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Speech: Juneau Chamber of Commerce

Location: Juneau, AK

Thank you: Cathie [Roemmich.] I think about Chambers of Commerce, and I think about you as job creators. I just want to say congratulations, and note the award for being Alaska's Outstanding Chamber; I understand that [you've been recognized] two out of the last five years, now, so congratulations -- this is great.

And I also appreciate all the work the Chamber and you, Cathie, did in supporting SB 21, in getting the action alert out. I had it in my folder, because I read it right after it went out, so I appreciate the help there, thank you very much.

We have much to talk about. Time is short.

Everybody expects me to dive right into SB 21, right? No … not doing it; will do it at the end, because there are some other important topics to speak to here.

In particular, I met a man in Dillingham about a year ago, or not quite a year ago, who was serving as a Village Public Safety Officer. He was a kind and gentle man. I sat down in a Dillingham post with him and asked about how life was in Manokotak. That was my first and only introduction to Tom Madole, who lost his life as a Village Public Safety Officer just recently. So our hearts, and thoughts, and our prayers go out to his family and friends.

Also, it just spikes the message that we have a long way to go when it comes to safety, when it comes to Alaskans, not just our VPSOs but in our homes and our families.

So I just want to raise high the banner of Choose Respect, and the fight that we have against domestic violence and sexual assault in this state.

I raise it high because it is a human issue. It impacts each one of us. It impacts our workplaces. It certainly impacts our cultures.

And this next week on March 28, what is that … next Thursday, we have the opportunity to join across Alaska with 140 communities in marches and rallies, including here in Juneau at noon on the steps of the Capitol; to say that we, as Alaskans, will stand up against this scourge, against this evil.

And here's what happens when you give up a lunch. When you go up to the Capitol, and you take your employees, offer them transportation up there if you want, when you give up your lunch period like that, and you stand up, the media turns out.

They cover it because they know this is important to Alaskans. And when a victim or survivor of domestic violence or sexual assault sees you standing up, it gives them courage to break free and go get the help they need.

Every year after these marches and rallies, we have emails come into our office that tell us about how seeing Alaskans rally for them gave [people] the courage to stand up and go get some help. So do not minimize the impact of your presence, noon, next Thursday; and not just here, but in 139 other communities across the state. And I think it's a wonderful testament that Alaskans are standing up in this way.

Let me talk about tourism. I see smiles around the room. With the work that we've done together, we have definitely turned a corner when it comes to travel and our small- and mid-sized Alaska businesses.

I think Alaska opportunity is on the rise. It's been almost four years that we've worked together, lowering taxes, streamlining permitting, increasing tourism marketing.

And I just want to give you one stat to hang on to.

When we look at the business license renewals for tour-related transportation for land, water and the like, we are seeing an increase -- a dramatic increase.

In 2009, 19 businesses in these tourism categories were issued or renewed their business licenses.

In 2012, 126 new or renewed business licenses [in these categories] were issued by the Department of Commerce.

And to date, for 2013, it's 144.

So from 19 to 144 -- that is entrepreneurialism defined. That's what's happening in this great state of ours, and I am proud of Alaskans for stepping up and starting their own businesses.

Our Alaska Department of Commerce put the pedal to the metal on marketing. How many of you saw "Top Chef?" How many of you participated in the salmon bake in "Top Chef?"

You know our Capital City received national acclaim with two episodes of "Top Chef" that aired in February. This show was a valuable boost for the city's visibility, reaching millions of viewers. Alaska's tourism and seafood marketing programs worked closely with local businesses to coordinate this national media event.

If you watched the show, you saw Tracy's Crab Shack, Gold Creek Salmon Bake, Jorgenson House, and the Governor's House all featured, along with the Mendenhall Glacier, the kitchen at Thunder Mountain High School, and Alaska Glacier Seafoods, and more.

Many of you and your businesses participated in making these "Top Chef" episodes and the continued tourism marketing of Alaska a success, and I want to say thank you.

Moving on to mining, we've seen an explosion of growth in mineral exploration in recent years. It really is a new gold rush.

I enjoyed speaking to UAS. They had an Introduction to Mining and Mining Operations Course, where they bring high school people in and teach them about mining careers, mining occupations, mining operations, and that is a class that is interactive across the state. So as I stood in front of the class, I had computer screens in front of me with class members in northern Alaska, southwest Alaska, and I got to take questions from across the state.

The bottom line: Greens Creek, the largest silver mine in the U.S., and the sixth largest silver producer in the world, is Juneau's top private employer, now just surpassing 400 year-round employees, not including contractors. That makes them the third-largest mining employer in the state. Quite a difference from even a decade ago!

Kensington has over 300 employees, and growing. Coeur spent over $7 million on exploration at Kensington last year, and the company expects to spend $8.6 million in exploration this year.

Herbert Glacier -- another exciting new prospect. In fact, I went to the mining trade show in Vancouver and went into the prospects room where they lay out Alaska prospects, and I walked in, and there's Herbert Glacier on the table with people gathered around talking about the prospect.

And on Prince of Wales Island and up in Haines, more prospects are being worked and developed.

Right now, statewide, and it's global too, we see spending by the smaller explorers flattening. It's part of the natural ebb and flow of that commodities business model, and it relates to the overall economy.

Our challenge, like every other industry, is to stay competitive. We're going to do that, maintaining a stable tax structure and solid, streamlined permitting practices, and stability in government policy.

A couple of more things on my mind:

Ferries: With two new Lynn Canal ferries, we intend to get the same or better service from these vessels, built on budget, and in Alaska. That's the goal.

I predict it's going to be a great year for the ferry system, which is celebrating its 50th anniversary. A little-known fact is that my grandfather actually cooked on one of the ferries in the early 1960s. I saw his name on an employee worksheet. I did not know that until I was in the Legislature.

For the Lynn Canal ferries, here's the update:

The design concept report for these smaller Alaska Class Ferries has been given to Elliott Bay, the design team under contract, and they are doing an analysis of the design concept.

All aspects are being evaluated. You'll find a link on the Marine Highway web site for Alaskans to comment and ask questions about the design specs.

The cutoff for the comments and questions is March 29, and I understand there are fewer than 20 comments, so if you want to know more and you want to comment, please feel free to do that.

Marine Highways will prepare a list of frequently asked questions and give those to the design team, so they can see what concerns people have and address them. Those will also be posted on the Marine Highway web site.

In April, we expect the design study report to be completed and made public, and given to the Marine Transportation Advisory Board, and the project will move on to concept design.

I encourage you to keep an open mind about the day boat Alaska class ferry.

Will the stern deck be partially opened or completely covered, and how would that work? We are examining every option to assure that we get what works for Alaskans. That's what will happen.

We do know these ferries will bring about 23 Juneau-based jobs and another 20 Haines-based jobs. These are jobs for people who will come home to their families at night. These are great jobs, a family-friendly approach.

OK, SB 21. You know I had to get here at some point!

Most of us don't spend our nights watching Gavel-to-Gavel. Cathie did. I did, too. They didn't want me on the floor, so I watched it on TV. If you watched the press conference afterward with the majority caucus in the Senate, Senate President Charlie Huggins told a story.

He said that just recently he was down in North Dakota visiting the oil patch there to see what heavy investment in the oil patch in North Dakota looks like. And he ran into several young men, but with one young man in particular, he struck up a conversation, and found out he was from Alaska.

And the Senator asked him, after telling [the young man] who he was and why he was there, the Senator said, "Why are you down here?"

He said, "Because I needed work, and I wanted work in the oil patch, and I couldn't find a job in Alaska."

The way Senator Huggins told the story was so compelling because essentially the young man looked at him and said, "Can you fix it at home, so I can come home? Can you fix the tax structure at home, so I can come home?"

That's when tax change becomes personal and real, because it's not about the government's coffers. It's about creating opportunity in the private sector for Alaskans. That's where we are headed as a state.

We are not going to be satisfied with a decline and a declining future. We are guaranteed decline if we continue the course we're on.

You can argue whether it's 4.2 or 4.6 or 6 percent decline, which is what some of the senators were doing last night on television. But the bottom line is: We're in decline, and we need to work as hard as we can to stem the decline, because that is what will create opportunities for, not only that young man, but many others in this state.

So the bill passed, SB 21 passed just before I came over, completed its final vote and is on the way to the House now.

I think it does meet the four guiding principles that I set out there.

That it be fair to Alaskans. It has the essential elements that the bill I proposed had. It better protects Alaskans at lower oil prices because it doesn't have those tax credits out there.

And let me just tell you about those: We are on the hook for a billion dollars' worth of tax credits, under the current tax regime, in the next year. Those are tax credits that are based upon spending in the oil field, that are not necessarily linked to production. But we're on the hook for those tax credits, regardless of the price of oil.

If oil goes down to 90 or 85 bucks a barrel, we're writing checks effectively for a billion dollars, but we don't have the money to cover it. So there's a high risk to the treasury, and it really does distort the system when we are on the hook at the bottom end, at the low end, for such high tax credits, with no corresponding way to meet them.

The bill clearly focuses on new production. The gross revenue exclusion in there, which says if you find new oil you will get to exclude a portion of that value from this tax rate. That's effectively what it is, and it's only for new oil. So, there is a clear focus on new production.

It's simple and it focuses on restoring balance to the system. It's simple because the effect of the bill right now is to make it slightly progressive, but we don't have the monthly calculation that we do right now for each company in each field every month of the year. Those are gone, those calculations.

So it's a much more simple calculation.

What I am urging legislators to do, including just about two or three hours ago in the Capitol, as the bill moves forward now, and as new House members now take it up (they've already had several hearings in the House this year), I am urging those House members to look at the proposal that is there, look at SB 21 as it is now, with the dials and knobs that are there. And if you think that the system as passed to you as House members needs adjustment, then work those knobs and dials and come up with what you think is a competitive tax system, one that is fair to Alaskans, one that will inspire new production. Use those knobs and levers that are there. Don't try to make it more complicated by putting in more levels, knobs, and dials. We actually have a simple but effective system for Alaskans, one that is geared for new production.

I wanted to keep some time open for questions, but there is another bill I want to talk about. It's HB 76, our Unemployment Insurance payroll tax decrease bill. Many of you understand if you own a business, or if you're employed, your payroll tax gets pulled from your check. Every year, under State law, that payroll tax automatically increases. It doesn't matter whether there's enough money in the Unemployment Insurance Fund to fund unemployment compensation, under the law, you are still giving up your payroll, your earnings, as Alaskans, and as business owners. You're paying increased payroll taxes every year, unemployment insurance contributions, to fund the Unemployment Insurance Trust Fund.

Now, my first priority is to make sure that trust fund is solvent. This legislation assures that the trust fund is solvent. When it is solvent, under our original proposal, it would give the Department of Labor Commissioner the discretion to stop that automatic increase. My bottom line philosophy is: That money is yours. You earned it. You took the risk for it. You worked for it. And if the State does not need that for a solvent Unemployment Insurance Trust Fund, then there is no reason for the State to hold onto it.

This is so foundational to whose money it is and actually to who works for whom. I just want you to be aware of it because this is one of those little secret taxes that you bear and your businesses bear, and you shouldn't have to.

So I've got a lot of other topics we could talk about but [we have time to take some questions…]

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