Face To Face

Interview with Eric Croft

This interview with Democratic candidate Eric Croft took place July 22.

News-Miner: Why do you think the gas re_serves tax initiative, of which you are a prime sponsor, will succeed in bringing about a gas line when most others think it won't?

Croft: Well, most of the major politicians, Exxon and a lot of the incumbents don't like it. We, 47,000 of my closest friends, Jim Whitaker, Jay Hammond, Wally Hickel, think it's a great idea. So I'd at least put the balance as mixed ... and the polls I've seen—Don't trust polls now; I certainly don't want people to trust polls now—polls I've seen have it a in 10 to 15 point lead. So I think Alaskans get it. A lot of ex-politicians get it who are free to do what they want 'cause they are not running for a race. A lot of people who are still overly reliant on the oil industry to fund their campaigns don't like it, and the oil industry itself doesn't like it. So, it's a mixed bag as far as what the opinion leaders think.

News-Miner: Tell us, though, why you think the mechanism would work force the companies to bring about a gas line.

Croft: Oil companies, any company... is going to respond to the bottom line and the bottom line alone. They have to. They have a statutory duty to their shareholders to do that... If we're going to get this gas line, we've got to do two things: make delay expensive and make sure the project itself is profitable. If you have those two things, you will get it. No other combination does it. Now Frank Murkowski is saying "I've looked these guys in the eyes and shook their hand and I trust them" or true to the old saying he can renegotiate under the same economic situation.

You need to change the economics of the situation if you're going to get a good deal. You need to change the bargaining position, and that's exactly what (the reserves tax) does. It is why I believe it is the only thing that will give us a line because it very clearly says... delay is expensive. It is one of the most profitable projects in the world.

We're being asked to subsidize something that makes good money.

News-Miner: If you do become governor, what would be your plan for dealing with the gas line?

Croft: Two things: to begin to restructure the economics so that we can get a good deal. The first is using our taxing authority through the reserves tax. Remember, I started on that. The second is I would take back Point Thomson. It has been undeveloped for 30 years. There have been 24, I think now, but at least there were 22, plans of development, and every single one Exxon has failed to meet and you want to change the fundamental negotiating structures so that you can get a good deal instead of begging for what you can get.

You do those two things. Hey, delay is going to cost you, so you understand that this is going to get developed and it is going to develop quickly or it is going to cost you money and when you violate your leases, when you put off development in this state for 30 years you are going to lose something. And those two things will create the structure where we can get this built quickly.

News-Miner: Let's just clarify something. You believe that the Stranded Gas Act is not necessary for this project?

Croft: That's right... I mean I'm open to us negotiating regulatory approaches or speeded up regulatory review, (and) property tax deferrals might be appropriate for an independent line or even for this line, but the fundamental idea that we had to give up some of the value of our oil or gas to make this economic is simply not true.

News-Miner: Would you like to see the oil companies be the ones to build the line or would you like to see a third party do it?

Croft: You're going to have producer participation in selling the gas, but, no, I think Alaska would be better served by an independent pipeline. TransCanada, Mid-America, the (Alaska Gasline) Port Authority, and I think for at least two reasons, three let's say: economic, governmental, and political.

Economically an independent line simply doesn't ask you for the kind of concessions. If you ask Mid-America or TransCanada... whether they mind the PPT (oil tax)_or the reserves tax even, they say that "(it's) your oil, gas taxation policy is not really any of our business. We want one that is sort of stable and encourages development generally, but you don't have to give us anything like that. We want gas to fill our line and that's it." So economically you don't have those pressures to give away that stuff.

Governmentally, I would rather the government not be involved in the day-to-day business of this as a minority owner. I'd rather we do what we should do well, do best what we can, which is to monitor the companies, monitor the pipeline owner, but not be involved.

News-Miner: Would you prefer the state being part owner to having complete oil company ownership?

Croft: That's why I paused there, right. I think an independent line with us out of it is the most preferable. Having the oil companies in sole charge scares me a lot, but I would consider ownership as a protective means. But I don't like the ownership in it in the sense that it confuses government's role in this whole thing.

And then, finally, in the political aspect, we have so long been stuck in this political situation of the oil companies influencing our Legislature... because there is billions at stake for them. I would like to try and regulate that political structure.

[I]f you're in a cage with an 800-pound gorilla and you get beat up all the time and they won't let you out, but they put another 800-pound gorilla in, you're not going to get beat up any worse and maybe the two will fight and you'll get a rest. Maybe the two will fight and you can be the balance of power between the two of them if you work it right.

News-Miner: Do you think there's a window of opportunity for the gas pipeline that is about to close?

Croft: Yes, roughly speaking I think there's a window where a lot of these projects are coming in, particularly LNG (liquefied natural gas)... I am aware that we have that situation. I do believe LNG is going to be a significant new source for energy for America. It irritates me that the same people that say we've got a window of opportunity, let's do this or LNG is going to come in (also) say LNG is not profitable. They should be a little more consistent. I believe LNG is profitable and our cost of an 800-mile line, which does add cost to it as opposed to Qatar, which is at tidewater, is offset by the fact Qatar has to have three times as many ships, because we're so much closer and you get rough economics that work. Yes, LNG is going to fill it and I would like Alaska's LNG to fill this hole. [I]t's not a window that absolutely closes, but the more we delay, it is going to be harder and harder.

News-Miner: Oil taxes. Where you are on the freeze that the oil companies say they need in order to build the gas pipeline?

Croft: I don't think we should lock them in for any extended time. I think for me it is more than just—it's a philosophical, it's a constitutional and historical argument.

News-Miner: You think it can't be done?

Croft: I think it can't be done. (But) let's argue about whether it's right to do, whether it's the appropriate public policy. I suspect a court would reject it, but we should reject it first before they have the shot.

News-Miner: We want to ask you about the Healy Clean Coal Project. What would you do as governor to get that plant going again?

Croft: We've been investigating that for a long time. I'm still one of those older Alaskans that thinks that we ought to continue to pursue it. I think we can.

News-Miner: The municipal governments say they need financial help. They want a return to the municipal assistance programs from the state. What do you think and do you have anything in mind?

Croft: I do and I think it's something that we have to solve. I've always been a proponent of funding municipal assistance and revenue sharing, but I'm getting tired of waiting for the Legislature to act on proposed amendments and bills. We are going to come out shortly with a property tax relief package by initiative that provides relief mainly by making sure that the seniors and disabled veterans property tax exemption are funded. That is about $80 million for municipalities that right now is completely unfunded even though it remains on the books as a mandate. We did (fund it) for a while but we funded half, then we didn't fund any at all. And I'm going to propose that the legislators receive in long-term session per diem exactly that percentage as they fund the senior and disabled vets property taxes.

News-Miner: Where would the financial support for the municipal governments come from?

Croft: Well, the problem is not that we don't have the money. We have a $1.2 billion surplus this year and the bureaucracy grew by a substantial amount and has been for the last three years. The problem is the lack of a political will to make it a priority. So we're going to see if they don't have the political will, we are going to try to surgically graft it on to them.

News-Miner: So you want something that is sustainable and predictable? Those are the words we hear year after year from the local governments.

Croft: Right. I think when Gov. Murkowski says it, he means it's got to be out of the permanent fund.

News-Miner: We can pick a bone with you here because the governor's proposal involved using Amerada Hess funds.

Croft: And that's not permanent fund earnings?

News-Miner: It's in the walled-off account with the permanent fund and has nothing to do with dividends. Don't you think it's fair just in terms of how voters interpret that to say "Yes, it's permanent fund money, but I acknowledge that it's money that will not come from the dividend"?

Croft: The way the statute is written, it won't come from the dividend, so I acknowledge that. But I don't want government's hands on it regardless of its effect on the dividend.

News-Miner: There's been a push by some legislators the last couple of years to encourage or force the formation of new boroughs. Do you think it's time to get places like Delta Junction to incorporate? And which approach would be best?

Croft: I believe that we can encourage, but we should not beat people into municipalities. You don't get good function of municipalities that way, and it is just not good long-term public policy.

News-Miner: Is it time to get people in some of these unincorporated areas to pay toward the cost of education?

Croft: I believe that those people out in rural areas have as much right to determine whether they want to be a municipality as we in Anchorage did when we unified or decided we were going to. No, no one should be forced to do it.

News-Miner: So in places where there is an economic base that could potentially support education, for example, and lower the state's contribution to education, you don't think that a borough should be formed to help pay?

Croft: The question is whether you are going to use your governmental (power) trying to force them to and I don't think you should... When you get enough of a base, they generally want that control, and I don't think we should dictate it from Juneau.

News-Miner: Two questions for you about the problem in the state-run retirement systems. First off, do you think the state should help local or subgovernments, including the university, pay for the increased cost? Secondly, what would you do about covering the financial shortfall in the systems?

Croft: We had over the last couple of years a manageable—significant but not dramatic—shortfall. A lot of people tried to make it larger than it was. We had something that could be accommodated under our current structure and it would take some increases in those contribution levels, but it was not a calamity... They applied a radical, and I believe politically motivated, solution to what was a significant but manageable fiscal problem.

News-Miner: What are you referring to?

Croft: (The) shift to the defined-contribution plan was I believe a political solution looking for a fiscal problem.

News-Miner: So what would you do then about the funding shortfall?

Croft: Pardon me a second, but didn't they sell it (the change to the 401(k))as it was going to fix the shortfall?... I needed that caveat as to why that was not a solution, but here is what you would do for a solution. You asked whether the state should help pay part of the contribution rates. I believe we should, because the state has a dominant role in setting those rates and we, for whatever mix of fair or malice or whatever you want, I guess in the late '90s set the contribution rate much too low...

[Y]ou can make small, but they'll be painful, increases in contribution rates, both employee and employer, and help from the state... and over the long term you can get back into a solid situation. You shouldn't overcorrect now anymore. We made a mistake by overcorrecting when we looked like we were overfunded. We shouldn't overcorrect now when we look like we are underfunded.

News-Miner: Let's take a break from financial questions for a minute and ask your views on subsistence.

Croft: Yeah, I'm a hunter and a fisher in this state, but I've always believed that it made sense to have a local preference, and that's essentially what the vote was over and over in the Legislature, and I supported it each time. For deer hunting in Kodiak, caribou hunting out past Lake Clark—I grew up duck and geese hunting with my dad—but in any of those situations if they're having a shortage... I think in a time of shortage to have a local preference makes all the sense in the world because why would I go when there ain't much deer? And I like local hire and local preference and I like local priority for taking of wildlife in time of shortage.

News-Miner: So you're accepting of federal management?

Croft: No, I'm a big opponent of federal management and I believe if we had been able to amend our Constitution so that it allowed us to have a local preference we could have retained state management.

News-Miner: But that thinking hasn't gotten through the Legislature, so what idea do you have that others might not have had? Or do we just accept the way things are?

Croft: Boy, I hate federal management of fish and game in Alaska. Maybe it's growing up on the stories of statehood, but it was the reason I was so adamant that we try to find a solution through the amendments through the special sessions. I worry that the sort of very tenuous middle ground is gone. The (Alaska) Natives are going to do fine under federal management. We're not.

News-Miner: Let's stay with the outdoors and ask you about predator control. It's a big topic in this part of the state. What are your views?

Croft: I believe that we can and should have predator control when it is scientifically proven and not politically based. I want it done by Fish and Game. I want it done on a scientific basis by people trained to do it and done accurately. And then I don't care whether you're doing it from a plane or whatever technique is appropriate...

I'd say I voted against the land-and-shoot hunting option but have consistently said we can, Fish and Game, in a controlled and scientific culling operation if there is good data to say we got too many wolves in this area, Fish and Game can shoot them from the air, not just land and shoot but from the air. They can do any of the mechanism that they think is the cleanest, appropriate, quickest to do that scientifically based decision, but I do not believe justifying hunters who want to come from overseas or someplace else and get an easy wolf by land and shoot under that umbrella makes sense.

News-Miner: Do you think the Board of Game is unbalanced among user groups?

Croft: I'm a consumptive user. That is, I go out and hunt, enjoy hunting—and dad and I have plans this fall to go out either depending on how the primary works out either for caribou in September or deer in November. But I believe it to be appropriate to have non-consumptive users have a voice. I think there are other uses of fish and game—game is what we're talking about here—that are important and that they really don't have a voice now on the game board. They probably should not be a majority, but they should be a voice.

News-Miner: So designated seats on the board for certain user groups?

Croft: Designated seats or having a governor who is committed, and I would be, to having some of those members have that viewpoint.

News-Miner: Let's talk about the longevity bonus, which went away.

Croft: It didn't go away. Things don't just go away in politics. They don't disappear like socks in the dryer. They're vetoed. They're eliminated. They're canceled or struck out. That's what happened.

News-Miner: Is it going to be brought back if you are elected governor?

Croft: Yes.... Because it was a promise, you know. People made long-term decisions relying on it. And it was a class that was dying out.

News-Miner: What other plans do you have for seniors?

Croft: We've got to do something in this state about the inability to have seniors with doctors that will serve them under Medicare, and it is becoming a problem in many cases—for younger people as well. [I]t is very difficult to find health care for Medicare patients, the elderly, and we are starting to address senior housing but not quickly enough to meet the need that is growing. So housing, medical care...

News-Miner: There has been a fair amount of talk about therapeutic courts as an option for some people accused of drunken driving. Should the state become more involved with these and have more of them?

Croft: Absolutely, and I think Judge Wanamaker has done a fabulous job bringing in a new approach to this state and it has had very good results. Fairbanks has gone through a horrible wave of drunk-driving incidents. ... [T]he system we have works reasonably well for the large category of offenders. They offend the first time, they get the heck scared out of them and the mandatory jail that we put in, the other penalties, they don't reoffend. But there is a small chronic class of offenders (who) are often a core part of the problem, and for them the system doesn't work well and we need to try other approaches. Not just the magic drug, Naltrexone, but a sort of much more intensive solution to help. It's a good program. I was one of the early supporters in Anchorage and we ought to expand it.

News-Miner: Let's go back to seniors for a minute. Something you had mentioned was about we're not doing enough for low-income housing for seniors. Alaska has one of the fastest growing populations of seniors, percentage wise. What would you do to prepare for this?

Croft: We need to provide a range of options for our seniors. It is not a crisis on the ground yet. It's not a crisis for our seniors. It is a crisis of planning in that we have never made adequate plans for what we should do. I'd work with the Alaska Housing Finance Corp., because I have really liked the work they've done on low-income housing. Done wrong it's a subsidiary and a blight. You know it doesn't work and I've seen a lot of examples of that. There's a lot of examples of other states just ignoring it. AHFC does a very effective middle ground.

News-Miner: Whose responsibility is it to do this planning? The private sector or the public?

Croft: I think you need to work together to do that... It isn't government's role to provide all of the housing that we need. It is government's appropriate role to work with those private sectors to plan for it.

News-Miner: We need to talk about the budget. Gov. Murkowski's budget and the one approved by the Legislature, of which you are a part, is seen by many as unsustainable at this level of growth. If you were governor, what sort of budgets would we see from you?

Croft: You've already seen it in amendments that I have proposed this year. There are two problems. We have been growing the budget too fast and we've been growing in the wrong parts of the budget too fast. We have an unsustainable rate of growth for the operating (budget), and the capital is one of those records you have to put an asterisk on it and say Roger Maris or whatever or Barry Bonds now maybe now. This is the budget on steroids... [C]learly this capital budget is not sustainable and we're spending it by growing the bureaucracy...

So we need discipline in two areas. Overall discipline to bring back that rate of growth and sort of generosity to understand that we should at least be as generous with our local municipalities and individual aspects as we were on the budget. I have proposed this year a $60 million decrease... budget-wide just because Frank Murkowski had gone past my comfort level in how quickly we were expanding all of that. It did not pass, but a lot of Republicans said very nice things about it on the floor. They did end up voting for it and not all my Democrats voted for it. [T]hat is what I would do as a governor. I think we need to slow down this increase.

News-Miner: You want to slow the rate of increase but you're going to return the longevity bonus and bring back municipal assistance, and then you have increased costs with the retirement systems, and then Medicaid increases are out there. Is your plan doable or are you going to have cut other places?

Croft: It's doable. It is going to take some discipline, but that's why I divided it into two segments. You're going to have to have not only slow the overall growth but redirect some of it into municipalities and individual Alaskans...

Let's distinguish between fat and pork. Fat is in the operating budget. It is having more staffers than you really need, having press secretaries in all the departments, having the governor's office have all of these special assistants. Stuff that Tony Knowles would have been rightly criticized, if he tried to do. There are, in the capital budget, politically motivated projects that you can question. It is not so much a question of fat as it is "Did we need to do that?" Did we need to build a road right up to Denali so we could have a lawsuit on the sort? So it is a questionable capital budget and over-inflated operating budget.

News-Miner: So you're saying you would reduce the size of the work force, the state work force? You just mentioned the special assistants, press secretaries.

Croft: Yeah, I think we have let the state bureaucracy, particularly at the political-exempt level, get too high. But I do believe there are some positions that should be cut.

News-Miner: On education funding, Gov. Murkowski takes a good bit of pride in the dollar increase that has been granted in his term.

Croft: He should. I think the increases to education have been a bright spot in an otherwise somewhat dim last four years... I do believe we've got to..., in addition to those increases, which were needed solutions, make sure that we get real effects down to our classrooms. And I proposed a class size reduction bill this time, or eventually we may do it in an initiative that gets targeted at kindergarten through third grade. It would provide... a funded option, that is we put in statute a grant program that says if you're the Fairbanks school district or any other school district, we'll designate a school as a small class-size school, thereby guaranteeing that all the kindergarten through third-grade students there will be in a class size of no more than 15, then we will provide 60 percent more money for each of those students. It is flexible so districts can decide either to do this or not. They're not mandated to. They can decide which schools they're going to designate and when and if it is funded so that districts will actually have the resources if they make that commitment. Over and over the studies I've seen have shown that the single most important thing you can do for classroom achievement is reduce class size in that 15 to 18 range. If you have 30 second-grade students, you're wiping noses and tying shoes.

News-Miner: One school in a district?

Croft: No, no. You could do them all, but they get to pick, so Fairbanks could say we're doing two this year and three next. Anchorage could do five and eight. Juneau could not do it at all.

News-Miner: So how much money is that?

Croft: Because it is phased, you tell me how many schools before doing it, but we would fully implement it at some date five or six years in the future. The fiscal bill is about $150 million.

News-Miner: You seem to be fond of making law by initiative. Talk about that for a bit.

Croft: Yeah. I also have a strong record of passing legislation as a minority member in the Legislature, one of the strongest of the last 10 years—bills on domestic violence restraining orders and the pioneers dignity act on helping seniors in our Pioneers Homes... So there's an appropriate place, of course, for working through the legislative process. But on certain issues, big issues that the Legislature has not addressed, I believe the initiative process is there.

[I]n areas that are either too politically charged or affect their own conduct, I have to take into account that condition... Campaign finance reform on the August ballot—that's something I think the Legislature is structurally incapable of dealing with rationally because it effects them too closely, and then it's a direct standing up to the oil industry where I believe all too much of the Legislature is already in the pocket of the oil industry. So I try to do those things through the Legislature that it can handle. I try to put the pieces of legislation before them to give them a chance to do it. Jim Whitaker and I had a reserves tax in for the last four years at various times in various ways before we took it to the initiative.

News-Miner: University of Alaska President Mark Hamilton asked for a 5 percent increase each year. Gov. Murkowski has gone along. Where are you on that?

Croft: It was a good idea. We've taken great strides from a university that was in difficulty. Under Mark Hamilton and under both Tony Knowles and Frank Murkowski, we were able to get that up both in funding and in terms of the energy and excitement of the university.

News-Miner: People age 18 to 30 don't vote a heck of a lot, but in a close election maybe they can make a difference. What would your appeal be to them about why they ought to care or why they ought to vote for you?

Croft: The slogan that we've used is a new generation of leadership, and, not taking away anything from Frank Murkowski and Tony Knowles, but they have been in for the last 12 years and before that in the U.S. Senate for Frank and after that Tony trying to get into the U.S. Senate and before that for Tony in Anchorage, the biggest city. They really had their chance to implement the policies that they think are going to work for Alaska, and I think it's time for a new generation of Alaskans to step forward with those solutions. I think you're seeing that with Andrew Halcro and Sarah Palin. There's a whole group in there trying to break in, whether it is this election or next, they're going to. So I'd say to them two things. What we're doing is going to have a great deal of relevance to your life and whether you're able to live here at all, whether we're going to have good jobs, whether we're going to have the kind of Alaska you want, and you better get out to vote.

News-Miner: No disrespect in this question, but are you really running against Tony Knowles or are you running to keep the focus on the reserves tax initiative?

Croft: I'm running to win the nomination and then win the governorship because there are specific things that I want to do to help Alaska and Alaskans. We've talked about some of them today on the reserves tax... I recognize the difficulties of running against these two former governors with their organization and their money and their name recognition. And I didn't create this situation, they came in late, both of them, into the race, so I'm not underestimating their name recognition and the amount of money they've spent to get that name recognition. But ultimately Alaskans are going to make the decision. If you can get out and communicate that to them based on who they think is really going to help in their individual lives, I think we have a better story to tell.