February 25, 2025 • 57 mins
Welcome to The Weekly Top 3 — our look at the top 3 things on our mind here at Alaskans for Sustainable Budgets — for the week of February 24, 2025.
This week, our top 3 issues are these: 1) we discuss the Senate Finance Committee’s proposed SB109, which, if enacted, would be the largest permanent individual tax increase in Alaska’s history (2:09); 2) we explain why the source of the state’s fiscal problem isn’t either too much spending or too little revenue, it’s that we are using the wrong revenue structure (19:59); and 3) we explain why, if you look, you can see the forces behind the state’s next big spending wave starting to form (41:53).
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top threethe top three things on our
mind here at Alaskans forSustainable Budgets for the week
of February 24th 2025.
The weekly top three is aregular segment on the Michael
Duke Show.
The show broadcasts on bothFacebook Live and YouTube Live
(00:32):
as well as via streaming audiofrom the show's website.
Weekdays from 6 to 8 am.
I join Michael weekly in thefirst hour of Tuesday's show
from 6.10 to 7 am for adiscussion between the two of
us's show from 6.10 to 7 am fora discussion between the two of
us about our three issues.
We post the podcast of ourdiscussion following the show on
the Alaskans for SustainableBudgets Facebook, youtube,
(00:54):
soundcloud, spotify and Substackpages.
Also on the Alaskans forSustainable Budgets website, as
well as the project's page onnational blog site mediumcom,
you can find past episodes ofthe weekly top three also at the
same locations.
Keep in mind that, in additionto these podcasts during the
(01:15):
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic condition byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter this week.
Our top three issues are theseFirst, we discussed the Senate
Finance Committee's proposed SB109, which, if enacted, would be
(01:40):
the largest permanentindividual tax increase in
Alaska's history.
Second, we explain why thestate's problem isn't either too
much spending or too littlerevenue.
It's the wrong revenuestructure.
And third, we explain why, ifyou look, you can see the forces
(02:01):
behind the state's next bigspending wave starting to form
already.
Speaker 2 (02:06):
And now let's join Michael Brad Keithley Alaskans
for Sustainable Budgets.
Good morning, my friend.
How are you?
Speaker 1 (02:14):
You know, michael, I was coming off a great week.
I had a couple of concerts.
I went to a concert with an oldgroup that I've loved for years
and years and years.
I'm in Chicago.
I went to a concert in Boston.
I was really feeling great.
And then this morning I look atthe bills that got filed
yesterday and I think I thinkthe introduction that you use of
steaming is uh, is appropriatefor me this morning.
Speaker 2 (02:39):
Yeah, there's some uh boy, I tell you what.
And they're, they're finallysaying the quiet part out loud,
and I and I hate to say I toldyou so and they're finally
saying the quiet part out loud,and I hate to say I told you so.
But dang it, listeners, I toldyou so.
I mean, they're using some ofthe language that we talked
about here.
We'll get into that with BradKeithley, but let's get started
in number one, shall we?
The largest individual taxincrease in Alaska history.
(03:02):
That's what it's all about,brad.
Let's get started.
Speaker 1 (03:06):
Well, this segment was originally going to start
out to talk about what's goingon on the house side with the
PFD, and it was going to focuson.
The segment was going to focuson the change in language we're
seeing on the house side withrespect to the PFD.
Those who were around willremember that the whole thing
with the PFD started in.
(03:27):
The whole flippy floppy withthe PFD started in 2017 when the
legislative finance divisionchanged a footnote, or changed
their treatment of a footnote inthe way they do the fiscal
summary.
That flipped the PFD fromdesignated general funds, which
means it's set off for astatutory purpose, to
(03:50):
unrestricted general funds,which means it's open season.
Use it for whatever you want touse.
And that change in language thechange in language from
designated general fund tounrestricted general fund had a
huge impact.
It then justified the Senatesaying well, it's unrestricted
general funds, ledge Financetells us so, although they had
told Ledge Finance to tell themthat.
(04:11):
But Ledge Finance tells us soit's unrestricted general funds,
so we can use it for whateverwe want.
We're going to use it for this,that and the other thing, and
PFD that sort of comes last.
Then we shifted to the language, shifted to percentages.
We were going to have a 50-50PFD or some people said we were
(04:36):
going to have a 33.
I think the Republicans onHouse Finance one year tried a
33-67 PFD a third of the POMBdraw, and then it went to a 25
pfd.
But it was always about alwaysabout percentages.
A share of the the alaskanswould get through the pfd be
distributed through the pfd, ashare of what's ever being taken
from the po, from the percentof market value draw, from the
(04:59):
permanent fund earnings.
Now the house is trying tochange the.
The house andyson, call a namea name Andy Josephson is trying
to change the language again tostart talking about dollars,
dollar amounts, no longerpercentages.
We're going to give you athousand dollar PFD and boy
(05:20):
aren't you happy that you'regetting a thousand dollar PFD.
You're lucky, you're lucky.
And what that's doing isshifting the language away from
the percentages.
And you can.
I did a.
I did a cheat sheet that thatyou know.
People can go online to theAlaskans for sustainable budgets
Facebook page or Twitter pageor whatever and find it.
But I did a cheat sheet and thethousand dollar PFD is an 83.17
(05:45):
PFD, but they don't want to say83.17 or they don't want to say
80.20 or they don't want to say85.15.
They want to start putting itnow in terms of dollar amounts
and say, boy aren't you lucky.
And anyway, that's what thissegment was going to be about.
But last night, late last night, when I read the newspaper Sean
(06:06):
McGuire's newspaper on a newbill that got dropped yesterday,
and then read the bill thismorning, this segment changed.
What's happened is that theSenate Finance Committee has
introduced SB 109, which in factis the single largest permanent
(06:26):
individual tax increase,permanent individual tax
increase in Alaska's history.
It changes the statute from thetraditional POMV statute that's
been in there since the early1980s, changes it permanently to
2575, to POMV 2575.
(06:49):
Except, it doesn't even do thatbecause it changes the language
also from the shall distribute.
It's in the existing language,which the legislature has
ignored and the governor signedbills ignoring.
But it changes the language inthe statute from shall
distribute to may and it doesn'teven clear up what some claim
(07:11):
to be this conflict in theexisting statute now because of
the POMV statute beingsuperimposed on top of the PFD
statute.
It doesn't even clear up theconflict that some claim that
there's an ambiguity or there'sa conflict in the statute
between the amount thelegislature can take for general
fund, for UGF purposes, and theamount that's set aside for the
PFD.
(07:31):
It keeps that conflict insidethe statute.
So Burt Stedman can continue tosay oh well, there's a conflict
in the statute, so we have todecide.
It doesn't even insure 2575.
Even if it insured 2575, itwould be the single largest
permanent individual taxincrease in Alaska's history by
(07:51):
far.
But it doesn't even insure 2575.
All right, here's the part thatjust I blew off the planet.
My mind exploded so far that Iblew off the planet on.
Here's the part that really setme over the edge.
The co-sponsors of the billinclude not only the members of
(08:15):
the Senate majority, but theyinclude Mike Kronk and James
Kaufman from the Senate minority, who are co-sponsors from the
Senate minority, who areco-sponsors to the single
largest permanent individual taxincrease in Alaska's history.
I mean, what the hell?
(08:36):
Why do we have a Senateminority if they're just going
to roll over and go with theSenate majority on the single
largest individual permanentindividual tax increase in
Alaska's history?
There isn't even an effort inthis bill, although I understand
(08:57):
from Sean McGuire's articlethere may be more bills coming
at the end of the week, butthere isn't an effort in this
bill even to have acomprehensive plan at the end of
the week, but there isn't aneffort in this bill even to have
a comprehensive plan.
You know, at times we've talkedabout okay, if we've got to
adopt changes in the PFD, let'sat least make it part of a
(09:21):
comprehensive effort.
That was the entire goal of the2021 Legislative Fiscal Policy
Working Group that Ben Carpenterand Shelly Hughes sat on to
have a comprehensive plan thatincluded changes in the PFD but
also more equitable revenues.
If we needed additionalrevenues, changes to the old tax
code, a spending cap andputting the PFD in the
(09:42):
Constitution A comprehensiveplan.
There isn't even an effort inthis bill bill and there's no
companion bills to it.
The reason in an effort isn'teven an effort in this bill to
have a comprehensive plan.
Speaker 2 (09:53):
So what we, what we have is, one more time, the
single largest permanentindividual tax increase in
Alaska's history that the Senateminority members in the in the
legislature are signing off onwell, the senate minority
members in the finance committee, just to be clear, because I
got clarification from one uh,from uh, rob myers, who said
(10:15):
this is not the minority'sposition.
This is these two individuals,um, but.
Speaker 1 (10:21):
But the two.
The minority put on Senatefinance.
Speaker 2 (10:25):
It's two of the five two, of two, of five or six.
Yeah, the problem is, of courseand just for clarification so
everybody knows what Brad'stalking about they're talking
about changing the foundationalstatute for the PFD.
It would no longer be a fiveyear rolling average of the 21
percent%, yada, yada, yada.
They basically would calculateit at the end of the year, every
(10:47):
year, and just say here'swhat's left over, here's what.
It is a thousand bucks, andwe're taking everything else.
And again, this is we've saidif you want to ignore the
statute, you might as wellchange the statute.
So they're going to change it.
But I was definitely notexpecting this to be part of the
(11:08):
change that they came down with, especially from.
Again, I'm surprised, even ifit's not the minority's position
, it's not the caucus's position, I'm still surprised that two
members of the caucus are outthere supporting this.
It really kind of blows my mind.
Speaker 1 (11:27):
So the minority caucus appoints two members to
the finance committee.
Those are the caucus'srepresentatives on the finance
committee.
Those are supposed to be thecaucus's voice on the finance
committee, are you telling me?
Is someone trying to tell usthat they went rogue, that
(11:48):
they've gone off, that Kronk andKauffman are off in their own
universe now?
I don't believe that.
I don't believe that they wereappointed by the minority.
That is the minority on thefinance committee.
And if someone's trying to tellus that, oh, somehow there's a
(12:09):
different caucus position, orthat it's not the caucus
position or whatever, I'm notthere for that.
I'm not believing that, afterall the effort that's gone into
focusing on a comprehensive plan, after all the effort that
we've talked about in terms of,in terms of main, in terms of
(12:32):
the impact of PFD cuts on onAlaska families, in terms of the
adverse impact of PFD cuts onthe overall Alaska economy,
after all the effort to have thetwo minority I mean not Bert
Lyman, okay, you know.
Kiel, kelly Merrick, okay, yeah, I'm sort of expecting that,
but I cannot comprehend the factthat that that two, that the
(12:56):
two minority members have haverolled into this.
Co-sponsors Not, I mean,there's no asterisks, there's no
.
We agree to some, we, but wedisagree as to others.
Co-sponsors right out there,equal uh with uh with lyman and
stedman, I, I just think I, youknow well it's.
Speaker 2 (13:17):
It's beyond, beyond the beyond the edge for me, the
best part is the headline forthis article from sean mcgu
Senate panel introduces 75-25PFD formula amid doubts about
affordability.
They don't even know if that'saffordable.
I mean, as you pointed out, the$1,000 PFD is an 83-17.
And we already know that LedgeFinance said that they did all
(13:40):
the spending, just the generalspending and the increases and
everything else.
We're about 90 somethingpercent of the pomv draw to pay
for it all.
I mean it's, you know, it'smadness.
There is just, there's just nostopping it at this point.
Speaker 1 (13:54):
But that and that is the point.
There are no breaks if thesenate minority members are in
on this deal.
If the Senate minority has nowgone in on 75-25, and it's not
even, let's be clear, it's noteven 75-25.
It's sort of a goal of 75-25may appropriate 25%.
(14:17):
I mean remember this wholedebate we had at one point about
shall versus may.
Well, they've given up on thattoo.
Yeah no.
It is it, it is.
I mean there's no break anymore.
No, it's just.
It's just.
You know, everybody's pushingright ahead yeah, they're not
even trying.
Speaker 2 (14:36):
They're not even trying to throw the brakes on or
slow things down, they're justlike okay, here we go.
I mean they've taken out theword distribute.
Distribute I mean distribution.
There's no distribution now,it's just they may appropriate
it as you said.
Here we go.
I mean they've taken out theword distribute, I mean
distribution.
There's no distribution now,it's just they may appropriate
it as you said.
They're no longer taking outthe shell transfer.
They may, they could decide atany time.
It's just.
Speaker 1 (14:55):
You know, it's astonishing, all right, Single
largest permanent individual taxincrease in Alaska's history
and the two Senate minoritymembers are signed on to it.
Speaker 2 (15:09):
Yep, brad, you should really tell us how you feel
about this, because it's just, Imean, you know, look, I
expected at some point we weregoing to have this discussion
about the permanent fund formula, right, the statutory formula.
I expected that we were goingto have it, but I expected that
it would be, you know, kind of afull caucus coming together
(15:32):
saying, look, let's proposesomething that kind of protects
it or enshrines it or doessomething, or, you know, even if
it was just a you know somekind of political grandstanding,
I expected them to take somekind of stand on it in that
direction, instead for it tocome out of house finance and
basically say, oh, yeah, we'regoing to take it all apart and
everything else, and there is noshell transfer and there's no
(15:52):
more distribution, it's justappropriation.
And yeah, yada, yada, yada.
I mean I'm just like wow, theyhave just not only given up,
they have, they're going withthe full flow.
Speaker 1 (16:03):
At this point, they're becoming part of the
steamroller I mean so so the bigthings, the big things that
that Ben and and Shelly foughtfor in the legislative, in the
legislative finance or thelegislative working group,
fiscal policy working group bigthings were comprehensive plan.
If you're going to change thePFD, do it in conjunction with
(16:24):
the constitution, withconstitutionalizing the PFD, so
we don't keep going through thisevery year.
Do it in conjunction with aspending cap or some sort of
restraint on spending.
Do it in conjunction with somebroader revenue measures so you
get everybody involved in thegame, including non-residents,
the top 40% of the oil companies, 20% of the oil companies, and
(16:47):
do it as part of a comprehensiveplan.
That has been the key totalking about how we're going to
unlock or how we're going todeal with the PFD.
To have this comprehensive plan, there's nothing, nothing.
So what did the Senate minoritymember?
If we want to play this game,it's not really the caucus, it's
only the Senate minoritymembers.
So what did the Senate minoritymembers get out of this?
(17:07):
Nada, they just gave up.
They just they, just.
Why do we vote for the Senateminority?
I mean, they just gave up, theyjust became part of the
steamroller.
The steamroller there.
(17:29):
There's no indication that theygot anything, anything in
response in terms of acomprehensive plan in exchange
for giving up on uh, giving upon the pfd, and they've just
left, they just opened the doorto yeah, 75, 25 maybe, if we
feel like it in any given year.
This is by statute.
At least we have a statutoryargument now.
But now it's the statutoryargument is going to be.
Well, the statute says we cando whatever we want to.
So we're going to do what wewant to, just and just and just
(17:50):
keep taking it more and more andmore.
What did the Senate minoritymembers get, or for signing them
onto this bill Nothing, theygot nothing.
They got nothing in terms of acomprehensive plan.
They got nothing in terms ofconstitutional protection.
They, in terms of acomprehensive plan, they got
nothing in terms ofconstitutional protection.
They got nothing in terms ofmaking at least the 75-25
definitive.
They got nothing.
Speaker 2 (18:30):
I can keep going.
Now it says at the each fiscalyear, the legislature may
appropriate from the earningsreserve to the general fund the
amount available forappropriation, calculated under
this statute, to fund thedividend established under the
25 percent of income availablefor appropriation.
It's just, it may it may.
(18:51):
It is not even a, it's not evena shall distribute.
So that's the thing they say.
Well, now we're putting the2575.
No, it says may, right there,they may do it, they may decide
not to do it.
It's not a shall.
You don't even have theargument of shall distribute or
shall transfer.
Now it's they may appropriate,which was how they were treating
(19:11):
it anyway.
But now you've taken out anystatutory protection.
Speaker 1 (19:14):
It is a permanent anyway, but now you've taken out
any statutory protection, it isa permanent.
I mean.
That's why I'm heavy hittingthe word permanent when it's the
single largest permanentindividual tax increase in
Alaska's history.
We've had the largest annualincrease in Alaska's history
since 2017 as a result of theseappropriation cuts, but this is
(19:37):
the permanent.
Speaker 2 (19:39):
Angie said just because it's a committee bill
doesn't mean that all themembers agree, but they signed
on to it, right?
Speaker 1 (19:44):
Oh, absolutely.
It's not a committee bill.
Angie, Read it.
It has co-sponsors namedco-sponsors, and Kronk and
Kauffman are named co-sponsors.
Speaker 2 (19:55):
All right, hold on, hold on.
How's Kronk going to explainthis to his rural district?
That's what I want to know.
Okay, we just peeled Brad offthe ceiling and so hopefully
he's just a little.
The problem is the revenuestructure is what Brad says.
Now, my argument has alwaysbeen because it always used to
(20:17):
be, brad, I remember this 25years ago They'd be like oh no,
the state doesn't have aspending problem, the state's
got a revenue problem.
It's the real problem.
And I'm thinking well, wait,there's.
This is a chicken and the eggargument.
You have a spending, you've gotrevenue, you've got revenue
coming out.
Your, you know, you've gotrevenue coming out.
Your Wahoo here, I mean, you'rejust spending more than you
take in.
So you're, you have a spendingproblem.
(20:38):
That's creating the revenueproblem, and it's gone on so
long that now you have both, inmy opinion.
But you're saying you said it'sa revenue structural problem.
Uh, hit me with this here onthe way in all right.
Speaker 1 (20:50):
So this is a.
This is a takeoff on a op-edthat bruce tangeman has, a
former department ofrevenuevenue Commissioner Bruce
Tangeman has written.
It's now showing up in severalpublications.
The title of it is Does Alaskahave a Revenue Problem or a
Spending Problem?
And basically Tangeman says alittle bit of both and, in the
(21:12):
process of explaining why, hesays that he blows through the
PFD and just treats that as partof spending and saying, well,
we just need to keep reducingthe PFD and that's how we'll
solve this, and then we need todo something like zero-based
budgeting to address thespending problem.
(21:32):
In all honesty, not a veryhelpful article, but it does set
up this issue Does Alaska havea revenue problem or a spending
problem?
Here's why I say it's a revenuestructure problem.
Sb 109 is the perfect setup forthis conversation.
What we have is a legislaturewho is probing for the weakest
(21:58):
link in terms of where they canfind additional revenue.
Pfd cuts are additional revenue.
They aren't cuts in spending.
Every economist that has lookedat this issue in the 2016
studies, the 2017 studies, the2021 study that ITEP did they've
all treated PFD cuts as revenue, because that's what it is.
(22:18):
It's a diversion of revenue, ofadditional revenue into the UGF
by diverting a portion of therevenue that's supposed to be
going to individual Alaskafamilies.
And so what the legislature hasdone all the way along is look
for the weakest link, therevenue source that has the
(22:44):
least support, and then theyjust gone in and they probed
that.
Now, to date it's been the PFD,because PFD cuts really only
affect middle and lower incomeAlaska families.
They take some money, yes, theytake some money.
Yes, they take some money fromthe top 20%, but as a share of
income it's a trivial amount andthe top 20% are more than happy
(23:11):
to give up that portion oftheir PFD in order to avoid
taxes.
But the legislatures look forthe weakest link.
If, instead of giving them thePFD, which really hits only
middle and lower income Alaskafamilies, if we had had a
revenue structure that saideverybody's going to pay the
same proportionate share or oilcompanies, you're going to pay a
proportionate share, ornon-resident industries like
(23:33):
tourism and fishing, you'regoing to pay a proportionate
share of the cost If we had hada broad-based tax that hit
everybody equally, didn't focusthe entire burden on middle and
lower-income Alaska families,but had hit everybody equally,
we would have had a broad-basedpushback on additional spending,
(23:54):
the top 20% would have saidwait, you're going to raise my
taxes to do what?
No thanks, we're not going tohave additional spending, you're
not going to raise my taxes todo that.
The old companies would havesaid, wait, you're going to
increase our taxes to do that?
No thanks, because they weregoing to pay a share of it.
They would have pushed back onspending and held spending down.
(24:17):
They would have I mean, that'sthe donor class.
They would have pushed back ontheir legislators and say don't
do that, because you're going toincrease the taxes on me.
If we had been paying for thisthrough a broad-based tax.
But we haven't done that.
Instead we've done it throughPFD cuts a very narrow,
economically narrow tax thathones in just on middle and
(24:38):
lower income.
Alaska families the weakest interms of being able to push back
, don't have lobbyists downthere, don't have the time, mom
and pop don't have the time tofollow all this stuff in detail,
the weakest link in the chain.
And so they continue doing it.
And that's what SB 109 provesthat I mean they're just
(24:59):
continuing to go suck therevenue out of the PFD through
PFD cuts, suck the revenue outof middle and lower income
Alaska families and the rest ofthe population, the rest of the
stakeholders in the state, theold companies, the industries
(25:20):
that are dependent onnon-residents, and the top 20
spending more.
But they're not using theirresources, their abilities,
(25:40):
their ties to legislators topush back because it doesn't
affect them.
And as long as they can keepsucking the PFD dry, as long as
they can keep buildingadditional spending by sucking
down the PFD, focusing it onmiddle and lower income Alaska
families, the top 20% oilcompanies, non-residents aren't
(26:01):
going to push back, because ifthey do, somebody is going to
say, well, let's just tax them.
Then, if they're going to startinto this conversation, let's
tax them, let's tax them also.
So they're just, they'reacquiescing to the increase in
spending.
So to me, the problem thisisn't a revenue problem, it
isn't a spending problem, it's arevenue structure problem,
(26:24):
because we've allowed thelegislature to find a weak link
in the chain and just blowthrough that in terms of
additional spending.
And you're right, it's apush-pull, michael.
I mean, you're right.
Once you have that muchspending, then you start having
a revenue problem behind it.
But the reason we have aspending problem in the first
place, the reason we go downthis road in the first place is
(26:46):
because we have a revenuestructure problem that has not
captured all of Alaskans inpushing back and being affected
by and thus in pushing back onspending.
Speaker 2 (26:59):
I mean this is a big deal here.
Tangeman actually again sayssome of the quiet parts out loud
.
I had to laugh, he said.
Because exactly what did we sayfor years?
That boy, it's been a nice, youknow, it's been a free ride.
The free rides die hard, youknow.
Buckle up sugar lips.
Here it comes.
(27:20):
And he even says that on theexpenditure side, alaska's been
fortunate that for much of thepast 50 years our expenses have
basically been 100% covered bytaxes and royalties paid for the
industry.
But but free rides die hard.
Essentially, he's alreadysaying it there's going to have
to be a tax and he flat out saysit there's going to have to be
(27:41):
a tax some way down the road.
And that's what we've beentalking about.
There is, and in tangiment, tohis credit, says the same thing
it's, you know, the spending islargely unaffected.
Speaker 1 (27:53):
There is nothing has stopped them from continuing to
spend Because there hasn't beenpushback because they found a
way to target the weakest link,to target middle and lower
income Alaska families, the oneswithout lobbyists, the ones
without trade associations, theones without the ability to go
down to Juneau, the ones withoutthe information flow that all
(28:17):
the other segments of thepopulation get.
They've been able to targetthat segment.
And so the rest of the segments, the top 20%, the old companies
, the non-resident industries,just sat around going, oh lucky
us, we continue to get freegovernment.
I mean, think about thechildcare right.
(28:39):
Childcare affects a lot ofupper middle income Alaska
families that have dual incomes,have the wife working and the
husband working, have childrenat home and, oh my gosh,
childcare is expensive.
We want somebody to help coverthe cost of child care.
We don't want to pay for it.
So let's just go to PFD cuts.
(28:59):
Let's take money out of thehands of middle and lower income
Alaska families and use it topay for our child care, which is
essentially what that bill is,either whether it's through a
tax credit that Julie Colon'sdone, or whether it's direct
subsidies that Zach Fields wantsto do.
(29:20):
It is taking money out of middleand lower income Alaska
families to pay for the childcare of the top 20%.
It has been revenue structureall along.
It has been the failure tobroad base the hit, to broad
(29:42):
base the hit, the cost, thediscomfort from the increased
spending, to broad base that andmake everybody pay a share.
It's been that failure that'sresulted in additional spending,
out of control spending andsucking up the need for
additional revenue to followalong up the need for additional
revenue to follow along.
I swear to God, I swear, if wehad paid I know this to a
certainty if we had paid, if wehad required the oil companies
(30:11):
to pay for the increasedspending through adjustments to
oil taxes, those spendingincreases never, ever, ever
would have happened, right?
No, the oil companies wouldhave happened, right.
No, the whole companies wouldhave come down like a ton of
bricks.
Speaker 2 (30:20):
Yeah, they got the big lobbying stick, they would
have been beating them down onthat.
And I want to clear somethingup here, because there's been
some comments here in the chatroom that I think encapsulate
probably what some of thelisteners think out there.
Randy says I think peopleshould push back against Brad's
tax increase proposals.
We need to stop the gestationof an income tax.
(30:41):
Fat Ray over on YouTube saysyeah, let's do that revenue
structure thing so I can addtaxes to the list of reasons why
I'm leaving.
Willing to bet I wouldn't bealone.
You don't understand.
Taxes are coming.
Taxes are here, Michael.
Well, I mean even set.
Okay, let's just set aside theargument about the PFD being a
tax.
Okay, Just for a second.
I agree with you.
(31:01):
It is a tax.
Matt Berman, the ICER professor, says it has the, it is the
effective attacks, it's.
The ICER said it would be thelargest tax.
I mean let, but let's set thataside.
Everybody is saying now, everylegislature, when you look at it
and they start talking aboutrevenue, they all talk about
taxes.
They are coming and this iswhat you and I have been saying
(31:23):
for 10 years.
We're not saying we are fans oftaxes.
We're not saying that we lovetaxes, we're saying we better
start talking about the type oftax we want because it is coming
, and if we don't start talkingabout it and we keep ignoring it
, they're going to shove theworst form of tax down our
throat that could possiblyhappen.
This is.
I'm getting pissed now becausethis is what I'm trying to
(31:45):
explain for 10 years.
I don't want a tax, but this iswhere we're going, and if we
just ignore it and go la, la, la, la, la la I'm not talking
about taxes they are going tostuff one right down our throats
.
That will be the worst tax thatwe could possibly imagine,
because it's easiest for themand worse for us.
That's just what's going tohappen.
Taxes are coming, people.
(32:07):
It's inevitable.
Speaker 1 (32:09):
And that's Michael.
If we would have done that in2014, we would have done that in
2015 and said look, if we'regoing to increase spending, if
we're going to increase spending, if we're going to continue to
grow these deficits, we're goingto pay for it with a
broad-based tax.
We never would have had thosedeficits If we would have said
oil companies you're going tohave to pay more if we continue
this spending.
Top 20% Natasha, you're goingto have to pay more if we
(32:32):
continue this spending.
Non-resident industries, fishtourism you're going to have to
pay more if we continue thisspending.
It never would have happened.
We're not talking about creatingtaxes for more revenues.
We're talking about creatingtaxes, a broad-based act to act
as a disincentive, as anincentive to push back on
(32:55):
spending Act as a disincentiveact as an incentive to push back
on spending.
We're talking about motivatingpeople who have power, political
power, to push back on spending.
You don't want taxes and that'sthe advantage of taxes you
don't want them.
So people push back onadditional spending that create
them.
We haven't done that.
They found the weak link in thefence.
(33:17):
They found the way to directthe cost to middle and lower
income Alaska families and then,once they found that weak link
in the fence, they just keptgoing.
If we would have said in theearly 20 teens, if we would have
said in the middle 20 teens, ifwe would have said in the late
20 teens, if we would have saidin the early 2020s, we're going
(33:38):
to pay for this on a broad-basedbasis, with top 20%
non-resident industries and theold companies paying a
proportionate share, spendingwould have stopped.
But we didn't.
We kept letting them take thePFD.
So the problem isn't not enoughrevenue or two.
(33:58):
The problem isn't we didn'tstructure the revenue right and,
as a result of that, spendinghas continued to grow because
they found a way to get therevenue to fund that spending in
a way that they didn't get hardpushback.
Speaker 2 (34:13):
Well and I will say this before we go, because this
is the, this is it right?
Here we're coming up on itRepublican.
They have.
They have leveraged theRepublicans risk, adversity to
the to even discussing taxes.
That's how they've done it.
They've leveraged that, that,that that the aversion to taxes,
(34:34):
to where they just basicallysay, well, you don't want to tax
, do you?
And that's what they do.
They drop that bomb and thenthey walk out of the room.
The Republicans spin and gowell, no, of course we don't
want to tax.
Nobody even wants to talk abouta tax.
I mean again, brian says ithere in the chat room.
It's not that Brad who'sadvocating for taxes.
He is and has been the guywho's been warning that taxes
(34:54):
are coming, that we've beentalking about this on this
program for years, that taxesare coming and that we should
have a discussion, that if theyare coming and if they are
inevitable which has been bothof our positions for the last 10
years then we should at leasthave a say in making sure that
the tax that we have is the mostequitable and has the biggest
(35:15):
potential for holding back thesize and scope of growth in
government.
This is where we've been, butthey've used that.
Oh, you don't want taxes, doyou?
Okay, that shuts up theconversation.
You don't want taxes, do you?
Speaker 1 (35:30):
That's what it's about.
And then they keep growinggovernment by taking additional
PFD cuts.
They hone in on the weakestlink.
They don't stop growinggovernment, they just continue
growing government by honing inon the weakest link.
I mean, in all fairness, randyGriffin is the biggest ally that
Andy Josephson has, becauseAndy Josephson wants you to keep
(35:55):
focused on PFDs, because heknows there isn't enough
political support to push backon spending If he can keep using
PFDs.
And when Randy says, oh, takePFDs, pfds, yeah, don't do that,
go ahead and do that, don'thave taxes.
He's playing right into AndyJosephson's hands.
Speaker 2 (36:16):
This.
This whole thing is sofrustrating because now we're
seeing it, and that's the thingEvery time we talk to.
This is the dichotomy wherethey would say do you want taxes
or a PFD?
Well, that's a false choice.
I mean, that's a fault, butthat's how they've been doing it
.
Do you want taxes or do youwant that?
Oh, well, you want taxes?
Well, then let us do this.
And people go okay, yeah, yeah,take the PFD, I don't need the
(36:42):
PFD.
Meanwhile, people in the lowerincome brackets are going wait,
that's like kind of you know,propping us up and but
everybody's else like just don'ttax us, whatever you do.
It's like we've been avoidingit for so long.
Speaker 1 (36:49):
When it finally does come here, it's going to be a
shock to the system and that hasfacilitated, enabled what's
coming, michael, because they'veused the don't taxes, use the
PFD to build spending to a levelnow that almost to a level that
the PFD can't support cuttingthe PFD can't support anymore.
(37:12):
But they've got spending up atthat level, they've got
everybody invested in spendingat that level.
They've got constituenciesbuilt around that level and so
they're going to say, oh well,now we need taxes to support
that level of spending late 20teens, early 2020s.
(37:39):
If we'd stopped it by saying,look, everybody's going to have
to pay a proportionate share ofwhatever additional spending
there is, that would havestopped it.
But we allowed them by saying,by all this crud about no taxes,
no taxes, use the pft, no taxes.
We allowed it by all, by by allthis crud of allowing them to
use the pfd to build up spendingto a level that we're now going
to get stuck with taxes payingfor.
(37:59):
Right, it is revenue structure.
We have done it to ourselvesthrough revenue structure.
It's not spending, it's notrevenue, it's revenue structure.
We allowed them to target theweakest link in the fence and to
build spending all around that,and now it's going to spread.
Now it's going to spread.
Speaker 2 (38:19):
Well, and then, as I've said it for years, if we
don't take a stand as peoplewere going, oh, take the PFD,
just don't tax us I kept sayingyou don't understand, If you
don't take a stand now, they'regoing to take the PFD and then
they're going to tax you, soyou'll be double losers.
(38:40):
That's where we're.
I mean, that's what?
Right now?
We're all double losers becausethey're going to take the whole
PFD and then there's going tobe a tax structure on top of it.
You've done nothing.
Brandy said something about well, we want to avoid the, we want
to avoid the pain.
We want it to be as far downthe road as possible.
You know, we don't want it.
That's not the way to go aboutit.
You can't be like oh, we justwant to put it off as long as
(39:05):
possible, because that will makeit worse if we don't.
You know, just because KathyGiesel says an income tax is
coming does not mean we have torush it.
It's coming and we should notwant to rush it.
You're right, we don't want it.
But if we don't deal with it,it's going to be worse than ever
.
It's the double indemnity.
Speaker 1 (39:21):
That's the very reason that we're going to have
taxes.
It's the very reason that we'regoing to have taxes because we
enable them to build up spendingthrough using PFD cuts.
If, in the early 20-teens, themid-20-teens, the late 20 teens,
the late 20 teens, we wouldhave said nope, no more spending
without broad-based taxes Wouldhave stopped it, we never would
(39:42):
have gotten to this point wherewe're going to lose the PFD and
have taxes on top of it.
We never would have gottenthere had we said broad-based
taxes, because it would havestopped it.
At that point, the oilcompanies would have said, nope,
we're not paying for anymore.
About 20% would have said nope,we're not paying for anymore.
Non-resident industries wouldhave said, nope, we're not
(40:04):
paying anymore.
Speaker 2 (40:05):
Anthony said.
I don't disagree that taxes arecoming and or necessary.
What I'm saying is that thosenet increases, absent of an
overall reduction of cost ofliving and resources, is going
to accelerate, not decelerate,the conditions required to
collapse our economy and driveour population out.
Drive out the population thatcan leave and force the ones who
can't to be tethered to moreand more government assistance
(40:27):
and create even more drain onthe hemorrhage economy, the doom
loop we talked about that.
He's not wrong.
Speaker 1 (40:34):
No, no.
And the way to stop it was tohave had broad-based taxes.
So everybody pushed back.
I'm saying this not as ahistorical matter, but we're at
it again.
We're going to cross 75-25.
Let's say 75-25.
Let's say that is the line.
Now we're just going to standon that line, forget about 50-50
.
Forget about the statute.
We're going to stand on 20, 75,25.
(40:55):
Well, we're about to cross thatand the question is are we
going to let them cross that anduse it out of PFD cuts and
build additional spending?
Because they, because they canbuild it on the weakest link
revenue source, we're going tolet them do that.
Are we going to stand and say,no, you want any further
increase beyond 75, 25, you gotto do it through broad-based
taxes.
(41:17):
And I swear to you to acertainty that if the oil
companies think they're going toget stuck with paying for part
of this, there will be noincreased spending.
Speaker 2 (41:29):
Right, no, and yeah, the doom loop thing that we've
talked about in the past isthere's a finite pool to be able
to tax from and if you tax them, some of them will leave, which
will force that same amount oftax to be on a smaller pool,
which in turn will force anothercadre to leave, which will
shrink it even more.
That is the doom loop andthat's what we're approaching
right now, and it's aself-reinforcing negative spiral
(41:52):
.
Is what it is.
All right, brad Keithley,alaska's for sustainable budgets
.
Boy, I was all kind of justsanguine and stuff at the
beginning too, and now Brad'sgot me all spun up.
Let's get to number three.
Speaker 1 (42:04):
I forgot what number three?
Speaker 2 (42:05):
was yeah, oh, look, the next state cost wave is
building.
What is the next state costwave?
I mean, I don't even know ifyou want to go into this one,
brad, because I mean, this issuch a you know.
Look, you and I, I just feellike it's Groundhog Day, right,
every Tuesday for 10 years it'sGroundhog Day.
(42:26):
We talk about the same things,we point out the same things in
different ways, with differentexamples and different things,
but you and I have been cryingthe same song and trumpeting the
same problems for 10 years andyet people still they get hung
up.
Oh well, you guys want taxes.
That's not what we said.
Oh, you guys want that's again,it's not.
(42:48):
What we've been doing is we'retrying to tell you that this is
what's coming, and the last twoyears they've all been saying
the quiet part out loud thatthis is now they're admitting
this is what's they're saying.
They're telegraphing that it'scoming and people are like oh,
no, well, no, no, we're just no,no.
And you know, at some point,brad and I will be like we told
(43:11):
you so, not that that will feelgreat, because we will still be,
uh, uh, will be subject to theconsequences as well as
everybody else it's best to beable to tell you.
I told you so when you'restanding outside of the
consequences.
But here we are.
All right, brad, I'm sorry,I'll let you go and get into it
whenever you want.
Speaker 1 (43:27):
Well, it's relevant.
I mean that discussion, thefirst discussion, the first two
segments is relevant to thethird segment.
Third segment is you can seethe next cost wave, the next
spending wave coming.
There's just all sorts ofheadlines about it.
In the Juneau empire there'sabout 100,000 Alaskans could
lose health insurance under GOPplan backed by Trump.
(43:50):
Hospital officials say it'sprobably not inaccurate in terms
of its impact.
Union expects at least 1,378Alaska federal employees in
probationary status to be fired.
And you see headline afterheadline about what the receding
federal presence in Alaska isgoing to do to the Alaska
(44:15):
economy.
And so you sit there and gowell, are these people going to
take it?
Are these people just going tosay, okay, well, I guess the
federal government isn't goingto do it anymore, so we got to
go find other jobs?
Hell, no, they're going tostart coming to the state.
I mean part of the impact, partof the reason or part of the
impact of the 100,000 Alaskanscould lose health insurance,
(44:39):
will go right back into the loopwe had when Walker was thinking
about Medicaid expansion, whichwas the hospitals are losing
money because they're not beingreimbursed by the federal
government for the poor patientswho come into the hospitals
that they cannot refuse to see,who come into the hospitals that
they cannot refuse to see.
The hospitals will be losingmoney, and so they'll say, oh,
(45:01):
we need more money.
Well, in the case of Medicaidexpansion, what Walker did was
say, okay, we'll do Medicaidexpansion, that'll get us more
federal money, and so we'llsolve your problem that way.
Well, if we've got reductionsin Medicaid as a result of
federal recession, as a resultof the federal government
(45:23):
leaving the field, so to speak,and uncovering this problem
again, hospitals aren't going tosay, okay, well, I guess we're
just going to make less money.
Hospitals are going to saywe're going to go to the state
and ask the state to step up.
Part of what the Medicaidreductions are going to be.
Part of it is going to betaking people off the rolls of
Medicaid, but part of it thefederal government can easily
(45:45):
say we're going to fund less.
We're going to reduce thepercent of Medicaid that we pay.
We're going to leave Medicaidin place.
We're going to leave it as ashell in place.
People will be able to claimMedicaid, but we're going to
reduce the federal contributionto covering the cost, which
leaves the state on the hook.
Right, guess who picks up thebill for that?
(46:06):
You can see the next wave ofcosts coming.
And if we say, I will fund itthrough additional PFD cuts or
we'll fund it through hugelyregressive sales taxes that
focus in on middle and lowerincome Alaska families, if we do
it that way, we're going to bein the same shape five years
(46:27):
from now that we are already.
I mean, which is we're.
You know spending is increasing.
We're not able to stop it.
It has not worked.
Folks focus on this.
Since we started talking aboutin the early 20-teens, it has
not worked to say no, just sayno to spending.
(46:48):
We've said that.
We've said that over and overand over.
Don't increase spending.
It has not worked.
And if you think it's going tostart working magically now by
us just saying no middle andlower income Alaska families
saying no then you're justignoring the last 10 years of
history.
We've got to address it.
(47:08):
We've got to address it throughchanging the incentives.
We've got to change it bybroadening the base of people
saying no.
The top 20% haven't said no.
The oil companies haven't saidno to increased spending.
In fact, they've been some ofthe advocates of increased
spending.
Ooh, more childcare for ouremployees, goodie, yeah, we can
do that.
The oil companies haven't saidno to increased spending.
(47:30):
The non-resident industrieshaven't said no to increased
spending.
They've all been in favor ofincreased spending because they
didn't have to pay for it.
If we change the incentives sothat they get stuck with part of
the bill, they will startsaying no also.
It hasn't worked for us just tosay no.
Anyway, the next cost wave iscoming.
(47:51):
It's coming in terms of as thefederal government recedes.
It's coming in terms of, as thefederal government recedes, we
think, oh good, we'll get thefederal government to reduce
spending and so we'll solve thefederal problem.
It's going to be at the expenseof increased pressure on the
state legislature to increasestate spending to offset that.
(48:11):
Medicaid's the best example ofthat, but it's going to show up
in a bunch of other places aswell, and you can see it coming
with these headlines.
Speaker 2 (48:20):
Well, the good news is the federal government is
cutting back because they're inthe same boat that the state is.
They don't have the moneyanymore.
They're going to be cuttingback.
But the bad news is that youhave constituencies for those
programs, whatever they are,whether they're medical or
something else, and they'regoing to look to the state
immediately to fill that gap,and so there's going to be more
pressure on the state to spendmore, even though they have less
(48:41):
money than the federalgovernment in the long run.
That's the bottom line.
Is it too little, too late,brad?
I mean, if we decided, let'sjust say that we took over the,
we pod peopled all the folks inthe legislature and they were
like we'll do what you say,master, whatever you say.
And we said, okay, it's got tobe something broad-based, it's
got to be the revenue's got tochange.
We've got to structurallychange it.
(49:02):
Everybody's got a piece of thepie, everybody's got to share,
throw something in the pot.
Do you think that we're?
Do we have enough time?
I mean, is it even feasible atthis point?
Speaker 1 (49:15):
Well, that's two questions.
One is it feasible to get thatpassed?
Not, you know, not with withRandy and others saying.
Oh we don't want that Right.
It's not, it's not feasible toget it passed.
If they, if they still getsucked in by the Andy, by the
Andy Josephson's of the world tosupport, to support their,
their focus on, on the singlesource, the weakest link in the
in the chain it's, it, chain,it's can we get it passed?
(49:39):
I think you know we keeptalking about it.
I have to hope that we can geta broad-based protection passed.
If we got it passed, would itwork?
Yes, if you've got the oilcompanies engaged, if you've got
Ralph Samuels and thenon-resident industries engaged,
if you've got Natasha vonHimhoff and the others in the
(50:02):
top 20% engaged in pushing backon spending, yes, we will stop
spending.
So it's not a question of is ittoo late to stop spending?
No, you can stop spending.
But but to do it you have to.
(50:23):
You have to, you have tobroaden up the hit so that
there's an incentive for people,for others, to push back.
You and I saying, as we'vedemonstrated over the last 10
years, you and I and Randysaying no, don't increase
spending, hasn't worked.
There's just too many peopleout there, and as long as they,
you know, wanting to, wantingfunding from government.
Speaker 2 (50:40):
Oh there's the whole election cycle was an example of
that.
It was nothing but morespending the whole election
cycle.
Speaker 1 (50:46):
And as long as they can get it from the weakest link
in the chain, they'll continueto do it.
So so we won't stop spending.
If we don't, if we don't createincentives for everybody to
push back, if we continue to godown this road of it's only
middle and lower income Alaskafamilies that get hit.
So everybody else doesn't care,or in fact they favor it,
(51:08):
because you know, yeah, hedoesn't like child care, he
doesn't like free child care,employers, corporations.
If we don't do that, if wedon't broaden it out, spending
will continue.
We'll lose.
We'll just keep going down thisroad.
If we're able to broaden itback, broaden it out, so the
coalition pushing back isbroad-based, then yeah, we'll
(51:28):
stop spending.
It's that simple.
Speaker 2 (51:33):
It's that simple.
It's really.
Brad just laid it out.
It's that simple.
But again, there is nopolitical will to cut folks,
even those people in thelegislature that want to cut,
they are a minority of theminority.
That's what's really coming outhere.
I mean, we saw that in 2018,2019, right, even when the
(51:54):
governor had the ability, whenhe could have you know, he may
not have been overridden in hisvetoes.
We had, even when the governorhad the ability, when he could
have, you know he may not havebeen overridden in his vetoes.
We had members of the minoritythat crossed the aisle and went
ahead and would, but becausethey didn't want their piece of
the pie cut, everybody's got tofeel the pain, everybody's got
to do it and nobody is willingto do it.
There is no political will tocut there there is.
Speaker 1 (52:14):
There will be political will to cut.
There will be political will tocut if the donor class, the oil
companies and the non-residentindustries push back.
There will be the politicalwill to cut because they will
pressure their representatives,the ones they helped put in
office to cut, to stop it ifthey're going to have to pay for
it.
Speaker 2 (52:36):
But they have no skin in the game right now.
Speaker 1 (52:38):
Right.
There won't be the politicalwill.
The only ones raising the issueare the ones being affected
middle and lower income Alaskafamilies, the ones being
affected, yeah, so it's changing.
Maybe another way to thinkabout it is changing the
political will, changing thescope of people pushing back,
changing the people pushing backon the legislators, creating
(53:02):
the incentive so that we have abroad base pushing back, as
opposed to just this narrow,weak link in the things.
Speaker 2 (53:09):
And Willie nails it.
Willie nails it when we weretalking about if we don't start
talking about this, they'regoing to give us the worst form
of tax ever, he said.
You could bet your ass that theincome tax bill will have a cap
for taxes at $200,000.
The top 20% aren't going to payan equal proportional share for
their spending.
That's what we've been talkingabout, that if you wait around
(53:30):
and keep ignoring it and la la,la, la la we can't have the la
la, la la then they'll putsomething in like this that has
a cap on the top 20% and therest of the state will still pay
the bill and they'll still wantspending because their
constituencies and theircontractors and their you know
they'll.
Hey, it's fine with me.
Speaker 1 (53:51):
We've already seen that.
We've already seen that withthe, with the so-called income
tax bills that Zach Fields andElyse Galvin put in.
They were very narrow, narrowlydrawn bills that generated a
very little bit of revenue.
They could say that they had anincome tax and they could say
that they were trying to get acontribution in the top 20%, but
(54:13):
they were very narrowly drawn.
The bulk of it still came fromPFD cuts and you're exactly
right, willie's exactly right.
It'll be drawn in a way toprotect those interests.
If we don't insist, if Randydoesn't insist on everybody
having skin in the game, thenRandy's going to be the one that
gets hit the hardest out ofthis.
Speaker 2 (54:36):
Yeah, I love it.
Randy said early on agree,michael dukes is right, there is
an excessive spending problem.
And yet right now he comes backand says please don't tax us
workers so you can give out morefree money on the pfd.
Speaker 1 (54:49):
You're missing the point, you, you're missing as I
tell you, randy is andyjosephson's biggest ally.
Yeah, randy, and randy and andAndy are right there together.
Speaker 2 (55:00):
And there's a whole bunch of people out there who
are like that on the right.
Oh well, I don't care about thePFD, just take it Again.
Yes, they're going to take it,and then they're going to tax
you on top of it Because youwere avoiding talking about
taxes.
They'll hit you with thehardest one that they can find.
Brad, 60 seconds Summatetoday's wonderful program for us
(55:20):
all the way through here.
Speaker 1 (55:22):
People are giving up.
I mean, sb 109 is theco-sponsors on.
Sb 109 is the single mostdisappointing thing I've seen in
the last 10 years.
The minority members, theSenate minority members the very
ones that we're counting on tosay no have given up and they
listed themselves as co-sponsorson the single largest permanent
(55:45):
individual tax crease inAlaska's history.
Sad day.
Speaker 2 (55:50):
Maybe we should vote harder, brad.
Maybe that's what we should dowe should vote harder and make
it work.
It's just I don't know how tofix this.
I really don't.
I know that it's coming and ifwe don't have a voice in how
this is working, if we don'thave a voice in how we are taxed
, then we're going to get theworst possible outcome and it
will affect us and not thepeople who are benefiting from
(56:12):
it in many ways.
All right, brad, thank you somuch for coming on board and
joining us.
We appreciate it.
Speaker 1 (56:22):
Michael, as always, thanks for having me.
Well, that's a wrap for anotherweek's edition of the weekly
top three from Alaskans forSustainable Budgets.
Thank you again for joining us.
Remember that you can find pastepisodes on our YouTube,
soundcloud, spotify and Substackpages, and keep track of us
during the week on Facebook andTwitter.
This has been Brad Keithley,managing Director of Alaskans
for Sustainable Budgets.
No-transcript.
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top threethe top three things on our
mind here at Alaskans forSustainable Budgets for the week
of February 24th 2025.
The weekly top three is aregular segment on the Michael
Duke Show.
The show broadcasts on bothFacebook Live and YouTube Live
(00:32):
as well as via streaming audiofrom the show's website.
Weekdays from 6 to 8 am.
I join Michael weekly in thefirst hour of Tuesday's show
from 6.10 to 7 am for adiscussion between the two of
us's show from 6.10 to 7 am fora discussion between the two of
us about our three issues.
We post the podcast of ourdiscussion following the show on
the Alaskans for SustainableBudgets Facebook, youtube,
(00:54):
soundcloud, spotify and Substackpages.
Also on the Alaskans forSustainable Budgets website, as
well as the project's page onnational blog site mediumcom,
you can find past episodes ofthe weekly top three also at the
same locations.
Keep in mind that, in additionto these podcasts during the
(01:15):
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic condition byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter this week.
Our top three issues are theseFirst, we discussed the Senate
Finance Committee's proposed SB109, which, if enacted, would be
(01:40):
the largest permanentindividual tax increase in
Alaska's history.
Second, we explain why thestate's problem isn't either too
much spending or too littlerevenue.
It's the wrong revenuestructure.
And third, we explain why, ifyou look, you can see the forces
(02:01):
behind the state's next bigspending wave starting to form
already.
Speaker 2 (02:06):
And now let's join Michael Brad Keithley Alaskans
for Sustainable Budgets.
Good morning, my friend.
How are you?
Speaker 1 (02:14):
You know, michael, I was coming off a great week.
I had a couple of concerts.
I went to a concert with an oldgroup that I've loved for years
and years and years.
I'm in Chicago.
I went to a concert in Boston.
I was really feeling great.
And then this morning I look atthe bills that got filed
yesterday and I think I thinkthe introduction that you use of
steaming is uh, is appropriatefor me this morning.
Speaker 2 (02:39):
Yeah, there's some uh boy, I tell you what.
And they're, they're finallysaying the quiet part out loud,
and I and I hate to say I toldyou so and they're finally
saying the quiet part out loud,and I hate to say I told you so.
But dang it, listeners, I toldyou so.
I mean, they're using some ofthe language that we talked
about here.
We'll get into that with BradKeithley, but let's get started
in number one, shall we?
The largest individual taxincrease in Alaska history.
(03:02):
That's what it's all about,brad.
Let's get started.
Speaker 1 (03:06):
Well, this segment was originally going to start
out to talk about what's goingon on the house side with the
PFD, and it was going to focuson.
The segment was going to focuson the change in language we're
seeing on the house side withrespect to the PFD.
Those who were around willremember that the whole thing
with the PFD started in.
(03:27):
The whole flippy floppy withthe PFD started in 2017 when the
legislative finance divisionchanged a footnote, or changed
their treatment of a footnote inthe way they do the fiscal
summary.
That flipped the PFD fromdesignated general funds, which
means it's set off for astatutory purpose, to
(03:50):
unrestricted general funds,which means it's open season.
Use it for whatever you want touse.
And that change in language thechange in language from
designated general fund tounrestricted general fund had a
huge impact.
It then justified the Senatesaying well, it's unrestricted
general funds, ledge Financetells us so, although they had
told Ledge Finance to tell themthat.
(04:11):
But Ledge Finance tells us soit's unrestricted general funds,
so we can use it for whateverwe want.
We're going to use it for this,that and the other thing, and
PFD that sort of comes last.
Then we shifted to the language, shifted to percentages.
We were going to have a 50-50PFD or some people said we were
(04:36):
going to have a 33.
I think the Republicans onHouse Finance one year tried a
33-67 PFD a third of the POMBdraw, and then it went to a 25
pfd.
But it was always about alwaysabout percentages.
A share of the the alaskanswould get through the pfd be
distributed through the pfd, ashare of what's ever being taken
from the po, from the percentof market value draw, from the
(04:59):
permanent fund earnings.
Now the house is trying tochange the.
The house andyson, call a namea name Andy Josephson is trying
to change the language again tostart talking about dollars,
dollar amounts, no longerpercentages.
We're going to give you athousand dollar PFD and boy
(05:20):
aren't you happy that you'regetting a thousand dollar PFD.
You're lucky, you're lucky.
And what that's doing isshifting the language away from
the percentages.
And you can.
I did a.
I did a cheat sheet that thatyou know.
People can go online to theAlaskans for sustainable budgets
Facebook page or Twitter pageor whatever and find it.
But I did a cheat sheet and thethousand dollar PFD is an 83.17
(05:45):
PFD, but they don't want to say83.17 or they don't want to say
80.20 or they don't want to say85.15.
They want to start putting itnow in terms of dollar amounts
and say, boy aren't you lucky.
And anyway, that's what thissegment was going to be about.
But last night, late last night, when I read the newspaper Sean
(06:06):
McGuire's newspaper on a newbill that got dropped yesterday,
and then read the bill thismorning, this segment changed.
What's happened is that theSenate Finance Committee has
introduced SB 109, which in factis the single largest permanent
(06:26):
individual tax increase,permanent individual tax
increase in Alaska's history.
It changes the statute from thetraditional POMV statute that's
been in there since the early1980s, changes it permanently to
2575, to POMV 2575.
(06:49):
Except, it doesn't even do thatbecause it changes the language
also from the shall distribute.
It's in the existing language,which the legislature has
ignored and the governor signedbills ignoring.
But it changes the language inthe statute from shall
distribute to may and it doesn'teven clear up what some claim
(07:11):
to be this conflict in theexisting statute now because of
the POMV statute beingsuperimposed on top of the PFD
statute.
It doesn't even clear up theconflict that some claim that
there's an ambiguity or there'sa conflict in the statute
between the amount thelegislature can take for general
fund, for UGF purposes, and theamount that's set aside for the
PFD.
(07:31):
It keeps that conflict insidethe statute.
So Burt Stedman can continue tosay oh well, there's a conflict
in the statute, so we have todecide.
It doesn't even insure 2575.
Even if it insured 2575, itwould be the single largest
permanent individual taxincrease in Alaska's history by
(07:51):
far.
But it doesn't even insure 2575.
All right, here's the part thatjust I blew off the planet.
My mind exploded so far that Iblew off the planet on.
Here's the part that really setme over the edge.
The co-sponsors of the billinclude not only the members of
(08:15):
the Senate majority, but theyinclude Mike Kronk and James
Kaufman from the Senate minority, who are co-sponsors from the
Senate minority, who areco-sponsors to the single
largest permanent individual taxincrease in Alaska's history.
I mean, what the hell?
(08:36):
Why do we have a Senateminority if they're just going
to roll over and go with theSenate majority on the single
largest individual permanentindividual tax increase in
Alaska's history?
There isn't even an effort inthis bill, although I understand
(08:57):
from Sean McGuire's articlethere may be more bills coming
at the end of the week, butthere isn't an effort in this
bill even to have acomprehensive plan at the end of
the week, but there isn't aneffort in this bill even to have
a comprehensive plan.
You know, at times we've talkedabout okay, if we've got to
adopt changes in the PFD, let'sat least make it part of a
(09:21):
comprehensive effort.
That was the entire goal of the2021 Legislative Fiscal Policy
Working Group that Ben Carpenterand Shelly Hughes sat on to
have a comprehensive plan thatincluded changes in the PFD but
also more equitable revenues.
If we needed additionalrevenues, changes to the old tax
code, a spending cap andputting the PFD in the
(09:42):
Constitution A comprehensiveplan.
There isn't even an effort inthis bill bill and there's no
companion bills to it.
The reason in an effort isn'teven an effort in this bill to
have a comprehensive plan.
Speaker 2 (09:53):
So what we, what we have is, one more time, the
single largest permanentindividual tax increase in
Alaska's history that the Senateminority members in the in the
legislature are signing off onwell, the senate minority
members in the finance committee, just to be clear, because I
got clarification from one uh,from uh, rob myers, who said
(10:15):
this is not the minority'sposition.
This is these two individuals,um, but.
Speaker 1 (10:21):
But the two.
The minority put on Senatefinance.
Speaker 2 (10:25):
It's two of the five two, of two, of five or six.
Yeah, the problem is, of courseand just for clarification so
everybody knows what Brad'stalking about they're talking
about changing the foundationalstatute for the PFD.
It would no longer be a fiveyear rolling average of the 21
percent%, yada, yada, yada.
They basically would calculateit at the end of the year, every
(10:47):
year, and just say here'swhat's left over, here's what.
It is a thousand bucks, andwe're taking everything else.
And again, this is we've saidif you want to ignore the
statute, you might as wellchange the statute.
So they're going to change it.
But I was definitely notexpecting this to be part of the
(11:08):
change that they came down with, especially from.
Again, I'm surprised, even ifit's not the minority's position
, it's not the caucus's position, I'm still surprised that two
members of the caucus are outthere supporting this.
It really kind of blows my mind.
Speaker 1 (11:27):
So the minority caucus appoints two members to
the finance committee.
Those are the caucus'srepresentatives on the finance
committee.
Those are supposed to be thecaucus's voice on the finance
committee, are you telling me?
Is someone trying to tell usthat they went rogue, that
(11:48):
they've gone off, that Kronk andKauffman are off in their own
universe now?
I don't believe that.
I don't believe that they wereappointed by the minority.
That is the minority on thefinance committee.
And if someone's trying to tellus that, oh, somehow there's a
(12:09):
different caucus position, orthat it's not the caucus
position or whatever, I'm notthere for that.
I'm not believing that, afterall the effort that's gone into
focusing on a comprehensive plan, after all the effort that
we've talked about in terms of,in terms of main, in terms of
(12:32):
the impact of PFD cuts on onAlaska families, in terms of the
adverse impact of PFD cuts onthe overall Alaska economy,
after all the effort to have thetwo minority I mean not Bert
Lyman, okay, you know.
Kiel, kelly Merrick, okay, yeah, I'm sort of expecting that,
but I cannot comprehend the factthat that that two, that the
(12:56):
two minority members have haverolled into this.
Co-sponsors Not, I mean,there's no asterisks, there's no
.
We agree to some, we, but wedisagree as to others.
Co-sponsors right out there,equal uh with uh with lyman and
stedman, I, I just think I, youknow well it's.
Speaker 2 (13:17):
It's beyond, beyond the beyond the edge for me, the
best part is the headline forthis article from sean mcgu
Senate panel introduces 75-25PFD formula amid doubts about
affordability.
They don't even know if that'saffordable.
I mean, as you pointed out, the$1,000 PFD is an 83-17.
And we already know that LedgeFinance said that they did all
(13:40):
the spending, just the generalspending and the increases and
everything else.
We're about 90 somethingpercent of the pomv draw to pay
for it all.
I mean it's, you know, it'smadness.
There is just, there's just nostopping it at this point.
Speaker 1 (13:54):
But that and that is the point.
There are no breaks if thesenate minority members are in
on this deal.
If the Senate minority has nowgone in on 75-25, and it's not
even, let's be clear, it's noteven 75-25.
It's sort of a goal of 75-25may appropriate 25%.
(14:17):
I mean remember this wholedebate we had at one point about
shall versus may.
Well, they've given up on thattoo.
Yeah no.
It is it, it is.
I mean there's no break anymore.
No, it's just.
It's just.
You know, everybody's pushingright ahead yeah, they're not
even trying.
Speaker 2 (14:36):
They're not even trying to throw the brakes on or
slow things down, they're justlike okay, here we go.
I mean they've taken out theword distribute.
Distribute I mean distribution.
There's no distribution now,it's just they may appropriate
it as you said.
Here we go.
I mean they've taken out theword distribute, I mean
distribution.
There's no distribution now,it's just they may appropriate
it as you said.
They're no longer taking outthe shell transfer.
They may, they could decide atany time.
It's just.
Speaker 1 (14:55):
You know, it's astonishing, all right, Single
largest permanent individual taxincrease in Alaska's history
and the two Senate minoritymembers are signed on to it.
Speaker 2 (15:09):
Yep, brad, you should really tell us how you feel
about this, because it's just, Imean, you know, look, I
expected at some point we weregoing to have this discussion
about the permanent fund formula, right, the statutory formula.
I expected that we were goingto have it, but I expected that
it would be, you know, kind of afull caucus coming together
(15:32):
saying, look, let's proposesomething that kind of protects
it or enshrines it or doessomething, or, you know, even if
it was just a you know somekind of political grandstanding,
I expected them to take somekind of stand on it in that
direction, instead for it tocome out of house finance and
basically say, oh, yeah, we'regoing to take it all apart and
everything else, and there is noshell transfer and there's no
(15:52):
more distribution, it's justappropriation.
And yeah, yada, yada, yada.
I mean I'm just like wow, theyhave just not only given up,
they have, they're going withthe full flow.
Speaker 1 (16:03):
At this point, they're becoming part of the
steamroller I mean so so the bigthings, the big things that
that Ben and and Shelly foughtfor in the legislative, in the
legislative finance or thelegislative working group,
fiscal policy working group bigthings were comprehensive plan.
If you're going to change thePFD, do it in conjunction with
(16:24):
the constitution, withconstitutionalizing the PFD, so
we don't keep going through thisevery year.
Do it in conjunction with aspending cap or some sort of
restraint on spending.
Do it in conjunction with somebroader revenue measures so you
get everybody involved in thegame, including non-residents,
the top 40% of the oil companies, 20% of the oil companies, and
(16:47):
do it as part of a comprehensiveplan.
That has been the key totalking about how we're going to
unlock or how we're going todeal with the PFD.
To have this comprehensive plan, there's nothing, nothing.
So what did the Senate minoritymember?
If we want to play this game,it's not really the caucus, it's
only the Senate minoritymembers.
So what did the Senate minoritymembers get out of this?
(17:07):
Nada, they just gave up.
They just they, just.
Why do we vote for the Senateminority?
I mean, they just gave up, theyjust became part of the
steamroller.
The steamroller there.
(17:29):
There's no indication that theygot anything, anything in
response in terms of acomprehensive plan in exchange
for giving up on uh, giving upon the pfd, and they've just
left, they just opened the doorto yeah, 75, 25 maybe, if we
feel like it in any given year.
This is by statute.
At least we have a statutoryargument now.
But now it's the statutoryargument is going to be.
Well, the statute says we cando whatever we want to.
So we're going to do what wewant to, just and just and just
(17:50):
keep taking it more and more andmore.
What did the Senate minoritymembers get, or for signing them
onto this bill Nothing, theygot nothing.
They got nothing in terms of acomprehensive plan.
They got nothing in terms ofconstitutional protection.
They, in terms of acomprehensive plan, they got
nothing in terms ofconstitutional protection.
They got nothing in terms ofmaking at least the 75-25
definitive.
They got nothing.
Speaker 2 (18:30):
I can keep going.
Now it says at the each fiscalyear, the legislature may
appropriate from the earningsreserve to the general fund the
amount available forappropriation, calculated under
this statute, to fund thedividend established under the
25 percent of income availablefor appropriation.
It's just, it may it may.
(18:51):
It is not even a, it's not evena shall distribute.
So that's the thing they say.
Well, now we're putting the2575.
No, it says may, right there,they may do it, they may decide
not to do it.
It's not a shall.
You don't even have theargument of shall distribute or
shall transfer.
Now it's they may appropriate,which was how they were treating
(19:11):
it anyway.
But now you've taken out anystatutory protection.
Speaker 1 (19:14):
It is a permanent anyway, but now you've taken out
any statutory protection, it isa permanent.
I mean.
That's why I'm heavy hittingthe word permanent when it's the
single largest permanentindividual tax increase in
Alaska's history.
We've had the largest annualincrease in Alaska's history
since 2017 as a result of theseappropriation cuts, but this is
(19:37):
the permanent.
Speaker 2 (19:39):
Angie said just because it's a committee bill
doesn't mean that all themembers agree, but they signed
on to it, right?
Speaker 1 (19:44):
Oh, absolutely.
It's not a committee bill.
Angie, Read it.
It has co-sponsors namedco-sponsors, and Kronk and
Kauffman are named co-sponsors.
Speaker 2 (19:55):
All right, hold on, hold on.
How's Kronk going to explainthis to his rural district?
That's what I want to know.
Okay, we just peeled Brad offthe ceiling and so hopefully
he's just a little.
The problem is the revenuestructure is what Brad says.
Now, my argument has alwaysbeen because it always used to
(20:17):
be, brad, I remember this 25years ago They'd be like oh no,
the state doesn't have aspending problem, the state's
got a revenue problem.
It's the real problem.
And I'm thinking well, wait,there's.
This is a chicken and the eggargument.
You have a spending, you've gotrevenue, you've got revenue
coming out.
Your, you know, you've gotrevenue coming out.
Your Wahoo here, I mean, you'rejust spending more than you
take in.
So you're, you have a spendingproblem.
(20:38):
That's creating the revenueproblem, and it's gone on so
long that now you have both, inmy opinion.
But you're saying you said it'sa revenue structural problem.
Uh, hit me with this here onthe way in all right.
Speaker 1 (20:50):
So this is a.
This is a takeoff on a op-edthat bruce tangeman has, a
former department ofrevenuevenue Commissioner Bruce
Tangeman has written.
It's now showing up in severalpublications.
The title of it is Does Alaskahave a Revenue Problem or a
Spending Problem?
And basically Tangeman says alittle bit of both and, in the
(21:12):
process of explaining why, hesays that he blows through the
PFD and just treats that as partof spending and saying, well,
we just need to keep reducingthe PFD and that's how we'll
solve this, and then we need todo something like zero-based
budgeting to address thespending problem.
(21:32):
In all honesty, not a veryhelpful article, but it does set
up this issue Does Alaska havea revenue problem or a spending
problem?
Here's why I say it's a revenuestructure problem.
Sb 109 is the perfect setup forthis conversation.
What we have is a legislaturewho is probing for the weakest
(21:58):
link in terms of where they canfind additional revenue.
Pfd cuts are additional revenue.
They aren't cuts in spending.
Every economist that has lookedat this issue in the 2016
studies, the 2017 studies, the2021 study that ITEP did they've
all treated PFD cuts as revenue, because that's what it is.
(22:18):
It's a diversion of revenue, ofadditional revenue into the UGF
by diverting a portion of therevenue that's supposed to be
going to individual Alaskafamilies.
And so what the legislature hasdone all the way along is look
for the weakest link, therevenue source that has the
(22:44):
least support, and then theyjust gone in and they probed
that.
Now, to date it's been the PFD,because PFD cuts really only
affect middle and lower incomeAlaska families.
They take some money, yes, theytake some money.
Yes, they take some money fromthe top 20%, but as a share of
income it's a trivial amount andthe top 20% are more than happy
(23:11):
to give up that portion oftheir PFD in order to avoid
taxes.
But the legislatures look forthe weakest link.
If, instead of giving them thePFD, which really hits only
middle and lower income Alaskafamilies, if we had had a
revenue structure that saideverybody's going to pay the
same proportionate share or oilcompanies, you're going to pay a
proportionate share, ornon-resident industries like
(23:33):
tourism and fishing, you'regoing to pay a proportionate
share of the cost If we had hada broad-based tax that hit
everybody equally, didn't focusthe entire burden on middle and
lower-income Alaska families,but had hit everybody equally,
we would have had a broad-basedpushback on additional spending,
(23:54):
the top 20% would have saidwait, you're going to raise my
taxes to do what?
No thanks, we're not going tohave additional spending, you're
not going to raise my taxes todo that.
The old companies would havesaid, wait, you're going to
increase our taxes to do that?
No thanks, because they weregoing to pay a share of it.
They would have pushed back onspending and held spending down.
(24:17):
They would have I mean, that'sthe donor class.
They would have pushed back ontheir legislators and say don't
do that, because you're going toincrease the taxes on me.
If we had been paying for thisthrough a broad-based tax.
But we haven't done that.
Instead we've done it throughPFD cuts a very narrow,
economically narrow tax thathones in just on middle and
(24:38):
lower income.
Alaska families the weakest interms of being able to push back
, don't have lobbyists downthere, don't have the time, mom
and pop don't have the time tofollow all this stuff in detail,
the weakest link in the chain.
And so they continue doing it.
And that's what SB 109 provesthat I mean they're just
(24:59):
continuing to go suck therevenue out of the PFD through
PFD cuts, suck the revenue outof middle and lower income
Alaska families and the rest ofthe population, the rest of the
stakeholders in the state, theold companies, the industries
(25:20):
that are dependent onnon-residents, and the top 20
spending more.
But they're not using theirresources, their abilities,
(25:40):
their ties to legislators topush back because it doesn't
affect them.
And as long as they can keepsucking the PFD dry, as long as
they can keep buildingadditional spending by sucking
down the PFD, focusing it onmiddle and lower income Alaska
families, the top 20% oilcompanies, non-residents aren't
(26:01):
going to push back, because ifthey do, somebody is going to
say, well, let's just tax them.
Then, if they're going to startinto this conversation, let's
tax them, let's tax them also.
So they're just, they'reacquiescing to the increase in
spending.
So to me, the problem thisisn't a revenue problem, it
isn't a spending problem, it's arevenue structure problem,
(26:24):
because we've allowed thelegislature to find a weak link
in the chain and just blowthrough that in terms of
additional spending.
And you're right, it's apush-pull, michael.
I mean, you're right.
Once you have that muchspending, then you start having
a revenue problem behind it.
But the reason we have aspending problem in the first
place, the reason we go downthis road in the first place is
(26:46):
because we have a revenuestructure problem that has not
captured all of Alaskans inpushing back and being affected
by and thus in pushing back onspending.
Speaker 2 (26:59):
I mean this is a big deal here.
Tangeman actually again sayssome of the quiet parts out loud
.
I had to laugh, he said.
Because exactly what did we sayfor years?
That boy, it's been a nice, youknow, it's been a free ride.
The free rides die hard, youknow.
Buckle up sugar lips.
Here it comes.
(27:20):
And he even says that on theexpenditure side, alaska's been
fortunate that for much of thepast 50 years our expenses have
basically been 100% covered bytaxes and royalties paid for the
industry.
But but free rides die hard.
Essentially, he's alreadysaying it there's going to have
to be a tax and he flat out saysit there's going to have to be
(27:41):
a tax some way down the road.
And that's what we've beentalking about.
There is, and in tangiment, tohis credit, says the same thing
it's, you know, the spending islargely unaffected.
Speaker 1 (27:53):
There is nothing has stopped them from continuing to
spend Because there hasn't beenpushback because they found a
way to target the weakest link,to target middle and lower
income Alaska families, the oneswithout lobbyists, the ones
without trade associations, theones without the ability to go
down to Juneau, the ones withoutthe information flow that all
(28:17):
the other segments of thepopulation get.
They've been able to targetthat segment.
And so the rest of the segments, the top 20%, the old companies
, the non-resident industries,just sat around going, oh lucky
us, we continue to get freegovernment.
I mean, think about thechildcare right.
(28:39):
Childcare affects a lot ofupper middle income Alaska
families that have dual incomes,have the wife working and the
husband working, have childrenat home and, oh my gosh,
childcare is expensive.
We want somebody to help coverthe cost of child care.
We don't want to pay for it.
So let's just go to PFD cuts.
(28:59):
Let's take money out of thehands of middle and lower income
Alaska families and use it topay for our child care, which is
essentially what that bill is,either whether it's through a
tax credit that Julie Colon'sdone, or whether it's direct
subsidies that Zach Fields wantsto do.
(29:20):
It is taking money out of middleand lower income Alaska
families to pay for the childcare of the top 20%.
It has been revenue structureall along.
It has been the failure tobroad base the hit, to broad
(29:42):
base the hit, the cost, thediscomfort from the increased
spending, to broad base that andmake everybody pay a share.
It's been that failure that'sresulted in additional spending,
out of control spending andsucking up the need for
additional revenue to followalong up the need for additional
revenue to follow along.
I swear to God, I swear, if wehad paid I know this to a
certainty if we had paid, if wehad required the oil companies
(30:11):
to pay for the increasedspending through adjustments to
oil taxes, those spendingincreases never, ever, ever
would have happened, right?
No, the oil companies wouldhave happened, right.
No, the whole companies wouldhave come down like a ton of
bricks.
Speaker 2 (30:20):
Yeah, they got the big lobbying stick, they would
have been beating them down onthat.
And I want to clear somethingup here, because there's been
some comments here in the chatroom that I think encapsulate
probably what some of thelisteners think out there.
Randy says I think peopleshould push back against Brad's
tax increase proposals.
We need to stop the gestationof an income tax.
(30:41):
Fat Ray over on YouTube saysyeah, let's do that revenue
structure thing so I can addtaxes to the list of reasons why
I'm leaving.
Willing to bet I wouldn't bealone.
You don't understand.
Taxes are coming.
Taxes are here, Michael.
Well, I mean even set.
Okay, let's just set aside theargument about the PFD being a
tax.
Okay, Just for a second.
I agree with you.
(31:01):
It is a tax.
Matt Berman, the ICER professor, says it has the, it is the
effective attacks, it's.
The ICER said it would be thelargest tax.
I mean let, but let's set thataside.
Everybody is saying now, everylegislature, when you look at it
and they start talking aboutrevenue, they all talk about
taxes.
They are coming and this iswhat you and I have been saying
(31:23):
for 10 years.
We're not saying we are fans oftaxes.
We're not saying that we lovetaxes, we're saying we better
start talking about the type oftax we want because it is coming
, and if we don't start talkingabout it and we keep ignoring it
, they're going to shove theworst form of tax down our
throat that could possiblyhappen.
This is.
I'm getting pissed now becausethis is what I'm trying to
(31:45):
explain for 10 years.
I don't want a tax, but this iswhere we're going, and if we
just ignore it and go la, la, la, la, la la I'm not talking
about taxes they are going tostuff one right down our throats
.
That will be the worst tax thatwe could possibly imagine,
because it's easiest for themand worse for us.
That's just what's going tohappen.
Taxes are coming, people.
(32:07):
It's inevitable.
Speaker 1 (32:09):
And that's Michael.
If we would have done that in2014, we would have done that in
2015 and said look, if we'regoing to increase spending, if
we're going to increase spending, if we're going to continue to
grow these deficits, we're goingto pay for it with a
broad-based tax.
We never would have had thosedeficits If we would have said
oil companies you're going tohave to pay more if we continue
this spending.
Top 20% Natasha, you're goingto have to pay more if we
(32:32):
continue this spending.
Non-resident industries, fishtourism you're going to have to
pay more if we continue thisspending.
It never would have happened.
We're not talking about creatingtaxes for more revenues.
We're talking about creatingtaxes, a broad-based act to act
as a disincentive, as anincentive to push back on
(32:55):
spending Act as a disincentiveact as an incentive to push back
on spending.
We're talking about motivatingpeople who have power, political
power, to push back on spending.
You don't want taxes and that'sthe advantage of taxes you
don't want them.
So people push back onadditional spending that create
them.
We haven't done that.
They found the weak link in thefence.
(33:17):
They found the way to directthe cost to middle and lower
income Alaska families and then,once they found that weak link
in the fence, they just keptgoing.
If we would have said in theearly 20 teens, if we would have
said in the middle 20 teens, ifwe would have said in the late
20 teens, if we would have saidin the early 2020s, we're going
(33:38):
to pay for this on a broad-basedbasis, with top 20%
non-resident industries and theold companies paying a
proportionate share, spendingwould have stopped.
But we didn't.
We kept letting them take thePFD.
So the problem isn't not enoughrevenue or two.
(33:58):
The problem isn't we didn'tstructure the revenue right and,
as a result of that, spendinghas continued to grow because
they found a way to get therevenue to fund that spending in
a way that they didn't get hardpushback.
Speaker 2 (34:13):
Well and I will say this before we go, because this
is the, this is it right?
Here we're coming up on itRepublican.
They have.
They have leveraged theRepublicans risk, adversity to
the to even discussing taxes.
That's how they've done it.
They've leveraged that, that,that that the aversion to taxes,
(34:34):
to where they just basicallysay, well, you don't want to tax
, do you?
And that's what they do.
They drop that bomb and thenthey walk out of the room.
The Republicans spin and gowell, no, of course we don't
want to tax.
Nobody even wants to talk abouta tax.
I mean again, brian says ithere in the chat room.
It's not that Brad who'sadvocating for taxes.
He is and has been the guywho's been warning that taxes
(34:54):
are coming, that we've beentalking about this on this
program for years, that taxesare coming and that we should
have a discussion, that if theyare coming and if they are
inevitable which has been bothof our positions for the last 10
years then we should at leasthave a say in making sure that
the tax that we have is the mostequitable and has the biggest
(35:15):
potential for holding back thesize and scope of growth in
government.
This is where we've been, butthey've used that.
Oh, you don't want taxes, doyou?
Okay, that shuts up theconversation.
You don't want taxes, do you?
Speaker 1 (35:30):
That's what it's about.
And then they keep growinggovernment by taking additional
PFD cuts.
They hone in on the weakestlink.
They don't stop growinggovernment, they just continue
growing government by honing inon the weakest link.
I mean, in all fairness, randyGriffin is the biggest ally that
Andy Josephson has, becauseAndy Josephson wants you to keep
(35:55):
focused on PFDs, because heknows there isn't enough
political support to push backon spending If he can keep using
PFDs.
And when Randy says, oh, takePFDs, pfds, yeah, don't do that,
go ahead and do that, don'thave taxes.
He's playing right into AndyJosephson's hands.
Speaker 2 (36:16):
This.
This whole thing is sofrustrating because now we're
seeing it, and that's the thingEvery time we talk to.
This is the dichotomy wherethey would say do you want taxes
or a PFD?
Well, that's a false choice.
I mean, that's a fault, butthat's how they've been doing it
.
Do you want taxes or do youwant that?
Oh, well, you want taxes?
Well, then let us do this.
And people go okay, yeah, yeah,take the PFD, I don't need the
(36:42):
PFD.
Meanwhile, people in the lowerincome brackets are going wait,
that's like kind of you know,propping us up and but
everybody's else like just don'ttax us, whatever you do.
It's like we've been avoidingit for so long.
Speaker 1 (36:49):
When it finally does come here, it's going to be a
shock to the system and that hasfacilitated, enabled what's
coming, michael, because they'veused the don't taxes, use the
PFD to build spending to a levelnow that almost to a level that
the PFD can't support cuttingthe PFD can't support anymore.
(37:12):
But they've got spending up atthat level, they've got
everybody invested in spendingat that level.
They've got constituenciesbuilt around that level and so
they're going to say, oh well,now we need taxes to support
that level of spending late 20teens, early 2020s.
(37:39):
If we'd stopped it by saying,look, everybody's going to have
to pay a proportionate share ofwhatever additional spending
there is, that would havestopped it.
But we allowed them by saying,by all this crud about no taxes,
no taxes, use the pft, no taxes.
We allowed it by all, by by allthis crud of allowing them to
use the pfd to build up spendingto a level that we're now going
to get stuck with taxes payingfor.
(37:59):
Right, it is revenue structure.
We have done it to ourselvesthrough revenue structure.
It's not spending, it's notrevenue, it's revenue structure.
We allowed them to target theweakest link in the fence and to
build spending all around that,and now it's going to spread.
Now it's going to spread.
Speaker 2 (38:19):
Well, and then, as I've said it for years, if we
don't take a stand as peoplewere going, oh, take the PFD,
just don't tax us I kept sayingyou don't understand, If you
don't take a stand now, they'regoing to take the PFD and then
they're going to tax you, soyou'll be double losers.
(38:40):
That's where we're.
I mean, that's what?
Right now?
We're all double losers becausethey're going to take the whole
PFD and then there's going tobe a tax structure on top of it.
You've done nothing.
Brandy said something about well, we want to avoid the, we want
to avoid the pain.
We want it to be as far downthe road as possible.
You know, we don't want it.
That's not the way to go aboutit.
You can't be like oh, we justwant to put it off as long as
(39:05):
possible, because that will makeit worse if we don't.
You know, just because KathyGiesel says an income tax is
coming does not mean we have torush it.
It's coming and we should notwant to rush it.
You're right, we don't want it.
But if we don't deal with it,it's going to be worse than ever
.
It's the double indemnity.
Speaker 1 (39:21):
That's the very reason that we're going to have
taxes.
It's the very reason that we'regoing to have taxes because we
enable them to build up spendingthrough using PFD cuts.
If, in the early 20-teens, themid-20-teens, the late 20 teens,
the late 20 teens, we wouldhave said nope, no more spending
without broad-based taxes Wouldhave stopped it, we never would
(39:42):
have gotten to this point wherewe're going to lose the PFD and
have taxes on top of it.
We never would have gottenthere had we said broad-based
taxes, because it would havestopped it.
At that point, the oilcompanies would have said, nope,
we're not paying for anymore.
About 20% would have said nope,we're not paying for anymore.
Non-resident industries wouldhave said, nope, we're not
(40:04):
paying anymore.
Speaker 2 (40:05):
Anthony said.
I don't disagree that taxes arecoming and or necessary.
What I'm saying is that thosenet increases, absent of an
overall reduction of cost ofliving and resources, is going
to accelerate, not decelerate,the conditions required to
collapse our economy and driveour population out.
Drive out the population thatcan leave and force the ones who
can't to be tethered to moreand more government assistance
(40:27):
and create even more drain onthe hemorrhage economy, the doom
loop we talked about that.
He's not wrong.
Speaker 1 (40:34):
No, no.
And the way to stop it was tohave had broad-based taxes.
So everybody pushed back.
I'm saying this not as ahistorical matter, but we're at
it again.
We're going to cross 75-25.
Let's say 75-25.
Let's say that is the line.
Now we're just going to standon that line, forget about 50-50
.
Forget about the statute.
We're going to stand on 20, 75,25.
(40:55):
Well, we're about to cross thatand the question is are we
going to let them cross that anduse it out of PFD cuts and
build additional spending?
Because they, because they canbuild it on the weakest link
revenue source, we're going tolet them do that.
Are we going to stand and say,no, you want any further
increase beyond 75, 25, you gotto do it through broad-based
taxes.
(41:17):
And I swear to you to acertainty that if the oil
companies think they're going toget stuck with paying for part
of this, there will be noincreased spending.
Speaker 2 (41:29):
Right, no, and yeah, the doom loop thing that we've
talked about in the past isthere's a finite pool to be able
to tax from and if you tax them, some of them will leave, which
will force that same amount oftax to be on a smaller pool,
which in turn will force anothercadre to leave, which will
shrink it even more.
That is the doom loop andthat's what we're approaching
right now, and it's aself-reinforcing negative spiral
(41:52):
.
Is what it is.
All right, brad Keithley,alaska's for sustainable budgets
.
Boy, I was all kind of justsanguine and stuff at the
beginning too, and now Brad'sgot me all spun up.
Let's get to number three.
Speaker 1 (42:04):
I forgot what number three?
Speaker 2 (42:05):
was yeah, oh, look, the next state cost wave is
building.
What is the next state costwave?
I mean, I don't even know ifyou want to go into this one,
brad, because I mean, this issuch a you know.
Look, you and I, I just feellike it's Groundhog Day, right,
every Tuesday for 10 years it'sGroundhog Day.
(42:26):
We talk about the same things,we point out the same things in
different ways, with differentexamples and different things,
but you and I have been cryingthe same song and trumpeting the
same problems for 10 years andyet people still they get hung
up.
Oh well, you guys want taxes.
That's not what we said.
Oh, you guys want that's again,it's not.
(42:48):
What we've been doing is we'retrying to tell you that this is
what's coming, and the last twoyears they've all been saying
the quiet part out loud thatthis is now they're admitting
this is what's they're saying.
They're telegraphing that it'scoming and people are like oh,
no, well, no, no, we're just no,no.
And you know, at some point,brad and I will be like we told
(43:11):
you so, not that that will feelgreat, because we will still be,
uh, uh, will be subject to theconsequences as well as
everybody else it's best to beable to tell you.
I told you so when you'restanding outside of the
consequences.
But here we are.
All right, brad, I'm sorry,I'll let you go and get into it
whenever you want.
Speaker 1 (43:27):
Well, it's relevant.
I mean that discussion, thefirst discussion, the first two
segments is relevant to thethird segment.
Third segment is you can seethe next cost wave, the next
spending wave coming.
There's just all sorts ofheadlines about it.
In the Juneau empire there'sabout 100,000 Alaskans could
lose health insurance under GOPplan backed by Trump.
(43:50):
Hospital officials say it'sprobably not inaccurate in terms
of its impact.
Union expects at least 1,378Alaska federal employees in
probationary status to be fired.
And you see headline afterheadline about what the receding
federal presence in Alaska isgoing to do to the Alaska
(44:15):
economy.
And so you sit there and gowell, are these people going to
take it?
Are these people just going tosay, okay, well, I guess the
federal government isn't goingto do it anymore, so we got to
go find other jobs?
Hell, no, they're going tostart coming to the state.
I mean part of the impact, partof the reason or part of the
impact of the 100,000 Alaskanscould lose health insurance,
(44:39):
will go right back into the loopwe had when Walker was thinking
about Medicaid expansion, whichwas the hospitals are losing
money because they're not beingreimbursed by the federal
government for the poor patientswho come into the hospitals
that they cannot refuse to see,who come into the hospitals that
they cannot refuse to see.
The hospitals will be losingmoney, and so they'll say, oh,
(45:01):
we need more money.
Well, in the case of Medicaidexpansion, what Walker did was
say, okay, we'll do Medicaidexpansion, that'll get us more
federal money, and so we'llsolve your problem that way.
Well, if we've got reductionsin Medicaid as a result of
federal recession, as a resultof the federal government
(45:23):
leaving the field, so to speak,and uncovering this problem
again, hospitals aren't going tosay, okay, well, I guess we're
just going to make less money.
Hospitals are going to saywe're going to go to the state
and ask the state to step up.
Part of what the Medicaidreductions are going to be.
Part of it is going to betaking people off the rolls of
Medicaid, but part of it thefederal government can easily
(45:45):
say we're going to fund less.
We're going to reduce thepercent of Medicaid that we pay.
We're going to leave Medicaidin place.
We're going to leave it as ashell in place.
People will be able to claimMedicaid, but we're going to
reduce the federal contributionto covering the cost, which
leaves the state on the hook.
Right, guess who picks up thebill for that?
(46:06):
You can see the next wave ofcosts coming.
And if we say, I will fund itthrough additional PFD cuts or
we'll fund it through hugelyregressive sales taxes that
focus in on middle and lowerincome Alaska families, if we do
it that way, we're going to bein the same shape five years
(46:27):
from now that we are already.
I mean, which is we're.
You know spending is increasing.
We're not able to stop it.
It has not worked.
Folks focus on this.
Since we started talking aboutin the early 20-teens, it has
not worked to say no, just sayno to spending.
(46:48):
We've said that.
We've said that over and overand over.
Don't increase spending.
It has not worked.
And if you think it's going tostart working magically now by
us just saying no middle andlower income Alaska families
saying no then you're justignoring the last 10 years of
history.
We've got to address it.
(47:08):
We've got to address it throughchanging the incentives.
We've got to change it bybroadening the base of people
saying no.
The top 20% haven't said no.
The oil companies haven't saidno to increased spending.
In fact, they've been some ofthe advocates of increased
spending.
Ooh, more childcare for ouremployees, goodie, yeah, we can
do that.
The oil companies haven't saidno to increased spending.
(47:30):
The non-resident industrieshaven't said no to increased
spending.
They've all been in favor ofincreased spending because they
didn't have to pay for it.
If we change the incentives sothat they get stuck with part of
the bill, they will startsaying no also.
It hasn't worked for us just tosay no.
Anyway, the next cost wave iscoming.
(47:51):
It's coming in terms of as thefederal government recedes.
It's coming in terms of, as thefederal government recedes, we
think, oh good, we'll get thefederal government to reduce
spending and so we'll solve thefederal problem.
It's going to be at the expenseof increased pressure on the
state legislature to increasestate spending to offset that.
(48:11):
Medicaid's the best example ofthat, but it's going to show up
in a bunch of other places aswell, and you can see it coming
with these headlines.
Speaker 2 (48:20):
Well, the good news is the federal government is
cutting back because they're inthe same boat that the state is.
They don't have the moneyanymore.
They're going to be cuttingback.
But the bad news is that youhave constituencies for those
programs, whatever they are,whether they're medical or
something else, and they'regoing to look to the state
immediately to fill that gap,and so there's going to be more
pressure on the state to spendmore, even though they have less
(48:41):
money than the federalgovernment in the long run.
That's the bottom line.
Is it too little, too late,brad?
I mean, if we decided, let'sjust say that we took over the,
we pod peopled all the folks inthe legislature and they were
like we'll do what you say,master, whatever you say.
And we said, okay, it's got tobe something broad-based, it's
got to be the revenue's got tochange.
We've got to structurallychange it.
(49:02):
Everybody's got a piece of thepie, everybody's got to share,
throw something in the pot.
Do you think that we're?
Do we have enough time?
I mean, is it even feasible atthis point?
Speaker 1 (49:15):
Well, that's two questions.
One is it feasible to get thatpassed?
Not, you know, not with withRandy and others saying.
Oh we don't want that Right.
It's not, it's not feasible toget it passed.
If they, if they still getsucked in by the Andy, by the
Andy Josephson's of the world tosupport, to support their,
their focus on, on the singlesource, the weakest link in the
in the chain it's, it, chain,it's can we get it passed?
(49:39):
I think you know we keeptalking about it.
I have to hope that we can geta broad-based protection passed.
If we got it passed, would itwork?
Yes, if you've got the oilcompanies engaged, if you've got
Ralph Samuels and thenon-resident industries engaged,
if you've got Natasha vonHimhoff and the others in the
(50:02):
top 20% engaged in pushing backon spending, yes, we will stop
spending.
So it's not a question of is ittoo late to stop spending?
No, you can stop spending.
But but to do it you have to.
(50:23):
You have to, you have tobroaden up the hit so that
there's an incentive for people,for others, to push back.
You and I saying, as we'vedemonstrated over the last 10
years, you and I and Randysaying no, don't increase
spending, hasn't worked.
There's just too many peopleout there, and as long as they,
you know, wanting to, wantingfunding from government.
Speaker 2 (50:40):
Oh there's the whole election cycle was an example of
that.
It was nothing but morespending the whole election
cycle.
Speaker 1 (50:46):
And as long as they can get it from the weakest link
in the chain, they'll continueto do it.
So so we won't stop spending.
If we don't, if we don't createincentives for everybody to
push back, if we continue to godown this road of it's only
middle and lower income Alaskafamilies that get hit.
So everybody else doesn't care,or in fact they favor it,
(51:08):
because you know, yeah, hedoesn't like child care, he
doesn't like free child care,employers, corporations.
If we don't do that, if wedon't broaden it out, spending
will continue.
We'll lose.
We'll just keep going down thisroad.
If we're able to broaden itback, broaden it out, so the
coalition pushing back isbroad-based, then yeah, we'll
(51:28):
stop spending.
It's that simple.
Speaker 2 (51:33):
It's that simple.
It's really.
Brad just laid it out.
It's that simple.
But again, there is nopolitical will to cut folks,
even those people in thelegislature that want to cut,
they are a minority of theminority.
That's what's really coming outhere.
I mean, we saw that in 2018,2019, right, even when the
(51:54):
governor had the ability, whenhe could have you know, he may
not have been overridden in hisvetoes.
We had, even when the governorhad the ability, when he could
have, you know he may not havebeen overridden in his vetoes.
We had members of the minoritythat crossed the aisle and went
ahead and would, but becausethey didn't want their piece of
the pie cut, everybody's got tofeel the pain, everybody's got
to do it and nobody is willingto do it.
There is no political will tocut there there is.
Speaker 1 (52:14):
There will be political will to cut.
There will be political will tocut if the donor class, the oil
companies and the non-residentindustries push back.
There will be the politicalwill to cut because they will
pressure their representatives,the ones they helped put in
office to cut, to stop it ifthey're going to have to pay for
it.
Speaker 2 (52:36):
But they have no skin in the game right now.
Speaker 1 (52:38):
Right.
There won't be the politicalwill.
The only ones raising the issueare the ones being affected
middle and lower income Alaskafamilies, the ones being
affected, yeah, so it's changing.
Maybe another way to thinkabout it is changing the
political will, changing thescope of people pushing back,
changing the people pushing backon the legislators, creating
(53:02):
the incentive so that we have abroad base pushing back, as
opposed to just this narrow,weak link in the things.
Speaker 2 (53:09):
And Willie nails it.
Willie nails it when we weretalking about if we don't start
talking about this, they'regoing to give us the worst form
of tax ever, he said.
You could bet your ass that theincome tax bill will have a cap
for taxes at $200,000.
The top 20% aren't going to payan equal proportional share for
their spending.
That's what we've been talkingabout, that if you wait around
(53:30):
and keep ignoring it and la la,la, la la we can't have the la
la, la la then they'll putsomething in like this that has
a cap on the top 20% and therest of the state will still pay
the bill and they'll still wantspending because their
constituencies and theircontractors and their you know
they'll.
Hey, it's fine with me.
Speaker 1 (53:51):
We've already seen that.
We've already seen that withthe, with the so-called income
tax bills that Zach Fields andElyse Galvin put in.
They were very narrow, narrowlydrawn bills that generated a
very little bit of revenue.
They could say that they had anincome tax and they could say
that they were trying to get acontribution in the top 20%, but
(54:13):
they were very narrowly drawn.
The bulk of it still came fromPFD cuts and you're exactly
right, willie's exactly right.
It'll be drawn in a way toprotect those interests.
If we don't insist, if Randydoesn't insist on everybody
having skin in the game, thenRandy's going to be the one that
gets hit the hardest out ofthis.
Speaker 2 (54:36):
Yeah, I love it.
Randy said early on agree,michael dukes is right, there is
an excessive spending problem.
And yet right now he comes backand says please don't tax us
workers so you can give out morefree money on the pfd.
Speaker 1 (54:49):
You're missing the point, you, you're missing as I
tell you, randy is andyjosephson's biggest ally.
Yeah, randy, and randy and andAndy are right there together.
Speaker 2 (55:00):
And there's a whole bunch of people out there who
are like that on the right.
Oh well, I don't care about thePFD, just take it Again.
Yes, they're going to take it,and then they're going to tax
you on top of it Because youwere avoiding talking about
taxes.
They'll hit you with thehardest one that they can find.
Brad, 60 seconds Summatetoday's wonderful program for us
(55:20):
all the way through here.
Speaker 1 (55:22):
People are giving up.
I mean, sb 109 is theco-sponsors on.
Sb 109 is the single mostdisappointing thing I've seen in
the last 10 years.
The minority members, theSenate minority members the very
ones that we're counting on tosay no have given up and they
listed themselves as co-sponsorson the single largest permanent
(55:45):
individual tax crease inAlaska's history.
Sad day.
Speaker 2 (55:50):
Maybe we should vote harder, brad.
Maybe that's what we should dowe should vote harder and make
it work.
It's just I don't know how tofix this.
I really don't.
I know that it's coming and ifwe don't have a voice in how
this is working, if we don'thave a voice in how we are taxed
, then we're going to get theworst possible outcome and it
will affect us and not thepeople who are benefiting from
(56:12):
it in many ways.
All right, brad, thank you somuch for coming on board and
joining us.
We appreciate it.
Speaker 1 (56:22):
Michael, as always, thanks for having me.
Well, that's a wrap for anotherweek's edition of the weekly
top three from Alaskans forSustainable Budgets.
Thank you again for joining us.
Remember that you can find pastepisodes on our YouTube,
soundcloud, spotify and Substackpages, and keep track of us
during the week on Facebook andTwitter.
This has been Brad Keithley,managing Director of Alaskans
for Sustainable Budgets.
No-transcript.
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