March 4, 2025 • 56 mins
Welcome to The Weekly Top 3 — our look at the top 3 things on our mind here at Alaskans for Sustainable Budgets — for the week of March 3, 2025.
This week, our top 3 issues are these: 1) we explain why we believe Alaska oil tax reform is not only justified, but needed (2:06); 2) we discuss the fiscal irresponsibility of how both increased K-12 spending as well as defined benefits are being pursued (19:25); and 3) we explain how the PFD is being squeezed from both the left and right (37:52).
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top three, the top three things on our
mind here at Alaskans forSustainable Budgets for the week
of March 3rd 2025.
The weekly top three is aregular segment on the Michael
Duke 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 for
Sustainable Budgets website, aswell as the projects page on
national blog site mediumcom.
You can find past episodes ofthe weekly top three also at the
same locations.
Keep in mind that, in additionto these podcasts during the
(01:16):
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic condition byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter.
This week, our top three issuesare these First, we explain why
(01:37):
we believe oil tax reform is notonly justified but needed.
Not only justified, but needed.
Second, we discuss the fiscalirresponsibility of both how
increased K-12 spending as wellas increased defined benefits
are being pursued.
And third, we explain how thePFD is being squeezed from both
(02:00):
the left and the right.
Speaker 2 (02:03):
And now let's join Michael, let's get to it.
I mean, I hate to be the brokenrecord, but boy, there's some.
It's like you know, lions.
It's Groundhog Day again in thelegislature, right?
I mean, this is where we're at.
Let's start off with the latestand greatest oil, oil taxes.
(02:24):
Um, and boy, there's a lot ofuh angst on the part of the
right.
Uh for, uh for uh.
Rob yuntz, I mean, there was awhole thing.
Dan fagan wrote an articleabout how this is how republics
die and all this kind of stuff.
I mean, in his article about it, um, but there's.
You know, you have a finiteresource that's owned by you,
(02:47):
the people.
You have a finite, limitedresource.
Shouldn't you get the maximumyield out of that, since it's
only going to be here one time?
I mean, I'm just asking as anowner maybe we should do more.
But you know I'll leave it toyou.
Speaker 1 (03:00):
Yeah, I read Fagan's piece.
It was Hillcorp's talkingpoints.
Somebody slipped him the bulletpoints and he just put words
around it.
So here's the deal to me withoil taxes.
And keep in mind that I was abig proponent of SB21, that I
testified in favor of it, Ihelped draft part of it, I was a
big defender of it in thereferendum on it in the
(03:24):
subsequent election cycle andI've been a believer in it in
terms of its ability to restartinvestment in Alaska and it's
proven to do that.
But here's the problem.
Here's the problem.
It's in the current environmentwhere we have all this massive
(03:45):
investment going on and we havenew production coming in, it's
overshot the mark.
You can tell that in two waysand this is very simple, very,
very simple.
You can tell that in two ways.
If you look at the fall revenueforecast, the fall revenue
(04:09):
forecast projects big increasesin production Over the 10-year
period covered by the forecast.
Projected production levelsrise by over 35% from $467,000
at the start start to 640,000 atthe end.
But now let's look at therevenue side.
(04:30):
Yeah, we got big productioncoming up right.
Now.
Let's look at the revenue side.
Royalty revenues over thatentire period only rise by 1%.
Productions rising by 35%.
Royalty revenues are onlyrising by 1%.
Production's rising by 35%.
Royalty revenues are onlyrising by 1%.
The answer to that is a lot ofthe production, a lot of the
(04:52):
increased production.
Most of the increasedproduction is coming from
federal lands from which wedon't get royalty.
So what's going on is statelands.
Production from state lands isstill staying relatively
constant.
The big rise is coming fromfederal production.
So you would expect royalty tosort of stay where it is over
(05:13):
that period.
It only rises by 1%.
But here's the big deal andhere's what Mike Schauer and
Feagin and others on the rightneed to concentrate on.
Over that same period, revenuesfrom production.
Now production itself is risingby 35%.
(05:39):
Right, revenues from productionthrough the production tax are
dropping, dropping, dropping by30%, from $940 million at the
start to $658 million at the end, and driven by that, overall
unrestricted petroleum revenuesalso fall over the period.
(06:00):
Production taxes, revenues fromproduction taxes, which apply
both to the state and to thefederal lands.
So there's no, we're notgetting any problems with the
federal lands.
Production taxes apply to thefederal lands.
Productions increasing by 35%.
(06:21):
Production taxes are droppingby 30%.
There's another way to look atthat.
We don't have a gross revenuesystem but you can calculate the
percent.
Take on the gross and that's afairly good measure of how your
production tax system ischanging, how your production
(06:45):
tax system is changing.
So you can look back and youcan look back at the pre-ACES
period and we had about 17% fromthe gross.
That's what the production taxgenerated about 17% from the
gross.
During ACES that jumped up to32% from the gross.
Bad, too much and itdisincentivized investment in
the state.
Dollars went elsewhere.
(07:07):
During the first 10 years ofSB21, it came back down to about
where it was pre-ASIS, to aboutwhere it was in the old system
about 16% of the gross andthat's lasted for about 10 years
.
About 16% of the gross andthat's lasted for about 10 years
(07:30):
.
Now, when you look at the fallrevenue forecast, it's dropping.
The SB21 stays in effect butthe revenue from the gross is
dropping to about 12%.
It's dropping by about 4%.
What's going on is that in SB21,the legislature put in a lot of
incentives.
They put it for example theyhave one-year amortization.
(07:50):
Usually, when you have a taxcode to encourage investment,
you allow amortization over ashorter period than the life of
the investment, right, so youallow amortization over five
years, maybe, or 10 years, right, and so you can amortize the
capital ACES, or I mean SB21allows amortization over five
years, maybe, or 10 years, andso you can amortize the capital
ACES, or I mean SB21 allowsamortization over one year.
So every dollar they put in aninvestment is a credit against
(08:16):
revenue.
We also instituted what's calledGBR gross value reduction, and
that's on new oil, oil fromregions that are from areas that
hadn't previously been produced.
That was an incentive to go outand develop additional oil, and
that applies both to Prudhoe Imean there were areas in Prudhoe
(08:37):
that hadn't been developed andit applies to Willow and PECA
and the others and PICA and theothers.
The revenues from, or the grossvalue reduction is you take 30%
of your revenues off the top,exclude that before you start
calculating taxes, before youstart calculating the revenues
that are included in taxes, andthen we've got the per barrel
(08:59):
credits that are on top of that.
All of those combined arehitting in a way in the current
environment to reduce one moretime, or 15 more times, whatever
it takes to get it throughpeople's brains to reduce
production taxes by 30% over the10-year period, at a time when
production volumes areincreasing by 35%.
(09:22):
Sb21 has.
The internal workings of sb21have sort of gone wrong.
Speaker 2 (09:29):
They're over correcting for the problems that
we had which historically inthis state, which historically
in this state, we have a problemwith right.
I mean that there was, you know, elf, and then aces, and then
it always swings back one way orthe other.
For it, you know, it's even forjust a little bit, and then it
runs off into the park, alwaysswings back one way or the other
, it's even for just a littlebit, and then it runs off into
the Parker brush in one side orthe other.
It seems like every time whereit's good for a finite period of
(09:53):
time and then it runs askew,because we're trying to predict
market behavior.
And, of course, all these oilcompanies.
They've got a whole floor fullof accountants and lawyers, and
the state of Alaska has gotthree people auditing the books
versus a whole fleet ofaccountants and lawyers, and so
this is inevitably what's goingto.
You have to come back andrevisit it every handful of
years, I think, to make it work.
Speaker 1 (10:15):
Yeah, I'm not, I'm not, I'm not.
I don't think this is a waywhere the oil companies are
cooking the books.
This is the way.
This is the way SB21 operates.
When you get in thisenvironment, what we told
Alaskans in 2013 and 2014 ishelp us increase investment.
What the industry told Alaskanswas help us increase investment
(10:36):
by reducing your take fromproduction taxes.
Take a hit from productiontaxes, help us, and when volumes
increase, that'll result ininvestment.
It'll result in volume increase.
When that happens, you'llbenefit too.
We'll share in the benefit.
What's happening now that we'vegotten to that point is the
exact reverse Production taxesor production volumes are
(11:00):
blowing out 35% increase, butproduction taxes, revenues from
production taxes, are dropping.
So when I see people likeShower and others you know
knee-jerking the industryreaction to taxes, oh my God,
bad.
You know horrible.
You know we're going to leave,we're going to do this, we're
going to do that.
When I see them knee-jerkingthe industry reaction, I get
(11:23):
upset because that's not whatyou should be doing.
You should be looking at thenumbers, and I've written about
the numbers.
We've got them in the AlaskaLandmine column.
You and I have talked about thenumbers on the show before.
When the Fall Revenue Sourcesbook first came out, I was just
shocked at what was going onwith production taxes.
(11:43):
You've got to look at thenumbers and you've got to look
at what's going on, don't kneejerk a reaction.
Now you know I'm not a big fanof the way Willikowski is
proposing to fix it with alimitation on the production
credits and with the limitationon the related limitation on
(12:09):
deduction of capital investments.
That's a matter of revenuedesign.
We talk a lot about revenuedesign on the show.
That is revenue design.
He's trying to design how toget $400 million and that's the
design he's using.
I'm not a big fan of thatdesign because I don't think
that's getting at the heart ofthe problem, which is the
amortization and the GVRsCredits are part of the problem.
(12:32):
Per barrel credits are part ofthe problem, but I don't think
that fix is getting at it.
But the number's about right.
I mean I've done these numbers alot and if you look at gross,
if you look at share of grossand if you look at what would
happen if we didn't have thesedeductions going on in the way
(12:53):
we're, having them go on in thenext 10 years, over the next 10
years, yeah, about $400 millionis the right number.
You and I have talked about thison the show a lot, right, but
so I just don't give me yourknee jerk.
You know talking points fromHillcorp in the case of closing
(13:13):
the Hillcorp loophole, or fromthe oil companies in the case of
the production tax fix.
Look at the goddamn numbers andsee for yourself what's going
on.
And what's going on is, nowthat we've developed a tax code
that has encouraged making allthese investments, now that
(13:34):
we're getting to the point wherethose pay off in terms of
increased production, productiontaxes are going down, and
that's not what was intended in2013 and 14.
That's not what was toldAlaskans in 2013 and 2014.
And that's not what should behappening, consistent with a
(13:54):
constitutional obligation thatsays maximize revenue for the
benefit of Alaskans.
Speaker 2 (14:00):
Right, and this is again.
This is what we've been sayingfor a long time.
There's money on the table andwe need to be looking at it, but
the second we start talkingabout it, you know immediately
the right is activated over thefact that we shouldn't do
anything more with the oilcompanies.
But we're leaving money on thetable.
There's money on the table andwe, you know we are the owners,
(14:21):
and again, it's a finiteresource.
60 seconds, brad.
Speaker 1 (14:24):
Well, I owners and again, it's a finite resource 60
seconds, brad.
Well, I mean, and people talkabout consistent tax code.
We need consistency in the tax.
Well, this isn't consistent.
The fact that we're losingrevenue at a time production is
increasing, the fact that ourtake of gross revenues are going
down, that's not consistent.
The provisions that are causingthat are consistent with what
happened before, but you have tolook at the environment in
(14:47):
which those provisions areapplying and and it's resulting
in a significant I mean 30% dropin production tax revenues is
huge, right, and that's andthat's what's going on.
Speaker 2 (14:58):
Yeah, how can we have more production yet less
revenue in the other end?
And that's, you know, that'sthe kind of the continual
question that we should beasking ourselves.
There's a lot of factors there,but this taxation is definitely
part of it.
This is, this is some, this issome crazy stuff.
And again, the fact that you,as an oil and gas company
attorney you know, former guy inthe industry is saying there's
(15:21):
still money on the table oughtto raise the eyebrows for people
who are like, no, the oil cutwe, everything you know, you
know, um, we, we've, we've gotto be paying attention to this.
This is a, this is a deal, andit could again help with some of
the issues that we're having.
Uh, as well, and as as incitizen owners, we should be
(15:44):
getting.
I mean, the Constitution saysthat we need to get the maximum
yield.
I mean, that's what we'resupposed to be getting as owners
out of this whole deal.
Speaker 1 (15:53):
You know, and people say, oh you know, taking this
money away from the oilcompanies, they'll leave, they
won't.
Speaker 2 (15:59):
No, I mean, this is they're making more money than
God out here Are you kidding me.
Speaker 1 (16:03):
All we're talking about is maintaining the same
level of gross revenues and Iknow we're not on a gross
revenue system but we, but ourrate, design the way we design.
The net profits tax produces acertain level of take from the
gross and you can see thatconsistency over time.
(16:23):
You can see it before ACES.
You can see it much higherduring ACES.
Of consistency, you can see itcoming back down in SB21.
And that's a good measure ofwhether you have a consistent
result from the tax code.
And our take from the gross isfalling and it's falling.
I mean it cannot be more obvious.
(16:45):
At a time when productionvolumes are going up by 35%,
production tax revenues aregoing down by 30%.
It can't be more obvious thatsomething's gone wrong and that
(17:17):
the shares have flipped in a wayso that Alaskans are not
getting the same share that theythought they were getting out
of SB21 and they got out of thefirst 10 years of SB1.
So for legislators, I mean Iunderstand, I sort of understand
the knee jerk against taxes, Isort of get that.
But for legislators to not lookat the numbers and understand
that we're not asking for more,we're just asking for the same
share that we got in the first10 years.
(17:39):
We're trying to restore theresults we had in the first 10
years For legislators to not getthat Right, the balance right.
It doesn't reflect well on themRight.
Speaker 2 (17:52):
It's got to be equitable in both directions and
that's been part of the problem.
Again, the challenge it hasfallen out of sync and we need
to go get her done, so to speak.
All right, uh, we are about 90seconds.
Uh, we're about 90 seconds.
Uh, before we hit this, give mea tease for number two, brad.
(18:16):
What, uh?
Speaker 1 (18:19):
well, number two.
Number two is it's going to beanother rant on or another
discussion.
There we go.
Discussion.
Speaker 2 (18:25):
You're ranting.
It's fine, it's okay.
Speaker 1 (18:28):
Undefined benefits in K-12 and the press for
additional spending in thoseareas.
Speaker 2 (18:35):
Yeah, well, I'm starting to wonder quite
honestly, and I guess we canbring this up, and yes, thank
you Anthony.
Anthony says oh, please, you'veheard worse in the checkout
line of Fred Myers than you knowit when Brad had the slippage
there.
Yes, he's right, I have heardworse in the checkout line of
Fred Myers.
I've heard things and I waslike man, I don't have any kids
(18:55):
around here, do I?
Because dang Anyway, in thefact that I'm starting to wonder
if this is just all kabukitheater where they want to lay
all this at the governor's feet.
They know they don't have themoney to do it, but they want to
lay it at his feet and try andmake him the bad guy in this
situation that they sold a bigpack of stuff knowing that it
(19:19):
was undeliverable, and I'mstarting to wonder if that might
be the case.
And you can comment on that.
Probably by the end of it I'llbring it back up, brad, all
right, number two of the weeklytop three.
Um, I mean, it seems like thisis just a repeat from last week
and the week before the weekbefore that last year, and I
(19:40):
mean maybe, uh, so number two isdefined benefits and K-12
spending.
Brad, the gift that just keepson giving.
What's happening?
Speaker 1 (19:54):
Oh, it is a repeat.
It's probably a repeat fromevery show we've done for the
last 10 years.
You see all these articlesabout both K-12 and about
defined benefits.
I mean just looking over therange of newspapers in the state
(20:16):
.
From the Catch Can Daily News,representative Bynum, a
Republican, proposes a one-timeBSA hike, a one-time BSA hike.
Down on the Kenai, you've gotassembly calls on state to boost
school funding.
Also from the Kenai, saldotnajoins call for increased school
funding.
I mean you've got With nopolicy change right.
Speaker 2 (20:35):
With no policy change .
Yeah, exactly.
Speaker 1 (20:37):
Everybody and his brother out there pushing for
increased K-12 funding and I cansort of get the need for that.
I can sort of see the inflationargument around that, but
where's the revenues kind ofcome from?
It is the height of fiscalirresponsibility to be facing
(20:58):
the kind of budgets that we'refacing, the kind of budget
deficits that we're facing, andyou can see them over the next
10 years.
You don't just next year, youcan see it the year following
that.
But if you look at the fallrevenue forecast, you can see it
over the entire 10-year period,in significant part due to the
drop in production tax revenues.
(21:18):
You can see the deficits thatare sitting out there, that the
deficits that are sitting outthere, and in that context to be
pushing for substantialincreases in spending.
Keep in mind that HB 69 has a$330 million plus or minus price
tag next year but there are twoadditional increments of
(21:40):
increases.
Then it's adjustedautomatically, adjusted by
inflation, right by the time youget to the end of the 10-year
period.
Sb 69 is a billion dollars ayear and for legislators to be
(22:02):
pushing that before they havethe revenues in place to pay for
it is just fiscallyirresponsible.
I mean it's Congress, I meanit's just like Congress let's
keep spending, let's keepspending, let's keep spending.
In the case of Congress, it'sand we'll keep borrowing and
we'll keep borrowing, and we'llkeep borrowing.
In Alaska it's let's keepspending, let's keep spending,
let's keep spending.
But there's no borrowing powerthat sits behind that, that
(22:25):
enables you to balance it outthat way, and so it's let's keep
spending, let's keep spending,let's keep spending, let's keep
growing the deficit, let's keepgrowing the deficit, let's keep
growing the deficit.
It is fiscally irresponsible.
And I just, you know, at somepoint you just you see Kenai.
You see Saldatna joins, fornajoins call for increased school
(22:46):
funding.
You see Assembly calls Kenai,assembly calls on state to boost
increased funding.
You say Ketchikan RepublicanJeremy Bynum proposes a one-time
BSA hike.
All of these people who arepushing for increased spending,
not telling us how they're goingto pay for it, not talking
about the revenue side, at leastat the same time, if not in
(23:09):
front, to sort of set the stagefor the increased spending, all
of these people pushing forincreased spending and not
talking about revenue at thesame time is just very
frustrating and it's fiscallyirresponsible.
We're just going deeper anddeeper and deeper.
The state's going deeper anddeeper and deeper into an
unsustainability hole that I'mnot sure how we ever get out of.
(23:32):
We keep going.
Defined benefits has its ownbizarreness.
Speaker 2 (23:37):
Yeah, I know the New Reason Foundation commentary on
this is like hello, hello.
Has anybody been payingattention to this?
There are other states thathave defined benefits that have
worse employment retentionproblems than we do here.
The Reason Foundation broughtthat up Like hey, you saying
that this is the magic bulletthat'll bring all the new
employees back and hold on tothe employees you have.
(24:00):
And yet they mentioned two orthree states that have defined
benefits plans like you want,and they're hemorrhaging people
faster than we are in Alaska,which is you know.
Come on, this is not the magicbullet.
Speaker 1 (24:13):
Michael, here's the thing on the fiscal side.
There's still no fiscal note.
Yeah, there's still no fiscalnote on defined benefits.
There wasn't a fiscal note lastyear.
Actually there was, but the onethey got they didn't like
because it said it increased thedeficit.
So geisel and others just sortof dismissed that fiscal note
(24:37):
and said, oh no, we're workingon another.
There was by the end.
There wasn't.
There still wasn't one, thereisn't one now.
These are the same people, thepeople pushing this, pushing
this bill without a fiscal.
These are the same people, thepeople pushing this, pushing
this bill without a fiscal note,are the same people who are
complaining about the governor'sholding on to the wage study.
Right, that the governor hasthe wage study, but he's not.
He's not giving it out, theyclaim, and so you know he's,
(25:02):
he's.
He's artificially, you know,tilting the playing field by not
giving out this, by not givingout the wage study.
They've had a whole year theproponents of defined benefits
have had a whole year to do thisdamn fiscal, do this fiscal
note, and they haven't done itand it's still not done Now,
(25:23):
chuck.
And what that does is giveChuck Kopp and Giesel the
ability to say, oh, I know wehaven't done it yet, but when it
comes we think it's going tosay this and say that, and so
it's all okay.
Speaker 2 (25:35):
This is the Cliff Grow.
This is going to save you money.
Comment on the program oh, thisis going to.
We're going to actually savemoney on.
Show me on this napkin howthat's going to work out.
Speaker 1 (25:45):
Just show me the numbers, give me a spreadsheet,
I'll run them.
If you're right, if that's whatthe calculations show, fine,
then that point goes off thetable.
But the fact you haven't givenit to me, the fact you haven't
published those numbers in ayear, over a year since this
started, the fact you haven'tgiven it to me, the fact the
(26:06):
only numbers out there are theones that you didn't like so you
dismissed it, the fact youhaven't shown me the numbers
over the entire year makes me alittle skeptical of what those
numbers are going to show.
And once again, it's justfiscally irresponsible to be
going down this road, especiallywithout a fiscal note.
(26:27):
But even if we had a fiscalnote, if it showed a deficit, we
don't have the money.
And to be pushing forward onthese spending programs without
talking at least at the sametime about revenues, how you're
going to pay for them, but to bepushing forward on these
spending programs is justfiscally irresponsible.
(26:49):
You know all the legislatorslike to claim that, oh, they're
fiscally responsible, they knowwhat they're doing.
They're looking out forAlaska's best interests.
No, they're not.
They're looking out for thebeneficiaries of the spending.
They're not looking out forAlaskans' interests
beneficiaries of the spending.
They're not looking out forAlaskans' interests, running us
(27:13):
into a deficit, forcing us to dostupid things down the road,
like taxing the oil companiesmore than the right number from
a gross standpoint.
Forcing us to tax Alaskans morethan we should be is stupid.
We need to make these judgmentsabout what we're doing at the
(27:33):
time we're doing them, asopposed to passing a spending
bill and then putting our backsagainst the wall on the revenue
side down the road and saying,oh well, we'll get to the
revenue someday.
It's just not fiscallyresponsible, it's not
sustainable, it's not goodpolicy, it's not good anything.
It's not good for Alaskans,it's not good for the state's
(28:00):
overall well-being.
All it's doing is putting abunch of money that we don't
know yet where we're going toget it from, and we don't know
yet where we're going to get itfrom and we don't know the
impacts of that, the adverseimpacts of that.
We don't know exactly how much.
Putting a bunch of money incertain people's hands.
Speaker 2 (28:13):
Yeah, we don't know exactly how much, we just know
it's going to be a gop, right.
I mean, that's the thing.
We just we still don't evenknow.
But we've got the fiscal noteon HB 69 and it huge, yeah, yeah
.
Well, I was talking aboutdefined benefits, but yeah,
(28:34):
exactly we still don't knowwhere it is.
And you know, brad, I said itearlier during the break before
we came on that I'm starting tothink that maybe the you know,
maybe there's a cadre out therethat understands all of a sudden
or maybe they knew this fromthe beginning that there's not
enough money.
But they said, well, we'll justrun on all these things, we'll
run on pumping up the BSA, we'llrun on defined benefits, we'll
run on these programs.
(28:54):
We know there's not enoughmoney for it, but we'll just lay
it all at the governor's feet.
That's really one of the onlyexplanations for rushing HB 69
through, the whole thing thatthey got here, that they want to
lay it at the governor's feet.
The governor is going to vetoit, and then they could say,
look, we tried, but it's youknow, tall man, bad that.
Speaker 1 (29:15):
I'm starting to wonder if that's the kabuki
theater we're dealing with couldbe, could be, but they're not
doing their constituents,they're not doing the ones they
claim to be helping any any anygood in that regard and they're
giving the governor a freetalking point.
The governor the governor canbounce it back by saying, look,
you didn't.
You have, you have no revenuesto cover this.
And in the case of definedbenefits, you have no fiscal
(29:37):
note even to tell us how muchit's going to be, how much it's
going to be.
You're just, you're running us,you're running us into the
ditch Fiscally, you're beingfiscally irresponsible.
That's the governor's, should bethe governor's response to all
this, and they're just givinghim that free pass on that.
I mean, to most, I think tomost Alaska families, that makes
sense.
Look, if you don't have therevenues to cover it, then why
(30:00):
are you voting for the spending?
If we don't have in ourhousehold the revenues to cover
the vacation to Hawaii or towherever we want to go, we don't
take it, we don't spend themoney until we have the revenues
.
And I think that's a powerfultalking point that they're
giving the governor.
And they're not doing theirconstituents, they're not doing
(30:21):
the interests that they claim tobe representing any good,
because they're just runningthem into a wall.
Speaker 2 (30:26):
We can get into that in the next segment with the
whole zach fields thing.
But you know, I mean, hey,don't worry, scooter kendall, he
wrote an opinion piece, saidhe's a fiscal conservative.
But I don't know if you caughtthat opinion piece in the adn.
Hey, I'm a fiscal conservative,but and uh, you know, again
goes on to say we really need toeducate.
And you know, again goes on tosay we really need to educate.
(30:48):
You know, education, you knoweverything.
I mean it's again, it's allabout constituencies.
Who's getting paid?
Follow the money.
Speaker 1 (30:58):
And if you're a fiscal conservative and you want
to advocate for K through 12,fine, do it, but do it in a
fiscally conservative way.
Talk about where the revenuesare going to come from.
Pass the revenues at least atthe same time.
Advance the revenues to pay forthis stuff at least at the same
time as you're advancing thespending bill.
That's what a fiscalconservative does.
(31:20):
Fiscal conservative doesn'tlead with spending and say, hey,
we'll catch up with revenuesomewhere down the road, don't
worry about it.
Speaker 2 (31:26):
Yeah, well it's.
I mean exactly, how do you payfor it?
Big question, you know still noanswer as to how you pay for
all this.
Nobody has a talking point.
Go ahead.
Speaker 1 (31:38):
Final thought how do you pay for it and then who pays
for it?
Once you know how you pay forit, then you know who's paying
for it and then you can discusswhether it's a reasonable
approach to be taking money outof those people's pockets to
advance the other side'sinterests.
I mean, that's part of what youget when you get the.
How do you pay for it?
(31:59):
You get the who pays for it atthe same time, and then you can
have an honest discussion aboutwhether it's good policy.
Speaker 2 (32:08):
Zen Kelly asserted last night in the KPBSD.
There was a school boardmeeting last night with like 130
people on the Zoom call.
They asserted last night thatHB 69 has policy and is fiscally
responsible.
Saying it so is not making it.
So there's a cadre of peopleout there that are just like, oh
(32:31):
, it's fine, but the whole thingis the whole answer to this,
and not to get too far down intothe weeds on HB 69 specifically
but the answer is always justgive us the money, just shut up
and give us the money.
We'll figure out the policylater.
The policy is what's creatingpart of the problem.
If you don't work on both ofthese things together, history
(32:56):
shows that if we just shut upand give you the money and
you'll get to the other partlater, you never get to the
other part.
And again, how do you pay forit?
Who pays for it?
No answer Crickets, 100%crickets on this.
Speaker 1 (33:05):
Brad, yeah, Show me the T-chart.
Here's your spending over here.
Show me the incoming.
Show me the revenues over here.
That's paying for the spendingthat you've got on the.
That's paying for theliabilities you're creating
through the spending.
Just show me the T-chart andshow me how it's.
That'll show me how it'sfiscally responsible.
They can't do that because theydon't have the revenues.
(33:30):
I mean, even if they wipe outthe PFD, they don't have the
revenues to pay for this overthe 10 year period to pay for.
And this isn't, this isn't justa one-time deal, folks.
This is $330 million in thefirst year.
That's the.
That's sort of the buy-in cost,right?
You've gone to the auto dealerand he says, oh, it's only $330
million down.
Don't look at the back end ofthis thing.
Speaker 2 (33:52):
Don't look at what the ultimate cost is.
You can afford it.
It's only $300 million a month.
Speaker 1 (33:59):
You can afford it and that's what they're trying to
sell it as.
But it's a bill that sets up aprocedure, sets up a statutory
formula that grows and grows andgrows and grows and grows and
grows until the end of the10-year period.
It's a billion dollars.
So when you do your T-chart,when you show me the liability
(34:20):
and show me the assets that aregoing to the income that's going
to offset that spending, Showme a billion dollars.
Show me what grows into abillion dollars At the same time
as we've got production taxes,a big chunk of the revenue to
the state going down by 30% overthat 10-year period.
(34:43):
Tell me how this balances out.
Show me the T-chart where itbalances out.
And they can't, they can't.
Yeah, that's the problem.
Speaker 2 (34:48):
They me how this balances out.
Show me the T chart where itbalances out.
And they can't, they can't.
Yeah, that's the problem, theyjust can't.
I'm sorry, I'm don't answer.
I don't understand the question.
Speaker 1 (34:56):
I'm sorry.
I know it's fiscallyresponsible, but I don't
understand what T charts are andI don't understand the question
.
Speaker 2 (35:03):
What are you trying to say?
This whole thing is is justit's astonishing to watch, but
this is, this is where we're atright now.
This is, uh, this is this isthe, this is, this is fiscal
reality in the state of alaska,and that's the thing they're
just.
They're ignoring everythingelse fiscal fantasy.
Speaker 1 (35:25):
I mean for scott kendall to go out and argue that
he's a.
He's a fiscal conservative.
I'm a fiscal conservative.
Speaker 2 (35:32):
I just, yeah, I was like wait, who?
Who wrote this?
Scott kendall?
Yeah, okay, never mind scooter,I, I don't think you keep using
that word.
I don't think it means what youthink it means, right.
I mean it's you know, I'm afiscal conservative, really, is
that is that right?
But that's the thing.
That phrase is getting thrownaround a lot and and I don't
know if you caught Rob Myers'sarticle in the Watchman talking
(35:55):
about where we are politicallyin the state of Alaska, but he
takes a knife to that and hejust he's like there's no, most
of the people in this state arenot fiscally conservative and
that's part of the problem.
We've gotten into this bigspending habit and it's
everything to protect it.
Jeannie was talking about againthe Zoom meeting.
(36:17):
Here we go 128 Zoom viewerswatching the KPBSD meeting last
night, lots of condemnation forcritics of school spending and,
of course, no shortage ofplatitudes, everything that I've
seen.
All the commentary on this isthat it's all emotional, oh,
it's for the children and weneed the spending.
(36:37):
How do?
Speaker 1 (36:37):
we pay.
Speaker 2 (36:38):
It doesn't matter, we just need to pay.
But they're failing right nowwith the money.
It doesn't matter, it's becauseyou're not giving them enough.
But wait, we gave them a lotback in 25th.
No, it doesn't matter.
Speaker 1 (36:53):
I mean there's no self-analysis on any of this.
Yeah and and no, and no fiscalfiscal analysis whatsoever.
I mean I will, we'll get intothis deeper into the, into the
next segment.
But it's also the same people,the house minority, house
majority, excuse me, that'spushing this bill, pushing the K
through 12 bill, right, andthey said no on oil taxes.
Nope, we're not interested inoil taxes, we're not interested
(37:13):
in taking on oil taxes.
We don't, we don't want to dothat.
So how do you ever make thisbalance, how do you ever make
this proposal out there?
Balance?
You're not talking, you're noteven trying, it's just spend it
all and then we'll figure outlater what the hell we're going
to do, having done that.
No, that's not how a fiscallyresponsible state works.
Speaker 2 (37:35):
Yeah, no, no, we'll pass it and then we'll see
what's in it.
Speaker 1 (37:39):
There you go, there you go, the Nancy Pelosi view.
Speaker 2 (37:42):
We'll pass it.
We had to pass it to figure outhow much it was going to cost
and what was in it.
I'm just like what?
That's not how it's supposed to, but okay, I mean you, do you?
Number three is the PFD.
I mean, do you even PFD?
Bro Zach Fields wrote a pieceand again it was again about the
(38:05):
supersized.
We got all these things we needto spend this money on and we
can't afford to give you.
In fact, one of his lines waswe wasted 3.8.
(38:28):
How did, how did he put it?
We wasted 3.8 billion in, likewhat?
That's exactly what he actuallylaid it out and said this is
what we spent it on and it was ahuge waste to do it.
We can't fund PFD needs andalso pay large PFDs.
So the last five years we'vesquandered 3.8 billion on PFDs.
(38:49):
We squandered it, your money.
We squandered your money bygiving your money to you, a
portion of it, not even all ofit, just some of it.
We could have done so muchbetter.
We know better than you how youshould spend it.
If we give it to you, yousquander it.
I mean, that's just the heightof arrogance here, brad.
Speaker 1 (39:10):
Yeah.
So Zach Field's piece is sortof the takeoff of my point,
which is that the PFD is in asqueeze play from both the left
Zach Field's and the right.
Zach Field's op-ed is justhorrible.
I mean the title of it is thereality is we can't fund
Alaska's needs and also paylarge PFDs.
(39:33):
And now the definition, by theway, the definition of large
PFDs is anything over $1,000.
It used to be anything over$1,750 or anything over $1,500.
Now large PFDs.
I mean it's changed theterminology.
You know, do policies bychanging the terminology.
Now it's anything over athousand dollars as a large PFD.
(39:55):
But what Fields is saying islook, we need to take your, we
need to take the money out ofthe PFD and transfer it over.
We need to treat it like justanother CBR, a bunch of money we
can play with, take the moneyout and transfer it over to
spending.
There's nothing in here in thispiece.
(40:16):
There's nothing in anythingZach Fields has ever said that
recognizes who he's taking themoney from.
He's taking the money frommiddle and lower income Alaska
families.
He's not taking it from the top20% in terms of share of share
of income, significant share ofincome.
He's not taking it fromnon-residents.
(40:36):
He's not taking it from the oilcompanies, he's taking it from
middle and lower income Alaskafamilies and he's and he's
essentially saying we need totax middle and lower income
Alaska families to pay for thisspending.
Zach Fields also says, inconjunction with Andy Josephson,
as part of the House majoritywe don't want to tax the old
(40:56):
companies, we don't want them topay their fair share, we don't
want to go fix SB21, theproblems that SB21 is showing as
it ages.
We don't want to fix that.
We just want to keep takingmoney from middle and lower
income Alaska families becauseit's easiest to do that, because
the subtext is, because it'seasiest to do that because they
(41:18):
don't send lobbyists down here,they don't make big campaign
donations, they don't, theydon't bother us in our offices,
they don't, you know, sendhordes of workers down here to
have performative art on thefront steps of the Capitol.
It's easiest to take it fromworking middle and lower income
Alaska families because they'reworking, they're trying to make
(41:39):
a living, they're trying to justget through life and they don't
bother us as much and theydon't bother us as much.
So what we've done is we foundthe soft spot in the fence and
we're just taking as much out ofthat soft spot in the fence as
we can.
But it's not just Zach Fields.
Zach Fields is a big problem.
Andy Josephson is a big problem.
They are not responsible.
(42:01):
They're not fiscallyresponsible.
They are taking the money in away that has the largest adverse
impact on the overall alaskaeconomy and is by far the
costliest to alaska families andtheir constituencies are the
ones that are beingdisproportionately affected by
this right.
Speaker 2 (42:17):
I mean, zach fields represents a big chunk of the
lower income group in the, inthe, in the anchorage area, and
yet he's the one that they'readvocating taking a lot of that
money from.
Speaker 1 (42:27):
I mean, when you start, when you start digging
into fields as district, as it'scurrently constructed, it's
really a bunch of limousineliberals.
It's really.
It's really people who arewealthy, live close to downtown,
but live in the wealthy areasclose to downtown, and so it's
more.
It's more that he he does havea poverty poverty section in in
(42:57):
this district, but it's muchmore people who say that they
want to do good things, theywant to increase K through 12,
but they don't want to pay forit.
And so Zach Fields isresponding to that by saying,
okay, well, let me spend andI'll find a way to spend that
doesn't take it out of yourpocket.
And you can praise me for allthis good I'm doing, for the
spending and it's not coming outof your pocket, so you can
continue to support me, continueto give me done fixing.
(43:20):
When you have people whoknee-jerk against fixing the
Hillcorp loophole, there'snobody and say, oh well, we
don't want to give any morerevenue.
Well, look, the spending'salready there.
The governor's already signedthe spending.
We're already in deficit.
The governor's already set upall these spending programs.
(43:43):
They're not going away.
We tried that in 2019.
Didn't happen.
Governor, hasn't tried again.
They're not going away.
We tried that in 2019, didn'thappen.
Governor hasn't tried again.
They're not going away.
So we've got these spendingprograms.
We've got an existing deficit.
Oil taxes would help fix thatand by helping to fix that,
would reduce the pressure on thePFD, would make the ability to
(44:03):
hold the PFD a lot easierbecause we'd be paying for that
spending that's already there.
I'm not talking about theadditional K-12.
I'm not talking about definedbenefits.
I'm just talking about payingfor the deficit that's already
there.
That would help fix that byrestoring reforming oil taxes to
get back to what we thought wewere passing in 2013 and 2014.
(44:28):
When people on the right opposedthat they're pushing PFD cuts
and they're pushing the stateinto a situation because there's
nothing left.
We've got the spending already,we've got a deficit already and
if you can't reform oil taxesand do other things that
(44:50):
increase revenues, increasealternative revenues to PFD cuts
, you're just putting more andmore pressure on the PFD.
So the PFD is caught in thissqueeze play.
It's caught in this squeezeplay from the left by Zach
Fields and others saying oh, wegot to spend and the PFD is bad,
we've got to spend and so we'lljust take it out of the PFD.
(45:11):
And we've got people on theright saying, well, yeah,
spending's there, but I don'twant to use these revenue
sources for this, that or theother reason to pay for it.
So the only thing that is leftwhen the legislature gets to the
end of the day is the PFD.
The PFD is caught in thissqueeze play from the left and
the right and their middleincome families are the ones.
(45:33):
Middle income families, whichis like 60% I mean by the time
you take lower middle, middleand upper middle like 60% of the
population middle incomefamilies are the ones that are
being squeezed and thelegislature is doing that.
My point is from both the left,from Zach Fields, and from the
right, from legislators on theright who are just having these
(45:55):
knee-jerk reactions to fixingoil taxes and closing the
Hillcorp loophole.
Speaker 2 (46:02):
Becky Schwanke just dropped the big bomb in the chat
room.
She says wait till you seetheir ads to the health budget
at today's closeouts in thehouse oh Lord, I mean because
again, this was the next phaseof the attack was the health
care cuts?
Because they're starting toclose out things.
(46:23):
They're trying to close that $2trillion budget gap at the
federal level and so they'regoing to stop paying for a lot
to close out things.
They're trying to close that $2trillion budget gap at the
federal level and so they'regoing to stop paying for a lot
of the Medicaid things.
And you can see the state'salready.
Oh, we're going to have to payfor all this.
We're going to have to.
No, you just shut it off.
Shut it off.
You know we don't want to takethe money.
Shut it off, find a way aroundit.
If the federal can't fund it,then shut it off.
And here's where we are.
(46:46):
Here's where we are right now.
This is.
Speaker 1 (46:55):
I mean this is madness.
At this point it is Michael,and it's madness because it's
madness for a lot of reasons.
But yeah, okay.
So the healthcare budgets,that's going to be, that's going
to be yet another spendingcategory and and that's going to
be yet another problem and yetanother hit on the PFD.
We wonder why middle income andyou and I I've done the
analysis, you and I have talkedabout the analysis it's middle
income, middle and lower incomeAlaska families that are doing
(47:17):
the out migration.
The top 20% is actually growingin the state.
The number of top 20%households in the state is
actually growing.
It's middle and income Alaskafamilies that are leaving the
state.
We wonder why that is Well,we're taxing them.
We're taxing them through PFDcuts.
We're taking income out oftheir pockets so that the top
(47:37):
20% non-residents and oilcompanies don't have to pay,
don't have to pay.
We're hitting middle incomefamilies, middle income Alaska
families, hardest and theeconomics of staying here just
aren't working for them anymoreand they're leaving.
But the economics of being inthe top 20%, since you don't
have to pay for any of this,since it's being funded entirely
(48:00):
by middle and low-income Alaskafamilies, the economics of
being in the top 20% in Alaskaare great, so we're getting more
and more and more of those.
Speaker 2 (48:08):
It's the reason for the inflow of the top 20% and
the retired population, whilethe working class population is
exiting the state.
And again this creates what wetalked about earlier, kind of
that doom loop of there's asmaller and smaller pool of
people to draw from who areactually paying for that and
eventually it's just going to bepaid.
Here's the thing when the PFDis gone and Zach Fields said the
(48:30):
quiet part out loud, uh, we'regoing to get into this in the
next segment.
But he said, while mostAlaskans recognize he goes, he's
talking about PFDs.
If we paid a $1,400 PFD, thatwould decimate basic services
and we'd have to pass new taxes.
And he says, while mostAlaskans recognize we'll have to
generate new revenue at somepoint to fund basic services,
(48:52):
which basically they're going tohave to have taxes.
They know it, they're talkingabout it now.
You know we've been, you'vebeen slamming me and Brad and
everybody else for talking abouthey, taxes are coming and we
should have a discussion aboutwhat's the best form of tax for
that, because otherwise it'sgoing to get thrust down our
throats and everybody's likethey're talking about it Now.
(49:12):
They're talking about it out inthe open.
They're going, the PFD will begone, and then they'll come to
you and go oh man, you know it's.
Uh, you know it's.
It's so sad when free rides diehard, but now you're going to
have to pay sugar lips, right.
Speaker 1 (49:30):
Yeah, after, after the top 20 percent non-resident
oil companies rode on, had thefree ride all those years of by
being able to push the burdenoff to off the middle of lower
income Alaska families.
Look, you know, if there's ifthere's one thing.
If there's one thing that maybeis the theme of today is look
at the damn spreadsheets.
I mean Becky's right, othersare right.
(49:52):
When you look at thespreadsheets on K-12, when you
look at the spreadsheets ondefined benefits, when you look
at the spreadsheets onhealthcare, they just don't work
.
Increased spending onhealthcare they just don't work
because we've not set up therevenues to be able to pay for
it.
We're just plunging ourselveslike Thelma and Louise.
We're plunging ourselves offthe cliff with nothing set up
(50:15):
underneath.
But on the right, look at thedamn spreadsheets.
Also, look at the damnspreadsheets on oil taxes.
Look at the damn spreadsheetson what our take of the growth
has been.
Look at the damn spreadsheetson what our take of the growth
has been.
Look at the damn spreadsheetson what's happening to revenues
from production taxes asproduction volumes are going up.
Look at the damn spreadsheetsand you will see the problem
(50:39):
that is being created later inlife in SB21, by all the things
that we sprinkled in there lifein SB 21, by all the all of the
things that all the things thatwe sprinkled in there that
there's a problem in terms ofrevenues not rising, state
revenues not rising at the sameway, in the same way as
production taxes or productionvolumes are rising.
Look at the damn spreadsheets.
You know, you can't, I don't,it's not.
(51:01):
It's not appropriate for theright to complain about the left
increasing spending withouthaving revenues.
It's not appropriate for theright when the right won't even
look at the damn spreadsheetstheir own damn spreadsheets and
figure out what's going on withoil tax revenues.
Speaker 2 (51:25):
It's not appropriate.
Brad got all silent.
For me it's not appropriate.
Speaker 1 (51:30):
I was thinking about the FCC for a moment, yeah.
Speaker 2 (51:32):
Well, we're on Facebook now, Mother, but anyway
it's.
You know, look it's.
The whole thing is astonishingto watch.
Like you said, there's plentyof blame to go around on the
left and the right, and we couldname everything that's been
going, that's been happening,but we literally have two groups
(51:53):
in this state now.
It's not Democrats andRepublicans, it's not left
versus right, it's not evenconservative versus liberal.
It is big government spend atany cost versus smallest
government possible people.
That's what we have left, andthe problem is the smallest
government possible people.
They're a minor minority atthis point.
Speaker 1 (52:15):
But, michael, all taxes are an issue.
The smallest governmentpossible people are using that
knee jerk about taxes, aboutrevenues, to to overlook what's
going on.
What's truly going on with oiltaxes?
(52:35):
What's truly going on with theway SB21 is operating?
I don't have a.
I view myself as a, as a smallgovernment person, but a small
government person at least looksat the revenue sources and sees
whether the revenue sourcesthat you're relying on, that
you're using, are producingreasonable results.
Speaker 2 (52:58):
Brad, we're down to the last two minutes here, so
I'll give you a chance tosummate on everything today.
But I mean, I think it comesback to our same mantra of you
know how do you pay for it, whopays and why.
Can't we live within our means?
I mean, I don't know if Isummated it properly, but that's
pretty much the big threethings that we keep talking
about here, and it's of allthings, whether it's the
(53:20):
spending on the defined benefitsin the schools, whether it's
proper management of the PFD andnot spending twice as much on
the management fees as otherfunds are doing.
I mean, there's a millionthings out there, but nobody
wants to talk about the otherthings.
Speaker 1 (53:34):
Yeah, nobody wants to talk about them and nobody
wants to do the analysis.
Nobody wants to do thespreadsheets.
They all want to talk aboutthem but nobody wants to do the
calculations because they knowthat the calculations would
disprove what they're talkingabout.
And that's true on the left interms of K through 12 spending
(53:55):
this pie in the sky K through 12spending.
And it's true on the right interms of oil taxes and this knee
jerk on oil taxes that we'vegot going on on the right,
because they haven't looked atthe spreadsheets, they haven't
done the analysis of what ishappening with oil tax revenues
in this new decade that we'vegotten into with SB21.
(54:16):
The problem is not as much thefailure to do the analysis
People who are just shooting offtheir mouths without doing the
numbers the problem is as muchthat as it is the policies, that
the policy roads that we'regoing down.
Speaker 2 (54:34):
Well, everything we're seeing is being driven by
emotion.
Like you said, they don't wantto do the spreadsheets, they
don't want to look at reality,they don't want to look at the
fiscal note, they don't want toask the hard question of who
pays or how do we pay for it.
They just want the spendingbecause, emotionally, we need it
.
Speaker 1 (54:50):
Or on the right, they just want the no taxes.
It doesn't matter.
It doesn't matter that we needthe taxes to restore to get a
share of the increasedproduction, it doesn't matter.
They just want no taxes period.
End of statement.
Well, the PFD takes the hit.
Speaker 2 (55:04):
Yeah, so you're getting taxed already.
Anyway, brad Keithley Alaskansfor Sustainable Budgets.
Brad, thank you so much.
Speaker 1 (55:12):
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
(55:34):
for Sustainable Budgets.
We look forward to you joiningus again next week for the next
edition of the Weekly Top Three.
Top three.
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top three, the top three things on our
mind here at Alaskans forSustainable Budgets for the week
of March 3rd 2025.
The weekly top three is aregular segment on the Michael
Duke 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 for
Sustainable Budgets website, aswell as the projects page on
national blog site mediumcom.
You can find past episodes ofthe weekly top three also at the
same locations.
Keep in mind that, in additionto these podcasts during the
(01:16):
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic condition byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter.
This week, our top three issuesare these First, we explain why
(01:37):
we believe oil tax reform is notonly justified but needed.
Not only justified, but needed.
Second, we discuss the fiscalirresponsibility of both how
increased K-12 spending as wellas increased defined benefits
are being pursued.
And third, we explain how thePFD is being squeezed from both
(02:00):
the left and the right.
Speaker 2 (02:03):
And now let's join Michael, let's get to it.
I mean, I hate to be the brokenrecord, but boy, there's some.
It's like you know, lions.
It's Groundhog Day again in thelegislature, right?
I mean, this is where we're at.
Let's start off with the latestand greatest oil, oil taxes.
(02:24):
Um, and boy, there's a lot ofuh angst on the part of the
right.
Uh for, uh for uh.
Rob yuntz, I mean, there was awhole thing.
Dan fagan wrote an articleabout how this is how republics
die and all this kind of stuff.
I mean, in his article about it, um, but there's.
You know, you have a finiteresource that's owned by you,
(02:47):
the people.
You have a finite, limitedresource.
Shouldn't you get the maximumyield out of that, since it's
only going to be here one time?
I mean, I'm just asking as anowner maybe we should do more.
But you know I'll leave it toyou.
Speaker 1 (03:00):
Yeah, I read Fagan's piece.
It was Hillcorp's talkingpoints.
Somebody slipped him the bulletpoints and he just put words
around it.
So here's the deal to me withoil taxes.
And keep in mind that I was abig proponent of SB21, that I
testified in favor of it, Ihelped draft part of it, I was a
big defender of it in thereferendum on it in the
(03:24):
subsequent election cycle andI've been a believer in it in
terms of its ability to restartinvestment in Alaska and it's
proven to do that.
But here's the problem.
Here's the problem.
It's in the current environmentwhere we have all this massive
(03:45):
investment going on and we havenew production coming in, it's
overshot the mark.
You can tell that in two waysand this is very simple, very,
very simple.
You can tell that in two ways.
If you look at the fall revenueforecast, the fall revenue
(04:09):
forecast projects big increasesin production Over the 10-year
period covered by the forecast.
Projected production levelsrise by over 35% from $467,000
at the start start to 640,000 atthe end.
But now let's look at therevenue side.
(04:30):
Yeah, we got big productioncoming up right.
Now.
Let's look at the revenue side.
Royalty revenues over thatentire period only rise by 1%.
Productions rising by 35%.
Royalty revenues are onlyrising by 1%.
Production's rising by 35%.
Royalty revenues are onlyrising by 1%.
The answer to that is a lot ofthe production, a lot of the
(04:52):
increased production.
Most of the increasedproduction is coming from
federal lands from which wedon't get royalty.
So what's going on is statelands.
Production from state lands isstill staying relatively
constant.
The big rise is coming fromfederal production.
So you would expect royalty tosort of stay where it is over
(05:13):
that period.
It only rises by 1%.
But here's the big deal andhere's what Mike Schauer and
Feagin and others on the rightneed to concentrate on.
Over that same period, revenuesfrom production.
Now production itself is risingby 35%.
(05:39):
Right, revenues from productionthrough the production tax are
dropping, dropping, dropping by30%, from $940 million at the
start to $658 million at the end, and driven by that, overall
unrestricted petroleum revenuesalso fall over the period.
(06:00):
Production taxes, revenues fromproduction taxes, which apply
both to the state and to thefederal lands.
So there's no, we're notgetting any problems with the
federal lands.
Production taxes apply to thefederal lands.
Productions increasing by 35%.
(06:21):
Production taxes are droppingby 30%.
There's another way to look atthat.
We don't have a gross revenuesystem but you can calculate the
percent.
Take on the gross and that's afairly good measure of how your
production tax system ischanging, how your production
(06:45):
tax system is changing.
So you can look back and youcan look back at the pre-ACES
period and we had about 17% fromthe gross.
That's what the production taxgenerated about 17% from the
gross.
During ACES that jumped up to32% from the gross.
Bad, too much and itdisincentivized investment in
the state.
Dollars went elsewhere.
(07:07):
During the first 10 years ofSB21, it came back down to about
where it was pre-ASIS, to aboutwhere it was in the old system
about 16% of the gross andthat's lasted for about 10 years
.
About 16% of the gross andthat's lasted for about 10 years
(07:30):
.
Now, when you look at the fallrevenue forecast, it's dropping.
The SB21 stays in effect butthe revenue from the gross is
dropping to about 12%.
It's dropping by about 4%.
What's going on is that in SB21,the legislature put in a lot of
incentives.
They put it for example theyhave one-year amortization.
(07:50):
Usually, when you have a taxcode to encourage investment,
you allow amortization over ashorter period than the life of
the investment, right, so youallow amortization over five
years, maybe, or 10 years, right, and so you can amortize the
capital ACES, or I mean SB21allows amortization over five
years, maybe, or 10 years, andso you can amortize the capital
ACES, or I mean SB21 allowsamortization over one year.
So every dollar they put in aninvestment is a credit against
(08:16):
revenue.
We also instituted what's calledGBR gross value reduction, and
that's on new oil, oil fromregions that are from areas that
hadn't previously been produced.
That was an incentive to go outand develop additional oil, and
that applies both to Prudhoe Imean there were areas in Prudhoe
(08:37):
that hadn't been developed andit applies to Willow and PECA
and the others and PICA and theothers.
The revenues from, or the grossvalue reduction is you take 30%
of your revenues off the top,exclude that before you start
calculating taxes, before youstart calculating the revenues
that are included in taxes, andthen we've got the per barrel
(08:59):
credits that are on top of that.
All of those combined arehitting in a way in the current
environment to reduce one moretime, or 15 more times, whatever
it takes to get it throughpeople's brains to reduce
production taxes by 30% over the10-year period, at a time when
production volumes areincreasing by 35%.
(09:22):
Sb21 has.
The internal workings of sb21have sort of gone wrong.
Speaker 2 (09:29):
They're over correcting for the problems that
we had which historically inthis state, which historically
in this state, we have a problemwith right.
I mean that there was, you know, elf, and then aces, and then
it always swings back one way orthe other.
For it, you know, it's even forjust a little bit, and then it
runs off into the park, alwaysswings back one way or the other
, it's even for just a littlebit, and then it runs off into
the Parker brush in one side orthe other.
It seems like every time whereit's good for a finite period of
(09:53):
time and then it runs askew,because we're trying to predict
market behavior.
And, of course, all these oilcompanies.
They've got a whole floor fullof accountants and lawyers, and
the state of Alaska has gotthree people auditing the books
versus a whole fleet ofaccountants and lawyers, and so
this is inevitably what's goingto.
You have to come back andrevisit it every handful of
years, I think, to make it work.
Speaker 1 (10:15):
Yeah, I'm not, I'm not, I'm not.
I don't think this is a waywhere the oil companies are
cooking the books.
This is the way.
This is the way SB21 operates.
When you get in thisenvironment, what we told
Alaskans in 2013 and 2014 ishelp us increase investment.
What the industry told Alaskanswas help us increase investment
(10:36):
by reducing your take fromproduction taxes.
Take a hit from productiontaxes, help us, and when volumes
increase, that'll result ininvestment.
It'll result in volume increase.
When that happens, you'llbenefit too.
We'll share in the benefit.
What's happening now that we'vegotten to that point is the
exact reverse Production taxesor production volumes are
(11:00):
blowing out 35% increase, butproduction taxes, revenues from
production taxes, are dropping.
So when I see people likeShower and others you know
knee-jerking the industryreaction to taxes, oh my God,
bad.
You know horrible.
You know we're going to leave,we're going to do this, we're
going to do that.
When I see them knee-jerkingthe industry reaction, I get
(11:23):
upset because that's not whatyou should be doing.
You should be looking at thenumbers, and I've written about
the numbers.
We've got them in the AlaskaLandmine column.
You and I have talked about thenumbers on the show before.
When the Fall Revenue Sourcesbook first came out, I was just
shocked at what was going onwith production taxes.
(11:43):
You've got to look at thenumbers and you've got to look
at what's going on, don't kneejerk a reaction.
Now you know I'm not a big fanof the way Willikowski is
proposing to fix it with alimitation on the production
credits and with the limitationon the related limitation on
(12:09):
deduction of capital investments.
That's a matter of revenuedesign.
We talk a lot about revenuedesign on the show.
That is revenue design.
He's trying to design how toget $400 million and that's the
design he's using.
I'm not a big fan of thatdesign because I don't think
that's getting at the heart ofthe problem, which is the
amortization and the GVRsCredits are part of the problem.
(12:32):
Per barrel credits are part ofthe problem, but I don't think
that fix is getting at it.
But the number's about right.
I mean I've done these numbers alot and if you look at gross,
if you look at share of grossand if you look at what would
happen if we didn't have thesedeductions going on in the way
(12:53):
we're, having them go on in thenext 10 years, over the next 10
years, yeah, about $400 millionis the right number.
You and I have talked about thison the show a lot, right, but
so I just don't give me yourknee jerk.
You know talking points fromHillcorp in the case of closing
(13:13):
the Hillcorp loophole, or fromthe oil companies in the case of
the production tax fix.
Look at the goddamn numbers andsee for yourself what's going
on.
And what's going on is, nowthat we've developed a tax code
that has encouraged making allthese investments, now that
(13:34):
we're getting to the point wherethose pay off in terms of
increased production, productiontaxes are going down, and
that's not what was intended in2013 and 14.
That's not what was toldAlaskans in 2013 and 2014.
And that's not what should behappening, consistent with a
(13:54):
constitutional obligation thatsays maximize revenue for the
benefit of Alaskans.
Speaker 2 (14:00):
Right, and this is again.
This is what we've been sayingfor a long time.
There's money on the table andwe need to be looking at it, but
the second we start talkingabout it, you know immediately
the right is activated over thefact that we shouldn't do
anything more with the oilcompanies.
But we're leaving money on thetable.
There's money on the table andwe, you know we are the owners,
(14:21):
and again, it's a finiteresource.
60 seconds, brad.
Speaker 1 (14:24):
Well, I owners and again, it's a finite resource 60
seconds, brad.
Well, I mean, and people talkabout consistent tax code.
We need consistency in the tax.
Well, this isn't consistent.
The fact that we're losingrevenue at a time production is
increasing, the fact that ourtake of gross revenues are going
down, that's not consistent.
The provisions that are causingthat are consistent with what
happened before, but you have tolook at the environment in
(14:47):
which those provisions areapplying and and it's resulting
in a significant I mean 30% dropin production tax revenues is
huge, right, and that's andthat's what's going on.
Speaker 2 (14:58):
Yeah, how can we have more production yet less
revenue in the other end?
And that's, you know, that'sthe kind of the continual
question that we should beasking ourselves.
There's a lot of factors there,but this taxation is definitely
part of it.
This is, this is some, this issome crazy stuff.
And again, the fact that you,as an oil and gas company
attorney you know, former guy inthe industry is saying there's
(15:21):
still money on the table oughtto raise the eyebrows for people
who are like, no, the oil cutwe, everything you know, you
know, um, we, we've, we've gotto be paying attention to this.
This is a, this is a deal, andit could again help with some of
the issues that we're having.
Uh, as well, and as as incitizen owners, we should be
(15:44):
getting.
I mean, the Constitution saysthat we need to get the maximum
yield.
I mean, that's what we'resupposed to be getting as owners
out of this whole deal.
Speaker 1 (15:53):
You know, and people say, oh you know, taking this
money away from the oilcompanies, they'll leave, they
won't.
Speaker 2 (15:59):
No, I mean, this is they're making more money than
God out here Are you kidding me.
Speaker 1 (16:03):
All we're talking about is maintaining the same
level of gross revenues and Iknow we're not on a gross
revenue system but we, but ourrate, design the way we design.
The net profits tax produces acertain level of take from the
gross and you can see thatconsistency over time.
(16:23):
You can see it before ACES.
You can see it much higherduring ACES.
Of consistency, you can see itcoming back down in SB21.
And that's a good measure ofwhether you have a consistent
result from the tax code.
And our take from the gross isfalling and it's falling.
I mean it cannot be more obvious.
(16:45):
At a time when productionvolumes are going up by 35%,
production tax revenues aregoing down by 30%.
It can't be more obvious thatsomething's gone wrong and that
(17:17):
the shares have flipped in a wayso that Alaskans are not
getting the same share that theythought they were getting out
of SB21 and they got out of thefirst 10 years of SB1.
So for legislators, I mean Iunderstand, I sort of understand
the knee jerk against taxes, Isort of get that.
But for legislators to not lookat the numbers and understand
that we're not asking for more,we're just asking for the same
share that we got in the first10 years.
(17:39):
We're trying to restore theresults we had in the first 10
years For legislators to not getthat Right, the balance right.
It doesn't reflect well on themRight.
Speaker 2 (17:52):
It's got to be equitable in both directions and
that's been part of the problem.
Again, the challenge it hasfallen out of sync and we need
to go get her done, so to speak.
All right, uh, we are about 90seconds.
Uh, we're about 90 seconds.
Uh, before we hit this, give mea tease for number two, brad.
(18:16):
What, uh?
Speaker 1 (18:19):
well, number two.
Number two is it's going to beanother rant on or another
discussion.
There we go.
Discussion.
Speaker 2 (18:25):
You're ranting.
It's fine, it's okay.
Speaker 1 (18:28):
Undefined benefits in K-12 and the press for
additional spending in thoseareas.
Speaker 2 (18:35):
Yeah, well, I'm starting to wonder quite
honestly, and I guess we canbring this up, and yes, thank
you Anthony.
Anthony says oh, please, you'veheard worse in the checkout
line of Fred Myers than you knowit when Brad had the slippage
there.
Yes, he's right, I have heardworse in the checkout line of
Fred Myers.
I've heard things and I waslike man, I don't have any kids
(18:55):
around here, do I?
Because dang Anyway, in thefact that I'm starting to wonder
if this is just all kabukitheater where they want to lay
all this at the governor's feet.
They know they don't have themoney to do it, but they want to
lay it at his feet and try andmake him the bad guy in this
situation that they sold a bigpack of stuff knowing that it
(19:19):
was undeliverable, and I'mstarting to wonder if that might
be the case.
And you can comment on that.
Probably by the end of it I'llbring it back up, brad, all
right, number two of the weeklytop three.
Um, I mean, it seems like thisis just a repeat from last week
and the week before the weekbefore that last year, and I
(19:40):
mean maybe, uh, so number two isdefined benefits and K-12
spending.
Brad, the gift that just keepson giving.
What's happening?
Speaker 1 (19:54):
Oh, it is a repeat.
It's probably a repeat fromevery show we've done for the
last 10 years.
You see all these articlesabout both K-12 and about
defined benefits.
I mean just looking over therange of newspapers in the state
(20:16):
.
From the Catch Can Daily News,representative Bynum, a
Republican, proposes a one-timeBSA hike, a one-time BSA hike.
Down on the Kenai, you've gotassembly calls on state to boost
school funding.
Also from the Kenai, saldotnajoins call for increased school
funding.
I mean you've got With nopolicy change right.
Speaker 2 (20:35):
With no policy change .
Yeah, exactly.
Speaker 1 (20:37):
Everybody and his brother out there pushing for
increased K-12 funding and I cansort of get the need for that.
I can sort of see the inflationargument around that, but
where's the revenues kind ofcome from?
It is the height of fiscalirresponsibility to be facing
(20:58):
the kind of budgets that we'refacing, the kind of budget
deficits that we're facing, andyou can see them over the next
10 years.
You don't just next year, youcan see it the year following
that.
But if you look at the fallrevenue forecast, you can see it
over the entire 10-year period,in significant part due to the
drop in production tax revenues.
(21:18):
You can see the deficits thatare sitting out there, that the
deficits that are sitting outthere, and in that context to be
pushing for substantialincreases in spending.
Keep in mind that HB 69 has a$330 million plus or minus price
tag next year but there are twoadditional increments of
(21:40):
increases.
Then it's adjustedautomatically, adjusted by
inflation, right by the time youget to the end of the 10-year
period.
Sb 69 is a billion dollars ayear and for legislators to be
(22:02):
pushing that before they havethe revenues in place to pay for
it is just fiscallyirresponsible.
I mean it's Congress, I meanit's just like Congress let's
keep spending, let's keepspending, let's keep spending.
In the case of Congress, it'sand we'll keep borrowing and
we'll keep borrowing, and we'llkeep borrowing.
In Alaska it's let's keepspending, let's keep spending,
let's keep spending.
But there's no borrowing powerthat sits behind that, that
(22:25):
enables you to balance it outthat way, and so it's let's keep
spending, let's keep spending,let's keep spending, let's keep
growing the deficit, let's keepgrowing the deficit, let's keep
growing the deficit.
It is fiscally irresponsible.
And I just, you know, at somepoint you just you see Kenai.
You see Saldatna joins, fornajoins call for increased school
(22:46):
funding.
You see Assembly calls Kenai,assembly calls on state to boost
increased funding.
You say Ketchikan RepublicanJeremy Bynum proposes a one-time
BSA hike.
All of these people who arepushing for increased spending,
not telling us how they're goingto pay for it, not talking
about the revenue side, at leastat the same time, if not in
(23:09):
front, to sort of set the stagefor the increased spending, all
of these people pushing forincreased spending and not
talking about revenue at thesame time is just very
frustrating and it's fiscallyirresponsible.
We're just going deeper anddeeper and deeper.
The state's going deeper anddeeper and deeper into an
unsustainability hole that I'mnot sure how we ever get out of.
(23:32):
We keep going.
Defined benefits has its ownbizarreness.
Speaker 2 (23:37):
Yeah, I know the New Reason Foundation commentary on
this is like hello, hello.
Has anybody been payingattention to this?
There are other states thathave defined benefits that have
worse employment retentionproblems than we do here.
The Reason Foundation broughtthat up Like hey, you saying
that this is the magic bulletthat'll bring all the new
employees back and hold on tothe employees you have.
(24:00):
And yet they mentioned two orthree states that have defined
benefits plans like you want,and they're hemorrhaging people
faster than we are in Alaska,which is you know.
Come on, this is not the magicbullet.
Speaker 1 (24:13):
Michael, here's the thing on the fiscal side.
There's still no fiscal note.
Yeah, there's still no fiscalnote on defined benefits.
There wasn't a fiscal note lastyear.
Actually there was, but the onethey got they didn't like
because it said it increased thedeficit.
So geisel and others just sortof dismissed that fiscal note
(24:37):
and said, oh no, we're workingon another.
There was by the end.
There wasn't.
There still wasn't one, thereisn't one now.
These are the same people, thepeople pushing this, pushing
this bill without a fiscal.
These are the same people, thepeople pushing this, pushing
this bill without a fiscal note,are the same people who are
complaining about the governor'sholding on to the wage study.
Right, that the governor hasthe wage study, but he's not.
He's not giving it out, theyclaim, and so you know he's,
(25:02):
he's.
He's artificially, you know,tilting the playing field by not
giving out this, by not givingout the wage study.
They've had a whole year theproponents of defined benefits
have had a whole year to do thisdamn fiscal, do this fiscal
note, and they haven't done itand it's still not done Now,
(25:23):
chuck.
And what that does is giveChuck Kopp and Giesel the
ability to say, oh, I know wehaven't done it yet, but when it
comes we think it's going tosay this and say that, and so
it's all okay.
Speaker 2 (25:35):
This is the Cliff Grow.
This is going to save you money.
Comment on the program oh, thisis going to.
We're going to actually savemoney on.
Show me on this napkin howthat's going to work out.
Speaker 1 (25:45):
Just show me the numbers, give me a spreadsheet,
I'll run them.
If you're right, if that's whatthe calculations show, fine,
then that point goes off thetable.
But the fact you haven't givenit to me, the fact you haven't
published those numbers in ayear, over a year since this
started, the fact you haven'tgiven it to me, the fact the
(26:06):
only numbers out there are theones that you didn't like so you
dismissed it, the fact youhaven't shown me the numbers
over the entire year makes me alittle skeptical of what those
numbers are going to show.
And once again, it's justfiscally irresponsible to be
going down this road, especiallywithout a fiscal note.
(26:27):
But even if we had a fiscalnote, if it showed a deficit, we
don't have the money.
And to be pushing forward onthese spending programs without
talking at least at the sametime about revenues, how you're
going to pay for them, but to bepushing forward on these
spending programs is justfiscally irresponsible.
(26:49):
You know all the legislatorslike to claim that, oh, they're
fiscally responsible, they knowwhat they're doing.
They're looking out forAlaska's best interests.
No, they're not.
They're looking out for thebeneficiaries of the spending.
They're not looking out forAlaskans' interests
beneficiaries of the spending.
They're not looking out forAlaskans' interests, running us
(27:13):
into a deficit, forcing us to dostupid things down the road,
like taxing the oil companiesmore than the right number from
a gross standpoint.
Forcing us to tax Alaskans morethan we should be is stupid.
We need to make these judgmentsabout what we're doing at the
(27:33):
time we're doing them, asopposed to passing a spending
bill and then putting our backsagainst the wall on the revenue
side down the road and saying,oh well, we'll get to the
revenue someday.
It's just not fiscallyresponsible, it's not
sustainable, it's not goodpolicy, it's not good anything.
It's not good for Alaskans,it's not good for the state's
(28:00):
overall well-being.
All it's doing is putting abunch of money that we don't
know yet where we're going toget it from, and we don't know
yet where we're going to get itfrom and we don't know the
impacts of that, the adverseimpacts of that.
We don't know exactly how much.
Putting a bunch of money incertain people's hands.
Speaker 2 (28:13):
Yeah, we don't know exactly how much, we just know
it's going to be a gop, right.
I mean, that's the thing.
We just we still don't evenknow.
But we've got the fiscal noteon HB 69 and it huge, yeah, yeah
.
Well, I was talking aboutdefined benefits, but yeah,
(28:34):
exactly we still don't knowwhere it is.
And you know, brad, I said itearlier during the break before
we came on that I'm starting tothink that maybe the you know,
maybe there's a cadre out therethat understands all of a sudden
or maybe they knew this fromthe beginning that there's not
enough money.
But they said, well, we'll justrun on all these things, we'll
run on pumping up the BSA, we'llrun on defined benefits, we'll
run on these programs.
(28:54):
We know there's not enoughmoney for it, but we'll just lay
it all at the governor's feet.
That's really one of the onlyexplanations for rushing HB 69
through, the whole thing thatthey got here, that they want to
lay it at the governor's feet.
The governor is going to vetoit, and then they could say,
look, we tried, but it's youknow, tall man, bad that.
Speaker 1 (29:15):
I'm starting to wonder if that's the kabuki
theater we're dealing with couldbe, could be, but they're not
doing their constituents,they're not doing the ones they
claim to be helping any any anygood in that regard and they're
giving the governor a freetalking point.
The governor the governor canbounce it back by saying, look,
you didn't.
You have, you have no revenuesto cover this.
And in the case of definedbenefits, you have no fiscal
(29:37):
note even to tell us how muchit's going to be, how much it's
going to be.
You're just, you're running us,you're running us into the
ditch Fiscally, you're beingfiscally irresponsible.
That's the governor's, should bethe governor's response to all
this, and they're just givinghim that free pass on that.
I mean, to most, I think tomost Alaska families, that makes
sense.
Look, if you don't have therevenues to cover it, then why
(30:00):
are you voting for the spending?
If we don't have in ourhousehold the revenues to cover
the vacation to Hawaii or towherever we want to go, we don't
take it, we don't spend themoney until we have the revenues
.
And I think that's a powerfultalking point that they're
giving the governor.
And they're not doing theirconstituents, they're not doing
(30:21):
the interests that they claim tobe representing any good,
because they're just runningthem into a wall.
Speaker 2 (30:26):
We can get into that in the next segment with the
whole zach fields thing.
But you know, I mean, hey,don't worry, scooter kendall, he
wrote an opinion piece, saidhe's a fiscal conservative.
But I don't know if you caughtthat opinion piece in the adn.
Hey, I'm a fiscal conservative,but and uh, you know, again
goes on to say we really need toeducate.
And you know, again goes on tosay we really need to educate.
(30:48):
You know, education, you knoweverything.
I mean it's again, it's allabout constituencies.
Who's getting paid?
Follow the money.
Speaker 1 (30:58):
And if you're a fiscal conservative and you want
to advocate for K through 12,fine, do it, but do it in a
fiscally conservative way.
Talk about where the revenuesare going to come from.
Pass the revenues at least atthe same time.
Advance the revenues to pay forthis stuff at least at the same
time as you're advancing thespending bill.
That's what a fiscalconservative does.
(31:20):
Fiscal conservative doesn'tlead with spending and say, hey,
we'll catch up with revenuesomewhere down the road, don't
worry about it.
Speaker 2 (31:26):
Yeah, well it's.
I mean exactly, how do you payfor it?
Big question, you know still noanswer as to how you pay for
all this.
Nobody has a talking point.
Go ahead.
Speaker 1 (31:38):
Final thought how do you pay for it and then who pays
for it?
Once you know how you pay forit, then you know who's paying
for it and then you can discusswhether it's a reasonable
approach to be taking money outof those people's pockets to
advance the other side'sinterests.
I mean, that's part of what youget when you get the.
How do you pay for it?
(31:59):
You get the who pays for it atthe same time, and then you can
have an honest discussion aboutwhether it's good policy.
Speaker 2 (32:08):
Zen Kelly asserted last night in the KPBSD.
There was a school boardmeeting last night with like 130
people on the Zoom call.
They asserted last night thatHB 69 has policy and is fiscally
responsible.
Saying it so is not making it.
So there's a cadre of peopleout there that are just like, oh
(32:31):
, it's fine, but the whole thingis the whole answer to this,
and not to get too far down intothe weeds on HB 69 specifically
but the answer is always justgive us the money, just shut up
and give us the money.
We'll figure out the policylater.
The policy is what's creatingpart of the problem.
If you don't work on both ofthese things together, history
(32:56):
shows that if we just shut upand give you the money and
you'll get to the other partlater, you never get to the
other part.
And again, how do you pay forit?
Who pays for it?
No answer Crickets, 100%crickets on this.
Speaker 1 (33:05):
Brad, yeah, Show me the T-chart.
Here's your spending over here.
Show me the incoming.
Show me the revenues over here.
That's paying for the spendingthat you've got on the.
That's paying for theliabilities you're creating
through the spending.
Just show me the T-chart andshow me how it's.
That'll show me how it'sfiscally responsible.
They can't do that because theydon't have the revenues.
(33:30):
I mean, even if they wipe outthe PFD, they don't have the
revenues to pay for this overthe 10 year period to pay for.
And this isn't, this isn't justa one-time deal, folks.
This is $330 million in thefirst year.
That's the.
That's sort of the buy-in cost,right?
You've gone to the auto dealerand he says, oh, it's only $330
million down.
Don't look at the back end ofthis thing.
Speaker 2 (33:52):
Don't look at what the ultimate cost is.
You can afford it.
It's only $300 million a month.
Speaker 1 (33:59):
You can afford it and that's what they're trying to
sell it as.
But it's a bill that sets up aprocedure, sets up a statutory
formula that grows and grows andgrows and grows and grows and
grows until the end of the10-year period.
It's a billion dollars.
So when you do your T-chart,when you show me the liability
(34:20):
and show me the assets that aregoing to the income that's going
to offset that spending, Showme a billion dollars.
Show me what grows into abillion dollars At the same time
as we've got production taxes,a big chunk of the revenue to
the state going down by 30% overthat 10-year period.
(34:43):
Tell me how this balances out.
Show me the T-chart where itbalances out.
And they can't, they can't.
Yeah, that's the problem.
Speaker 2 (34:48):
They me how this balances out.
Show me the T chart where itbalances out.
And they can't, they can't.
Yeah, that's the problem, theyjust can't.
I'm sorry, I'm don't answer.
I don't understand the question.
Speaker 1 (34:56):
I'm sorry.
I know it's fiscallyresponsible, but I don't
understand what T charts are andI don't understand the question
.
Speaker 2 (35:03):
What are you trying to say?
This whole thing is is justit's astonishing to watch, but
this is, this is where we're atright now.
This is, uh, this is this isthe, this is, this is fiscal
reality in the state of alaska,and that's the thing they're
just.
They're ignoring everythingelse fiscal fantasy.
Speaker 1 (35:25):
I mean for scott kendall to go out and argue that
he's a.
He's a fiscal conservative.
I'm a fiscal conservative.
Speaker 2 (35:32):
I just, yeah, I was like wait, who?
Who wrote this?
Scott kendall?
Yeah, okay, never mind scooter,I, I don't think you keep using
that word.
I don't think it means what youthink it means, right.
I mean it's you know, I'm afiscal conservative, really, is
that is that right?
But that's the thing.
That phrase is getting thrownaround a lot and and I don't
know if you caught Rob Myers'sarticle in the Watchman talking
(35:55):
about where we are politicallyin the state of Alaska, but he
takes a knife to that and hejust he's like there's no, most
of the people in this state arenot fiscally conservative and
that's part of the problem.
We've gotten into this bigspending habit and it's
everything to protect it.
Jeannie was talking about againthe Zoom meeting.
(36:17):
Here we go 128 Zoom viewerswatching the KPBSD meeting last
night, lots of condemnation forcritics of school spending and,
of course, no shortage ofplatitudes, everything that I've
seen.
All the commentary on this isthat it's all emotional, oh,
it's for the children and weneed the spending.
(36:37):
How do?
Speaker 1 (36:37):
we pay.
Speaker 2 (36:38):
It doesn't matter, we just need to pay.
But they're failing right nowwith the money.
It doesn't matter, it's becauseyou're not giving them enough.
But wait, we gave them a lotback in 25th.
No, it doesn't matter.
Speaker 1 (36:53):
I mean there's no self-analysis on any of this.
Yeah and and no, and no fiscalfiscal analysis whatsoever.
I mean I will, we'll get intothis deeper into the, into the
next segment.
But it's also the same people,the house minority, house
majority, excuse me, that'spushing this bill, pushing the K
through 12 bill, right, andthey said no on oil taxes.
Nope, we're not interested inoil taxes, we're not interested
(37:13):
in taking on oil taxes.
We don't, we don't want to dothat.
So how do you ever make thisbalance, how do you ever make
this proposal out there?
Balance?
You're not talking, you're noteven trying, it's just spend it
all and then we'll figure outlater what the hell we're going
to do, having done that.
No, that's not how a fiscallyresponsible state works.
Speaker 2 (37:35):
Yeah, no, no, we'll pass it and then we'll see
what's in it.
Speaker 1 (37:39):
There you go, there you go, the Nancy Pelosi view.
Speaker 2 (37:42):
We'll pass it.
We had to pass it to figure outhow much it was going to cost
and what was in it.
I'm just like what?
That's not how it's supposed to, but okay, I mean you, do you?
Number three is the PFD.
I mean, do you even PFD?
Bro Zach Fields wrote a pieceand again it was again about the
(38:05):
supersized.
We got all these things we needto spend this money on and we
can't afford to give you.
In fact, one of his lines waswe wasted 3.8.
(38:28):
How did, how did he put it?
We wasted 3.8 billion in, likewhat?
That's exactly what he actuallylaid it out and said this is
what we spent it on and it was ahuge waste to do it.
We can't fund PFD needs andalso pay large PFDs.
So the last five years we'vesquandered 3.8 billion on PFDs.
(38:49):
We squandered it, your money.
We squandered your money bygiving your money to you, a
portion of it, not even all ofit, just some of it.
We could have done so muchbetter.
We know better than you how youshould spend it.
If we give it to you, yousquander it.
I mean, that's just the heightof arrogance here, brad.
Speaker 1 (39:10):
Yeah.
So Zach Field's piece is sortof the takeoff of my point,
which is that the PFD is in asqueeze play from both the left
Zach Field's and the right.
Zach Field's op-ed is justhorrible.
I mean the title of it is thereality is we can't fund
Alaska's needs and also paylarge PFDs.
(39:33):
And now the definition, by theway, the definition of large
PFDs is anything over $1,000.
It used to be anything over$1,750 or anything over $1,500.
Now large PFDs.
I mean it's changed theterminology.
You know, do policies bychanging the terminology.
Now it's anything over athousand dollars as a large PFD.
(39:55):
But what Fields is saying islook, we need to take your, we
need to take the money out ofthe PFD and transfer it over.
We need to treat it like justanother CBR, a bunch of money we
can play with, take the moneyout and transfer it over to
spending.
There's nothing in here in thispiece.
(40:16):
There's nothing in anythingZach Fields has ever said that
recognizes who he's taking themoney from.
He's taking the money frommiddle and lower income Alaska
families.
He's not taking it from the top20% in terms of share of share
of income, significant share ofincome.
He's not taking it fromnon-residents.
(40:36):
He's not taking it from the oilcompanies, he's taking it from
middle and lower income Alaskafamilies and he's and he's
essentially saying we need totax middle and lower income
Alaska families to pay for thisspending.
Zach Fields also says, inconjunction with Andy Josephson,
as part of the House majoritywe don't want to tax the old
(40:56):
companies, we don't want them topay their fair share, we don't
want to go fix SB21, theproblems that SB21 is showing as
it ages.
We don't want to fix that.
We just want to keep takingmoney from middle and lower
income Alaska families becauseit's easiest to do that, because
the subtext is, because it'seasiest to do that because they
(41:18):
don't send lobbyists down here,they don't make big campaign
donations, they don't, theydon't bother us in our offices,
they don't, you know, sendhordes of workers down here to
have performative art on thefront steps of the Capitol.
It's easiest to take it fromworking middle and lower income
Alaska families because they'reworking, they're trying to make
(41:39):
a living, they're trying to justget through life and they don't
bother us as much and theydon't bother us as much.
So what we've done is we foundthe soft spot in the fence and
we're just taking as much out ofthat soft spot in the fence as
we can.
But it's not just Zach Fields.
Zach Fields is a big problem.
Andy Josephson is a big problem.
They are not responsible.
(42:01):
They're not fiscallyresponsible.
They are taking the money in away that has the largest adverse
impact on the overall alaskaeconomy and is by far the
costliest to alaska families andtheir constituencies are the
ones that are beingdisproportionately affected by
this right.
Speaker 2 (42:17):
I mean, zach fields represents a big chunk of the
lower income group in the, inthe, in the anchorage area, and
yet he's the one that they'readvocating taking a lot of that
money from.
Speaker 1 (42:27):
I mean, when you start, when you start digging
into fields as district, as it'scurrently constructed, it's
really a bunch of limousineliberals.
It's really.
It's really people who arewealthy, live close to downtown,
but live in the wealthy areasclose to downtown, and so it's
more.
It's more that he he does havea poverty poverty section in in
(42:57):
this district, but it's muchmore people who say that they
want to do good things, theywant to increase K through 12,
but they don't want to pay forit.
And so Zach Fields isresponding to that by saying,
okay, well, let me spend andI'll find a way to spend that
doesn't take it out of yourpocket.
And you can praise me for allthis good I'm doing, for the
spending and it's not coming outof your pocket, so you can
continue to support me, continueto give me done fixing.
(43:20):
When you have people whoknee-jerk against fixing the
Hillcorp loophole, there'snobody and say, oh well, we
don't want to give any morerevenue.
Well, look, the spending'salready there.
The governor's already signedthe spending.
We're already in deficit.
The governor's already set upall these spending programs.
(43:43):
They're not going away.
We tried that in 2019.
Didn't happen.
Governor, hasn't tried again.
They're not going away.
We tried that in 2019, didn'thappen.
Governor hasn't tried again.
They're not going away.
So we've got these spendingprograms.
We've got an existing deficit.
Oil taxes would help fix thatand by helping to fix that,
would reduce the pressure on thePFD, would make the ability to
(44:03):
hold the PFD a lot easierbecause we'd be paying for that
spending that's already there.
I'm not talking about theadditional K-12.
I'm not talking about definedbenefits.
I'm just talking about payingfor the deficit that's already
there.
That would help fix that byrestoring reforming oil taxes to
get back to what we thought wewere passing in 2013 and 2014.
(44:28):
When people on the right opposedthat they're pushing PFD cuts
and they're pushing the stateinto a situation because there's
nothing left.
We've got the spending already,we've got a deficit already and
if you can't reform oil taxesand do other things that
(44:50):
increase revenues, increasealternative revenues to PFD cuts
, you're just putting more andmore pressure on the PFD.
So the PFD is caught in thissqueeze play.
It's caught in this squeezeplay from the left by Zach
Fields and others saying oh, wegot to spend and the PFD is bad,
we've got to spend and so we'lljust take it out of the PFD.
(45:11):
And we've got people on theright saying, well, yeah,
spending's there, but I don'twant to use these revenue
sources for this, that or theother reason to pay for it.
So the only thing that is leftwhen the legislature gets to the
end of the day is the PFD.
The PFD is caught in thissqueeze play from the left and
the right and their middleincome families are the ones.
(45:33):
Middle income families, whichis like 60% I mean by the time
you take lower middle, middleand upper middle like 60% of the
population middle incomefamilies are the ones that are
being squeezed and thelegislature is doing that.
My point is from both the left,from Zach Fields, and from the
right, from legislators on theright who are just having these
(45:55):
knee-jerk reactions to fixingoil taxes and closing the
Hillcorp loophole.
Speaker 2 (46:02):
Becky Schwanke just dropped the big bomb in the chat
room.
She says wait till you seetheir ads to the health budget
at today's closeouts in thehouse oh Lord, I mean because
again, this was the next phaseof the attack was the health
care cuts?
Because they're starting toclose out things.
(46:23):
They're trying to close that $2trillion budget gap at the
federal level and so they'regoing to stop paying for a lot
to close out things.
They're trying to close that $2trillion budget gap at the
federal level and so they'regoing to stop paying for a lot
of the Medicaid things.
And you can see the state'salready.
Oh, we're going to have to payfor all this.
We're going to have to.
No, you just shut it off.
Shut it off.
You know we don't want to takethe money.
Shut it off, find a way aroundit.
If the federal can't fund it,then shut it off.
And here's where we are.
(46:46):
Here's where we are right now.
This is.
Speaker 1 (46:55):
I mean this is madness.
At this point it is Michael,and it's madness because it's
madness for a lot of reasons.
But yeah, okay.
So the healthcare budgets,that's going to be, that's going
to be yet another spendingcategory and and that's going to
be yet another problem and yetanother hit on the PFD.
We wonder why middle income andyou and I I've done the
analysis, you and I have talkedabout the analysis it's middle
income, middle and lower incomeAlaska families that are doing
(47:17):
the out migration.
The top 20% is actually growingin the state.
The number of top 20%households in the state is
actually growing.
It's middle and income Alaskafamilies that are leaving the
state.
We wonder why that is Well,we're taxing them.
We're taxing them through PFDcuts.
We're taking income out oftheir pockets so that the top
(47:37):
20% non-residents and oilcompanies don't have to pay,
don't have to pay.
We're hitting middle incomefamilies, middle income Alaska
families, hardest and theeconomics of staying here just
aren't working for them anymoreand they're leaving.
But the economics of being inthe top 20%, since you don't
have to pay for any of this,since it's being funded entirely
(48:00):
by middle and low-income Alaskafamilies, the economics of
being in the top 20% in Alaskaare great, so we're getting more
and more and more of those.
Speaker 2 (48:08):
It's the reason for the inflow of the top 20% and
the retired population, whilethe working class population is
exiting the state.
And again this creates what wetalked about earlier, kind of
that doom loop of there's asmaller and smaller pool of
people to draw from who areactually paying for that and
eventually it's just going to bepaid.
Here's the thing when the PFDis gone and Zach Fields said the
(48:30):
quiet part out loud, uh, we'regoing to get into this in the
next segment.
But he said, while mostAlaskans recognize he goes, he's
talking about PFDs.
If we paid a $1,400 PFD, thatwould decimate basic services
and we'd have to pass new taxes.
And he says, while mostAlaskans recognize we'll have to
generate new revenue at somepoint to fund basic services,
(48:52):
which basically they're going tohave to have taxes.
They know it, they're talkingabout it now.
You know we've been, you'vebeen slamming me and Brad and
everybody else for talking abouthey, taxes are coming and we
should have a discussion aboutwhat's the best form of tax for
that, because otherwise it'sgoing to get thrust down our
throats and everybody's likethey're talking about it Now.
(49:12):
They're talking about it out inthe open.
They're going, the PFD will begone, and then they'll come to
you and go oh man, you know it's.
Uh, you know it's.
It's so sad when free rides diehard, but now you're going to
have to pay sugar lips, right.
Speaker 1 (49:30):
Yeah, after, after the top 20 percent non-resident
oil companies rode on, had thefree ride all those years of by
being able to push the burdenoff to off the middle of lower
income Alaska families.
Look, you know, if there's ifthere's one thing.
If there's one thing that maybeis the theme of today is look
at the damn spreadsheets.
I mean Becky's right, othersare right.
(49:52):
When you look at thespreadsheets on K-12, when you
look at the spreadsheets ondefined benefits, when you look
at the spreadsheets onhealthcare, they just don't work
.
Increased spending onhealthcare they just don't work
because we've not set up therevenues to be able to pay for
it.
We're just plunging ourselveslike Thelma and Louise.
We're plunging ourselves offthe cliff with nothing set up
(50:15):
underneath.
But on the right, look at thedamn spreadsheets.
Also, look at the damnspreadsheets on oil taxes.
Look at the damn spreadsheetson what our take of the growth
has been.
Look at the damn spreadsheetson what our take of the growth
has been.
Look at the damn spreadsheetson what's happening to revenues
from production taxes asproduction volumes are going up.
Look at the damn spreadsheetsand you will see the problem
(50:39):
that is being created later inlife in SB21, by all the things
that we sprinkled in there lifein SB 21, by all the all of the
things that all the things thatwe sprinkled in there that
there's a problem in terms ofrevenues not rising, state
revenues not rising at the sameway, in the same way as
production taxes or productionvolumes are rising.
Look at the damn spreadsheets.
You know, you can't, I don't,it's not.
(51:01):
It's not appropriate for theright to complain about the left
increasing spending withouthaving revenues.
It's not appropriate for theright when the right won't even
look at the damn spreadsheetstheir own damn spreadsheets and
figure out what's going on withoil tax revenues.
Speaker 2 (51:25):
It's not appropriate.
Brad got all silent.
For me it's not appropriate.
Speaker 1 (51:30):
I was thinking about the FCC for a moment, yeah.
Speaker 2 (51:32):
Well, we're on Facebook now, Mother, but anyway
it's.
You know, look it's.
The whole thing is astonishingto watch.
Like you said, there's plentyof blame to go around on the
left and the right, and we couldname everything that's been
going, that's been happening,but we literally have two groups
(51:53):
in this state now.
It's not Democrats andRepublicans, it's not left
versus right, it's not evenconservative versus liberal.
It is big government spend atany cost versus smallest
government possible people.
That's what we have left, andthe problem is the smallest
government possible people.
They're a minor minority atthis point.
Speaker 1 (52:15):
But, michael, all taxes are an issue.
The smallest governmentpossible people are using that
knee jerk about taxes, aboutrevenues, to to overlook what's
going on.
What's truly going on with oiltaxes?
(52:35):
What's truly going on with theway SB21 is operating?
I don't have a.
I view myself as a, as a smallgovernment person, but a small
government person at least looksat the revenue sources and sees
whether the revenue sourcesthat you're relying on, that
you're using, are producingreasonable results.
Speaker 2 (52:58):
Brad, we're down to the last two minutes here, so
I'll give you a chance tosummate on everything today.
But I mean, I think it comesback to our same mantra of you
know how do you pay for it, whopays and why.
Can't we live within our means?
I mean, I don't know if Isummated it properly, but that's
pretty much the big threethings that we keep talking
about here, and it's of allthings, whether it's the
(53:20):
spending on the defined benefitsin the schools, whether it's
proper management of the PFD andnot spending twice as much on
the management fees as otherfunds are doing.
I mean, there's a millionthings out there, but nobody
wants to talk about the otherthings.
Speaker 1 (53:34):
Yeah, nobody wants to talk about them and nobody
wants to do the analysis.
Nobody wants to do thespreadsheets.
They all want to talk aboutthem but nobody wants to do the
calculations because they knowthat the calculations would
disprove what they're talkingabout.
And that's true on the left interms of K through 12 spending
(53:55):
this pie in the sky K through 12spending.
And it's true on the right interms of oil taxes and this knee
jerk on oil taxes that we'vegot going on on the right,
because they haven't looked atthe spreadsheets, they haven't
done the analysis of what ishappening with oil tax revenues
in this new decade that we'vegotten into with SB21.
(54:16):
The problem is not as much thefailure to do the analysis
People who are just shooting offtheir mouths without doing the
numbers the problem is as muchthat as it is the policies, that
the policy roads that we'regoing down.
Speaker 2 (54:34):
Well, everything we're seeing is being driven by
emotion.
Like you said, they don't wantto do the spreadsheets, they
don't want to look at reality,they don't want to look at the
fiscal note, they don't want toask the hard question of who
pays or how do we pay for it.
They just want the spendingbecause, emotionally, we need it
.
Speaker 1 (54:50):
Or on the right, they just want the no taxes.
It doesn't matter.
It doesn't matter that we needthe taxes to restore to get a
share of the increasedproduction, it doesn't matter.
They just want no taxes period.
End of statement.
Well, the PFD takes the hit.
Speaker 2 (55:04):
Yeah, so you're getting taxed already.
Anyway, brad Keithley Alaskansfor Sustainable Budgets.
Brad, thank you so much.
Speaker 1 (55:12):
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
(55:34):
for Sustainable Budgets.
We look forward to you joiningus again next week for the next
edition of the Weekly Top Three.
Top three.
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