February 4, 2025 • 55 mins
Looking down the road, HB69 has a $1bn price tag; with the #akleg backing out of the Cook Inlet, it’s now up to the RCA to protect Alaskans & what the 2026 #AKgov candidates need to start focusing on now
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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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 3rd 2025.
The weekly top three is aregular segment on the Michael
Dukes Show.
The show broadcasts on bothFacebook Live and YouTube Live
(00:33):
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
about our three issues.
We post the podcast of ourdiscussion following the show on
the Alaskans for SustainableBudgets Facebook, youtube,
(00:55):
soundcloud, spotify and Substackpages.
Also on the Alaskans forSustainable Budgets website, as
well as the projects 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
week, you can also follow andparticipate in the discussion
(01:18):
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 issuesare these First, while some want
to focus only on the short-termcost.
We explain why, looking downthe road, hb 69 is really a $1
(01:44):
billion appropriation bill.
Second, we explain why, withthe legislature backing out of
the Cook Inlet debate, it's upto the Regulatory Commission of
Alaska to protect Alaskaconsumers.
And third, as the positioningstarts, we discuss what we think
is the big thing on whichpotential candidates for the
(02:06):
2026 governor's race should befocusing on now and now let's
join Michael.
Speaker 2 (02:13):
So let's get started.
The weekly top three startswith the literal literally one
billion dollars.
You get a billion and you get abillion $1 billion
appropriation bill.
That's what HB 69 could end upbeing.
Brad, please try, Don't get toosuicidal in the middle of the
(02:34):
show.
All right, we can't deal withthat.
Just go ahead and get startedon this bill.
Speaker 1 (02:39):
So the fiscal note on HB 69 finally came out over the
weekend Thanks to Rob Myers forpointing it out to me when it
came out and so I startedthrough the fiscal note and it
just got worse and worse andworse and worse.
I had done some calculationslast week based on the news
stories of what what an estimateof HB 69 over the long haul
(03:02):
would be, and I got the firstyear right $330 million but the
subsequent years I didn't getright at all.
So the fiscal note setup ifyou've got it, if you've got
that first page I sent you, youcan throw it up or not.
I can talk through it.
But the fiscal note shows theappropriation for FY26, the
(03:25):
first year of the bill.
Nope, it's the other page, thefirst year of the bill and then
it shows the increments on topof that for the subsequent years
of the bill.
So the first year of the bill,fy26, the addition in FY26 is
(03:45):
$325 million.
The increment on top of thatthis is where I started going
wrong the increment on top ofthat, yeah.
So for those able to see this,look at the total operating line
, which is about a little bitabove halfway through the page,
or fund source that gives youthe same number little bit above
halfway through the page.
Or fund source that gives youthe same number, and you can see
(04:06):
the increment on top of the$325 million for FY27 is $173.9
million, $174 million.
(04:29):
The increment on top of that,on top of the addition of the
325 and the 173, the incrementon top of that for FY28 is 144.
Those are the step additionsthat are in the bill a big bump
in 26, and then another bump in27, then another bump in 28.
And then it goes to inflation,adjusted by inflation.
But you can see these inflationadjustments on top of the bill,
(04:51):
on top of the cumulative amountat that point is $51 million in
29, $55 million in 30, $56million in 31.
I've added those up as you'vegone and so the total cost of
the bill in FY26 is $326 million.
The total cost in FY27 is $500million, half a billion dollars.
(05:15):
The total cost in FY28 is $644million.
The total cost in FY30 is $751million.
The total cost in FY31 is $800million and then that's where
the fiscal note cuts off.
But I took the rate at which itis increasing along the way and
(05:38):
added those increments in andthe total.
When you do that, the total inFY32 is $865 million, the total
in FY33 is $923 million, thetotal in FY34 is $981 million
and the total in FY35, 10 yearsfrom now, 10 years out, if this
(06:00):
bill is passed as proposed, withthese inflation increments
going on, the total in FY35 isone just from this bill alone.
This isn't the total.
Education funding this is justfrom this bill alone is
$1,038,000,000 in FY35.
(06:21):
When you factor those in, whenyou factor those into the
percent of the POMV I did acalculation in last Friday's
Landmine.
For anybody who wants to goread it what is happening to the
percent of POMV?
The percent of the POMV drawthat is needed to support state
(06:41):
spending.
Now that we recognize thatwe've gone past that, we're
blowing past 2575.
When you factor those in, fy25is at 76.5%.
When you add in SB69 to thealready existing budget, the
alleged finance baseline, whenyou add in SB 69, we go to 98%
(07:07):
of the POMV is required tobalance government spending.
And then in FY 27, we go over100 and we stay over 100 through
FY 35.
We get up to something like135% or 140% by FY35.
I'll have those numbers in thedetailed numbers in the coming
(07:28):
Alaska landmine column thiscoming Friday.
But we have now.
In two years we're going to ifwe pass SB69 as proposed, we're
going to blow through the 100%POMB mark and we're going to
blow into the twilight zonebecause we will have no revenues
(07:50):
to support the legislation thatwe're going to pass this year.
All these debates that peopleare having right now are sort of
humorous from the standpoint ofoh, we got $200 million deficit
this year and this is at 300.
And that's bad.
Where are we going to get themoney?
Oh, maybe we can draw it fromthe CBR or maybe we can just tax
(08:11):
the PFD more to cover it.
No one has yet stumbled on theout-year.
As far as I can tell.
No one's yet stumbled on theout-year effects.
No one has yet stumbled onwhere this bill takes us, and it
is a bill that is intended tobe permanent.
It's intended to directspending, create a formula that
(08:34):
directs spending to educationpermanently.
So no one has stumbled to theextent I've seen.
No one has yet stumbled on whatthe heck is going on once we get
through this year and that maybe from the proponents, that may
be by design, it may be.
Oh, it's just $330 million thisyear, don't worry about it,
(08:57):
it's not that big a deal.
We can handle it out of the CBR.
We can handle it out ofadditional PFD cuts.
Focusing on this year, becausethat's the last year they can
say that, that's the only yearthey can say that Once we get
into FY27, you blow out theentire PFD, you blow out the
entire CBR, it's all gone.
And by the time you get to FY35, this state is just one giant
(09:23):
education appropriation with alittle, with a little bit of
other stuff, uh, uh, tagged onthat would mean that the
education budget was 2.2 2.3billion dollars.
Well, yeah, and that's notapplying inflation to the other
part of the education budget.
Speaker 2 (09:40):
That's right any one-time funding, which, which,
if you think the one-timefunding is going away, because
you don't, you don't thinkthat's going to happen, right?
I mean, this is what theywanted was to get the BSA up
there, but you don't think thatthey won't be fighting for one
time funding on top of that?
Yeah, michael it's just.
Speaker 1 (09:56):
I mean nobody, even conservatives, I mean Delaina
Johnson, the supposed educationexperts in the House minority,
the people in the Senateminority with no disrespect
intended but the people in theSenate minority.
Nobody is talking about theout-year consequences of what
(10:18):
this bill does.
It's all focused on battlingover the FY26 appropriation and
I think in doing that we'rebeing sucked in to the game plan
where, oh, let's just talkabout FY36 and let's pass it
because it's not that bad a deal, and then, oh my, and then FY27
is going to be Gary Stevensagain.
(10:38):
Oh, my God, you mean we passthis.
Well, I guess we got to dealwith it.
I guess, because we just passedit, I guess we got to deal with
it.
I guess, because we just passedit, I guess we got to deal with
it.
It's, um, the, the out yeareffects.
People are not thinking through,or they are and intentionally
not discussing uh, the out yeareffects, uh, of of the bill.
You were talking about seandugan's piece.
(11:00):
Uh, there's a similar one fromin the Alaska Beacon a couple of
few days ago.
Looked like Sean was trying toplay catch up with his piece.
But you know, all of thosepieces are talking about the one
year effects.
They're talking about what theeffect would be this year.
They're not talking through thebudgetary effects over the long
(11:24):
term.
Talking through the budgetaryeffects over the long term,
it'll be interesting to see ifsomebody asks Ledge Finance or
if somebody puts up thecalculation along the way of
what those long-term effects are.
But the fiscal note makes themabsolutely clear about where
we're going A billion dollars in10 years.
Speaker 2 (11:45):
Now, this doesn't include the defined benefits.
It doesn't include anythingthat they may or may not do with
the oil and gas.
It includes no other spendingwhatsoever.
Just the education bill willconsume all of the PFD in the
next 24 months and it makes uslook like geniuses, brad.
We've been projecting for thelast two years that it would be
(12:07):
three to four years before thePFD would be gone, and now, if
this gets passed, it will be thenext 24 months.
It will be totally gone.
Speaker 1 (12:16):
Yeah, and, and Michael, I mean everybody, under
everybody, almost everybody, umrecognizes that you can't.
You can't set in motion newrevenue approaches, revenue
alternatives.
You know, on the on the theflip of a dime or on the on the
click of a button, that it takestime to get them in place.
(12:39):
And so what we're going to hit,what we're going to, I can sort
of see this game plan comingtogether.
What we're going to hit is asituation in which next year,
people say, or this year, orlater this year, when they start
recognizing what's going on,they'll say oh, yeah, we need to
do that.
We need to do that permanentfund reform that consolidates
(13:02):
the earnings reserve and the andthe corpus together.
Uh, we need, we need to, weneed to get on that and we need
to go ahead and just sort of,you know, play like we're doing
it, find ways to play like we'redoing it, and, uh, and, and
that's what we're going to needto.
We need to do that.
And they'll argue that's for aseparate reason.
But then what we're going tofind is it's for the real reason
(13:25):
of starting to pull down thecorpus of the permanent fund to
support spending.
Speaker 2 (13:30):
And the worst part of this whole thing is is that
nobody's talking about thelatest NEAP scores, where we
fell even further.
We fell out of the states.
We were at 48th and 49th out ofthe 50, you know, 50 states
plus the territories.
Now we're 51st out of 53.
We're falling, spending moremoney than ever, and we're
falling and they want to spendmore.
(13:51):
It's, it's absolute madness.
I mean, brad, this is it's.
It's been so predictable.
We knew it was coming.
We've been talking about it.
We, you know, we've beentalking about it.
We, you know, we've beentouting, we've been blowing the
horn and warning the bell andsaying the bridge is out and
nobody is just okay, all right,it's fine.
(14:12):
And then gary's like oh, what'sthat?
Is that bridge out out there?
Oh man, maybe we should slowdown a little bit.
You're right, they're going touse this as an excuse to go
right after the corpus of thepermanent fund, because we need
that, we can't have taxes now,and they'll drain the CBR.
I mean, they'll drain thecorpus of the fund, I mean, and
(14:35):
of course they don't want to getinto the CBR, because then the
minority might have a voice onsomething if they get into the
CBR.
And so here we are.
I mean here a billion dollars,and we still haven't seen the
updated fiscal note on thedefined benefits, and that's
still in the pipeline somewhere.
A billion.
Speaker 1 (14:56):
We may never see an updated fiscal note.
Speaker 2 (14:58):
I know, I know that's the insanity here, the
nuttiness that's going on um.
I, I just don't.
I, I don't know how people can,I don't know how people can
miss it.
I, I really don't.
I just don't know how peoplecan see this and go.
This is okay.
Speaker 1 (15:15):
This is totally fine well, michael, but they are.
I mean, even the sean duganarticle misses it.
The sean dugan article focuseson the one near number.
He doesn't get anybody and Iand sean's a reporter, I assume
he talked about sean mcguire.
Not the good, I'm sorry yeah,sean mcguire I sean's a decent
reporter and I assume that thathe talked to enough people that
(15:39):
at least somebody, if somebodywas thinking about it, somebody
would have said whoa, you thinkthis is bad?
Look at the 10th year.
What happens in the 10th year?
And nobody said that.
At least he doesn't quote himin the article Right?
We're also focused on trying toget through this next year and
responding to the crisis of themoment that we're losing focus
(16:02):
on where this all is taking us,and it's not.
You know, you don't even hear.
All you hear from legislatorsis yeah, we're going to have to
give something.
Everybody's in favor ofsomething, for some increased
spending for K-12, for education, but nobody is talking about
(16:24):
revenue, the revenue side.
Nobody's talking about howthey're going to pay for it.
So they're by.
I mean, even the conservatives,even the so-called
conservatives, by omission, areleaving it to PFD cuts, leaving
it to deeper and deeper PFD cuts.
But as as as the play out of SB, of HB 69 shows by FB, even
next year, we're over that limit, we blow through that limit.
(16:47):
So I, you know, I, I we'vebarely got current thinkers in
the legislature.
I guess we don't have forwardthinkers in the legislature and
the governor hasn't talked aboutit.
I mean, he's talked abouteducation.
He's talked about increasededucation spending.
He's talked about his $200million that he wants to
(17:09):
increase education spending by.
And he's not talking about howthe hell he's going to pay for
it?
Speaker 2 (17:15):
Well, but I will say at least that is a one-time
funding, it's not in perpet.
How the hell he's going to payfor it?
Well, but I will say at leastthat is a one-time funding, it's
not in perpetuity.
I mean, again, looking at yourmagic chart here, I just want to
throw that out there Wrong one,let me get the right number.
Looking at this chart againhere, as you look at the
increase, why will you not gothere?
We go.
I mean it's $50 million plus $1million every year, essentially
(17:39):
.
And it goes up because it'sbased on the total amount.
So $51, $55, $56, it'll be $58the next year.
It's $59 or $60 the followingyear.
It's $62 the next year, everyyear going up.
And we already had a baked-inescalator of what $150 million a
year, baked in escalator ofwhat 150 million dollars a year.
(18:01):
Now you're just going to seethat means in 20 years it'll be
close to, it'll be close to 1.8billion dollars.
Based on that math, right?
I mean?
Speaker 1 (18:06):
it's in 20 years the us will want to give us back to
russia.
I mean, yeah, this is such sadshape.
Speaker 2 (18:16):
This is nutty.
I mean, how do you continue topay for it?
I know everybody wants a fishin every pot, but I mean, how do
you, how do you pay for it andkeep people here?
This is nutty.
It is absolutely nuttier thansquirrel poo.
I do not understand what'sgoing on.
And you're right, these other,these legislators, they need to
(18:37):
start shaking this fiscal noteand saying what are we doing?
What are we doing?
I'm just shaking my head.
I am shaking my head that theyjust like well, okay, you know,
how did we?
How did we get here, man?
Speaker 1 (18:54):
All right, incrementally, we got here
thinking year to year to year toyear, with very few people
thinking about the long term.
Speaker 2 (19:04):
Yeah, I would agree with that 100%.
Number two of the weekly topthree.
Well, the legislature may havebowed out.
It looks like it's up to theRCA to protect Alaskans, which
doesn't give me a tremendousamount of confidence based on
their past record.
But Brad, the RCA.
Speaker 1 (19:20):
Well, let's focus on the legislature first.
There was some interestingdevelopments this past week in
the legislature about Cook Inletenergy and they get summed up
well in a.
Maybe it's Sean, no, yeah, thisis a Sean McGuire article from
yesterday on the Cook Inlet.
The headline is GovernorDunleavy points to temporary and
painful measures to addressCook Inlet gas crunch.
(19:43):
As legislators say, their rolemay be limited After a year in
which, you know, legislatorscouldn't talk about the
solutions that they were goingto have for the Cook Inlet
enough.
You know we're going to reducethe royalty that was going to
lead to an explosion in CookInlet development.
(20:04):
We're going to have phase oneof the North Slope pipeline of
the AKLNG project come down.
That's going to solve it Aftera year of delay, frankly, in
facing reality, while thelegislators went through all of
these fantasy solutions, they'refinally facing up to the fact
(20:26):
that they really can't doanything about it.
Here's the quote from Sean'sarticle Alaska legislators have
broadly said energy reforms area top priority this year, but
they say the legislature's rolecould be limited in addressing a
looming shortfall of Cook Inletgas.
Anchorage Republican SenatorKathy Giesel.
Let's still call her aRepublican, anyway.
(20:47):
Anchorage Republican SenatorKathy Giesel, chair of the
Senate Resources Committee,suggested critical decisions
such as importing gas shouldlargely be left to the utilities
and the private sector.
It's a business case.
I don't think the legislatureshould insert themselves.
We're just going to gum it up.
You've already gummed it up.
You've already gummed it upwith the year delay, messing
(21:09):
around with fantasy solutionslike Cook Inlet, royalty Relief
and Phase 1 of the AKLNG project.
Thank you for finally backingout of it, thank you for finally
recognizing the reality,economic reality.
But you've already gummed it upby that year delay.
And now we're a year closer tothe shortfall.
(21:32):
We're a year farther down theroad and we've got NSTAR off in
some other world talking about,you know, lining themselves up
with a small cap, smallcapitalized, inexperienced
player to bring in LNG supplieson land that they don't own
(21:55):
Neither one of them owns, at anew LNG facility to be built in
the cooking land.
We've got a mess, but at leastit's good news that the
legislature is backing out of it, because the legislature can
only make this worse, like theydid last year, like they did
delaying reality, the reality ofit, by a, by talking about all
(22:19):
these grand solutions that theywere going to come up with.
At least if the legislature isfinally recognizing that they
can't do anything about it, atleast that's a good thing.
But here's the deal.
The RCA, the RegulatoryCommission of Alaska, now needs
to step in and do its job.
What we've got are monopolistsNSTAR, chugach, monopoly
(22:44):
utilities that are grantedcertificates don't have
competition protected againstcompetition.
What we've got now are themmaking unfettered decisions.
You know John Sims likes tofocus on the statute that says
it's the utility's decision tomake all of these choices about
supply and they have anobligation for adequate service.
(23:05):
They have an obligation forreasonable cost of utilities
decision.
Well, that's only half thetruth.
The other half of the truth isthe RCA has a regulatory
responsibility, created becausethe utilities have a monopoly
position.
The RCA is there to protectAlaskans against utilities
(23:25):
screwing up and have statutoryauthority statutory authorities
to be able to step in when theutilities are in the process of
screwing up, because there's nofallback if the utilities screw
up, they're monopolies.
The RCA has statutoryauthorities to be able to step
in and correct the utilities orat least understand what the
(23:48):
utilities are doing.
The RCA hasn't done that yet.
The hearing Roger Marks wrote apiece in the an op-ed in the ADN
that, michael, you sent to methis morning, is a good one to
read.
Last week, or last two weeksago, nstar did a presentation on
mid January and started apresentation in front of the RCA
(24:08):
talking about what it's doing.
The RCA's response was well,we're thinking, we think you're
late, we don't think this isgoing to solve it.
Well, if the RCA thinks it'snot going to solve it, it's the
RCA's responsibility to step inand do something that does solve
it.
(24:29):
It's not that you can just sayutilities, well, you did a bad
job, too bad on you.
Speaker 2 (24:36):
You don't just slap their hand.
Speaker 1 (24:37):
You actually do something and say well, since
you're not doing it, here's whatyou're going to do, and instead
of the legislature, you know,screwing around with what it
screwed around last year and atleast starting this year
screwing around again before itfinally wakes up.
Instead of that, the RCAactually can do something about
it by directing the utility andactually can do something about
(24:58):
it by directing the utility andactually should do something
about it.
Nstar's made a proposal thatmakes no sense.
Nstar's made a proposal tobuild a brand new LNG facility
that's tied to someone who'sdoing the AK LNG project, or
purportedly doing the AK LNGproject, on land that neither of
them own, with a proposal by anoperator who has no experience
(25:22):
doing projects of this type andis underfunded in doing the
projects, that it's bitten offRight next to the land where
this facility is located.
Where this proposed facility isto be located is an existing
LNG plant that's alreadycertificated by the FERC to
import gas.
(25:42):
It's the old export facilitybut when Marathon bought it from
Phillips they recertificated itto import gas because at the
time Marathon was concerned, orprobably still is concerned,
about Hillcorp running out ofgas or Hillcorp costing or
charging so much that it wasmore economic to bring in LNG.
Marathon got that facilityrecertificated to import gas.
(26:05):
It's only certificated at themoment to import gas for
Marathon, but it's no big stepto expand that certification to
include importation for Marathonand others.
The big analysis of whether itshould be used for importation
has already gone by.
It's already been certificated,already been approved for that
(26:26):
purpose.
So we've got Instar out thererunning around saying, oh, we're
going to build a new facility,maybe with a company who's not
had any experience doing this,with a company that's
undercapitalized, with a companythat has a clear conflict of
interest that we talked aboutlast week in focusing on the
AKLNG project the big project atthe same time as they're
supposed to be focusing on thisproject with Instar.
(26:48):
We have Instar going down thattrack, while we've got this
existing LNG facility sittingright there on the ground, built
right there next door, and wedon't know.
We have no clue where Chugachand MEA are, who have expiration
dates on their Hillcorpcontracts sooner than NSTAR's
(27:11):
presumably, are going to runinto this situation sooner than
NSTAR have been talking aboutimported LNG, but we have no
clue about what they're doingbecause they haven't even made a
presentation to the RCA.
They haven't even come up witha proposal about how they're
going to go forward on this.
So I'm thankful the legislatureis backing out, because all
(27:32):
they've done is delayed,focusing on the real issue, and
all they've done is, to useSenator Giesel's words, gum up
the works.
I'm thankful the legislature isbacking out.
They needed to before they evengot in last year.
But now we need the RCA to stepup.
Now we need the RegulatoryCommission of Alaska appointed,
(27:52):
whose members are appointed bythe governor.
You want to point at somebodyand say it's your responsibility
, whose members are appointed bythe governor.
You want to point at somebodyand say it's your responsibility
, whose members are appointed bythe governor.
It's up to the RCA to step up.
Uh and, uh, and and and take,take hold of the
responsibilities the statutegives them to protect Alaska
consumers.
Speaker 2 (28:10):
And that's been our big question this whole time is
why isn't the?
I mean, we thought, you know,when they had that meeting and
and uh Hicks, everybody was, ohyou know, slapping them down.
But the problem is they'reoffering no other solution.
They are the governing body,they're the ones that can direct
.
And I will say again, creditwhere credit's due.
Kathy Giesel, I guess even astopped clock is right twice a
(28:30):
day.
Kathy Giesel saying that thisis not the legislative's purview
was shocking, but surprising.
I mean a welcome surprise, Iguess I should say.
Again, too little, too late.
They spent all of last sessiondithering about what they were
going to do about the gas issueand the whole election season,
(28:53):
and then, coming into thebeginning of this session, what
were we going to do about it?
And then they finally decidedwe're not going to do anything
because it's not our place.
Well, thank God, somebodyfinally figured it out and John
Sims can't apparently keepkicking the can down the road
hoping that somebody else willpick up the bill.
Speaker 1 (29:11):
That may be part of Sims' strategy.
I mean, doing this deal withGlenn Farn may be part of his
strategy to hopefully jerk thelegislature in, Hopefully say,
oh yeah, that didn't work out,so what are we going to do?
Now Somebody bail us out.
It is a proposal designed tofail.
It's not a proposal designed tosucceed.
(29:32):
Maybe he's thinking that he'sgoing to pull the legislature in
, yet.
Maybe he's thinking that he'sgoing to pull the legislature in
, yet.
Hopefully he will wake up tothe reality also that the
legislature is not going to be acavalry coming over the hill
because, frankly, they don'thave any guns, they don't have
any way of fixing it coming overthe hill.
So hopefully he's going to wakeup to that and hopefully the
(29:57):
RCA is going to wake up to thefact that NSTAR really doesn't
know what it's doing and wedon't even know what Chugach and
MEA are doing.
Speaker 2 (30:00):
Well, before we go here.
We only got about two minuteshere.
But why?
Why paint me a picture as anoil and gas guy former oil and
gas guy, you've been in thebusiness, for you were in the
business for years, you're youknow, you're intimately familiar
with all that stuff.
When you look at this, whywould NSTAR propose standing up
a whole new plant on a patch ofland they don't even own in this
(30:22):
potential, when there's one,like you said, right there,
where probably I don't know 80%of the work has already been
done.
A lot of the heavy lifting hasalready been done.
It only requires a monetaryinvestment and recertification.
Why would that just guess here?
Why would that happen?
Speaker 1 (30:40):
Could be that Marathon's asking too high a
price.
I mean, the facility's owned byMarathon, they have the title
to it, they are the ones thathold the permits and it could be
that Marathon's asking too higha price.
But that's a question the RCAought to be asking.
The question that the RCA oughtto be asking why are you not
pursuing something with Marathon?
(31:01):
Why did you give up on thefloating LNG project that you
had, that you talked about andwe approved $50 million in
spending for on pipelines?
Why did you give up on that?
Go through in detail what youranalysis is.
The other thing is that youknow sims may be hoping that
(31:23):
that ultimately the legislaturepays for the imported lng plant
and and he knows his, his parentcompany knows if they do the
deal with merit with nstar,they're going to have to pay, or
do the deal with marathon,they're going to have to pay for
it.
So maybe he's still hoping,maybe they're still hoping that
the legislature comes in andpays for it.
Speaker 2 (31:40):
With what money?
With what money?
I mean, I mean again, with whatmoney?
Oh man, this is, yeah, I mean,I'm just trying to, I'm just
trying to pick this out.
Hea, homer Electric Association.
Their contract ends next month,Next month, and the president
(32:04):
of HEA was in front of the RCAboard when that big meeting went
down and Hicks and everybodywas slapping everybody on the
wrist and they were asking himdon't you lose?
He goes.
No, I don't lose any sleep overthat and I'm like it's two
months away and you're notlosing any sleep.
How much do you get paid again?
Maybe I should take that joband do it part-time and and
(32:26):
figure, I mean it's, it's crazy.
I mean there, there really is abig, there's a, there's a,
there is a, a reckoning comingand everybody's just walking
around.
Maybe they're just waiting topoint the fingers at each other.
Speaker 1 (32:41):
I don't even know Well, in a state that doesn't
have gas, or in a in a.
So HEA, hea is defensible inthis or explainable?
How about this?
Probably not defensible.
Explainable in the sense thatthey're the tail way out, or
they're way out on the tail ofthe dog and they've got an
interruptible contract, as MattHertz has pointed out, an
interruptible contract with,with N star, for additional
(33:04):
supplies for a longer term.
But but there's still the tail,there's still a fairly small
player in the tail, out on thedog or out on the end of the
tail of the dog, and they'resaying look, this is going to
get solved somehow and and we'llbe part of the solution.
So we can't do anything alone.
We can't go in, we don't haveenough money to go in and buy an
(33:24):
LNG plant and set up an LNGimport facility on our own.
So whatever the big dogs, mstarChugach and MEA, decide to do,
we'll be part of.
That is basically how Homer islooking at this thing.
But the question is what areNSTAR Chugach and MEA doing?
(33:49):
How are they addressing it?
Particularly, I mean, nstar atleast has come up with a plan,
not a good one, not the rightone, but at least they've come
up with a plan.
We don't know what Chugach andMEA are doing.
The last thing we heard fromChugach was a December editorial
in the ADN by the chairman ofthe board, their chairman of the
(34:10):
board and the president, inwhich they said we're pursuing
LNG period full stop.
We haven't heard anything aboutthat.
Not a word since, yeah, aboutwhat the proposal is and about
how they're going to do it,since and Sims went out of his
way not to include MEA andChugach as part of the
discussion around what he'sdoing with Glen Farn.
(34:32):
So we've got to, as the datecomes closer, and I blame the
legislature and I blame thegovernor for part of this,
because they wasted all lastyear claiming that they could do
something about it and sayingthey were going to do something
about it.
And so Sims said look,legislature's going to do
something about it, I don't needto worry about it,
(34:53):
legislature's going to dosomething about it.
And they wasted all last yeargoing in circles about things
that they can't deal, that theycan't do, that they aren't going
to do, and so you know, we losta year in that process.
But now the year's over and nowit's on the utilities.
Now Senator Giesel says it's onthe utilities.
(35:14):
What are the utilities doing?
And that's the question the RCAneeds to be asking and the RCA
needs to be evaluating.
Problem is we've got some RCAcommissioners that don't really
have any utility experience,don't have any utility
background, are Republicans whothink they ought to be
deregulating things anyway.
(35:35):
But you don't deregulate to amonopolist, I mean.
That's why the RCA is set up toprotect consumers against the
monopolist, to balance thenegotiations, to balance the
power between the monopolist andconsumers.
And the RCA has a role to playhere.
(35:55):
As much as they may not want toplay it, they have a role to
play here and they need to geton with playing that role or
else we're going to waste yetanother year of going in circles
about people saying, well, wedon't have the ball, who has the
ball?
You have the ball, you have theball.
Speaker 2 (36:13):
Well, I mean, homer's is next month, but 2027 is
right around the corner and it'searly 2027 for everybody else.
So you got what?
18 months to get your ducks ina row and figure all this out?
It's not long, it's not long atall.
And unless they do something, Ijust don't know.
(36:33):
I don't know.
And it's a 10% increase thisyear, what is it next year?
What is it if they don't getthis done in time and there's a
stop gap of a year or two?
While they're trying to figureit out, what's the heating and
electricity costs go to then?
Speaker 1 (36:49):
I mean it's crazy Sims has talked about on a spot
basis, if this thing doesn't getsolved in time on a spot basis,
if this thing doesn't getsolved in time, trucking LNG up
through Canada to Alaska, up onthe Alaska Highway, trucking LNG
over the Alaska Highway intoSouth Central.
(37:10):
I don't have any clue what thecost of that is, but it's got to
be a hell of a lot moreexpensive than the proposals
that have been on the table sofar.
Speaker 2 (37:20):
Brad Keithley Alaskans, for Sustainable
Budgets, the weekly top three.
I thought the Roger Marksarticle was very good to kind of
summate this as well.
That was timely for today, soyou can go look at it.
I'll post it up here in just asec.
Brad Keithley Alaskans, forSustainable Budgets, is our
guest.
The Weekly Top Three continueswith number three, the Pig 3-0.
(37:45):
What do we got here?
Well, how's that boldleadership working out for us so
far?
Right, because some are callingfor bold leadership.
I mean, I guess you could beargued that all this spending is
bold leadership.
I don't know, brad, what.
What do you say with a boldleadership that we're being
asked to look for?
Speaker 1 (38:07):
Well, this is.
This is people are starting tofocus on the 2026 governor's
race and they're starting toposition themselves.
And they're starting toposition themselves.
Those who are interested inrunning are starting to position
themselves around themes thatthey're trying out for their
campaigns.
Some of them ClickBishop is agood example want to talk about
(38:31):
infrastructure, rebuildingAlaska.
You know, building new things,employing Alaskans to build new
things.
That's sort of the theme behindthe AKL and G line as well
Employing Alaskans to build newthings, although Senator Giesel
points out less than less than50% of the people employed to
(38:52):
build the pipeline would beAlaskans.
It'd be people that wereimporting from the lower 48, but
you know, build big new things,big bold.
I've got a publisher, jeffLahanfield, who's occasionally
talked about running forgovernor, and his big bold new
thing is building the KinnickArm Bridge.
That's going to solve housing.
That's going to solve, you know, homelessness.
(39:14):
It's going to solve all sortsof things if we we build the
connect our own bridge becauseit's going to open up the land
over on the Mat-Su side of thebridge to to additional
development and provide a secondroute up to up to the Mat-Su
and all and all sorts of goodthings.
So people are positioningthemselves about, about to for
(39:34):
this run by talking about beingbig and bold.
You know taking major steps, butthey all cost money and if the
current debate about HB 69 isnot focusing us yet on where
we're headed, we'll get there atsome point.
We'll finally focus on it atsome point.
(39:56):
We don't have the money, thestate doesn't have the money, to
be big and bold.
The state barely has well,doesn't even have enough money
to pay its budget.
I mean legislative finances,told us, in FY26, we're $200
million short of financing evena bare bones budget.
(40:18):
At FY25 service levels, we're$200 million short at a 25S75
POMV split, 25 to the PFD, 75 togovernment we're two $200
million short Even at that.
When you look at the numbersthat play out over time,
particularly with the HB 69 withyou, when you look at the HB 69
(40:41):
fiscal note, we don't have themoney we're, we're we, we run
through the entire POMVcompletely eliminate, if we pass
HB 69, completely eliminate thePFD next year.
So when people talk about beingbig and bold, that may be a
(41:01):
theme for a campaign that looksgood two years out, but I think
when we get to the time, it'sgoing to look ridiculous,
frankly, to be talking aboutspending additional money that
the state doesn't have on big,bold, new projects.
I think what we need to bethinking about now, what
candidates need to be thinkingabout, what people need to be
(41:24):
thinking about when they'reencouraging certain people to
run for office, is fiscalresponsibility.
We're going to need a governorin two years, looking two years
down the road.
We're going to need a governorwho talks about, who talks and
has plans for fiscalresponsibility and that's not
just talking about curbingspending, like Dunleavy did in.
(41:46):
What was that?
2020, no, 2008, 2000, 2018,whatever the hell.
You're right in yeah 2018.
They all run together after awhile 2018.
It's not I mean, it's not justcurbing spending, like Dunleavy
talked about in 2018.
We passed that point.
We tried that in thelegislative session in 2019,
(42:08):
didn't work, and Dunleavy hasn'tcome back to it since.
We've tried.
That Didn't work.
So we're going to need agovernor who, candidates who
reasonably talk about therevenue side, who reasonably
talk about what's theresponsible thing to do on the
revenue side, and some of themmay talk about wiping out the
PFD, but that's only going toget you so far.
(42:30):
If we do HB 69 or anythingapproaching HB 69, we're going
to have wiped out the PFD by thetime we get to the campaign.
So we need people who arethinking about now and putting
together their platforms nowbased upon the situation we're
going to be in in 2026.
(42:51):
And that situation that we'regoing to be in in FY26 is going
to be a pretty bad one from afiscal standpoint.
Production will be ramping upand some will claim oh, with
production wrapping up, happydays are here again.
Well, it's not the way the oiltax credit works.
(43:14):
The revenues from that, if theyever show up, show up way out
in the future somewhere and theycan be delayed even further
than way out in the future.
They can disappear entirelyunder the way the current oil
tax structure works.
So we need people who are goingto address the fiscal reality
(43:38):
that we face in FY26.
Talking about big, boldsolutions may seem to be the
right thing to talk about now.
Resolutions may seem to be theright thing to talk about now.
Right, may seem to be the rightthing.
That appeals now.
But you're not putting yourselftwo years out.
You're not thinking throughwhat happens in the meantime and
where the state's fiscalsituation is when we get to the
(43:59):
2026 election cycle.
Speaker 2 (44:01):
What we need.
If you're talking about bold,what we need is somebody with
bold vision, somebody who cansee beyond the next election
cycle, the next legislativesession, somebody who can look
down the road and say this iswhere we need to be.
I mean, what you did with thatfiscal note was not rocket
science, right?
You just extrapolated out theamount that because they put it
(44:21):
on the second page there thepercentage that they're
multiplying it by and everythingelse.
Anybody with a calculator and apiece of paper could figure out
that this is going to cost us abillion dollars in 10 years,
and nobody you know.
A billion dollars a year in 10years, and so nobody you know.
But they're just not thinkingbeyond the next cycle, the next
(44:44):
session, the next.
We need somebody with bold,long-term vision, and that's
something we complained about onthe show for 25 years is that
nobody is thinking beyond thenext budget cycle.
Speaker 1 (44:56):
Yeah, and it's big, bold vision, michael.
I mean, I think when we thinkabout big and bold, click will
want us to think about big andbold in terms of building things
.
Oh, we're going to build outthe infrastructure.
We're going to make Alaskagreat again by building out the
infrastructure.
Because Click comes from theconstruction trades.
That's his bread and butter,that's where he wants people
(45:17):
employed, that's where he thinksthe jobs ought to be.
When people think about big andbold, they think about building
things.
What we need is somebody who.
I guess what we're saying indifferent ways is we need
somebody who's big and boldabout thinking about how you pay
for things, because we'vegotten to the point.
We're getting to the point inthis state.
(45:38):
We've already gotten to thepoint.
I mean the $200 million deficit, even at 75-25.
We've gotten to the point inthis state where we can't pay
for everything that we'vealready said we want.
We can't pay for it.
There's not enough money to payfor even that, much less
anything else.
So we need someone who comes,who is to be big and bold,
(46:02):
someone who comes in and thinksabout how are we going to pay
for this stuff and how are wegoing to pay for it in a way
that has the lowest adverseimpact on the economy and has
the lowest adverse impact onAlaskans.
How are we going to spread thisburden in a way that makes life
better off for all of us andgives us maybe the capacity to
(46:26):
increase a little bit to dothings that we need to do to
sort of finish out Alaska?
But we need somebody, first andforemost, who's focusing on the
pay-for side as opposed to the Iwant to spend more, and here's
how I'm going to spend more, andhere's why you ought to vote
for me, because I'm going tospend more going in this
direction.
Speaker 2 (46:47):
Right, I don't know, brian, this whole thing is just.
I mean, we can see it.
Why, why is it so hard for thelegislature to see what we've
been talking about?
I mean, you know, why is it sohard for them to see that it
can't be?
I mean, I guess, unless it'sintentional and they want access
to the big pot of money, andthat's the whole plan, and it's
(47:07):
been the plan, the whole,although I don't know if I would
ascribe that much forethoughtto them or Machiavellian kind of
you know, planning.
It just seems like it's justmore at this point.
They just want more.
Speaker 1 (47:24):
They would explain it .
So let's ask how they wouldexplain it.
So let's ask how they wouldexplain it.
They would explain it in termsof their constituents wanting
more and their constituents notwanting to pay for it themselves
, at least their donor class notwanting to pay for it
themselves.
They want more, but they don'twant to pay for it.
So how do you do that?
I mean, they send thelegislators off to the
legislature to figure that out,and the way you do that is by
(47:46):
shifting the cost of middle andlower income Alaska families
through PFD cuts.
You keep spending, but, butwe're about to hit the point
where you can't do that anymore.
So so what's going to?
What's going to happen in theand I think I think you know, as
we've talked about on previousshows, I think this is all just
a setup to merging, to thecrisis, where we have to merge
(48:06):
the earnings reserve with thecorpus.
That's the solution toeverything, and then we'll start
tinkering with how much we'regoing to be taking through our
POMV draw in order to keepfunding this stuff.
But they would say it's theconstituents that are driving it
(48:26):
and I would lay some of theblame back with the so-called
conservative legislators, whoaren't talking about it in terms
of how do you pay for thisadditional stuff, but are
talking about it just in termsof raw opposition to the
(48:47):
proposed spending.
So, with HB 69, variouslegislators, conservatives and
progressives, have said well,we're going to end up with
something.
We got to increase spending tothe school system in some way.
Well, there's not a discussionof how are you going to pay for
that.
There's not a discussion of areyou ready for taxes?
Is that what you want in orderto, in order to pay for, in
(49:11):
order to pay for this additionalspending?
I mean, to me, the way to pushback sort of has me agreeing
with Americans for prosperity,in a way, the me.
The way to push back on thisstuff is is to say look, you can
(49:34):
have this stuff, but you'regoing to have to pay for it, and
to pay for it, we're going tohave to have taxes.
And so I'm going to propose anamendment.
It takes a strong conservativeto do this, I suppose, but I'm
going to propose an amendmentthat says if you pass this bill,
then we're going to have taxesand this is how we're going to
pay for it and create opposition, create a recognition in the
state that this stuff doesn'tcome for free, that somebody's
going to have to pay for it, andthis is going to be the target
(49:56):
audience for who's going to payfor it.
We don't have.
To my knowledge, we don't haveone revenue bill in the
legislature this time.
We don't have anything aboutoil taxes.
We don't have anything aboutoil taxes.
We don't have anything aboutsales taxes.
We don't have anything aboutany sort of revenue.
So we're just admitting,everybody's admitting, it's
(50:17):
going to come out of the PFD,but HB 69 runs us out of that in
two years.
So it's a combination.
Michael, I guess the answer isit's a combination of
constituents pushing for more.
Legislators saying, okay, I'llgive you more.
(50:37):
Constituents saying, but Idon't want to pay for it.
Legislators saying, okay, well,I figured out a way where you
don't have to pay for it.
You, my donors, don't have topay for it.
You, my donors, don't have topay for it.
And that just keeps going andno one recognizing, no one
identifying, no one educatingconstituents on where that takes
(50:58):
us in the long term, on wherethat's going to take us in terms
of who pays.
Speaker 2 (51:03):
Well, and that's.
I mean, that's been part of theproblem the whole time is that
nobody's been asking who pays.
Uh, donna just sent me a textthat said ledge finance.
Laid out the numbers for hb 69at the house education committee
.
Brad may have missed it, um,but did they respond?
I mean, did they look at it andgo well, this is a billion
dollars, this is.
This is going to be problematic.
(51:24):
How, if we can't pay for ittoday, how are we going to pay
for it tomorrow?
How are we going to beproblematic?
If we can't pay for it today,how are we going to pay for it
tomorrow?
How are we going to pay for itnext year If we're already $200
million upside down at thispoint?
How do we pay for it when it'sa billion dollars a year, or
$800 or $700 or $600 million ayear?
Nobody's asking.
Maybe that's when Gary Stevenssaid wow, it's going to be so
(51:45):
difficult.
I mean, maybe I just don't it'sgoing to be so difficult.
I mean maybe that I just don'tknow.
But this should not be a shockor a surprise to anybody that's
been paying attention.
Speaker 1 (51:55):
No, no, and the House Education Committee was
yesterday, so it got laid outyesterday, but Sean didn't
include it in his article today.
Speaker 2 (52:07):
Which again is still I mean congrats to Sean McGuire
for finally welcome to the partypal talking about the who pays
function of it and what thecosts are, although he doesn't
really bring up who pays.
He just talks about the costsof it, but it's not even the
true costs, which is again, howare people supposed to make
decision if they don't have?
And this goes back to my wholeproblem and heartburn with some
(52:27):
of the journalists in this stateis that they're not talking
about these things.
We're talking about it on theshow and nobody else really
seems to be bringing up theultimate cost of these things in
the long run, which isfrustrating for sure.
Speaker 1 (52:40):
Yeah, I would.
I would encourage to the extentthat members of the House
minority or the Senate minorityare listening to the show, I
would encourage you to talkabout it at your briefings.
I would encourage you to talkabout the long-term costs of
these things and running throughthe PFD and where the hell is
this taking us, because that'sthe only thing that the
(53:02):
journalists are responding to.
The journalists are respondingto what the legislators talk
about.
They're not responding, or thespecial interests, the industry.
They're not responding toanything else.
They're not doing any thinkingon their own.
They're just responding to whatpeople are saying down in
Juneau.
So I would encourage, to theextent there are minority
members, either House or Senate,listening to the show, I would
(53:24):
encourage you to talk about thatAll right, brad.
Speaker 2 (53:26):
one minute final thoughts here on today.
I know it's been tough, butgive us your final word for
today.
Speaker 1 (53:33):
Long-term that's the word of the day.
Think long-term.
Think about what you're doingnow in the long-term.
Think about what you're doingnow on the fiscal side in the
long-term.
Think about what you're doingnow in the Cook Inlet
legislature for the long term.
Get out of the way.
Let the RCA do its job.
Speaker 2 (53:51):
Boldness in thought and in how do we pay a billion
dollar appropriation and the RCAnot doing their job?
That's the weekly top three,and it's kind of painful to keep
bringing it up, but that's we.
We got to start thinking thisway because otherwise, well, two
years the PFD is gone.
That's, that's, that's thebottom line at this point.
(54:12):
Brad Keithley Alaskans forSustainable Budgets the Weekly
Top Three.
Thank you, my friend.
I appreciate you coming onboard.
Speaker 1 (54:20):
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
(54:42):
for Sustainable Budgets.
We look forward to you joiningus again next week for the next
edition of the Weekly Top Three.
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 3rd 2025.
The weekly top three is aregular segment on the Michael
Dukes Show.
The show broadcasts on bothFacebook Live and YouTube Live
(00:33):
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
about our three issues.
We post the podcast of ourdiscussion following the show on
the Alaskans for SustainableBudgets Facebook, youtube,
(00:55):
soundcloud, spotify and Substackpages.
Also on the Alaskans forSustainable Budgets website, as
well as the projects 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
week, you can also follow andparticipate in the discussion
(01:18):
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 issuesare these First, while some want
to focus only on the short-termcost.
We explain why, looking downthe road, hb 69 is really a $1
(01:44):
billion appropriation bill.
Second, we explain why, withthe legislature backing out of
the Cook Inlet debate, it's upto the Regulatory Commission of
Alaska to protect Alaskaconsumers.
And third, as the positioningstarts, we discuss what we think
is the big thing on whichpotential candidates for the
(02:06):
2026 governor's race should befocusing on now and now let's
join Michael.
Speaker 2 (02:13):
So let's get started.
The weekly top three startswith the literal literally one
billion dollars.
You get a billion and you get abillion $1 billion
appropriation bill.
That's what HB 69 could end upbeing.
Brad, please try, Don't get toosuicidal in the middle of the
(02:34):
show.
All right, we can't deal withthat.
Just go ahead and get startedon this bill.
Speaker 1 (02:39):
So the fiscal note on HB 69 finally came out over the
weekend Thanks to Rob Myers forpointing it out to me when it
came out and so I startedthrough the fiscal note and it
just got worse and worse andworse and worse.
I had done some calculationslast week based on the news
stories of what what an estimateof HB 69 over the long haul
(03:02):
would be, and I got the firstyear right $330 million but the
subsequent years I didn't getright at all.
So the fiscal note setup ifyou've got it, if you've got
that first page I sent you, youcan throw it up or not.
I can talk through it.
But the fiscal note shows theappropriation for FY26, the
(03:25):
first year of the bill.
Nope, it's the other page, thefirst year of the bill and then
it shows the increments on topof that for the subsequent years
of the bill.
So the first year of the bill,fy26, the addition in FY26 is
(03:45):
$325 million.
The increment on top of thatthis is where I started going
wrong the increment on top ofthat, yeah.
So for those able to see this,look at the total operating line
, which is about a little bitabove halfway through the page,
or fund source that gives youthe same number little bit above
halfway through the page.
Or fund source that gives youthe same number, and you can see
(04:06):
the increment on top of the$325 million for FY27 is $173.9
million, $174 million.
(04:29):
The increment on top of that,on top of the addition of the
325 and the 173, the incrementon top of that for FY28 is 144.
Those are the step additionsthat are in the bill a big bump
in 26, and then another bump in27, then another bump in 28.
And then it goes to inflation,adjusted by inflation.
But you can see these inflationadjustments on top of the bill,
(04:51):
on top of the cumulative amountat that point is $51 million in
29, $55 million in 30, $56million in 31.
I've added those up as you'vegone and so the total cost of
the bill in FY26 is $326 million.
The total cost in FY27 is $500million, half a billion dollars.
(05:15):
The total cost in FY28 is $644million.
The total cost in FY30 is $751million.
The total cost in FY31 is $800million and then that's where
the fiscal note cuts off.
But I took the rate at which itis increasing along the way and
(05:38):
added those increments in andthe total.
When you do that, the total inFY32 is $865 million, the total
in FY33 is $923 million, thetotal in FY34 is $981 million
and the total in FY35, 10 yearsfrom now, 10 years out, if this
(06:00):
bill is passed as proposed, withthese inflation increments
going on, the total in FY35 isone just from this bill alone.
This isn't the total.
Education funding this is justfrom this bill alone is
$1,038,000,000 in FY35.
(06:21):
When you factor those in, whenyou factor those into the
percent of the POMV I did acalculation in last Friday's
Landmine.
For anybody who wants to goread it what is happening to the
percent of POMV?
The percent of the POMV drawthat is needed to support state
(06:41):
spending.
Now that we recognize thatwe've gone past that, we're
blowing past 2575.
When you factor those in, fy25is at 76.5%.
When you add in SB69 to thealready existing budget, the
alleged finance baseline, whenyou add in SB 69, we go to 98%
(07:07):
of the POMV is required tobalance government spending.
And then in FY 27, we go over100 and we stay over 100 through
FY 35.
We get up to something like135% or 140% by FY35.
I'll have those numbers in thedetailed numbers in the coming
(07:28):
Alaska landmine column thiscoming Friday.
But we have now.
In two years we're going to ifwe pass SB69 as proposed, we're
going to blow through the 100%POMB mark and we're going to
blow into the twilight zonebecause we will have no revenues
(07:50):
to support the legislation thatwe're going to pass this year.
All these debates that peopleare having right now are sort of
humorous from the standpoint ofoh, we got $200 million deficit
this year and this is at 300.
And that's bad.
Where are we going to get themoney?
Oh, maybe we can draw it fromthe CBR or maybe we can just tax
(08:11):
the PFD more to cover it.
No one has yet stumbled on theout-year.
As far as I can tell.
No one's yet stumbled on theout-year effects.
No one has yet stumbled onwhere this bill takes us, and it
is a bill that is intended tobe permanent.
It's intended to directspending, create a formula that
(08:34):
directs spending to educationpermanently.
So no one has stumbled to theextent I've seen.
No one has yet stumbled on whatthe heck is going on once we get
through this year and that maybe from the proponents, that may
be by design, it may be.
Oh, it's just $330 million thisyear, don't worry about it,
(08:57):
it's not that big a deal.
We can handle it out of the CBR.
We can handle it out ofadditional PFD cuts.
Focusing on this year, becausethat's the last year they can
say that, that's the only yearthey can say that Once we get
into FY27, you blow out theentire PFD, you blow out the
entire CBR, it's all gone.
And by the time you get to FY35, this state is just one giant
(09:23):
education appropriation with alittle, with a little bit of
other stuff, uh, uh, tagged onthat would mean that the
education budget was 2.2 2.3billion dollars.
Well, yeah, and that's notapplying inflation to the other
part of the education budget.
Speaker 2 (09:40):
That's right any one-time funding, which, which,
if you think the one-timefunding is going away, because
you don't, you don't thinkthat's going to happen, right?
I mean, this is what theywanted was to get the BSA up
there, but you don't think thatthey won't be fighting for one
time funding on top of that?
Yeah, michael it's just.
Speaker 1 (09:56):
I mean nobody, even conservatives, I mean Delaina
Johnson, the supposed educationexperts in the House minority,
the people in the Senateminority with no disrespect
intended but the people in theSenate minority.
Nobody is talking about theout-year consequences of what
(10:18):
this bill does.
It's all focused on battlingover the FY26 appropriation and
I think in doing that we'rebeing sucked in to the game plan
where, oh, let's just talkabout FY36 and let's pass it
because it's not that bad a deal, and then, oh my, and then FY27
is going to be Gary Stevensagain.
(10:38):
Oh, my God, you mean we passthis.
Well, I guess we got to dealwith it.
I guess, because we just passedit, I guess we got to deal with
it.
I guess, because we just passedit, I guess we got to deal with
it.
It's, um, the, the out yeareffects.
People are not thinking through,or they are and intentionally
not discussing uh, the out yeareffects, uh, of of the bill.
You were talking about seandugan's piece.
(11:00):
Uh, there's a similar one fromin the Alaska Beacon a couple of
few days ago.
Looked like Sean was trying toplay catch up with his piece.
But you know, all of thosepieces are talking about the one
year effects.
They're talking about what theeffect would be this year.
They're not talking through thebudgetary effects over the long
(11:24):
term.
Talking through the budgetaryeffects over the long term,
it'll be interesting to see ifsomebody asks Ledge Finance or
if somebody puts up thecalculation along the way of
what those long-term effects are.
But the fiscal note makes themabsolutely clear about where
we're going A billion dollars in10 years.
Speaker 2 (11:45):
Now, this doesn't include the defined benefits.
It doesn't include anythingthat they may or may not do with
the oil and gas.
It includes no other spendingwhatsoever.
Just the education bill willconsume all of the PFD in the
next 24 months and it makes uslook like geniuses, brad.
We've been projecting for thelast two years that it would be
(12:07):
three to four years before thePFD would be gone, and now, if
this gets passed, it will be thenext 24 months.
It will be totally gone.
Speaker 1 (12:16):
Yeah, and, and Michael, I mean everybody, under
everybody, almost everybody, umrecognizes that you can't.
You can't set in motion newrevenue approaches, revenue
alternatives.
You know, on the on the theflip of a dime or on the on the
click of a button, that it takestime to get them in place.
(12:39):
And so what we're going to hit,what we're going to, I can sort
of see this game plan comingtogether.
What we're going to hit is asituation in which next year,
people say, or this year, orlater this year, when they start
recognizing what's going on,they'll say oh, yeah, we need to
do that.
We need to do that permanentfund reform that consolidates
(13:02):
the earnings reserve and the andthe corpus together.
Uh, we need, we need to, weneed to get on that and we need
to go ahead and just sort of,you know, play like we're doing
it, find ways to play like we'redoing it, and, uh, and, and
that's what we're going to needto.
We need to do that.
And they'll argue that's for aseparate reason.
But then what we're going tofind is it's for the real reason
(13:25):
of starting to pull down thecorpus of the permanent fund to
support spending.
Speaker 2 (13:30):
And the worst part of this whole thing is is that
nobody's talking about thelatest NEAP scores, where we
fell even further.
We fell out of the states.
We were at 48th and 49th out ofthe 50, you know, 50 states
plus the territories.
Now we're 51st out of 53.
We're falling, spending moremoney than ever, and we're
falling and they want to spendmore.
(13:51):
It's, it's absolute madness.
I mean, brad, this is it's.
It's been so predictable.
We knew it was coming.
We've been talking about it.
We, you know, we've beentalking about it.
We, you know, we've beentouting, we've been blowing the
horn and warning the bell andsaying the bridge is out and
nobody is just okay, all right,it's fine.
(14:12):
And then gary's like oh, what'sthat?
Is that bridge out out there?
Oh man, maybe we should slowdown a little bit.
You're right, they're going touse this as an excuse to go
right after the corpus of thepermanent fund, because we need
that, we can't have taxes now,and they'll drain the CBR.
I mean, they'll drain thecorpus of the fund, I mean, and
(14:35):
of course they don't want to getinto the CBR, because then the
minority might have a voice onsomething if they get into the
CBR.
And so here we are.
I mean here a billion dollars,and we still haven't seen the
updated fiscal note on thedefined benefits, and that's
still in the pipeline somewhere.
A billion.
Speaker 1 (14:56):
We may never see an updated fiscal note.
Speaker 2 (14:58):
I know, I know that's the insanity here, the
nuttiness that's going on um.
I, I just don't.
I, I don't know how people can,I don't know how people can
miss it.
I, I really don't.
I just don't know how peoplecan see this and go.
This is okay.
Speaker 1 (15:15):
This is totally fine well, michael, but they are.
I mean, even the sean duganarticle misses it.
The sean dugan article focuseson the one near number.
He doesn't get anybody and Iand sean's a reporter, I assume
he talked about sean mcguire.
Not the good, I'm sorry yeah,sean mcguire I sean's a decent
reporter and I assume that thathe talked to enough people that
(15:39):
at least somebody, if somebodywas thinking about it, somebody
would have said whoa, you thinkthis is bad?
Look at the 10th year.
What happens in the 10th year?
And nobody said that.
At least he doesn't quote himin the article Right?
We're also focused on trying toget through this next year and
responding to the crisis of themoment that we're losing focus
(16:02):
on where this all is taking us,and it's not.
You know, you don't even hear.
All you hear from legislatorsis yeah, we're going to have to
give something.
Everybody's in favor ofsomething, for some increased
spending for K-12, for education, but nobody is talking about
(16:24):
revenue, the revenue side.
Nobody's talking about howthey're going to pay for it.
So they're by.
I mean, even the conservatives,even the so-called
conservatives, by omission, areleaving it to PFD cuts, leaving
it to deeper and deeper PFD cuts.
But as as as the play out of SB, of HB 69 shows by FB, even
next year, we're over that limit, we blow through that limit.
(16:47):
So I, you know, I, I we'vebarely got current thinkers in
the legislature.
I guess we don't have forwardthinkers in the legislature and
the governor hasn't talked aboutit.
I mean, he's talked abouteducation.
He's talked about increasededucation spending.
He's talked about his $200million that he wants to
(17:09):
increase education spending by.
And he's not talking about howthe hell he's going to pay for
it?
Speaker 2 (17:15):
Well, but I will say at least that is a one-time
funding, it's not in perpet.
How the hell he's going to payfor it?
Well, but I will say at leastthat is a one-time funding, it's
not in perpetuity.
I mean, again, looking at yourmagic chart here, I just want to
throw that out there Wrong one,let me get the right number.
Looking at this chart againhere, as you look at the
increase, why will you not gothere?
We go.
I mean it's $50 million plus $1million every year, essentially
(17:39):
.
And it goes up because it'sbased on the total amount.
So $51, $55, $56, it'll be $58the next year.
It's $59 or $60 the followingyear.
It's $62 the next year, everyyear going up.
And we already had a baked-inescalator of what $150 million a
year, baked in escalator ofwhat 150 million dollars a year.
(18:01):
Now you're just going to seethat means in 20 years it'll be
close to, it'll be close to 1.8billion dollars.
Based on that math, right?
I mean?
Speaker 1 (18:06):
it's in 20 years the us will want to give us back to
russia.
I mean, yeah, this is such sadshape.
Speaker 2 (18:16):
This is nutty.
I mean, how do you continue topay for it?
I know everybody wants a fishin every pot, but I mean, how do
you, how do you pay for it andkeep people here?
This is nutty.
It is absolutely nuttier thansquirrel poo.
I do not understand what'sgoing on.
And you're right, these other,these legislators, they need to
(18:37):
start shaking this fiscal noteand saying what are we doing?
What are we doing?
I'm just shaking my head.
I am shaking my head that theyjust like well, okay, you know,
how did we?
How did we get here, man?
Speaker 1 (18:54):
All right, incrementally, we got here
thinking year to year to year toyear, with very few people
thinking about the long term.
Speaker 2 (19:04):
Yeah, I would agree with that 100%.
Number two of the weekly topthree.
Well, the legislature may havebowed out.
It looks like it's up to theRCA to protect Alaskans, which
doesn't give me a tremendousamount of confidence based on
their past record.
But Brad, the RCA.
Speaker 1 (19:20):
Well, let's focus on the legislature first.
There was some interestingdevelopments this past week in
the legislature about Cook Inletenergy and they get summed up
well in a.
Maybe it's Sean, no, yeah, thisis a Sean McGuire article from
yesterday on the Cook Inlet.
The headline is GovernorDunleavy points to temporary and
painful measures to addressCook Inlet gas crunch.
(19:43):
As legislators say, their rolemay be limited After a year in
which, you know, legislatorscouldn't talk about the
solutions that they were goingto have for the Cook Inlet
enough.
You know we're going to reducethe royalty that was going to
lead to an explosion in CookInlet development.
(20:04):
We're going to have phase oneof the North Slope pipeline of
the AKLNG project come down.
That's going to solve it Aftera year of delay, frankly, in
facing reality, while thelegislators went through all of
these fantasy solutions, they'refinally facing up to the fact
(20:26):
that they really can't doanything about it.
Here's the quote from Sean'sarticle Alaska legislators have
broadly said energy reforms area top priority this year, but
they say the legislature's rolecould be limited in addressing a
looming shortfall of Cook Inletgas.
Anchorage Republican SenatorKathy Giesel.
Let's still call her aRepublican, anyway.
(20:47):
Anchorage Republican SenatorKathy Giesel, chair of the
Senate Resources Committee,suggested critical decisions
such as importing gas shouldlargely be left to the utilities
and the private sector.
It's a business case.
I don't think the legislatureshould insert themselves.
We're just going to gum it up.
You've already gummed it up.
You've already gummed it upwith the year delay, messing
(21:09):
around with fantasy solutionslike Cook Inlet, royalty Relief
and Phase 1 of the AKLNG project.
Thank you for finally backingout of it, thank you for finally
recognizing the reality,economic reality.
But you've already gummed it upby that year delay.
And now we're a year closer tothe shortfall.
(21:32):
We're a year farther down theroad and we've got NSTAR off in
some other world talking about,you know, lining themselves up
with a small cap, smallcapitalized, inexperienced
player to bring in LNG supplieson land that they don't own
(21:55):
Neither one of them owns, at anew LNG facility to be built in
the cooking land.
We've got a mess, but at leastit's good news that the
legislature is backing out of it, because the legislature can
only make this worse, like theydid last year, like they did
delaying reality, the reality ofit, by a, by talking about all
(22:19):
these grand solutions that theywere going to come up with.
At least if the legislature isfinally recognizing that they
can't do anything about it, atleast that's a good thing.
But here's the deal.
The RCA, the RegulatoryCommission of Alaska, now needs
to step in and do its job.
What we've got are monopolistsNSTAR, chugach, monopoly
(22:44):
utilities that are grantedcertificates don't have
competition protected againstcompetition.
What we've got now are themmaking unfettered decisions.
You know John Sims likes tofocus on the statute that says
it's the utility's decision tomake all of these choices about
supply and they have anobligation for adequate service.
(23:05):
They have an obligation forreasonable cost of utilities
decision.
Well, that's only half thetruth.
The other half of the truth isthe RCA has a regulatory
responsibility, created becausethe utilities have a monopoly
position.
The RCA is there to protectAlaskans against utilities
(23:25):
screwing up and have statutoryauthority statutory authorities
to be able to step in when theutilities are in the process of
screwing up, because there's nofallback if the utilities screw
up, they're monopolies.
The RCA has statutoryauthorities to be able to step
in and correct the utilities orat least understand what the
(23:48):
utilities are doing.
The RCA hasn't done that yet.
The hearing Roger Marks wrote apiece in the an op-ed in the ADN
that, michael, you sent to methis morning, is a good one to
read.
Last week, or last two weeksago, nstar did a presentation on
mid January and started apresentation in front of the RCA
(24:08):
talking about what it's doing.
The RCA's response was well,we're thinking, we think you're
late, we don't think this isgoing to solve it.
Well, if the RCA thinks it'snot going to solve it, it's the
RCA's responsibility to step inand do something that does solve
it.
(24:29):
It's not that you can just sayutilities, well, you did a bad
job, too bad on you.
Speaker 2 (24:36):
You don't just slap their hand.
Speaker 1 (24:37):
You actually do something and say well, since
you're not doing it, here's whatyou're going to do, and instead
of the legislature, you know,screwing around with what it
screwed around last year and atleast starting this year
screwing around again before itfinally wakes up.
Instead of that, the RCAactually can do something about
it by directing the utility andactually can do something about
(24:58):
it by directing the utility andactually should do something
about it.
Nstar's made a proposal thatmakes no sense.
Nstar's made a proposal tobuild a brand new LNG facility
that's tied to someone who'sdoing the AK LNG project, or
purportedly doing the AK LNGproject, on land that neither of
them own, with a proposal by anoperator who has no experience
(25:22):
doing projects of this type andis underfunded in doing the
projects, that it's bitten offRight next to the land where
this facility is located.
Where this proposed facility isto be located is an existing
LNG plant that's alreadycertificated by the FERC to
import gas.
(25:42):
It's the old export facilitybut when Marathon bought it from
Phillips they recertificated itto import gas because at the
time Marathon was concerned, orprobably still is concerned,
about Hillcorp running out ofgas or Hillcorp costing or
charging so much that it wasmore economic to bring in LNG.
Marathon got that facilityrecertificated to import gas.
(26:05):
It's only certificated at themoment to import gas for
Marathon, but it's no big stepto expand that certification to
include importation for Marathonand others.
The big analysis of whether itshould be used for importation
has already gone by.
It's already been certificated,already been approved for that
(26:26):
purpose.
So we've got Instar out thererunning around saying, oh, we're
going to build a new facility,maybe with a company who's not
had any experience doing this,with a company that's
undercapitalized, with a companythat has a clear conflict of
interest that we talked aboutlast week in focusing on the
AKLNG project the big project atthe same time as they're
supposed to be focusing on thisproject with Instar.
(26:48):
We have Instar going down thattrack, while we've got this
existing LNG facility sittingright there on the ground, built
right there next door, and wedon't know.
We have no clue where Chugachand MEA are, who have expiration
dates on their Hillcorpcontracts sooner than NSTAR's
(27:11):
presumably, are going to runinto this situation sooner than
NSTAR have been talking aboutimported LNG, but we have no
clue about what they're doingbecause they haven't even made a
presentation to the RCA.
They haven't even come up witha proposal about how they're
going to go forward on this.
So I'm thankful the legislatureis backing out, because all
(27:32):
they've done is delayed,focusing on the real issue, and
all they've done is, to useSenator Giesel's words, gum up
the works.
I'm thankful the legislature isbacking out.
They needed to before they evengot in last year.
But now we need the RCA to stepup.
Now we need the RegulatoryCommission of Alaska appointed,
(27:52):
whose members are appointed bythe governor.
You want to point at somebodyand say it's your responsibility
, whose members are appointed bythe governor.
You want to point at somebodyand say it's your responsibility
, whose members are appointed bythe governor.
It's up to the RCA to step up.
Uh and, uh, and and and take,take hold of the
responsibilities the statutegives them to protect Alaska
consumers.
Speaker 2 (28:10):
And that's been our big question this whole time is
why isn't the?
I mean, we thought, you know,when they had that meeting and
and uh Hicks, everybody was, ohyou know, slapping them down.
But the problem is they'reoffering no other solution.
They are the governing body,they're the ones that can direct
.
And I will say again, creditwhere credit's due.
Kathy Giesel, I guess even astopped clock is right twice a
(28:30):
day.
Kathy Giesel saying that thisis not the legislative's purview
was shocking, but surprising.
I mean a welcome surprise, Iguess I should say.
Again, too little, too late.
They spent all of last sessiondithering about what they were
going to do about the gas issueand the whole election season,
(28:53):
and then, coming into thebeginning of this session, what
were we going to do about it?
And then they finally decidedwe're not going to do anything
because it's not our place.
Well, thank God, somebodyfinally figured it out and John
Sims can't apparently keepkicking the can down the road
hoping that somebody else willpick up the bill.
Speaker 1 (29:11):
That may be part of Sims' strategy.
I mean, doing this deal withGlenn Farn may be part of his
strategy to hopefully jerk thelegislature in, Hopefully say,
oh yeah, that didn't work out,so what are we going to do?
Now Somebody bail us out.
It is a proposal designed tofail.
It's not a proposal designed tosucceed.
(29:32):
Maybe he's thinking that he'sgoing to pull the legislature in
, yet.
Maybe he's thinking that he'sgoing to pull the legislature in
, yet.
Hopefully he will wake up tothe reality also that the
legislature is not going to be acavalry coming over the hill
because, frankly, they don'thave any guns, they don't have
any way of fixing it coming overthe hill.
So hopefully he's going to wakeup to that and hopefully the
(29:57):
RCA is going to wake up to thefact that NSTAR really doesn't
know what it's doing and wedon't even know what Chugach and
MEA are doing.
Speaker 2 (30:00):
Well, before we go here.
We only got about two minuteshere.
But why?
Why paint me a picture as anoil and gas guy former oil and
gas guy, you've been in thebusiness, for you were in the
business for years, you're youknow, you're intimately familiar
with all that stuff.
When you look at this, whywould NSTAR propose standing up
a whole new plant on a patch ofland they don't even own in this
(30:22):
potential, when there's one,like you said, right there,
where probably I don't know 80%of the work has already been
done.
A lot of the heavy lifting hasalready been done.
It only requires a monetaryinvestment and recertification.
Why would that just guess here?
Why would that happen?
Speaker 1 (30:40):
Could be that Marathon's asking too high a
price.
I mean, the facility's owned byMarathon, they have the title
to it, they are the ones thathold the permits and it could be
that Marathon's asking too higha price.
But that's a question the RCAought to be asking.
The question that the RCA oughtto be asking why are you not
pursuing something with Marathon?
(31:01):
Why did you give up on thefloating LNG project that you
had, that you talked about andwe approved $50 million in
spending for on pipelines?
Why did you give up on that?
Go through in detail what youranalysis is.
The other thing is that youknow sims may be hoping that
(31:23):
that ultimately the legislaturepays for the imported lng plant
and and he knows his, his parentcompany knows if they do the
deal with merit with nstar,they're going to have to pay, or
do the deal with marathon,they're going to have to pay for
it.
So maybe he's still hoping,maybe they're still hoping that
the legislature comes in andpays for it.
Speaker 2 (31:40):
With what money?
With what money?
I mean, I mean again, with whatmoney?
Oh man, this is, yeah, I mean,I'm just trying to, I'm just
trying to pick this out.
Hea, homer Electric Association.
Their contract ends next month,Next month, and the president
(32:04):
of HEA was in front of the RCAboard when that big meeting went
down and Hicks and everybodywas slapping everybody on the
wrist and they were asking himdon't you lose?
He goes.
No, I don't lose any sleep overthat and I'm like it's two
months away and you're notlosing any sleep.
How much do you get paid again?
Maybe I should take that joband do it part-time and and
(32:26):
figure, I mean it's, it's crazy.
I mean there, there really is abig, there's a, there's a,
there is a, a reckoning comingand everybody's just walking
around.
Maybe they're just waiting topoint the fingers at each other.
Speaker 1 (32:41):
I don't even know Well, in a state that doesn't
have gas, or in a in a.
So HEA, hea is defensible inthis or explainable?
How about this?
Probably not defensible.
Explainable in the sense thatthey're the tail way out, or
they're way out on the tail ofthe dog and they've got an
interruptible contract, as MattHertz has pointed out, an
interruptible contract with,with N star, for additional
(33:04):
supplies for a longer term.
But but there's still the tail,there's still a fairly small
player in the tail, out on thedog or out on the end of the
tail of the dog, and they'resaying look, this is going to
get solved somehow and and we'llbe part of the solution.
So we can't do anything alone.
We can't go in, we don't haveenough money to go in and buy an
(33:24):
LNG plant and set up an LNGimport facility on our own.
So whatever the big dogs, mstarChugach and MEA, decide to do,
we'll be part of.
That is basically how Homer islooking at this thing.
But the question is what areNSTAR Chugach and MEA doing?
(33:49):
How are they addressing it?
Particularly, I mean, nstar atleast has come up with a plan,
not a good one, not the rightone, but at least they've come
up with a plan.
We don't know what Chugach andMEA are doing.
The last thing we heard fromChugach was a December editorial
in the ADN by the chairman ofthe board, their chairman of the
(34:10):
board and the president, inwhich they said we're pursuing
LNG period full stop.
We haven't heard anything aboutthat.
Not a word since, yeah, aboutwhat the proposal is and about
how they're going to do it,since and Sims went out of his
way not to include MEA andChugach as part of the
discussion around what he'sdoing with Glen Farn.
(34:32):
So we've got to, as the datecomes closer, and I blame the
legislature and I blame thegovernor for part of this,
because they wasted all lastyear claiming that they could do
something about it and sayingthey were going to do something
about it.
And so Sims said look,legislature's going to do
something about it, I don't needto worry about it,
(34:53):
legislature's going to dosomething about it.
And they wasted all last yeargoing in circles about things
that they can't deal, that theycan't do, that they aren't going
to do, and so you know, we losta year in that process.
But now the year's over and nowit's on the utilities.
Now Senator Giesel says it's onthe utilities.
(35:14):
What are the utilities doing?
And that's the question the RCAneeds to be asking and the RCA
needs to be evaluating.
Problem is we've got some RCAcommissioners that don't really
have any utility experience,don't have any utility
background, are Republicans whothink they ought to be
deregulating things anyway.
(35:35):
But you don't deregulate to amonopolist, I mean.
That's why the RCA is set up toprotect consumers against the
monopolist, to balance thenegotiations, to balance the
power between the monopolist andconsumers.
And the RCA has a role to playhere.
(35:55):
As much as they may not want toplay it, they have a role to
play here and they need to geton with playing that role or
else we're going to waste yetanother year of going in circles
about people saying, well, wedon't have the ball, who has the
ball?
You have the ball, you have theball.
Speaker 2 (36:13):
Well, I mean, homer's is next month, but 2027 is
right around the corner and it'searly 2027 for everybody else.
So you got what?
18 months to get your ducks ina row and figure all this out?
It's not long, it's not long atall.
And unless they do something, Ijust don't know.
(36:33):
I don't know.
And it's a 10% increase thisyear, what is it next year?
What is it if they don't getthis done in time and there's a
stop gap of a year or two?
While they're trying to figureit out, what's the heating and
electricity costs go to then?
Speaker 1 (36:49):
I mean it's crazy Sims has talked about on a spot
basis, if this thing doesn't getsolved in time on a spot basis,
if this thing doesn't getsolved in time, trucking LNG up
through Canada to Alaska, up onthe Alaska Highway, trucking LNG
over the Alaska Highway intoSouth Central.
(37:10):
I don't have any clue what thecost of that is, but it's got to
be a hell of a lot moreexpensive than the proposals
that have been on the table sofar.
Speaker 2 (37:20):
Brad Keithley Alaskans, for Sustainable
Budgets, the weekly top three.
I thought the Roger Marksarticle was very good to kind of
summate this as well.
That was timely for today, soyou can go look at it.
I'll post it up here in just asec.
Brad Keithley Alaskans, forSustainable Budgets, is our
guest.
The Weekly Top Three continueswith number three, the Pig 3-0.
(37:45):
What do we got here?
Well, how's that boldleadership working out for us so
far?
Right, because some are callingfor bold leadership.
I mean, I guess you could beargued that all this spending is
bold leadership.
I don't know, brad, what.
What do you say with a boldleadership that we're being
asked to look for?
Speaker 1 (38:07):
Well, this is.
This is people are starting tofocus on the 2026 governor's
race and they're starting toposition themselves.
And they're starting toposition themselves.
Those who are interested inrunning are starting to position
themselves around themes thatthey're trying out for their
campaigns.
Some of them ClickBishop is agood example want to talk about
(38:31):
infrastructure, rebuildingAlaska.
You know, building new things,employing Alaskans to build new
things.
That's sort of the theme behindthe AKL and G line as well
Employing Alaskans to build newthings, although Senator Giesel
points out less than less than50% of the people employed to
(38:52):
build the pipeline would beAlaskans.
It'd be people that wereimporting from the lower 48, but
you know, build big new things,big bold.
I've got a publisher, jeffLahanfield, who's occasionally
talked about running forgovernor, and his big bold new
thing is building the KinnickArm Bridge.
That's going to solve housing.
That's going to solve, you know, homelessness.
(39:14):
It's going to solve all sortsof things if we we build the
connect our own bridge becauseit's going to open up the land
over on the Mat-Su side of thebridge to to additional
development and provide a secondroute up to up to the Mat-Su
and all and all sorts of goodthings.
So people are positioningthemselves about, about to for
(39:34):
this run by talking about beingbig and bold.
You know taking major steps, butthey all cost money and if the
current debate about HB 69 isnot focusing us yet on where
we're headed, we'll get there atsome point.
We'll finally focus on it atsome point.
(39:56):
We don't have the money, thestate doesn't have the money, to
be big and bold.
The state barely has well,doesn't even have enough money
to pay its budget.
I mean legislative finances,told us, in FY26, we're $200
million short of financing evena bare bones budget.
(40:18):
At FY25 service levels, we're$200 million short at a 25S75
POMV split, 25 to the PFD, 75 togovernment we're two $200
million short Even at that.
When you look at the numbersthat play out over time,
particularly with the HB 69 withyou, when you look at the HB 69
(40:41):
fiscal note, we don't have themoney we're, we're we, we run
through the entire POMVcompletely eliminate, if we pass
HB 69, completely eliminate thePFD next year.
So when people talk about beingbig and bold, that may be a
(41:01):
theme for a campaign that looksgood two years out, but I think
when we get to the time, it'sgoing to look ridiculous,
frankly, to be talking aboutspending additional money that
the state doesn't have on big,bold, new projects.
I think what we need to bethinking about now, what
candidates need to be thinkingabout, what people need to be
(41:24):
thinking about when they'reencouraging certain people to
run for office, is fiscalresponsibility.
We're going to need a governorin two years, looking two years
down the road.
We're going to need a governorwho talks about, who talks and
has plans for fiscalresponsibility and that's not
just talking about curbingspending, like Dunleavy did in.
(41:46):
What was that?
2020, no, 2008, 2000, 2018,whatever the hell.
You're right in yeah 2018.
They all run together after awhile 2018.
It's not I mean, it's not justcurbing spending, like Dunleavy
talked about in 2018.
We passed that point.
We tried that in thelegislative session in 2019,
(42:08):
didn't work, and Dunleavy hasn'tcome back to it since.
We've tried.
That Didn't work.
So we're going to need agovernor who, candidates who
reasonably talk about therevenue side, who reasonably
talk about what's theresponsible thing to do on the
revenue side, and some of themmay talk about wiping out the
PFD, but that's only going toget you so far.
(42:30):
If we do HB 69 or anythingapproaching HB 69, we're going
to have wiped out the PFD by thetime we get to the campaign.
So we need people who arethinking about now and putting
together their platforms nowbased upon the situation we're
going to be in in 2026.
(42:51):
And that situation that we'regoing to be in in FY26 is going
to be a pretty bad one from afiscal standpoint.
Production will be ramping upand some will claim oh, with
production wrapping up, happydays are here again.
Well, it's not the way the oiltax credit works.
(43:14):
The revenues from that, if theyever show up, show up way out
in the future somewhere and theycan be delayed even further
than way out in the future.
They can disappear entirelyunder the way the current oil
tax structure works.
So we need people who are goingto address the fiscal reality
(43:38):
that we face in FY26.
Talking about big, boldsolutions may seem to be the
right thing to talk about now.
Resolutions may seem to be theright thing to talk about now.
Right, may seem to be the rightthing.
That appeals now.
But you're not putting yourselftwo years out.
You're not thinking throughwhat happens in the meantime and
where the state's fiscalsituation is when we get to the
(43:59):
2026 election cycle.
Speaker 2 (44:01):
What we need.
If you're talking about bold,what we need is somebody with
bold vision, somebody who cansee beyond the next election
cycle, the next legislativesession, somebody who can look
down the road and say this iswhere we need to be.
I mean, what you did with thatfiscal note was not rocket
science, right?
You just extrapolated out theamount that because they put it
(44:21):
on the second page there thepercentage that they're
multiplying it by and everythingelse.
Anybody with a calculator and apiece of paper could figure out
that this is going to cost us abillion dollars in 10 years,
and nobody you know.
A billion dollars a year in 10years, and so nobody you know.
But they're just not thinkingbeyond the next cycle, the next
(44:44):
session, the next.
We need somebody with bold,long-term vision, and that's
something we complained about onthe show for 25 years is that
nobody is thinking beyond thenext budget cycle.
Speaker 1 (44:56):
Yeah, and it's big, bold vision, michael.
I mean, I think when we thinkabout big and bold, click will
want us to think about big andbold in terms of building things
.
Oh, we're going to build outthe infrastructure.
We're going to make Alaskagreat again by building out the
infrastructure.
Because Click comes from theconstruction trades.
That's his bread and butter,that's where he wants people
(45:17):
employed, that's where he thinksthe jobs ought to be.
When people think about big andbold, they think about building
things.
What we need is somebody who.
I guess what we're saying indifferent ways is we need
somebody who's big and boldabout thinking about how you pay
for things, because we'vegotten to the point.
We're getting to the point inthis state.
(45:38):
We've already gotten to thepoint.
I mean the $200 million deficit, even at 75-25.
We've gotten to the point inthis state where we can't pay
for everything that we'vealready said we want.
We can't pay for it.
There's not enough money to payfor even that, much less
anything else.
So we need someone who comes,who is to be big and bold,
(46:02):
someone who comes in and thinksabout how are we going to pay
for this stuff and how are wegoing to pay for it in a way
that has the lowest adverseimpact on the economy and has
the lowest adverse impact onAlaskans.
How are we going to spread thisburden in a way that makes life
better off for all of us andgives us maybe the capacity to
(46:26):
increase a little bit to dothings that we need to do to
sort of finish out Alaska?
But we need somebody, first andforemost, who's focusing on the
pay-for side as opposed to the Iwant to spend more, and here's
how I'm going to spend more, andhere's why you ought to vote
for me, because I'm going tospend more going in this
direction.
Speaker 2 (46:47):
Right, I don't know, brian, this whole thing is just.
I mean, we can see it.
Why, why is it so hard for thelegislature to see what we've
been talking about?
I mean, you know, why is it sohard for them to see that it
can't be?
I mean, I guess, unless it'sintentional and they want access
to the big pot of money, andthat's the whole plan, and it's
(47:07):
been the plan, the whole,although I don't know if I would
ascribe that much forethoughtto them or Machiavellian kind of
you know, planning.
It just seems like it's justmore at this point.
They just want more.
Speaker 1 (47:24):
They would explain it .
So let's ask how they wouldexplain it.
So let's ask how they wouldexplain it.
They would explain it in termsof their constituents wanting
more and their constituents notwanting to pay for it themselves
, at least their donor class notwanting to pay for it
themselves.
They want more, but they don'twant to pay for it.
So how do you do that?
I mean, they send thelegislators off to the
legislature to figure that out,and the way you do that is by
(47:46):
shifting the cost of middle andlower income Alaska families
through PFD cuts.
You keep spending, but, butwe're about to hit the point
where you can't do that anymore.
So so what's going to?
What's going to happen in theand I think I think you know, as
we've talked about on previousshows, I think this is all just
a setup to merging, to thecrisis, where we have to merge
(48:06):
the earnings reserve with thecorpus.
That's the solution toeverything, and then we'll start
tinkering with how much we'regoing to be taking through our
POMV draw in order to keepfunding this stuff.
But they would say it's theconstituents that are driving it
(48:26):
and I would lay some of theblame back with the so-called
conservative legislators, whoaren't talking about it in terms
of how do you pay for thisadditional stuff, but are
talking about it just in termsof raw opposition to the
(48:47):
proposed spending.
So, with HB 69, variouslegislators, conservatives and
progressives, have said well,we're going to end up with
something.
We got to increase spending tothe school system in some way.
Well, there's not a discussionof how are you going to pay for
that.
There's not a discussion of areyou ready for taxes?
Is that what you want in orderto, in order to pay for, in
(49:11):
order to pay for this additionalspending?
I mean, to me, the way to pushback sort of has me agreeing
with Americans for prosperity,in a way, the me.
The way to push back on thisstuff is is to say look, you can
(49:34):
have this stuff, but you'regoing to have to pay for it, and
to pay for it, we're going tohave to have taxes.
And so I'm going to propose anamendment.
It takes a strong conservativeto do this, I suppose, but I'm
going to propose an amendmentthat says if you pass this bill,
then we're going to have taxesand this is how we're going to
pay for it and create opposition, create a recognition in the
state that this stuff doesn'tcome for free, that somebody's
going to have to pay for it, andthis is going to be the target
(49:56):
audience for who's going to payfor it.
We don't have.
To my knowledge, we don't haveone revenue bill in the
legislature this time.
We don't have anything aboutoil taxes.
We don't have anything aboutoil taxes.
We don't have anything aboutsales taxes.
We don't have anything aboutany sort of revenue.
So we're just admitting,everybody's admitting, it's
(50:17):
going to come out of the PFD,but HB 69 runs us out of that in
two years.
So it's a combination.
Michael, I guess the answer isit's a combination of
constituents pushing for more.
Legislators saying, okay, I'llgive you more.
(50:37):
Constituents saying, but Idon't want to pay for it.
Legislators saying, okay, well,I figured out a way where you
don't have to pay for it.
You, my donors, don't have topay for it.
You, my donors, don't have topay for it.
And that just keeps going andno one recognizing, no one
identifying, no one educatingconstituents on where that takes
(50:58):
us in the long term, on wherethat's going to take us in terms
of who pays.
Speaker 2 (51:03):
Well, and that's.
I mean, that's been part of theproblem the whole time is that
nobody's been asking who pays.
Uh, donna just sent me a textthat said ledge finance.
Laid out the numbers for hb 69at the house education committee
.
Brad may have missed it, um,but did they respond?
I mean, did they look at it andgo well, this is a billion
dollars, this is.
This is going to be problematic.
(51:24):
How, if we can't pay for ittoday, how are we going to pay
for it tomorrow?
How are we going to beproblematic?
If we can't pay for it today,how are we going to pay for it
tomorrow?
How are we going to pay for itnext year If we're already $200
million upside down at thispoint?
How do we pay for it when it'sa billion dollars a year, or
$800 or $700 or $600 million ayear?
Nobody's asking.
Maybe that's when Gary Stevenssaid wow, it's going to be so
(51:45):
difficult.
I mean, maybe I just don't it'sgoing to be so difficult.
I mean maybe that I just don'tknow.
But this should not be a shockor a surprise to anybody that's
been paying attention.
Speaker 1 (51:55):
No, no, and the House Education Committee was
yesterday, so it got laid outyesterday, but Sean didn't
include it in his article today.
Speaker 2 (52:07):
Which again is still I mean congrats to Sean McGuire
for finally welcome to the partypal talking about the who pays
function of it and what thecosts are, although he doesn't
really bring up who pays.
He just talks about the costsof it, but it's not even the
true costs, which is again, howare people supposed to make
decision if they don't have?
And this goes back to my wholeproblem and heartburn with some
(52:27):
of the journalists in this stateis that they're not talking
about these things.
We're talking about it on theshow and nobody else really
seems to be bringing up theultimate cost of these things in
the long run, which isfrustrating for sure.
Speaker 1 (52:40):
Yeah, I would.
I would encourage to the extentthat members of the House
minority or the Senate minorityare listening to the show, I
would encourage you to talkabout it at your briefings.
I would encourage you to talkabout the long-term costs of
these things and running throughthe PFD and where the hell is
this taking us, because that'sthe only thing that the
(53:02):
journalists are responding to.
The journalists are respondingto what the legislators talk
about.
They're not responding, or thespecial interests, the industry.
They're not responding toanything else.
They're not doing any thinkingon their own.
They're just responding to whatpeople are saying down in
Juneau.
So I would encourage, to theextent there are minority
members, either House or Senate,listening to the show, I would
(53:24):
encourage you to talk about thatAll right, brad.
Speaker 2 (53:26):
one minute final thoughts here on today.
I know it's been tough, butgive us your final word for
today.
Speaker 1 (53:33):
Long-term that's the word of the day.
Think long-term.
Think about what you're doingnow in the long-term.
Think about what you're doingnow on the fiscal side in the
long-term.
Think about what you're doingnow in the Cook Inlet
legislature for the long term.
Get out of the way.
Let the RCA do its job.
Speaker 2 (53:51):
Boldness in thought and in how do we pay a billion
dollar appropriation and the RCAnot doing their job?
That's the weekly top three,and it's kind of painful to keep
bringing it up, but that's we.
We got to start thinking thisway because otherwise, well, two
years the PFD is gone.
That's, that's, that's thebottom line at this point.
(54:12):
Brad Keithley Alaskans forSustainable Budgets the Weekly
Top Three.
Thank you, my friend.
I appreciate you coming onboard.
Speaker 1 (54:20):
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
(54:42):
for Sustainable Budgets.
We look forward to you joiningus again next week for the next
edition of the Weekly Top Three.
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