It's wonderful to be back home and to be with so many of you. The opportunity to visit ahead of time, I think is the best part of what I get to do with my annual return to deliver comments to you here in Juneau.
You know the drill. We start with how the family is doing -- how the boys are. For those of you who are new to this chamber and don't know, when I was serving here my boys were still relatively junior at that point in time. And they had occasion to be guest pages and many of you came to know them and as the years have passed and they have grown, I feel a maternal obligations to always report on their well being and that's a good thing. Nick is graduating from college this year which is just phenomenal, and he's got all kinds of grand ideas about what he will do and I'm sure he will work to accomplish all of them. Matt is a sophomore this year. He is changing majors about once a semester and he's focusing on skiing, which really is rattling to me. It's the extreme skiing and he does very well, but I can't even keep my eyes open to watch. He continues to make me proud. Verne is doing well. I can give you the annual update on the remodel. It's still the same remodel but by gosh that house is looking great -- so he is doing well. I continue to be blessed by the love and support of family and of friends, as well.
When I begin my comments with you and speak about family part of it is perhaps because I consider many of you to be an extension of that family. And as families should do, families should be honest with one another. And my comments this morning will probably not be viewed as too rosy and optimistic, but they will be honest and I think that's important.
Despite the seriousness of our nation's challenges in what we're facing, I think it's fair to say that Americans have witnessed an atmosphere of perhaps unprecedented dysfunction and partisanship in Congress that has compromised our ability to govern. The list of accomplishments out of the Senate this past year is a relatively short one. It seems we went from impasse to crisis, to kicking the can down the road - and then we would just start that cycle all over again. We have simply been unable to muster the comprehensive solutions that this country demands.
And this is a brutally honest assessment, I think you would agree. We've had some partial victories at the federal level but really given the enormous challenges we face, this process and progress is inadequate. And that's why I would like to use this occasion today to renew our partnership. The discussions that need to take place in overcoming what I consider the biggest obstacles to growing Alaska's economy.
Now, we all know that federal spending and resource development drive the lion's share of our state's economy --they employ a huge share of our workforce. And our reality is that both are threatened as perhaps never before. We've seen years of deficit spending that have generated unprecedented debt that jeopardizes the ability of our federal government to meet even its basic obligations. And meanwhile, years of denial, basically saying no, overreach by the very same government have limited access to many of our best opportunities whether it be for oil, for mineral, for timber production - the very things, my friends, that can help reduce our dependency on federal funds.
So let's talk about the budget situation first; fact of the matter is, it is likely to get worse before it gets better.
We are just one week shy now of sequestration, so folks all over the state are asking me the question: what is this going to mean for us here in Alaska? What is it going to mean for Alaskans? And unfortunately there is very little certainty about a very chaotic process that is facing us. But I think, at least in the short-term, sequestration is likely to be our new reality because what we're seeing, the plans that were put forward by the House Republicans, the plan that Senate Democrats have presented, these are supported by those majorities but not necessarily by the other chamber. And that means decisions about every proposal, every policy, every program will soon have to be made within the context of these very indiscriminate cuts.
Now it is important to note that sequestration will shield some of the programs that are important to our State -- like Medicaid, Social Security, our veterans' benefits, and a few others, but things like decisions within Department of Interior, the Coast Guard which we've been talking about, these are perhaps not going to fare as well. And because of lack of information from the Administration about sequestration, we really don't know what it may mean for so many of the programs. Whether it be Head Start, whether it is Indian Health Service, the BLM offices. So there is so much uncertainty at this point and time.
I asked for -- and the Appropriations Committee held -- a hearing last week on the impacts of sequestration. We had three cabinet members and someone from OMB, there to hopefully detail to us what is it we might expect. And during that hearing, the Administration's witnesses, the Secretaries, couldn't even agree that these across the board cuts should be replaced with more targeted and certainly less painful cuts. And I worry, I worry that the Administration has perhaps come to view this as an opportunity to make perhaps the most visible cuts and not the least painful. We should not be messing with people's lives for political gain. It's as simple as that.
What is certain about what we're facing now is that spending reductions are unavoidable. And the choice for us really is now how we make them. Can we do better than the "meat cleaver' approach that sequestrator represents? And the answer to that is absolutely we can do better. But there is not enough discretionary spending that can be cut, there are not enough revenues that can be raised that can affect a $16.4 trillion debt without real economic damage being incurred. And we cannot permanently increase taxes to secure a temporary 10-month delay to achieve sequestration targets that are intended over a 10-year timeframe. And that's one of the proposals that's in front of us. So I'm continuing, we're going to work on this to push for a balanced plan. There has to be some balance to this and that comes through targeted spending reductions. We must have an overhaul of our tax code, we must do that, as well as changes in mandatory spending -- and these are not just concepts floating out there, the revised Simpson-Bowles plan came out earlier this week kind of updating and refreshing a proposal. It's tough medicine, but is it necessary for what we are facing? I absolutely believe so.
Now I'm going to work to help Alaska to the greatest extent that we possibly can. We can make a case, a solid case for federal funding -- all you need to do is look at our state's demographics, look at the people you represent, that we work for. We have the highest veteran population per capita in the country, our significant Native population that looks to federal dollars through IHS, obviously the strong presence of our active military throughout the state. We have the third highest federal employee population per capita, again in the entire nation here in Alaska -- the third highest federal employee population. And this is due so much in part to the fact that federal ownership of over 60 percent of our state's land. So again, when you look to the case, the reason why we receive so much in federal funds, it's not because we have sharper elbows, it's because of our demographics, because of our constituency.
But whether through sequestration or through the regular budget process, we need to be prepared for a reduction in federal dollars. We need to prioritize our requests for funding. And we need to look carefully at what the State can handle on its own. And we must jointly oppose the cuts that would have the most severe impact on Alaskans.
And that includes cuts to our national defense. Given our strategic location, our geographic advantages, in my view the Last Frontier is one of the last places where the military capability should be reduced. And I think if the Generals alone could be making these decisions, I'm thinking that the military's presence in our State would remain stable or even increase. But today, accountants also play a substantial role -- and I think that helps to explain in part why the Air Force has proposed a downsizing of Eielson Air Force Base -- citing costs. I contend that the benefits of Eielson are priceless to us. It's the visa commercial, it's priceless.
I continue to believe that the Air Force proposal to move the F-16s is short-sighted. And this is not a parochial criticism; it's practical. We have to make cuts, but the cuts need to make sense. They need to make sense. The Air Force has acknowledged that its plan is actually going to cost, it's actually going to cost $5.6 million to implement within its first year. The savings then that are projected for future years are limited, and simply do not outweigh the strategic benefits of an unencroached base in the Asia-Pacific region with strategic access to the most troubled spots around the globe.
Now, the interior delegation did a terrific job a couple weeks ago at the scoping hearings up north. We had good hearings down in Southcentral as well. And I appreciate how, really, the state came together. Whether you were from the Interior, whether you're from Southcentral, came together on this issue and spoke up clearly, I think, to the Air Force. And I thank you for that.
I think we got a little bit of a surprised reaction from the Air Force. I think that they thought they could pit Anchorage and Fairbanks, or the Interior and Southcentral, against one another -- so that we would be fighting over the assets. They misjudged the strength of the people in this state; they misjudged how Alaskans view our military and what it is that we can provide them.
Now the Air Force is continuing to accept comments on their Eielson plan until March 1. They're not accepting electronic comments, so we have set it up through our website. And you can submit your comments up until March 1, go to murkowski.senate.gov. Many of you already have done that -- I appreciate it. If you have not, if you know others, I would truly hope that you would weight in. Again, Eielson absolutely benefits our entire State, our entire nation; this is not just an issue that relates to the Interior.
But we have to do more than just commenting on these proposals that are floating out there-- we're also in competition with other defense communities across the country who are also attempting to make their bases efficient, and effectively very attractive. You all in this body took a major step by funding construction of the Tanana River Bridge, we recognize that this is going to open up vast training grounds to the Army. I thank you for that. Keep it up, that's exactly the type of thing that we need to be doing to help our military, to help our installations, to help our country.
We also need to think creatively. The Governor has suggested a single squadron of F-16s in Germany perhaps might be situated better at Eielson. That would reduce our footprint overseas, reduce those costs overseas, and it clearly would make Eielson more cost-efficient. So I've directed the Air Force to look at it -- as well as Eielson's appropriateness for any other missions that might be available.
Now we all know that another factor that is at play in the military's decision-making is energy and the cost of energy. The truth is, that it's not just important to our military; this is across our state, it is critical to every Alaskan. I think we recognize that as we have seen our costs go up, and regulatory impact into certain areas, certain communities, there is a recognition that the Interior is hurting right now. And when we look to those solutions, I think it's important that again, we come together as a state. That we not view this parochially but we look at how we are benefiting the entire state.
As I go around the state, whether I'm in a tiny village along the Yukon, or out on the coast, or on the road system, I'm asking people, well how much of your budget, how much of your family budget is going towards energy? And in some parts of our state, out in the Interior, out in the bush, families are paying up to 47% of their budget to keep warm, to keep the lights on. Compare that with what's going on in the rest of the country. On average it's somewhere between 4 and 6 percent of the families budget that goes towards their energy. We are so far out of the ball park; people can't even understand what we are up against.
So what do we do about it? I think that the fastest progress, quite honestly, can be made here at the State level. That's why I hope, and I know you are devoting considerable time to the slate of energy proposals that are being circulated by the Governor and by many members in this body. I would encourage you to aggressively work to reduce energy prices in our Bush communities and along the Railbelt -- particularly a plan to get natural gas to the Interior. I would hope that you would consider our longer-term options, as well. We can't just be looking at the short term, even the midterm; we've got to push beyond. In-state gas line, underground coal gasification, a geothermal from our volcanoes, a resource that I think we too often overlook-- I know some of you have had an opportunity to visit Iceland. Look at what Energy independence can truly mean. Our coastal wind farms, expanded use of our vast hydro resources. So the focus on energy is absolutely key and critical to our overall economy.
At the federal level, there's a lot of talk going on right now, lot of conversation about the energy boom. And we're rightfully celebrating it. The United States just posted it's largest-ever increase in annual oil production, some 790,000 barrels per day. That's good news, great news, but production here in the state of Alaska fell by about 35,000 barrels. Despite nearly 40 billion barrels of oil waiting to be developed, we all know the story, TAPS is emptier than ever. What I'm pointing out to my colleagues, back in Washington and the Administration, and quit honestly anybody that is willing to listen, I remind them that we have tremendous opportunity here in Alaska, but we face unbelievable frustration. We need an all-of-the-above energy policy in this country-- but it has to include all 50 states.
So I've been working for about the past year now on a proposal on a way that we can reframe the conversation about Energy. How we can view it in the positive, we've gone from a position of scarcity to one of abundance. Out of 115 pages, I'll give you the reader's digest condensed version -- energy is good. It is as simple as that. And for those who are living without, they know exactly what that means.
So I've released this blueprint, it's entitled "Energy 20/20: A Vision for America's Energy Future." It's intended to provoke a new and I think a more thoughtful discussion about energy, and to recognize how bright our future can be if we produce our resources and we prioritize innovation. We've got to be pushing ourselves every day on the R & D side, we've got to always be challenging ourselves to do better than what we have today. Let's move forward with that. Now as you might expect, it's got all kinds of good ideas. I wrote it of course it has a lot of good ideas. It is designed to not only help the country but to allow Alaska to produce more energy, really of every kind.
This legislative session is, I think starting off on the right foot at least from the perspective of the Energy Committee. I'm encouraged by my relationship with the new Chairman of the Committee, Ron Wyden from Oregon. I invited him up to the state last summer to really focus on some of Alaska's issues, to understand what it is that we're dealing with. One area where we have great agreement is with hydropower. We're collaborating on some ideas to promote this resource -- we're looking forward to advancing legislation this year.
Just last week the committee held its first hearing, it was focused on natural gas. Exports, clearly, were a large part of that conversation. And given the boom that we have seen in the Lower 48 with natural gas production, given our location here -- I would suggest, I think we would all agree -- that the overseas markets are clearly the best opportunity for Alaska. Most of Congress however as their talking about exports, most of Congress' attention right now is focused on Lower 48 exports, but I think the greatest prospect could really be right here in Alaska.
I was over in Japan in mid January, not only in Japan but also Taiwan. And I was there in part to help facilitate movement among potential buyers. Alaska's LNG, we recognize, is not going to be ready for delivery in the next several years when Japan clearly needs it most, and Taiwan also is looking to find that immediate source. But I think that it's important for us to remember that stability is equally important, and every meeting that I was in with the Japanese they would bring up the 42 years of importing LNG from Nikiski to Japan. They would bring it up in every meeting we had. Long-term relationships matter and I think we need to remember that. Also, the open water between Alaska and Asia really matters. There are no choke points out there, there are no pirates, and there are no third-party national waters to traverse. So, whether you're Japan, Taiwan, South Korea, there's a great deal of interest.
Now export markets may be the key to the development of our stranded Arctic resources. And that's one of the reasons why I've been very pleased with your decision to create the Alaska Arctic Policy Commission. We see as Canada steps up to chair the Arctic Council now, the U.S steps up in 2015; I'm hoping that your Commission is going to move quickly, make its recommendations in time for the State Department to incorporate them into their policy decisions. Another thing that I've been working on, continue to push to move the State Department to place or nominate, appoint an Arctic Ambassador. To have somebody that is the point person, that's responsible, that's taking the lead, is going to be important to kind of focus the issues as well. So, we are continuing with that as we work on further engagement on Arctic issues.
Another area where Alaska can lead is the re-establishment of our nation's mineral supply chain. This last Congress, I introduced a Critical Minerals Policy Act -- it had very broad bipartisan support. I'm now working with Chairman Wyden to re-introduce this measure. This effort, I think truly brings our mineral policies into the 21st century; it'll bring direct economic benefits to our state. So we're hoping that we're going to make good progress on that.We also have a very good shot this Congress at revenue sharing for the state of Alaska revenue sharing for the country. Senator Mary Landrieu, who's from Louisiana, she and I will be introducing a bill soon. I had actually hoped that we would have it ready for introduction before this visit back to the state. We're still working out a few on the issues. We've been working with Chairman Widen on this and I'm really quite pleased with where we are right now
But we realize that an Alaska-only bill, it's not going to pass Congress. So what we wanted to do was focus on the national perspective. So what our legislation will do is direct 27.5 percent of the revenues from all forms of offshore energy production to our coastal States. So in other words, it's not just oil and gas but it would be if you have off shore wind, if you have ocean energy, that these would also be part of our revenue sharing proposals.
We offer an additional 10 percent of revenues if States establish funds for clean energy and conservation projects. So there's kind of a sweetener to this because we want to focus the states on how, again, we're pushing on the technology, how we push to develop our renewable energy projects. And then we also extend revenue sharing to cover alternative and renewable energy projects that are located onshore, as well. So if it's on BLM land, you've got a solar farm or whatever, there again would be an opportunity for revenue sharing. So what this proposal means for the country is more energy, plain and simple -- more energy. And for us here in Alaska, certainly new revenue, perhaps billions of dollars in new revenue to our state and I think that's something again would get the attention of all of you.
So these are some of the energy priorities that I have over the next couple years. But overshadowing all of this -- overshadowing our future prosperity here in the state - is a more insidious problem that we're fighting every day. And that's what we're seeing with federal overreach. Alaska bears a disproportionate share of that growing national burden, both terms in costs imposed and opportunities lost.
And we've seen that, we've seen that federal overreach up at the Colville River, we saw it on the banks of the Yukon. We've seen it on health care; we've seen it on our Second Amendment rights. Regulatory encroachment is affecting our fishermen, those families that are simply trying to stay warm, our ability to develop our resources.
And this federal overreach has impacted -- severely at times -- our economic opportunities, and that's disturbing enough. But just a few weeks ago, we were dealt, I believe, a new low when the Department of the Interior decided that a few miles of habitat within a vast refuge are more important than the villagers of King Cove. The Fish and Wildlife Service somehow found cause to oppose a single-lane gravel road that would allow non-commercial travel between King Cove and the all-weather airport over there at Cold Bay -- a road that is needed to provide for the safety of the people that live there, to prevent accidents and save lives.
This is where I have a tough time sticking to the script, because I can understand that we can have debates over issues that revolve around permits for access to develop something -- so that some, you know, producers make money, the state makes money but it's about access to a project. We're not talking about a project here; we are talking about the safety of Alaskans. And if there was not a simple opportunity here, if there wasn't a simple fix, maybe we wouldn't be having this argument. But we're talking about a 10 mile, single lane, gravel road that's not going to be open for commercial use. So I was asked, well ok, "it's not going to have much traffic now but what happens when people get comfortable with that road and they're going to start driving the road?" My friends, there are 748 people in King Cove, there are less than 100 people in Cold Bay. At the height of the season, when the fish are running we might be up to 1000. The price of unleaded gas or fuel out there is over 5 bucks, you think people just go out riding for the fun of it.
Anyway, we're going to address this. We're going to address this. Because what we have seen coming out of the Interior Department is a decision that has effectively prioritized conservation over the health and safety of the people, of the people who live there in King Cove. So if this is going to be the direction that the Department takes, that we are going to value, we're going to respect the refuge but we're not going to respect the lives of the people out there -- we've got a real problem with this, we've got a real problem.
But there's still an opportunity for the Secretary to address this, to correct it. He still has to make a "public interest" determination. And I'm going to do everything that I can to make sure that this Administration understands the gravity of its mistake and in the end do the right thing. I'm just simply not going to stand down when the safety of Alaskans is at stake. And the Secretary, I think, is getting this message. I was able to delivery this message to Vice President Biden. I was able to deliver this message to the President's nominee for the Secretary of Interior Sally Jewell. I think they are getting the message loud and clear.
The people of King Cove, or at least about 25 of them, are going to be coming back to Washington, D.C. next week. They will have a meeting with the Secretary. It's unfortunate that this is the sixth time that villagers from King Cove have had to travel back to Washington in the hopes that they might be able to meet with the Secretary. Not good.
So we've got some issues with how we are communicating here. But, again, Izembek is one issue that you can tell gets me riled up a little bit. But it is an issue of where we have seen examples of federal overreach in our State. I'm sure that each one of you has examples that you can share with me. We are all in this fight together, and so that's why I want to conclude my remarks with a serious request.
There has probably never been a time in our 54 years of statehood when the congressional delegation, the State Legislature, and the Governor need to work more closely together. On Eielson, on energy, on so many other issues, we must recognize that our broader economy will not be healthy unless our regional economies are also healthy. We must jointly make the case for the resource development needed to refill TAPS and diversify our economy. We need to do a better job of coordinating our fiscal priorities. We've got to do the research out there folks; we got to weigh in with the public comments on these endless string of regulations, rules, restrictions that are coming out of the executive branch. I know you hate to do it, but we need you to. And we must be communicating with one another -- about what we're seeing, what we're doing, and how we could use each other's help.
And with that spirit, it's now your turn to talk. I want to thank you again for this wonderful privilege.