Other issues including the development of state Natural Resources. From the Heritage Foundation, this is 40 minutes. Speak ladies and gentlemen please welcome the Heritage Foundation buys president ken holmes. [applause] its a nice rainy day outside and everybodys bunch together to keep warm. Good morning everybody how is everybody this morning . Welcome to the Heritage Foundation, its great to have you here. Its great to welcome mike dunlevy of alaska and he is guinness speak on the budget spending of alaska and what they can offer as an example. Governor dunlevy who was elected as governor in 2018. Hes had a very career in alaska since he was there in 1983 from working in a logging camp in Southeast Alaska to pursuing his dream in an Education Career as a teacher. He has a unique insight into alaskas communities due to his two decades of service there. He also served for five years as an alaskan senator there. So he knows alaska literally from coasttocoast. And that provides a unique perspective on his state, but what we, from the lower 48 learn from alaskas example. As all of us at the Heritage Foundation no, americas Founding Fathers envisioned a Strong Division of power between the federal and state levels of government. What we call federalism. The constitution created a limited federal government left much the power to the states and to the people of the united states. But of course what exists today is that we had created a highly centralized government. The states relinquishing much of their reserved powers into the federal government and also to federal funding. This is to allow the federal government to become more involved in issues that were traditional left to the states and communities. And thats highly centralized government has been a poor fit for a country as large and as diverse as america. Federalism should allow for 50 different models of governance suited to the particular needs of the nations individual states. And within the confines of the constitution, essay should be free to enact policy that best serves the needs of their citizens. In this respect, federalism fosters Competition Among the states and competition between states encourages innovation and helps create a more efficient government. As a general principle, the government closest to a problem should be the one addressing it. In our humble opinion. And for that reason we believe congress should leave to the states any program that does not carry out a constitutional function of the federal government. Governor dunleavy will speak with us this morning about the successes that alaska has had in promoting federalism through budget discipline as well as what the federal government may learn from alaskas experience. And after the governors remarks, our director of the Royal Institute for Economic Policy studies he will lead a further discussion with the governor, and also take questions from all of you. So now please join me in welcoming governor mike dunlevy. [applause] well thank you for the kind words, its a real honor to be here today. We talk a little bit about alaska. Im a former teacher i was gonna ask you that raise your hand if youve ever been to alaska but i wont do that. But if you havent, you silly to come up. It come up in the summertime its a little warmer and a beautiful state. I like to spend time with likeminded friends here in our nations capital. Every time i consider the difficulties of balancing alaskas budget im reminded that it could be a lot worse. I could be tasked with balancing the federal budget. Thats the mother of all challenges. I thank you all for the work that you do and try to accomplish that important goal. Fiscal policy and other federal issues. For those of you i havent met yet, my name is mike dunlevy and i was elected as alaskas 1h governor in the first governor to be sworn in north of the arctic circle. We are the second youngest state in the nation, just for reference. Candidate joe biden was about 16 years old and would join the union. In a nearly 600,000 square miles of land mass, alaskas not dissolute americas largest state but its also the largest subcontinent in perspective. Over half of alaskas called the un organize girl. I always joke around with people from texas because alaskas two nap times asylums of texas. We have four time zones where the furthers, the first northern state. We its a matter fact youre so far west we are closer to austerlitz than california. A lot of people have their hearts them to their arms around that. So over half of alaskas called the organized borough which means us outside the burrell government burrells is counties. So it creates a delicate issue for policymakers we are causally striving to balance our big cities with those who live outside in the middle of nowhere. And then we have hundreds of smaller communities in segregated areas consisting of a alice canadians of modernday immigrants. In fact one member of our congressional dam delegation was born alaska. Of course i did not come here today to review give you all alaska facts even though i could do it all a time. I came in to talk about fiscal policy and something i was told interest all of you. I took office last december in the midst of a financial meltdown in alaska. After years of inaction, the annual deficit had climbed to 1. 6 million. To put this in perspective, our state spending in alaska is approximately 4. 4 and 4. 6 millions of this was a significant budget deficit. And keep in mind we are expected to bring in about 2. 1 billion in revenue this year. So i deficit of this magnitude was a crisis. It was also predictable crisis. From 2014 to 2016, the price of north slope plummeted from one herndon 10 a barrel to just 30 a barrel. From the peak of 4 billion, state revenues collapsed to just seven or 50 million. Red rather than looking at these headon. They looked at increasing spending during this time. The estimated revenue and clement clever budgeting gimmicks became commonplace allowing the appropriations to hide the true extent of the crisis from the public. This policy of inaction and deception proved to be unmitigated disaster. For the first time we are forced to dictate into our oil wealth savings account called the premier fun just keep the lights on. Meanwhile gdt growth stalled in the last frontier was known as the worst state for business in america. I ran for governor because icom alike most alaskans believe our states decline had to be reversed. This simply is no reason for a state this rich in Natural Resources, and pioneer experience to be considered the worst in anything. To this end, i began my first term by directing my staff to publish the trades honest assessment of the less his finances. No more deception, no more disinformation, no more time to stall. And with some of our states big spending politicians decided to ignore this one, i utilized my veto power and cut spending by 650 million this is the largest Budget Reduction in the state history and a critical first step in getting alaska back on track. Critics still predicted doomsday. They figured alaska this was to be the end of alaska and it was just laid off in the pacific ocean. But they could not of been more wrong. With the economists are three recession is finally coming to an end, or gd t increased by 4. 1 last quarter. The second consecutive quarter of economic growth. Thousands of new jobs have been created across practically every sector of the economy and private sector increased by nearly 5 . We are projecting a 1. 1 billion increase in private investment on the north slope this year. In alaska has so much going for. In addition to this. A lot of people down here, we call the lower 48, believe our state is that place with a lot of cold displays and oil. Loads true but its only a sliver of the real story. I always tell folks that alaska is american and so much more. Its a place where you can open business, complete with all the benefits and protections of the first world system of governance, america. Yet at the same time have the access of the vast untapped Natural Resources that simply dont exist outside of the third world. Im talking about the largest lake graphite on the planet on the department. His been monopolized by china. Mineral endowments of nearly every precious and earth mineral earth minerals. An estimate half of the nations coal. The largest fisheries in the nation. Totaling 61 of all fish land in the u. S. One seventh of the nations timber, although federal regulations have crippled our logging agency leaving much of her timber to fall down and simply burn. Its a waste of resource right now. We are also located quite literally in the center of the industrialized world. This is often time the fact that people have all people get their arms around its wealth or to our International Airport in anchorage is positioned within nine hours of both new york and tokyo. It serves as a gateway to the asianpacific market. In terms of cargo input, our airport is second only to memphis nationally and ranked in the fifth busiest on the planet. Its growing rapidly in terms of its cargo transport. And believe it or not, the airport is never closed for snow. Despite plowing as much is 6 million tons of each winter. Alaska does a good job of handling snow. In fact aviation is one industry we expect to be a big part of economics future. One in every 60 alaskans is a pilot. Many fly out of lakewood, the world busiest seed plane base. Additionally the faa had designated proportion of the arctic for unmanned flight research. This areas open to all and its being used by boeing, bp and the university of alaska. Research there has led to breakthroughs in pipeline and arctic ice monitoring. Plans are also in the works to connect alaska to alberta and the lower 48 through railroad with 1500mile railroad link opening a historic new trade routes and benefiting alaskan refineries. In alaskas doors are always open to innovators and dreamers. In fact she mightve seen me reaching out about testing cyber checks. We have testing in alaska we went invite him to come to alaska learn more about how we produce minerals and how we dont probably better than anyplace in the world. These are the types of forward thinking people and businesses we are eager to collaborate with. But despite my optimism for alaskas escanaba future, the challenge of balancing a budget is not subsided. This year we again had a major shortfall of 1. 5 billion poured some of this can be traced back to the price which is expected to spend followed 10 of the next years. In some of it used to formula driven spending which increased by 89 million this year, including dent debts and pension payments and resource switches totaling over 160 million which is driving the budget upward. In fact, over half of alaskas budget consists of formulas and obligations embedded in statutes. On wednesday announced my plan to keep alaska on physically solid ground. This budget has for arching priorities. They change physical discipline, honor the law, tell alaska the truth, and to build the commitments i made to alaska when iran for government. And these arent just my priorities, by the way, they are based on feedback i received from folks across alaska. These are alaskan priorities. Of course im preaching to the choir when it comes to maintaining physical discipline, but theres a real sense for my opponents that many people no longer understand the dangers of deficit spending. Much of this i tribute to the creeping influence of washington d. C. , and a debt raising culture. Even in alaska, sources like twitter help to amplify National Politics and debt spending by both policies is commonplace. Barring which is backed by the treasurys printing machine, seems a little consequence. Unfortunately, i get to find a printing machine to print money in alaska. Fortunately or unfortunately, we are, we have to balance our budget. In the revenue funds which ones were over 60 million our reserve funds, our savings account, 16 billion as of 2013 were nearly be depleted after this year. As a result of deficit spending. And so this years budget represents the first in a tenure plan to contain spending and cut the annual deficit. Most Government Service will be flat funded and there will be no net spending increase with the budget i have rolled out. This is also budget that will honor the law. In alaska with something called the permit of frost. Its a Commonwealth Fund that disturbs dividends as well as saved oil wealth for future generations of alaskans. This distributes an annual check to alaskans and as a check and balance on government spending. The more money you save, the constitutionally protected, plus opportunities for politicians at the hands on it. In recent years, politicians have ignored her laws and have diverted a portion of the dividend to fuel government spending. This is all wrong. Its also bad policy. Ive yet to meet anyone who believes government spends money better than individual citizens. I even believe the folks on the left dont believe this is possible. Budget calls for full statutory diffidence with blasters payoffs, and also, secondly weve also fully funded education. Before joining the legislature i worked as a teacher. And later as a superintendent for nearly two decades in arctic alaska. After words i spent a couple more years to school board president. So im intimately familiar with the struggles alaskan educators face. Both from the teaching and administrative perspective. We cannot move forward as a state while leaving her children behind. We cant just be about him lex. How much you put into the system it also has to be about outputs. How well our kids doing. How well is a system . And finally albedo my best to change laws that are crippling our budget. As i alluded to a few minutes ago, 55 of alaska operating budget is now on autopilot spending. In other words, statutes, laws are driving the spending. And. Laws laws are changed, that will continue. And i know you folks are fighting a similar battle at the federal level. If you want to fix the numbers, we must change the laws. The flat funding and they hear its the budget will not be enough to balance the budget in the years ahead. That brings me to the third priority. Tell alaskans the truth. The boom years of 15 budget growth is over. Its over. Were facing deficits that nearly the size of the general fund. Star deficit is almost as big its actually in some cases its almost as big as the money we receive in its larger. Its time for everyone to get involved and that requires accurate fiscal information made available to the public. Starting in january ill be flying all over alaska together folks together to get a conversation started about the potential scenarios for sustainable budget. These include scenarios such as major Budget Reductions, changing the Permanent Fund formula, and the constitutional spending limit. Only through a constitutional spending limit cap that works will government truly have signed five boards on spending. Obviously, all my preferred methods, if you paid attention to any news out of alaska recently, youll know that i will always fall fight for Smaller Government and the bigger permanent payoff or alaskans. My team is gone to Great Lengths h scenario and unbiased fashion to make sure each alaskan has all the facts and they can be heard. As we plan for the next decade. Which leads me to it my next and most important priority. This is a budget that will fulfill my commitment to alaskans. Many of you may not be aware but alaskas facing a crime epidemic paid. Capita we are ranked the deadly state for women. Meanwhile a disastrous catch and release law led to sky high property crime rates in a city center towns. I was elected with the mandate to make alaska safe again. And we made great strides. Last year, we hired more state troopers and any other year in the past decade. I signed a landmark crime bill cracking down on social predators, and a broad array of other criminals. We funded Domestic Violence programs and shelters at the historic levels. Emily cleared a decadesold backlog of unchaste Sexual Assault kits. This year, were expanding our efforts. Our budget will pay for additional 15 troopers, state troopers and prosecutors. The department of corrections budget will increase by over 17 to cover population growth and restored programs. And finally the judiciary we fully funded including additional funding for public defenders and guardians. Public safety, remains my ministrations number 11 priority in the budget reflects that. So far, ive been pleased with the response of my budget announcement. The custommade last year were tough, absolutely they were tough. And necessary. And for many a serious wakeup call. For what im learning alaska is prepared to hold the line on spending. As you all know standing alone on your principles is often necessary but never enjoyable. Side very much look forward to collaborating with the legislature and the public as a budget process ms. Ford. Because at the end of the day, theres nothing more important in government and fiscal policy. You know as well as i do fizzle policies of future policy. The Financial Decisions and make today directly shape the world our children live in tomorrow. Its my greatest aspiration that the alaska idly behind us be safer and more prosperous than the alaska i discovered over four years ago. So for that i want to thank you for letting me speak today and id be happy to answer your questions. [applause] weave a couple of mics in the room for your questions. State your name and where youre from and will open it to the group. Neil mccabe one american news. Seller if you talk about your election, but theres a back story to what actually happens. There is a crazy governors race, can use or talk about that chain of events that landed you in this office . Which was said to criminal democratic wave year. So our incumbent governor was independent and was still in the race. At the same time former governor was in the race the three of us are running. The incoming governor bill walker, just a month or so before the election actually dropped out for a whole list of reasons. The numbers were looking good, and so he decided to step aside. So became it to a race at that. And the result was that at the election at the end of the election, they sa