NEAR the close of this year's state legislative session, Alaska's new governor - the only Democrat in the nation elected in 1994 to replace a Republican governor - was relishing a political role reversal that he had orchestrated.
Tony Knowles, a former Anchorage mayor with a long pro-environment record, was pushing a measure to allow deep cuts in state royalties to encourage new oil development. Blocking his bill were skeptical Republicans, usually defenders of the oil industry.
"It's no small irony," a grinning Knowles said then.
Alaska has had its share of iconoclastic governors, from Jay "No Growth" Hammond, a bush pilot and fisherman who pushed restraint during the oil pipeline boom, to Wally Hickel, a populist with dreams of megaprojects, such as shipping water by pipeline to Los Angeles. Now comes Knowles, a one-time Sierra Club Alaskan of the year, who seems bent on shattering stereotypes about liberal Democrats.
His oil-royalty bill, which eventually passed, was the keystone of a pro-business program he says is needed to help Alaska evolve from its old boom-bust, "cash-on-the-barrel" economy.
Such policies, he suggests, may be key to resurrecting Democrats nationally. "You can't be for jobs and antibusiness," he said in a recent interview. Democrats should also reclaim the mantle of family values, he says. "I think [conservative Republicans] stole the language."
Hence his mantras - "Jobs and Families" and "Alaska is Open and Ready for Business" - repeated so often they make reporters wince.
Knowles's victory was a cliffhanger. With ardent support from Alaska Natives, he eked out a 536-vote margin.
Popular new Democrat
Like President Clinton, Knowles won with a plurality, just over 41 percent. Like the president, Knowles faces a hostile, Republican-controlled legislature. But so far, Knowles's political status has been decidedly un-Clintonesque. Recent polls found him to be the most popular Alaska governor since the state's first elected chief executive, Bill Egan, was in office.
Some observers say Knowles's managerial experience in Alaska's biggest city gave him an edge over his less-popular predessors.
"Tony's already past his learning curve," says Anchorage-based pollster Marc Hellenthal.
Opponents say Knowles takes credit for others' accomplishments. And they don't hide their resentment of his widely acknowledged good looks and charm.
"He's telegenic. He presents himself well. He's a friendly person. He looks good. And he distances himself from controversy.... With him, you don't know what his core beliefs are," complains state Sen. Loren Leman, an Anchorage Republican.
Knowles says the public is giving him "the benefit of the doubt," but that his popularity may be ephemeral. "It's a short leash. The public, when they give an approval, can change their mind pretty quick on it if you betray the trust," he said.
The Yale-educated Vietnam veteran came to Alaska in 1968, seven days after his wedding to his college sweetheart. He took a job as an oil-field roustabout, then opened restaurants in Anchorage. Until recently, he waited tables daily at his Downtown Deli.
As mayor during the 1980s oil boom - when Anchorage was one of the fastest-growing US cities - Knowles is credited for taming much of the urban sprawl that prompted the nickname "Los Anchorage."
He expanded the road and water systems and championed quality-of-life initiatives such as greenbelts, parks and trails, and other environmental measures.
But Knowles has troubled some environmental supporters with his embrace of the oil industry.
His royalty bill allows the statenatural-resources commissioner to drop royalties on new fields deemed worthy of extra incentives to 5 percent from the normal 12.5 percent. Knowles says marginal development is crucial now that the supergiant Prudhoe Bay field is past its peak and the easy oil money is vanishing.
"These are brand-new economic times, and being a partner with industry is a new approach, not only for Alaska, but really for America," Knowles says.
Unlike past governors who battled with the industry, Knowles's approach "makes so much sense" for a state where some 85 percent of the government operating budget comes from oil revenues, says Dave Dittman, a conservative Anchorage pollster. "I just think other governors missed the boat and Tony was the first one to see that that's not the proper way to run the state."
Others disagree. "I believe he sold out. Period." says Mr. Hellenthal, who calls himself "pretty liberal."
Battle for the Arctic
Knowles's biggest split with environmentalists is over oil development on the coastal plain of the Arctic National Wildlife Refuge. Like most Alaskans, he favors the controversial development. Unlike the typical ANWR-drilling booster, the governor makes a pro-environment pitch, proposing that some ANWR oil revenues be used for a national heritage trust fund.
Other tough issues and potential pitfalls face Knowles.
His biggest challenge may be the state's growing fiscal gap. Oil wealth allowed Alaska to abolish its personal-income tax in 1980. With oil production falling, experts say the tax must return soon. This year the legislature needed some $500 million in savings to balance the $2.47 billion state budget.
Knowles plans to unveil a five-year fiscal plan this fall. He says he will consider every option, even an income tax, although some say its mere mention spells political doom. "I think it's suicidal if you just do it without any reason," he says of the tax. "I think you need to start the conversation with the public."