Wednesday, October 2, 2013

The Annual Top 49ers Luncheon: My Keynote

I was honored to be the Keynote Speaker at today's luncheon honoring Alaska Business Monthly 2013 Top 49ers:  Blockbusters of Business.  My remarks follows:

Remarks for Top 49ers Luncheon

Thank you very much Jim for that kind introduction and the opportunity to speak here today. 

The companies being recognized here today – the Top 49ers – are the best of the best. As suppliers to Alaska businesses and consumers, employers of Alaska residents and income and wealth generators for Alaska shareholders, those of you being recognized and honored today are critical to Alaska’s existing economy.

The state would be much less well supplied, significantly fewer Alaskans would have jobs, Alaska and Alaskans would have less wealth and less income – and critically, Alaska would be much more dependent on Outsiders – without you.

We thank you for all that you do to make our state and economy a better place.

But as important as you are to the current economy, you are even more critical to Alaska’s future.

In a study earlier this year the University of Alaska-Anchorage’s Institute of Social and Economic Research – the state’s best economic think tank -- had this to say after analyzing current and projected state government revenue and spending levels:
Reasonable assumptions about potential new revenue sources suggest [state government does] not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash.
Let me be very clear about that conclusion. ISER said that, on the state government’s current spending trajectory, the state will run through all of its current financial reserves by 2023. And for those of you that follow these things, that result occurs regardless of our approach to oil taxes. With slight differences in timing, it will occur under either ACES or SB 21.

It doesn’t have to be that way. In the same report ISER also outlines a solution that involves reducing state spending now, putting the excess revenues into the equivalent of a state 401(k) and using those earnings to support a sustainable budget as oil revenues decline. If that approach is implemented now, while Alaska still has a relatively strong state revenue stream, that sustainable approach can support a moderate level of state spending long into the future.

That will avoid a future which ISER says otherwise will leave the state with two options just to fund minimal state operations: institution of a broad-based tax such as a sales or income tax, or maybe both, and use of a portion of the earnings of the Permanent Fund for regular government operations.

But either way, the era of Alaska’s economy being significantly supported by state government spending, not to mention federal government spending, is coming to an end.

Which is why, as important as you are to Alaska’s economy now, those of you being recognized in this room today are even more critical to Alaska’s future.

This is the core group that will need to step up to the plate, supply the economy and spend money instate that will continue to drive the Alaska economy, hire the Alaskans that will need to be employed, and generate the wealth and revenues on which your Alaska shareholders depend.

As you receive your well-deserved awards today please think not only of what you have accomplished today, but what you will do as you take on an even more important role in the future.

One way or another Alaska is in the process of making the transition from a significantly government supported economy to a largely private economy.

You will need to be among the leaders in that effort. Work with our schools to ensure they are producing graduates that will fit into your workforce, work with your communities to make certain they transition from looking to state government for many things to working with you to look after themselves and work with your investors and shareholders to help them understand what is happening and the role they, and you, need to play in shaping Alaska’s future.

For the regional corporations, work hard to build an economy and find jobs for Alaskans within your regions.

For those of you that aren’t, work hard to find additional opportunities to provide jobs for Alaskans and continue to build the private side of the Alaska economy.

More than at any other time in its history, you are Alaska’s future. Step up to that responsibility for your customers, your employees and your shareholders.