly invested in, and it's very difficult to find staff to do that. And when I talk about some of the IT issues, the things at the state, this is a system that I walked in was still using as far as our eligibility a legacy system, a current system, and trying to implement a future system at the same time. So you've got three IT systems that are Band-Aided together because there was no project management process and a full-thought out of the capital costs necessary to clear them out. One of those systems is so old; it uses a COBOL system, which is a coding system from the 50s. It is very difficult to find somebody to even work on that, and that's some of the issues that we have.
And so, yeah, it is diving into and making sure our IT systems are invested in and up to date, and that we are trying to find the best level of staff. I know that current Department of Health staff have been really working on this, and it's one of those situations from the feds that you are darned if you do and darned if you don't. It is an absolute Catch-22. Because if you don't get us soon enough answer -- so you expand, like, hey we're not going to do an eligibility check on this time frame -- then all of a sudden you're you're you're satisfying the feds one way, but then the feds come back saying, well, you have to do these checks on a regular basis. And so you get dinged for not doing that. And so it is this, like, OK, what is our one way, what is our relief valve in order to relieve pressure from the system so we can fully clean it up. That is something that I haven't explored or tracked over the last two years amongst staff, but I do know that the IT concerns are an ongoing issue.
Is there anything you know in your own management of that department that you would do differently in order to better address the issue?
That issue in particular, no. I mean that was just — you've got to think, the last three years of my tenure as health commissioner was mainly dealing with the COVID pandemic response and the fallout from that. And so it was 100% public health, Medicaid-related, making sure hospitals stayed open and weren't overwhelmed. And that was one of the reasons why we actually looked at the portfolio that the commissioner of health and social services had. It was so big that I pushed for, and we were able to succeed in getting the department split in half. Because you remove child welfare, a pioneer home, juvenile justice, and the Alaska Psychiatric Institute into the Department of Family and Community Services, knowing that you have to remove some of those items so you can dive into and do internal fixes.
And so, we had a lot of stuff. Again, I wasn't able to even clean the rolls or adjust things based on federal rules at the end of my tenure, but I tried to set up the department for success by splitting it apart, so there's time for the commissioner's office and other leadership to address all of the internal issues which we know we've had, which have lingered for decades.
I want to close with a few more questions, just sort of about how you're speaking to voters and how voters should think about who you are (and) who you would be as governor. And one of those is sort of related to the last thing that we talked about.
You've been in the room for seven years, while a lot of these problems that you described, while this managed decline is happening. Why should voters believe that the same person would produce a different result in a different position?
Yeah, it's a good question. It's to look at the track record.
When we took over the Department of Health, you know, it was in a very bad way. I walked into the role, and the first thing I got on my first day in office was a letter from the federal government saying they were going to shut down the Alaska Psychiatric Institute because of all of the issues that occurred before I got there. And so I had to take drastic measures and actions in order to make sure we kept that open. Otherwise, it would have been just completely detrimental to our mental health system and our hospitals. And so we tackled that.
We led the state through COVID. We feel like we did a lot of innovative things. Then we split the department in half. So there is never a job that isn't going to be complete at any one of these. Early on, I went to a conference and I had somebody say never speak ill of your predecessor because of all the messes you find in the corner when they left. Because when you leave there's always going to be more. This is what happens when you deal with vulnerable populations, and these agencies are never 100% complete. And so we're going to continue working on that, but it was trying to set these up for success the best way possible.
At the Department of Revenue, we tried to do things in an innovative way: the way we got our credit ratings bumped, the way we actually tried to do some of the investments and pushed through — and I was successful, you know, with the with a national group, I was a national vice chair fighting against ESG, environmental, social, governance, which was just combating Alaska. It did not want us to actually have access to develop our resources. Banks had investment policy statements that punished them, that said we will not do direct financing for oil and gas development in the Arctic. And we were able to beat them up to where they removed those investment policy statements. And that's not partisan or anything like that. This is in Alaska. We have to have access to develop our resources. That's literally how the feds let us become a state.
And so, when I say, like, I've been able to do this. I've been a change agent everywhere I've gone. And I'd say just in general, you know — We've all had a boss at one point. Raise your hand if you ever agreed with 100% of everything your boss has ever done. No one ever will.
And that's the difference, is I was able to take control of my little universe and do it the best way we possibly could for Alaskans. And stepping into the role in the big seat of governor is to actually use that background and experience. My experience in the private sector, as a business owner, as an entrepreneur, understanding the largest department in the state at Health and Social Services, understanding how the money is invested in the state at Revenue. That is a different, unique experience that nobody else can actually compete with when it comes to understanding the function of government, the weight of decision making, and how you can actually affect Alaskans' lives.
