April 29, 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 April 28, 2025.
This week, our top 3 issues are these: 1) we explain how a recent op-ed by Larry Persily essentially lays out the same fiscal approach as the Legislature’s 2021 Fiscal Policy Working Group, and discuss how to implement both (2:13); 2) we discuss the impact of the Senate’s vote yesterday permanently to increase state spending on K-12, and with it, the state’s long-term deficit (20:19); and 3) we discuss the likely impact on Alaska of coming decisions at the federal level to shift a material share of the federal spending burden to the states (38:41).
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top threethe top three things on our
mind here at Alaskans forSustainable Budgets for the week
of April 28, 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 610 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,
(00:56):
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
(01:17):
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 how
a recent op-ed by Larry Persilyessentially lays out the same
(01:42):
fiscal approach as thelegislature's 2021 fiscal policy
working group and explores howwe implement it.
Second, we discussed the impactof the Senate's vote yesterday
to increase state spending and,with it, the state's long-term
deficit.
And third, we discussed thelikely impact of coming
(02:03):
decisions at the federal levelto shift a significant share of
the federal spending burden tothe states.
And now let's join Michael.
Speaker 2 (02:13):
Brad Keithley, of course, from Alaskans for
Sustainable Budgets.
He comes in every week to giveus his take on what's happening
out there and the big threestories.
And today we're going to startwith number one, which I never
thought we'd hear, which is kindof like.
Maybe we agree with LarryPersily, which is, I mean, that
(02:37):
would be unheard of, but he mayhave just endorsed the fiscal
policy working group plan.
I don't know, brad, what do youmean by this?
Give me your take here.
Speaker 1 (02:47):
So last week personally penned an op-ed in
the ADN and I'm sure it'll showup elsewhere.
The title is Alaska doesn'thave a spending or revenue
problem, it has an expectationsproblem.
And I've seen this op-ed pickedup by a bunch of people on
Facebook and Twitter andelsewhere Blue Sky praising it
(03:13):
and talking about you know,larry's, you know finally, you
know, broken through, and he'sarticulating the problem well.
Well, it's not novel, it's notnew, it's not a new articulation
of the problem.
It is for him, but it's notgenerally.
Here's the crux of what Persleysays in his op-ed the most
(03:36):
effective treatment and he'stalking about the budget, of
course, the most effectivetreatment is going to include
everything from everyone taxesand spending cuts and a smaller
dividend, taxes on oil companies, other businesses and
individuals share the burden,and taxes can be held to a
reasonable level that will notdestroy industry or families.
(03:56):
Well, let's go back to the 2021Legislative Fiscal Policy
Working Group and look at whattheir recommendation was.
Their recommendation was aholistic, what we've called on
the program, a holistic approach, which was a little bit of
(04:17):
everything A little bit ofspending cuts, a little bit of
PFD restructuring, a little bitof taxes, a spending cap, a
variety of things and here wastheir concluding paragraph.
The FPWG, which is the FiscalPolicy Working Group, believes
the legislature must pass acomprehensive solution.
(04:38):
Fpwg members do not supportaddressing only one or two
issues to the exclusion ofothers.
The FPWG believes addressingthese issues requires a
comprehensive solution thatsolves not only a fiscal
challenge but a politicalchallenge as well.
(05:00):
In other words, a little bitfrom everyone.
Go back to the governors thisis the thing that always amazes.
From everyone.
Go back to the governor's thisis the thing that always amazes
me.
I go back to the governor's FY2110-year plan and that 10-year
plan had a number of scenarios.
It was sort of like the threebears right.
(05:21):
It was tax me too much, cut thePFD too much, spend too much.
But scenario five, which Ipraised at the time and have
continued to think was a greatinsight into how to solve this,
scenario five was called thebalanced approach and it had a
(05:42):
little bit of everything.
It had a little bit of PFD cuts, it had a little bit of
spending cuts, had a little bitof taxes spread across a very
broad base so that no one group,a little bit of oil taxes, no
one group was hit too much.
The concluding paragraph ofscenario five was this the past
(06:02):
several legislative sessionshave illustrated that solutions
need to be moderate to earn thepeople's approval.
Previous proposals involvingbudget reductions or PF
decreases or taxes facedskepticism when the Alaska
citizenry believed that theywent too far on any one group.
Proponents of a balancedapproach suggest that everyone
(06:25):
give a little so that no groupof Alaskans faces undue harm.
That goes, that's the, that'sthe governor's 20, the
governor's 2021 OMB scenario.
Scenario five, which, after the, after the three bears was, was
sort of the, the uh, thesolution that, that, that that
proposed, not adopted by thelegislature, but just right,
(06:48):
yeah, yeah, the just rightsolution.
Goldilocks that was a Goldilocksand the three bears I knew I'd.
I knew I'd come back to that atsome point, so it so personally
isn't saying anything new.
It's new for personally becausepersonally it's typically been
beat up on PFDs that arehorrible.
They're free money.
(07:10):
We ought to take that forgovernment or beat up on the old
companies.
Persily's typically been sortof one of the focus on one and
take it all from them approach.
This is new for him, but it'snot new overall.
If you go back and look at thefiscal policy the 2021 fiscal
policy working group.
If you go back and look at thegovernor's fiscal year 2021
(07:33):
budget, which would have beenwritten in 2020, the year before
the fiscal policy working group.
If you go back and look at whatothers have said all along,
what personally is saying isconsistent with that a little
bit from everyone, and that, infact, is what Ben Carpenter
tried to do last year, lastsession.
(07:55):
Rather with Ways and Means, hetried to develop a group of
proposals that, taken together,would solve the budget issue
overall, but it's just never.
It has never gelled.
I wrote a column a couple ofyears ago that said, the title
(08:15):
of which was we all know whatthe answer is, why aren't we
doing it?
And it was built on thegovernor's, the OMB's FY21
10-year plan, following up onthe fiscal policy working group,
and said we all know what theanswer is it's a little bit from
(08:37):
everyone it's a little.
Everybody takes a little bit,including spending with a
spending cap built on top of it.
Everyone takes a little bit toincluding spending with a
spending cap built on top of it.
Everyone takes a little bit toresolve this.
And the question I put in thatcolumn was why aren't we doing
it?
And the answer is that no onewill give.
The answer is the oil companieswon't give.
You propose even a dime tax onthem.
(08:58):
It's oh my God, the sky'sfalling.
We can't do that, even thoughthe state's take from the oil
industry over the next 10 yearsis hugely lower than what the
state's take has been from theoil industry just the last 10
years.
The way SB21 is operating, it'slowering the take even more
from the oil industry.
But no, no, we can't give up adime on that PFD cuts.
(09:24):
We can't give up a dime on thatTaxes we can't give up a dime
on that.
And so when you take all thisstuff in component pieces,
people pile on one piece of itor one piece of it and say we
can't do that and without that,without each piece contributing,
what happens is the burdenfalls on the other pieces and
(09:47):
increases the burden remainingon the other pieces.
And so it's going to take anapproach like the fiscal policy
working group talked about, likethe governor talked about in
the FY21 10-year plan and likepersonally he's talking about.
It's going to take an approachthat takes a little bit from
(10:09):
everyone, including spendingcuts and some spending cuts and
the spending cap.
The problem with Ben's approachlooking back on it, the problem
with Ben's approach was it cameup in component pieces and so
you voted up or down on eachcomponent piece.
You weren't voting on a package, you were voting up or down on
(10:30):
each component piece.
And I understand and I knowthat the problem was ledge,
ledge, legal, uh gave an opinionthat you couldn't, that you
couldn't tie it all together.
But what we, what we've learnedover time and we saw it again
yesterday We'll talk about thisin the second segment but what
we saw yesterday in theeducation vote was you can tie
(10:54):
pieces together.
You can make a piece contingenton other pieces falling into
place Right.
What they did yesterday with RobYance amendment was he said we
want to increase spending in acertain area but it's contingent
on passing this tax that wehave up before the House, now
passed through the Senate, upbefore the House, contingent on
(11:16):
passing that to fund thatadditional spending that he
wanted to do.
We know that we can tie themtogether through these
contingent pieces and I thinkwhat it's going to take in this
session or the next session orsome session to get to a
solution is a package that'stied together in some fashion
(11:41):
with contingencies or otherwise,or just done as a total package
and said the subject of thepackage is fiscal policy, as
opposed to each of theseindividual pieces.
Tie it together and then putpersonally to the test, put the
governor to the test, put thefiscal policy working group
members to the test and say,look, you guys said it had to be
a holistic approach, it had tobe an all-in approach.
(12:03):
All right, that's what thisdoes Now.
Are you going to vote on thatapproach in total or are you
going to?
Are you going to vote that down, inconsistent with what you
said otherwise?
That it sort of gives itanother impetus, another voice
behind this, all of the aboveapproach, and I think people
(12:35):
ought to take advantage of that.
Legislators ought to takeadvantage of that to say, look,
we don't always agree with whathe has to say.
We certainly don't always agreewith what he has to say, but in
this case it makes some senseto get the holistic approach and
put together that package.
Try to recreate the HumptyDumpty that Ben had in ways and
means that the fiscal policyworking group put out there.
(12:57):
Try to recreate that and get iton the floor as a total package
, as opposed to the componentpieces.
Speaker 2 (13:04):
Well, and I agree, I think the fiscal policy working
group idea is a good idea.
It has to be holistic.
What I found interesting aboutPersily's piece is that he
analyzed every piece of it,except of course for the effect
of the PFD taking on the economyor anything else.
It was, you know, the effect ofwhat would oil taxes do, oh,
and what would that be, oh, andwhat would this do.
But he didn't look at anythingthat had to do with the PFD
(13:27):
because of course, again, that'shis nemesis.
That's what he wants to seestruck down.
He'd rather see that all spenton government, but he's even
coming around to the idea thatit can't.
Even that can't fix the hole.
I mean, that's the problem isnow, the gap is so big that even
taking the full PFD would notfix the hole Right.
Speaker 1 (13:46):
And I think to some degree he's reflecting some of
what's going on in thelegislature.
We seem to have finally hit thebottom among a lot of
legislators not all of them, butwe seem to finally have hit the
bottom of PFD cuts, the 2575,.
The Senate Finance Committeeseems to have drawn a line under
(14:08):
that.
The House didn't, but myunderstanding is from talking to
people, that there's a lot ofmembers of the House that
believe that that should be theline as well and sort of relied
on the Senate to create thatline when the House budget went
over to the Senate.
So to some degree I think we maybe hitting the floor of what
people are willing to tolerate.
(14:28):
So to some degree I think wemay be hitting the floor of what
people are willing to tolerate,at least in this legislature,
what people are willing totolerate in terms of PFD cuts,
and so that's leading personallyand others to say, okay, well,
if that's the floor, then I gotto deal with the fact that we
still don't have enough revenueto cover all the spending that
we want to do or that we'vepassed even, and so I'm going to
(14:50):
have.
We're going to have to talkabout other things as well.
So I think to some degree whathe's reflecting in here is is
the is the discussion going onamong some legislators that that
we're not going to go below2575.
And so he's having to deal withthat.
Speaker 2 (15:11):
This is going to be interesting, especially after
the Senate had to claw back thateducation bill from yesterday
because that contingency thatthey put in the language turned
out to be unconstitutional theway that it was written, and
they're going to have to pull itback.
But you know, I don't know,Maybe somebody's waking up to
something there quickly here.
Speaker 1 (15:30):
Well, the contingency itself wasn't, isn't
unconstitutional the way it waswritten.
They used the word shall, asopposed to may, right um, and
that was the.
That was the problem with thecontingency, not the contingency
itself we'll see.
Speaker 2 (15:42):
We'll see what it looks like here as we continue
on.
I gotta say that, uh, thiswhole thing is just so, uh,
irritating for me to watchbecause, again, persilly has
been so consistent in hisbanging on the pfd and yet not a
single, not a single word aboutwhat that effect is on the, on
the uh, on the economy, whenstuff like that that happens.
(16:04):
It's, it's truly infuriating.
Um, let's see.
I saw a comment from um.
The only one who gives, saysKevin McCabe, are Alaskans who
lose their PFD without a choice.
I mean, it's true, you know, we, we've got to right.
They're the only ones that aregiving at this point.
(16:24):
Nobody else really wants togive, the oil companies, like
you said.
You you talk about a nickel andthey start having a freak out
and every other organization outthere.
We couldn't possibly live onless.
The only ones who give are theAlaskans.
Speaker 1 (16:36):
Yeah, certainly that's been the case up until
this point.
The question is whether thatcan be changed going forward.
I have to think, maybe becausemaybe it's the optimist in me
which would shock everybody thatthere's an optimist part of me
but maybe it's the optimist inme.
I have to think that if therewas a comprehensive package
(16:59):
where everybody was giving alittle bit, not broken into
component pieces, but acomprehensive package where
everybody was giving a littlebit, I would think that oil
companies would be more hard,would find it more difficult to
argue against their piece of it.
Because the response is well,look, we're getting middle and
(17:19):
lower income Alaska families togive up a share of accept taxes
on the PFD, a share of theirincome.
We're getting the top 20% andthe non-residents to give up a
share of their income by havinga broad-based tax that affects
them.
We're doing the same thing withrespect to other fees.
(17:39):
And so you know, you're justpart of this.
We're not singling you out,we're not treating you unfairly
compared to to the others.
We're, you're part of acomprehensive solution.
You haven't had your tax, yourtax rates haven't been changed.
The tax structure hasn't beenchanged since 2013.
That's over more than a decadeold.
We're seeing some problems showup with with sb21 in the
(18:02):
current decade, in the currentenvironment.
We just need to read, we justneed to to adjust to address
those problems and I would thinkthe oil companies would be more
hard-pressed to argue about itat that point because they're
not being singled out.
There's not a bill that'stargeting just them.
It's a comprehensive solutionthat includes them in part.
Speaker 2 (18:25):
Well, you'd think so.
But again, even again, when youwere talking about creating a
contingent language thatbasically said this is for a
fiscal policy or something, youdon't have a bill that says this
bill is about fiscal policy andthen including all the
components so that it fallsunder the one the single rule
thing, kevin says the same thing.
(18:46):
He says there's zero appetitefor that, zero appetite for that
in the legislature, which isthe.
That is part of the problem.
And he goes on to say theproblem is the Democrats don't
want to give anything.
All they want is for more forthe government, more for the
government programs, and that'sthat's.
The problem is that there is nogive and take here.
It's all take and take.
Speaker 1 (19:07):
Yeah, I don't share that view.
I talk to Democrats as well asRepublicans and I don't find all
Democrats taking that attitude.
So maybe it's piecing ittogether, piecing the coalition
together in a way that supportswhat Persily is saying, supports
(19:29):
what the fiscal policy workinggroup said which did include
Democrats as well and supportswhat the governor said in the
FY21 10-year plan.
Maybe it's piecing it togetherin a way that bypasses some of
those who are saying that I meanI know COPS says no oil taxes
period.
I mean cops now become therepresentative from the oil
(19:51):
companies, basically, and cops,that cop says no oil taxes
period.
Uh, but I know there's other uhDemocrats who would say oil
taxes are fine or they wouldaccept some, some taxes, even
the sales tax.
Um, and I, and I think I thinkviewing it Republican Democrats,
republican Democrats split isthe wrong way to do it.
Speaker 2 (20:11):
Yeah well, we've said that for quite a while that
it's not Democrats versusRepublican, it's big government
versus smaller government.
That's what it's all about.
We're continuing now.
Brad Keithley Alaskans forSustainable Budgets the weekly
top three.
We continue on now into numbertwo of the weekly top three and
(20:33):
this has to do with the votefrom the Senate yesterday on
their new education policy.
Brad says if we couldn't afforda thousand dollar BSA increase
without new revenues, we can'tafford a permanent $700 increase
without the same thing, which Imean kind of yeah, that's been
the whole problem.
How do you pay for?
(20:53):
It has always been the question, brad.
Speaker 1 (20:55):
Yeah, I was.
I was, I gotta admit, I wassurprised, almost to the point
of being shocked, over thecourse of last week.
Last Monday, remember, we hadthe vote up or down on the
governor's veto of the thousanddollar BSA increase and we even
had the three co-chairs ofSenate Finance voting to uphold
the governor's veto, saying wecouldn't afford the thousand
(21:16):
dollar, we couldn't afford thethousand dollar increase, that
that that you know there wasn'tmoney, money in the budget for
that.
And then, three days later orfour days later, all of a sudden
(21:40):
the $700 BSA increase, plus anincrease in transportation, came
out of that same Senate finance, with no discussion of how we
pay for it.
Now, it is true that it isabout $80 million less, that the
$700 BSA increase is about $80million less than the $1,000 BSA
increase.
But the deficit, the gap thatwe're dealing with, is a heck of
a lot bigger than $80 million.
And if you add that $700 intowhere spending otherwise is, we
(22:06):
still are running a deficit inFY26, even at 2575, even at POMB
2575, we're running a deficitin FY26 of about $100 million.
And that deficit gets worse inthe period ahead.
I guess the thing, that thing,that is two things just sort of
(22:29):
just.
I'm sort of spinning in a wayto try to understand how we got
from where we were a week ago,monday, to where we are now.
Not only is the $700 millionstill unfundable, not only does
it still result, um, in adeficit, uh, but but we're
making it permanent.
The vote was to make itpermanent over the you know,
(22:52):
just permanent.
And we increasingly can'tafford it.
The deficit increases with that$700, 700 BSA over the course
of the next 10 years, over thecourse of the current projection
period.
It drives the deficit deeperand deeper and deeper over that
(23:13):
period.
Yet not only did the Senatefinance co-chairs who the week
before and said we can't affordit, so we're voting against it,
not only did the Senate financeco-chairs vote for it, but it
passed 19 to one, with, withfive members of the Senate
minority voting for it, but itpassed 19 to one, with five
members of the Senate minorityvoting for it A permanent
(23:33):
increase.
Not only can we not afford itthis year, we increasingly can't
afford it in the out years, butyet they voted for a permanent
increase.
I don't understand what's goingon in the sense that if what
they said last Monday we can'tafford.
(23:54):
A week ago, monday, we can'tafford the $1,000 increase.
But now what they're saying iswe can't afford a $700 increase.
And not only can we afford a$700 increase, we can afford it
permanently.
It's just there is no greatlogic to that.
(24:21):
I will say that if this passesthe House, it's pretty much the
death knell for ever gettingback to the statutory PFD and
probably a fatal blow or a nearfatal blow with getting back to
POMB 50-50 PFD, because it'staking a negotiating tool that
you had you want to increasespending?
Okay, we need to increaserevenues other than through PFD
(24:43):
cuts.
It's taking that negotiatingtool off the table and saying,
okay, you can have spending.
We don't have still have aproblem, we still don't have a
solution to the to the revenueside other than PFD cuts.
But you can have, you can haveyour spending without, without
dealing with, without dealingwith the revenue side of the
equation, and I think that's.
I think not only does itincrease spending permanently
(25:06):
going forward, but I think italso has the because it takes
that negotiating tool, thatbalance off the table.
I think it has the effect of,as I say, permanently
undermining the claim to go backto the statutory PFD and
probably also permanentlyundermining the position of
(25:27):
going back to POMV 50-50.
Because now you know, those whowant to increase spending on
education have got what theywant, or got most of what they
want, and now they don't have tonegotiate.
I will say this, I will giveRob Yount credit for this step.
So during the course ofyesterday for those who haven't
read the paper or didn't keep upwith what went on yesterday
(25:50):
during the course of yesterdaythe increased spending came on
the floor.
Rob Yount proposed anadditional spending, an
additional payment of a certainamount per student for students
who were at grade level,learning at grade level or above
, to reward the schools forstudents achieving that level.
(26:13):
He proposed that amendmentRight Contingent on having
revenue to match that, and therevenue would come from the tax
bill, the tax bill we discussedlast week, the SB 113, right,
the business, non-residentbusiness tax bill.
(26:34):
It would come from that source.
So at least Rob in thisinstance, at least Rob
recognized that we need to tieincreased spending, which he
proposed, to increased revenues.
Here's the problem, though thatreally isn't increased revenues
.
Here's the problem, though, thatreally isn't increased revenues
, that's revenues.
That was already at leastthrough the Senate and on its
(26:55):
way to the House and was goingto help reduce the overall
deficit.
It's not new revenue.
He's just grabbing someexisting revenue that was on its
way almost existing revenuethat was on its way through the
legislature and using it as anoffset for increased spending.
So it really, when you look atit that way, it doesn't have a
(27:18):
deficit reducing impact.
The deficit reducing impact wasfrom that tax bill already.
Rob's just taken that revenuefrom that tax bill and applied
it over to his favoriteincreased spending.
So he's increased spending,used existing what was almost
existing revenues to offset thatincreased spending and said,
hey, we're good.
(27:40):
So credit to him for at leastrecognizing that revenue needs
to be tied to increased spending.
But he gets a big minus forusing what's essentially an
existing revenue source or onits way to being an existing
revenue source to fund thatincreased spending.
Speaker 2 (27:57):
Reducing the deficit reduction essentially is what's
going on.
That's the you know, reducingthe reduction is how it goes.
You know, the whole thing was,and I was shocked because I was
traveling yesterday and so Iwasn't paying attention.
And I got up early this morningand I was trying to get caught
up from the weekend and I sawthis go on and I'm like what?
(28:18):
There's no real policy, there'sa minor policy change.
Do they really think thegovernor is going to sign on to
this?
I mean, that's what.
That's what kind of shocks me.
And then I saw that the paperwas quoting saying that Schauer
would vote against it if thegovernor vetoes it Okay, great,
but that Kronk and Kaufman andYunt would all continue.
(28:42):
Even if the governor vetoed it,they would continue to vote for
it.
I'm just like guys, there'sbeen no, nothing else has been
given.
And you're going to add this.
And this is what has been myheartache this whole time is
that we're not talking aboutone-time funding where we can
come back and revisit it.
It's going to be in perpetuity.
All this does is add to thepain and it's you know, it's.
(29:05):
It's astonishing.
It's astonishing that this hasgone through and that everybody,
except for Rob Myers, voted forit, even if they were planning
on, even if they knew in theirhearts that the governor was
going to veto it and they weregoing to uphold his veto.
I just I don't understand thisat all.
I do not understand thiscontingency right now
(29:28):
contingency right now.
Speaker 1 (29:29):
Well, yeah, and Michael, I mean they could say
the very same thing.
They can say the very samething about it today that they
said about the thousand dollarsa week ago, which is we can't
afford it, we don't have themoney to cover this,
particularly since Rob's takingaway the small increase in
revenue we might be getting.
He's taking that away anddedicating it to even more
spending.
You could have said the samething yesterday.
(29:52):
You said a week ago, which iswe can't afford it.
Yes, it's less, yes, the impacton the deficit is less, but we
still have a deficit and westill have a deficit going
forward.
We can't do this, we can't payfor this as long as we haven't
solved the revenue side on anequitable basis.
They could have said the samething, but they didn't, and it's
(30:15):
.
I mean, the politicalmotivation behind it must be so
strong that you've got to votefor increased spending without
revenues to offset.
It must be so strong that itjust, you know, bowled them over
in some fashion.
But the same thing's true, Imean, from a number standpoint I
got the number sitting hereright in front of me.
(30:36):
From a number standpoint, thedeficit is less because it's 700
as opposed to 1,000, but thedeficit is still there and the
deficit grows.
This is a permanent bill.
The deficit grows over time andyou've passed that.
You, the 19 that voted for it.
You passed that withoutaddressing the revenue side.
(31:00):
You voted to increase thedeficits.
I mean you voted to increasethe deficits without having a
revenue offset to it, and it'sjust.
I mean that's irresponsiblefiscal policy.
Yeah, yet it passes 19-1.
Speaker 2 (31:16):
Yeah, and they can't again.
There's, no, there is no futureplan.
What happens next year, whenit's even worse?
Now we're 700 million, or nowwe're $700 per student more in
the hole.
You know 120 million, whateverit is, I mean we're 185 million.
It's 18 hole.
You know, 120 million, whateverit is.
I mean we're, we're, we're 85million, 185 million, michael,
185 million and we're.
(31:37):
You know we're still in thehole even more.
It's just add additive,additive, additive, just keep
going.
And that's not even talkingabout which we haven't discussed
and we don't have time todiscuss in this segment, but the
fact that they added a trackingbill where now they're going to
track high school students for20 years, until they're 38 years
old.
I don't know if you saw thatlittle piece in there where
they're going to track thedetails of these people's lives
for some kind of study, or Imean, who's paying for that?
(31:58):
You're going to track all thesehigh school students for 20
years.
I mean, not only is it creepyas hell and Orwellian, who's
going to pay for that?
I mean what's the, what's the?
I mean pay for that.
I mean what's the, what's the?
I mean it's.
The whole thing is just, it'sinsane.
Speaker 1 (32:18):
It's.
You know it's insane, it is andand for.
For those who, who you know,run around saying I'm a fiscal
policy concern, I'm a fiscalconservative, I I believe in
balanced budgets.
I believe in, you know, pay asyou go.
I believe in if we don't havethe revenues, we don't increase
spending.
That all went out the windowfor 19 of them, the, the, that
portion of the 19 who say thosethings all went out the window
yesterday, yeah, yeah.
And I just and why?
(32:40):
What did you get out of it?
What did you get out of givingaway on the spending side
without getting anything over onthe revenue side?
Why?
Speaker 2 (32:50):
Yeah, absolutely Absolutely, and very little on
the spending side, withoutgetting anything over on the
revenue side.
Yeah, absolutely Absolutely,and very little on the policy
side.
I mean, not even you know.
I guess if they'd giveneverything that the governor
wanted, I could see the argumentfor it.
I still wouldn't have voted forit, but I could see the
argument for it if you got allthe but you didn't, you got, you
got.
You got basically, uh, you gotshined basically the whole time.
That was what it was.
(33:10):
Kevin just said that trackingthe DOL Department of Labor
already does that, but for 20years, kevin, you're going to
track somebody from the timethey leave high school for 20
years to look for trends.
I mean, I guess my big questionis why?
Second of all, it's creepy asit's, you know, as creepy as
(33:32):
hell.
That's all I'm saying.
And what exactly did they getfrom the governors?
I mean, the articles werepretty vague about you know.
Oh, they open it up a littlebit on the charter school and
made it harder to close charterschool, but that was it.
The governor had like a fulllist of things that he wanted
and they got the one thing andthen they voted yes on it.
(33:53):
And I mean, do you really thinkthat maybe the governor is
going to say, okay, I just gotsick and tired of everybody
telling me saying, well, youknow, the school really does
need a little bit more educationfunding?
I'm like, okay, one-timefunding.
Well, no, we probably shouldput it in the BSA.
You know, mike Kronk was like Ican't really decide if it
should be in the BSA.
Which means you want it to bein the BSA.
You're just too afraid to sayyou want it in the BSA.
(34:15):
It's just irritating.
Speaker 1 (34:17):
But he doesn't want to pay for it.
I mean he wants to pay for it,I assume, I guess because
there's no revenue side on this.
Rob used up the only revenuethere was out there On the
revenue side.
I guess he wants to do itthrough PFD cuts.
He wants to take it out of thepockets of middle and lower
income Alaska families.
I'm stunned After the speechesthat I thought were great
(34:38):
speeches, particularly by theSenate finance co-chairs, after
the speeches last week about wecan't afford this.
We've got to face up to the factthat we can't afford everything
we want.
We've got to limit our appetite.
After those speeches this weekto come back and say, oh, $85
million, yeah, we can afford it.
(34:58):
We can't afford it.
We can't afford I guess I oughtto say it $185 million
permanent increase.
We can't afford $185 millionpermanent increase.
I mean you look at the numbers,you look at the revenue numbers,
you look at where oil's going,you look at what the POMV draws
are doing, both of which haveprojections out there, and you
(35:19):
look at that spending.
The only way we're going towe're still $100 million over
this year, but the only waywe're and the Senate finances
are going to get it balanced.
The only way we're going to dothat is by pulling nickels and
dimes as we talked last week outof the couches, out of the
couch cushions, every place wepossibly can match it.
We're going to bring thecapital budget down to its
(35:41):
absolute minimum and we're goingto barely scrape by this fiscal
year.
Are you telling me now thatyou're going to do that every
year for the next 10 years?
No, you're not going to do thatevery year for the next 10
years.
You know you're not.
And even if you did, even ifyou did, we're going to be in
deficit every other one of thosenext 10 years because of the
(36:02):
permanent nature of thisincrease.
For the 19 that voted for it,particularly for the five out of
six who voted for from theminority, you just gave up.
You just gave up on fiscalpolicy.
Your, your, your, your claimsof being fiscal concert is just
puffed up in smoke with thatvote.
Speaker 2 (36:24):
Yeah, I agree.
I just, you know, I wonder andI haven't had a chance to talk
to Shower yet he was quoted assaying with he voted for it with
heavy reservations or something.
And I'm just like, but I mean,at that point you knew it was
going to, why would you vote ofit?
I mean, I, I don't know, butthe fact that they're going to
(36:51):
put this on forever in thefuture when we're already
struggling to, you know, fillthe deficit hole that we have
already, is, you know?
Speaker 1 (37:02):
the house.
The house vote's going to beinteresting.
Are we going to see theequivalent in the house minority
that we saw out of the Senateminority?
We're just going to see a broadscale cave and a broad scale
adoption of this sort of thing.
If so, michael, I don't know ifwe ever get this thing solved.
I mean, if people can't holdwhen you're facing a deficit,
(37:25):
when you're already facing adeficit and you're making the
deficit in future years worse bypassing it, if you can't hold
the line at that point and saybefore I'm going to vote for
this, we need to addressrevenues.
We need to know how we're goingto pay for this.
We need to have it be part ofthis bill, just like Rob's done
(37:45):
with paying for the additionalspending he wanted to do.
Before we vote for this, weneed to know how we're going to
pay for it.
If we can't hold the line onthat, if the House minority
can't hold the line on that, Idon't know if we ever get
anything solved.
Speaker 2 (38:01):
Well, this has always been my fear.
Right that this is theParkinson's principle they will
spend every available dollar,and the second that they get
more dollars, they'll spend thattoo, but they don't have the
more dollars.
Well, even I mean, this is yunt, this is yunt making it
contingent on the new.
you know what I'm saying.
This is like as soon as the newdollars prop up, they're like
oh, we just spend that too, butwait that now you were doing
(38:26):
it's, it's madness.
It is total, complete and uttermadness at this point.
And, like you said, they won'teven look at, you know,
potentially looking at the oilindustry or anything else.
Everything's bad except fortake the PFD and spend
everything we have and more.
That's the answer.
Okay, the weekly top threecontinues.
Brad Keithley Alaskans forsustainable budgets.
We're on to number three.
(38:47):
Sustainable budgets we're on tonumber three.
And he's talking about we're atthe start of Alaska's third
fiscal wave.
What do you mean?
Fiscal wave, brad?
Explain this to me.
What are you talking aboutspecifically here?
Speaker 1 (39:02):
Well, there's a number of ways to do it, but
I'll try this one In the stockmarket.
One of the technical approachesto following the stock market
and trying to time purchases andsales in the stock market is to
look at waves.
The stock market goes throughwaves.
It'll have a rise for a certainperiod of time and then it'll
sort of fall off.
Then it'll have another riseand it'll sort of fall off.
(39:23):
The third wave.
According to the people whoadopt this technical approach,
the third wave is always thebiggest wave.
Uh, and it's always the one.
I mean, it goes in reverse too.
You'll have a fall and thenyou'll have a brief rising, a
fall and a brief rise and then afall in the third wave.
The fall is that always thebiggest, and sometimes it swamps
(39:44):
the boat in terms of what your,your stock position is.
There are other references tothe third way, but that's the
one I had in mind when I wrotethe title for this segment.
And we're beginning at leastI'm beginning to see the
formation of the third wave, theAlaska's third fiscal wave,
(40:05):
sort of sitting out there.
We don't talk about federalpolicy much on the show, because
there's enough to talk aboutfrom a state fiscal policy
standpoint.
But if you follow federalfiscal policy which I do for
other purposes, other groups I'ma member of if you follow
federal fiscal policy, you'rebeginning to see an increased
(40:25):
effort at the federal level topush costs down to the state
level.
One that I picked on was arecent Alaska Beacon article.
In the Alaska Beacon it saysTrump denies disaster aid, tells
states to do more and basicallywhat had happened was Arkansas
and other states even Ruby Red,arkansas and other states states
(40:48):
had requested disaster aid inconnection with tornadoes and
other natural phenomena that hadhit them, that were causing big
costs, and Trump essentiallydenied as thus far essentially
denied giving them federaldisaster aid, telling the states
that they ought to be takingcare of that by themselves.
(41:09):
If you read Politico again as Ido for other purposes if you
read Politico, there was anarticle yesterday titled Mike
Johnson's tight mega billtimeline is on a collision
course with reality through inthe House to hit their deficit
(41:29):
reduction targets that they putin the reconciliation bill that
they're trying to push through,and one of the approaches that
they're taking this summerpushing is to shove is not to
reduce, because it gives themthe ability to say, oh, we
didn't do it, but to shove abunch of Medicare and SNAP,
(41:52):
supplemental nutritionalassistance program, food stamps,
push a bunch of federal spentof what's otherwise federal
spending for Medicaid and forSNAP off on the states by
reducing the federal, thefederal share of of those
programs and leaving the states,leaving the programs in place,
(42:16):
so that the people in Congresscan say, well, we didn't reduce
the programs, leaving theprograms in place, but pushing
the burden for funding thoseprograms.
Increasing the burden forfunding those programs to the
state, snap in particular, wouldbe an eye-opener.
Right now the state only paysfor the administration of the
SNAP programs at the state level.
(42:37):
The federal government pays allof the amount of the benefit
and what at least some proposalsin Congress would be would be
to reduce the federal sharebelow 100 and push a share of
that burden to the states.
We just talked about in the lastsegment that Alaska is
underwater as it is,particularly with this bill, the
(43:01):
education bill that's goingthrough.
You start piling onto thatincreased share of Medicaid
costs and a share of SNAPbenefits off on the state.
And to go back to my third waveanalogy, that may be the third
wave that swamps the boat.
That may be the wave that we'rejust not able to handle, and it
(43:27):
wouldn't be just a one-timedeal.
I mean, what Congress istalking about is reducing it on
a permanent basis and shiftingan increased share of the burden
back to the states on apermanent basis all the Medicaid
(43:50):
to take all the optionalprograms.
Speaker 2 (43:51):
They kept saying, oh, this is free money, this is
free money.
And when I said you and Italked about this at the time
and we both said, yeah, but whatwhen the federal government
stops paying for it?
Oh, they would never do that.
And here they are.
They're going to be pushing offcosts of Medicaid and SNAP a
portion of those onto the states.
Every state is running adeficit Every state, and here we
are.
Every state is running adeficit, every state, and here
(44:11):
we are.
Speaker 1 (44:12):
This is a big deal, but it's sort of out of the
sight line of people who arecurrently focusing on state
fiscal policy because it'soccurring at the federal level.
But it will come back with ahuge impact at the state level
(44:33):
if these sorts of things areadopted at the federal level.
And I don't.
I mean, when we talk aboutfederal policy, you and I talk
about the need to reduce thedeficit, the need to, you know,
to get spending under control atthe federal level.
So I'm not opposed to reducingspending at the federal level.
The problem is it doesn'treduce overall spending, it just
shifts the burden of thatspending.
(44:55):
Because Congress doesn't wantto confront the problem of
reducing the programs.
They want to be able to saythat, oh, we didn't reduce the
programs, it just shifts theburden of those programs out of
the federal level into the statelevel.
So it's I mean, the disasteraid may be bad enough If we have
(45:18):
a big disaster in Alaska wehave a lot of fires in Alaska If
we have a fire in Anchorage,for example, or if we have an
earthquake of any sort thatlooks like the 64 earthquake.
If we don't get disaster aidfrom the federal level, sort
that that that looks like the 64earthquake.
If we don't get disaster aidfrom the federal level for that,
that's going to be a big enoughhit to us.
But these additional add-ons ontop of it are just you know, you
(45:41):
can see this wave building upsort of outside Alaska's
boundary, this fiscal wavebuilding up and just about ready
to crash, crash down on top,crash down on top of the Alaska
budget.
And here we are, you know,seeing that, being able to read
that, understanding that'swhat's going on, that that's
(46:01):
what the administration andCongress is up to.
Here we are passing permanentincreases, permanent increases,
substantial increases inspending, by 19 to 1 vote.
Got to go back to that Passingpermanent increases in spending
when we don't even have enoughmoney to cover that.
(46:21):
And we aren't talking about howto get enough money to cover
that.
Here we are doing that withthis third wave about to come
crashing over.
So it is not.
This is not the good news.
This is not a good news segment.
Speaker 2 (46:36):
And the Medicaid component of that is somewhere
in the $800 million range, Imean for the total bill.
So whatever portion of that is,even if it's another 25% of it,
you know where are we going tocome up with another quarter of
a billion dollars at the end ofthe year, after we just funneled
170 million out the door inperpetuity on this education
span.
I mean it's.
(46:57):
You know.
Somebody said stop saying it'smadness, they're doing it on
purpose and they want to takethe PFD.
The problem is they could takethe whole PFD and still be
upside down.
Speaker 1 (47:07):
Yeah, yeah, and this is stuff.
I mean, this is stuff.
The, the federal, the, the, the.
The transfer of the federalburden of the state is stuff
that Bert and Lyman talked abouta week ago, monday.
I mean I'm just still sort ofspinning from this.
It's stuff they talked about aweek ago, monday, about how we,
why we, couldn't afford athousand dollars, and yet they
vote for 700 and we still can'tafford it, and and yet no
(47:30):
discussion.
No discussion during theirpresentation about about this
third wave sitting out there,about the transfer of the
federal burden.
It's just, it was.
It was a dramaticallyirresponsible vote yesterday.
From a fiscal standpoint, Imean from a, from an education
standpoint, from a, from a unionstandpoint, probably a great
vote, but from a fiscalstandpoint it was an abysmal
(47:53):
vote yesterday.
Speaker 2 (47:54):
Well, yeah, a long-term fiscal plan vote and
from a long-term stability,fiscal stability issue.
It's crazy, is what it was.
And Kevin says he expects it topass.
He said he won't vote for it,but he expects it to pass in the
House, which, again, that'snuttier than squirrel poo.
Why would you do?
I just I can't even wrap mybrain around it.
Are you that afraid thatthey're going to try and use it
(48:16):
as a campaign issue in the nextelection?
Is that what you're afraid of?
Because otherwise make it a onetime funding and then come back
.
Then you could say I paid forit, but not put us on the hook
for it forever.
Speaker 1 (48:33):
Giving up the leverage to be able to discuss
revenues at the same time asyou're discussing spending.
Giving up that leverage buying,agreeing to the spending
without addressing revenues isjust insane.
Speaker 2 (48:44):
This is a huge deal, and especially the SNAP.
I don't know how much money theSNAP program puts in the state.
I imagine it's a significantamount.
But, like I said, the numbersthat were being floated around
with Medicaid because theytalked about this in the
legislature here a month or soago, a month and a half ago, and
I could say, ooh, now we couldsee their next little funding
spike it was $800 million inspending for Medicaid in the
(49:08):
state and if we have to pick upany significant portion of that,
that's huge.
That is huge from where we'reat right now.
Speaker 1 (49:17):
You know, and some people will say, oh well, the
state will just reduce.
The state will take action toreduce its share by limiting the
Medicaid program or limitingthe SNAP program.
The problem is you can't dothat.
Problem is they're federalprograms.
If you take any federal moneyyou've got to have the full,
whatever the full federalprogram is.
Maybe Congress will introducesome flexibility in that, but
(49:42):
they'll be pressed not to.
The proponents of the programswill be pressing them not to.
So we would have to essentiallyopt out of Medicaid and opt out
of the entire Medicaid programand opt out of the entire SNAP
program to be able to dosomething like that, to
reconstruct it with narrowerparameters.
The way the law currently works.
(50:03):
So that's not an option either.
There is not a good option.
And in the face of thatpotential very real potential,
because Congress will reducespending and they will reduce
spending in part by pushing itback on the states In the face
of that very real potential, tobe passing a permanent increase
(50:27):
in spending without addressingthe revenue side, a substantial
increase in spending withoutaddressing the revenue side, a
substantial increase in spendingwithout addressing the revenue
side, is just, it's beyondfiscally irresponsible.
I'm not sure what the next wordis beyond irresponsible, but
it's beyond fiscallyirresponsible.
Speaker 2 (50:44):
And I don't know.
This is what we were talkingabout last week.
I don't know how to fix itanymore, brad.
I mean we've talked about thistill we're blue in the face.
I mean, anybody who has run ahousehold budget or a business
budget can see it.
But they seem to think, youknow, we've all heard the
argument of, well, you can't runthe government with budget like
a business.
You know, that's just not howit works.
(51:05):
But it doesn't mean that youcan get away from basic math,
which is you can't spend morethan you take in in perpetuity,
right?
So I mean, okay, maybe youcan't run it exactly like a
business, but there's stillarithmetic that you have to deal
with.
Speaker 1 (51:21):
Yeah, yeah, there's still arithmetic you have to
deal with.
I mean, it's hard for me now togive any credibility in all
honesty and I and you know Iwant to but it's hard for me to
give any credibility to peoplelike shelly hughes and mike
shower when they vote forsomething like this, when they
vote for a permanent increasewithout having the revenue to
(51:43):
back it up, knowing it changed,it increased, it retains a
deficit, um, uh, into the future.
I mean, they claim to be fiscalconservatives, they claim to be
looking out for the PFD, theyclaim to be looking out for the
taxes, but they just voted usinto a position where a lot of
those things, if not all thosethings, are going to hit us in
(52:05):
order to deal with the deficitincrease they've just created.
Speaker 2 (52:09):
And Rob said even more good.
Rob said even more good news,even more good news.
There's been talk in thelegislature of changing the high
, or talk around of changing thehighway matching funds from the
feds from 90-10, where thestate has to match 10% of those
funds, to now 80-20 on top ofthat.
Speaker 1 (52:27):
That's a big number.
That's a big number.
Speaker 2 (52:29):
That's a huge number you start talking about now.
The feds will only pay 80%.
We have to come up with anadditional 10%.
On top of everything else, itjust again, it just accelerates
the problem that we're havingthis whole time, which is
essentially, you know, we justdon't have the money.
And again it's not just us,it's every state in the union is
(52:51):
running a deficit and it justcan't continue.
Speaker 1 (52:55):
Yeah, and I don't I mean, but not every state union
is increasing their deficit,Michael every state not every
state union is going out andvoting for a bill that
affirmatively increases thedeficit, increases the deficit
permanently, normativelyincreases the deficit
permanently.
We may be in line witheverybody else in the fact we're
(53:16):
running deficits, okay, butwe're voting to make it worse.
Our legislature is voting tomake it worse.
Speaker 2 (53:20):
I'm not using it as an excuse that we're doing the
same thing everybody else isdoing.
I'm just saying everybody'sdoing it and I'm like how can
you guys not see thecatastrophic results of that?
If you don't get a handle onthis, it makes no sense.
I mean, what happens, brad, ifthey do take the full PFD?
What happens then?
I mean it doesn't solve theproblem anymore.
(53:42):
It used to be.
If you took the full PFD itwould solve the problem.
Now you can't even do thatbecause it's beyond what the
revenues that the PFD would give.
Speaker 1 (53:53):
Yeah, and if the third wave hits, if the federal
wave hits, we're way beyond that.
I mean, it's just we've leftourselves.
No after.
A week ago, monday, aftertalking about the need to leave
ourselves a wiggle room, talkingabout needing to put ourselves
in a position to be able toabsorb the shock that would come
(54:15):
if the feds upstream this stuffto the states, after having
great speeches in that regard,we didn't really mean it.
We sort of thought about it,but we didn't really mean it.
We were just going to putourselves in that position
anyway, a little bit less, $80million less, but but
(54:35):
nevertheless we're going to putourselves in that position
Anyway.
Speaker 2 (54:38):
We have a spending problem.
So somebody said we don't.
We don't have a revenue problem, we have a spending problem.
And Kevin said and a promiseand expectation problem.
He said I found that everysingle Alaskan wants budget cuts
, just not in their communityprogram, school hockey team,
airport road repair, librarywork, all this kind of stuff.
I mean it's right, he's right,that's what's going on.
(55:00):
We want a cut, but just not mystuff.
Speaker 1 (55:04):
We learned that in 2019, right, we learned that
when Dunleavy proposed the cutsin the budget and you couldn't
even get 16 legislators I thinkthe Republicans were in the
majority of that sessionCouldn't you, or that
legislature couldn't even get 16legislators from from the House
and Senate combined, to backhim up on the level of cuts that
(55:24):
he proposed to make.
I mean, we learned that lessonthat everybody, everybody said
cut everybody else, just don'tcut me.
Speaker 2 (55:31):
Just don't cut me All right, brad.
Thank you so much.
My friends Good to talk withyou.
Speaker 1 (55:35):
We'll see you next week.
Michael's always thanks forhaving 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
(55:58):
for Sustainable Budgets.
We look forward to you joiningus again next week for the next
edition of the Weekly Top Three.
Thank you.
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top threethe top three things on our
mind here at Alaskans forSustainable Budgets for the week
of April 28, 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 610 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,
(00:56):
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
(01:17):
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 how
a recent op-ed by Larry Persilyessentially lays out the same
(01:42):
fiscal approach as thelegislature's 2021 fiscal policy
working group and explores howwe implement it.
Second, we discussed the impactof the Senate's vote yesterday
to increase state spending and,with it, the state's long-term
deficit.
And third, we discussed thelikely impact of coming
(02:03):
decisions at the federal levelto shift a significant share of
the federal spending burden tothe states.
And now let's join Michael.
Speaker 2 (02:13):
Brad Keithley, of course, from Alaskans for
Sustainable Budgets.
He comes in every week to giveus his take on what's happening
out there and the big threestories.
And today we're going to startwith number one, which I never
thought we'd hear, which is kindof like.
Maybe we agree with LarryPersily, which is, I mean, that
(02:37):
would be unheard of, but he mayhave just endorsed the fiscal
policy working group plan.
I don't know, brad, what do youmean by this?
Give me your take here.
Speaker 1 (02:47):
So last week personally penned an op-ed in
the ADN and I'm sure it'll showup elsewhere.
The title is Alaska doesn'thave a spending or revenue
problem, it has an expectationsproblem.
And I've seen this op-ed pickedup by a bunch of people on
Facebook and Twitter andelsewhere Blue Sky praising it
(03:13):
and talking about you know,larry's, you know finally, you
know, broken through, and he'sarticulating the problem well.
Well, it's not novel, it's notnew, it's not a new articulation
of the problem.
It is for him, but it's notgenerally.
Here's the crux of what Persleysays in his op-ed the most
(03:36):
effective treatment and he'stalking about the budget, of
course, the most effectivetreatment is going to include
everything from everyone taxesand spending cuts and a smaller
dividend, taxes on oil companies, other businesses and
individuals share the burden,and taxes can be held to a
reasonable level that will notdestroy industry or families.
(03:56):
Well, let's go back to the 2021Legislative Fiscal Policy
Working Group and look at whattheir recommendation was.
Their recommendation was aholistic, what we've called on
the program, a holistic approach, which was a little bit of
(04:17):
everything A little bit ofspending cuts, a little bit of
PFD restructuring, a little bitof taxes, a spending cap, a
variety of things and here wastheir concluding paragraph.
The FPWG, which is the FiscalPolicy Working Group, believes
the legislature must pass acomprehensive solution.
(04:38):
Fpwg members do not supportaddressing only one or two
issues to the exclusion ofothers.
The FPWG believes addressingthese issues requires a
comprehensive solution thatsolves not only a fiscal
challenge but a politicalchallenge as well.
(05:00):
In other words, a little bitfrom everyone.
Go back to the governors thisis the thing that always amazes.
From everyone.
Go back to the governor's thisis the thing that always amazes
me.
I go back to the governor's FY2110-year plan and that 10-year
plan had a number of scenarios.
It was sort of like the threebears right.
(05:21):
It was tax me too much, cut thePFD too much, spend too much.
But scenario five, which Ipraised at the time and have
continued to think was a greatinsight into how to solve this,
scenario five was called thebalanced approach and it had a
(05:42):
little bit of everything.
It had a little bit of PFD cuts, it had a little bit of
spending cuts, had a little bitof taxes spread across a very
broad base so that no one group,a little bit of oil taxes, no
one group was hit too much.
The concluding paragraph ofscenario five was this the past
(06:02):
several legislative sessionshave illustrated that solutions
need to be moderate to earn thepeople's approval.
Previous proposals involvingbudget reductions or PF
decreases or taxes facedskepticism when the Alaska
citizenry believed that theywent too far on any one group.
Proponents of a balancedapproach suggest that everyone
(06:25):
give a little so that no groupof Alaskans faces undue harm.
That goes, that's the, that'sthe governor's 20, the
governor's 2021 OMB scenario.
Scenario five, which, after the, after the three bears was, was
sort of the, the uh, thesolution that, that, that that
proposed, not adopted by thelegislature, but just right,
(06:48):
yeah, yeah, the just rightsolution.
Goldilocks that was a Goldilocksand the three bears I knew I'd.
I knew I'd come back to that atsome point, so it so personally
isn't saying anything new.
It's new for personally becausepersonally it's typically been
beat up on PFDs that arehorrible.
They're free money.
(07:10):
We ought to take that forgovernment or beat up on the old
companies.
Persily's typically been sortof one of the focus on one and
take it all from them approach.
This is new for him, but it'snot new overall.
If you go back and look at thefiscal policy the 2021 fiscal
policy working group.
If you go back and look at thegovernor's fiscal year 2021
(07:33):
budget, which would have beenwritten in 2020, the year before
the fiscal policy working group.
If you go back and look at whatothers have said all along,
what personally is saying isconsistent with that a little
bit from everyone, and that, infact, is what Ben Carpenter
tried to do last year, lastsession.
(07:55):
Rather with Ways and Means, hetried to develop a group of
proposals that, taken together,would solve the budget issue
overall, but it's just never.
It has never gelled.
I wrote a column a couple ofyears ago that said, the title
(08:15):
of which was we all know whatthe answer is, why aren't we
doing it?
And it was built on thegovernor's, the OMB's FY21
10-year plan, following up onthe fiscal policy working group,
and said we all know what theanswer is it's a little bit from
(08:37):
everyone it's a little.
Everybody takes a little bit,including spending with a
spending cap built on top of it.
Everyone takes a little bit toincluding spending with a
spending cap built on top of it.
Everyone takes a little bit toresolve this.
And the question I put in thatcolumn was why aren't we doing
it?
And the answer is that no onewill give.
The answer is the oil companieswon't give.
You propose even a dime tax onthem.
(08:58):
It's oh my God, the sky'sfalling.
We can't do that, even thoughthe state's take from the oil
industry over the next 10 yearsis hugely lower than what the
state's take has been from theoil industry just the last 10
years.
The way SB21 is operating, it'slowering the take even more
from the oil industry.
But no, no, we can't give up adime on that PFD cuts.
(09:24):
We can't give up a dime on thatTaxes we can't give up a dime
on that.
And so when you take all thisstuff in component pieces,
people pile on one piece of itor one piece of it and say we
can't do that and without that,without each piece contributing,
what happens is the burdenfalls on the other pieces and
(09:47):
increases the burden remainingon the other pieces.
And so it's going to take anapproach like the fiscal policy
working group talked about, likethe governor talked about in
the FY21 10-year plan and likepersonally he's talking about.
It's going to take an approachthat takes a little bit from
(10:09):
everyone, including spendingcuts and some spending cuts and
the spending cap.
The problem with Ben's approachlooking back on it, the problem
with Ben's approach was it cameup in component pieces and so
you voted up or down on eachcomponent piece.
You weren't voting on a package, you were voting up or down on
(10:30):
each component piece.
And I understand and I knowthat the problem was ledge,
ledge, legal, uh gave an opinionthat you couldn't, that you
couldn't tie it all together.
But what we, what we've learnedover time and we saw it again
yesterday We'll talk about thisin the second segment but what
we saw yesterday in theeducation vote was you can tie
(10:54):
pieces together.
You can make a piece contingenton other pieces falling into
place Right.
What they did yesterday with RobYance amendment was he said we
want to increase spending in acertain area but it's contingent
on passing this tax that wehave up before the House, now
passed through the Senate, upbefore the House, contingent on
(11:16):
passing that to fund thatadditional spending that he
wanted to do.
We know that we can tie themtogether through these
contingent pieces and I thinkwhat it's going to take in this
session or the next session orsome session to get to a
solution is a package that'stied together in some fashion
(11:41):
with contingencies or otherwise,or just done as a total package
and said the subject of thepackage is fiscal policy, as
opposed to each of theseindividual pieces.
Tie it together and then putpersonally to the test, put the
governor to the test, put thefiscal policy working group
members to the test and say,look, you guys said it had to be
a holistic approach, it had tobe an all-in approach.
(12:03):
All right, that's what thisdoes Now.
Are you going to vote on thatapproach in total or are you
going to?
Are you going to vote that down, inconsistent with what you
said otherwise?
That it sort of gives itanother impetus, another voice
behind this, all of the aboveapproach, and I think people
(12:35):
ought to take advantage of that.
Legislators ought to takeadvantage of that to say, look,
we don't always agree with whathe has to say.
We certainly don't always agreewith what he has to say, but in
this case it makes some senseto get the holistic approach and
put together that package.
Try to recreate the HumptyDumpty that Ben had in ways and
means that the fiscal policyworking group put out there.
(12:57):
Try to recreate that and get iton the floor as a total package
, as opposed to the componentpieces.
Speaker 2 (13:04):
Well, and I agree, I think the fiscal policy working
group idea is a good idea.
It has to be holistic.
What I found interesting aboutPersily's piece is that he
analyzed every piece of it,except of course for the effect
of the PFD taking on the economyor anything else.
It was, you know, the effect ofwhat would oil taxes do, oh,
and what would that be, oh, andwhat would this do.
But he didn't look at anythingthat had to do with the PFD
(13:27):
because of course, again, that'shis nemesis.
That's what he wants to seestruck down.
He'd rather see that all spenton government, but he's even
coming around to the idea thatit can't.
Even that can't fix the hole.
I mean, that's the problem isnow, the gap is so big that even
taking the full PFD would notfix the hole Right.
Speaker 1 (13:46):
And I think to some degree he's reflecting some of
what's going on in thelegislature.
We seem to have finally hit thebottom among a lot of
legislators not all of them, butwe seem to finally have hit the
bottom of PFD cuts, the 2575,.
The Senate Finance Committeeseems to have drawn a line under
(14:08):
that.
The House didn't, but myunderstanding is from talking to
people, that there's a lot ofmembers of the House that
believe that that should be theline as well and sort of relied
on the Senate to create thatline when the House budget went
over to the Senate.
So to some degree I think we maybe hitting the floor of what
people are willing to tolerate.
(14:28):
So to some degree I think wemay be hitting the floor of what
people are willing to tolerate,at least in this legislature,
what people are willing totolerate in terms of PFD cuts,
and so that's leading personallyand others to say, okay, well,
if that's the floor, then I gotto deal with the fact that we
still don't have enough revenueto cover all the spending that
we want to do or that we'vepassed even, and so I'm going to
(14:50):
have.
We're going to have to talkabout other things as well.
So I think to some degree whathe's reflecting in here is is
the is the discussion going onamong some legislators that that
we're not going to go below2575.
And so he's having to deal withthat.
Speaker 2 (15:11):
This is going to be interesting, especially after
the Senate had to claw back thateducation bill from yesterday
because that contingency thatthey put in the language turned
out to be unconstitutional theway that it was written, and
they're going to have to pull itback.
But you know, I don't know,Maybe somebody's waking up to
something there quickly here.
Speaker 1 (15:30):
Well, the contingency itself wasn't, isn't
unconstitutional the way it waswritten.
They used the word shall, asopposed to may, right um, and
that was the.
That was the problem with thecontingency, not the contingency
itself we'll see.
Speaker 2 (15:42):
We'll see what it looks like here as we continue
on.
I gotta say that, uh, thiswhole thing is just so, uh,
irritating for me to watchbecause, again, persilly has
been so consistent in hisbanging on the pfd and yet not a
single, not a single word aboutwhat that effect is on the, on
the uh, on the economy, whenstuff like that that happens.
(16:04):
It's, it's truly infuriating.
Um, let's see.
I saw a comment from um.
The only one who gives, saysKevin McCabe, are Alaskans who
lose their PFD without a choice.
I mean, it's true, you know, we, we've got to right.
They're the only ones that aregiving at this point.
(16:24):
Nobody else really wants togive, the oil companies, like
you said.
You you talk about a nickel andthey start having a freak out
and every other organization outthere.
We couldn't possibly live onless.
The only ones who give are theAlaskans.
Speaker 1 (16:36):
Yeah, certainly that's been the case up until
this point.
The question is whether thatcan be changed going forward.
I have to think, maybe becausemaybe it's the optimist in me
which would shock everybody thatthere's an optimist part of me
but maybe it's the optimist inme.
I have to think that if therewas a comprehensive package
(16:59):
where everybody was giving alittle bit, not broken into
component pieces, but acomprehensive package where
everybody was giving a littlebit, I would think that oil
companies would be more hard,would find it more difficult to
argue against their piece of it.
Because the response is well,look, we're getting middle and
(17:19):
lower income Alaska families togive up a share of accept taxes
on the PFD, a share of theirincome.
We're getting the top 20% andthe non-residents to give up a
share of their income by havinga broad-based tax that affects
them.
We're doing the same thing withrespect to other fees.
(17:39):
And so you know, you're justpart of this.
We're not singling you out,we're not treating you unfairly
compared to to the others.
We're, you're part of acomprehensive solution.
You haven't had your tax, yourtax rates haven't been changed.
The tax structure hasn't beenchanged since 2013.
That's over more than a decadeold.
We're seeing some problems showup with with sb21 in the
(18:02):
current decade, in the currentenvironment.
We just need to read, we justneed to to adjust to address
those problems and I would thinkthe oil companies would be more
hard-pressed to argue about itat that point because they're
not being singled out.
There's not a bill that'stargeting just them.
It's a comprehensive solutionthat includes them in part.
Speaker 2 (18:25):
Well, you'd think so.
But again, even again, when youwere talking about creating a
contingent language thatbasically said this is for a
fiscal policy or something, youdon't have a bill that says this
bill is about fiscal policy andthen including all the
components so that it fallsunder the one the single rule
thing, kevin says the same thing.
(18:46):
He says there's zero appetitefor that, zero appetite for that
in the legislature, which isthe.
That is part of the problem.
And he goes on to say theproblem is the Democrats don't
want to give anything.
All they want is for more forthe government, more for the
government programs, and that'sthat's.
The problem is that there is nogive and take here.
It's all take and take.
Speaker 1 (19:07):
Yeah, I don't share that view.
I talk to Democrats as well asRepublicans and I don't find all
Democrats taking that attitude.
So maybe it's piecing ittogether, piecing the coalition
together in a way that supportswhat Persily is saying, supports
(19:29):
what the fiscal policy workinggroup said which did include
Democrats as well and supportswhat the governor said in the
FY21 10-year plan.
Maybe it's piecing it togetherin a way that bypasses some of
those who are saying that I meanI know COPS says no oil taxes
period.
I mean cops now become therepresentative from the oil
(19:51):
companies, basically, and cops,that cop says no oil taxes
period.
Uh, but I know there's other uhDemocrats who would say oil
taxes are fine or they wouldaccept some, some taxes, even
the sales tax.
Um, and I, and I think I thinkviewing it Republican Democrats,
republican Democrats split isthe wrong way to do it.
Speaker 2 (20:11):
Yeah well, we've said that for quite a while that
it's not Democrats versusRepublican, it's big government
versus smaller government.
That's what it's all about.
We're continuing now.
Brad Keithley Alaskans forSustainable Budgets the weekly
top three.
We continue on now into numbertwo of the weekly top three and
(20:33):
this has to do with the votefrom the Senate yesterday on
their new education policy.
Brad says if we couldn't afforda thousand dollar BSA increase
without new revenues, we can'tafford a permanent $700 increase
without the same thing, which Imean kind of yeah, that's been
the whole problem.
How do you pay for?
(20:53):
It has always been the question, brad.
Speaker 1 (20:55):
Yeah, I was.
I was, I gotta admit, I wassurprised, almost to the point
of being shocked, over thecourse of last week.
Last Monday, remember, we hadthe vote up or down on the
governor's veto of the thousanddollar BSA increase and we even
had the three co-chairs ofSenate Finance voting to uphold
the governor's veto, saying wecouldn't afford the thousand
(21:16):
dollar, we couldn't afford thethousand dollar increase, that
that that you know there wasn'tmoney, money in the budget for
that.
And then, three days later orfour days later, all of a sudden
(21:40):
the $700 BSA increase, plus anincrease in transportation, came
out of that same Senate finance, with no discussion of how we
pay for it.
Now, it is true that it isabout $80 million less, that the
$700 BSA increase is about $80million less than the $1,000 BSA
increase.
But the deficit, the gap thatwe're dealing with, is a heck of
a lot bigger than $80 million.
And if you add that $700 intowhere spending otherwise is, we
(22:06):
still are running a deficit inFY26, even at 2575, even at POMB
2575, we're running a deficitin FY26 of about $100 million.
And that deficit gets worse inthe period ahead.
I guess the thing, that thing,that is two things just sort of
(22:29):
just.
I'm sort of spinning in a wayto try to understand how we got
from where we were a week ago,monday, to where we are now.
Not only is the $700 millionstill unfundable, not only does
it still result, um, in adeficit, uh, but but we're
making it permanent.
The vote was to make itpermanent over the you know,
(22:52):
just permanent.
And we increasingly can'tafford it.
The deficit increases with that$700, 700 BSA over the course
of the next 10 years, over thecourse of the current projection
period.
It drives the deficit deeperand deeper and deeper over that
(23:13):
period.
Yet not only did the Senatefinance co-chairs who the week
before and said we can't affordit, so we're voting against it,
not only did the Senate financeco-chairs vote for it, but it
passed 19 to one, with, withfive members of the Senate
minority voting for it, but itpassed 19 to one, with five
members of the Senate minorityvoting for it A permanent
(23:33):
increase.
Not only can we not afford itthis year, we increasingly can't
afford it in the out years, butyet they voted for a permanent
increase.
I don't understand what's goingon in the sense that if what
they said last Monday we can'tafford.
(23:54):
A week ago, monday, we can'tafford the $1,000 increase.
But now what they're saying iswe can't afford a $700 increase.
And not only can we afford a$700 increase, we can afford it
permanently.
It's just there is no greatlogic to that.
(24:21):
I will say that if this passesthe House, it's pretty much the
death knell for ever gettingback to the statutory PFD and
probably a fatal blow or a nearfatal blow with getting back to
POMB 50-50 PFD, because it'staking a negotiating tool that
you had you want to increasespending?
Okay, we need to increaserevenues other than through PFD
(24:43):
cuts.
It's taking that negotiatingtool off the table and saying,
okay, you can have spending.
We don't have still have aproblem, we still don't have a
solution to the to the revenueside other than PFD cuts.
But you can have, you can haveyour spending without, without
dealing with, without dealingwith the revenue side of the
equation, and I think that's.
I think not only does itincrease spending permanently
(25:06):
going forward, but I think italso has the because it takes
that negotiating tool, thatbalance off the table.
I think it has the effect of,as I say, permanently
undermining the claim to go backto the statutory PFD and
probably also permanentlyundermining the position of
(25:27):
going back to POMV 50-50.
Because now you know, those whowant to increase spending on
education have got what theywant, or got most of what they
want, and now they don't have tonegotiate.
I will say this, I will giveRob Yount credit for this step.
So during the course ofyesterday for those who haven't
read the paper or didn't keep upwith what went on yesterday
(25:50):
during the course of yesterdaythe increased spending came on
the floor.
Rob Yount proposed anadditional spending, an
additional payment of a certainamount per student for students
who were at grade level,learning at grade level or above
, to reward the schools forstudents achieving that level.
(26:13):
He proposed that amendmentRight Contingent on having
revenue to match that, and therevenue would come from the tax
bill, the tax bill we discussedlast week, the SB 113, right,
the business, non-residentbusiness tax bill.
(26:34):
It would come from that source.
So at least Rob in thisinstance, at least Rob
recognized that we need to tieincreased spending, which he
proposed, to increased revenues.
Here's the problem, though thatreally isn't increased revenues
.
Here's the problem, though, thatreally isn't increased revenues
, that's revenues.
That was already at leastthrough the Senate and on its
(26:55):
way to the House and was goingto help reduce the overall
deficit.
It's not new revenue.
He's just grabbing someexisting revenue that was on its
way almost existing revenuethat was on its way through the
legislature and using it as anoffset for increased spending.
So it really, when you look atit that way, it doesn't have a
(27:18):
deficit reducing impact.
The deficit reducing impact wasfrom that tax bill already.
Rob's just taken that revenuefrom that tax bill and applied
it over to his favoriteincreased spending.
So he's increased spending,used existing what was almost
existing revenues to offset thatincreased spending and said,
hey, we're good.
(27:40):
So credit to him for at leastrecognizing that revenue needs
to be tied to increased spending.
But he gets a big minus forusing what's essentially an
existing revenue source or onits way to being an existing
revenue source to fund thatincreased spending.
Speaker 2 (27:57):
Reducing the deficit reduction essentially is what's
going on.
That's the you know, reducingthe reduction is how it goes.
You know, the whole thing was,and I was shocked because I was
traveling yesterday and so Iwasn't paying attention.
And I got up early this morningand I was trying to get caught
up from the weekend and I sawthis go on and I'm like what?
(28:18):
There's no real policy, there'sa minor policy change.
Do they really think thegovernor is going to sign on to
this?
I mean, that's what.
That's what kind of shocks me.
And then I saw that the paperwas quoting saying that Schauer
would vote against it if thegovernor vetoes it Okay, great,
but that Kronk and Kaufman andYunt would all continue.
(28:42):
Even if the governor vetoed it,they would continue to vote for
it.
I'm just like guys, there'sbeen no, nothing else has been
given.
And you're going to add this.
And this is what has been myheartache this whole time is
that we're not talking aboutone-time funding where we can
come back and revisit it.
It's going to be in perpetuity.
All this does is add to thepain and it's you know, it's.
(29:05):
It's astonishing.
It's astonishing that this hasgone through and that everybody,
except for Rob Myers, voted forit, even if they were planning
on, even if they knew in theirhearts that the governor was
going to veto it and they weregoing to uphold his veto.
I just I don't understand thisat all.
I do not understand thiscontingency right now
(29:28):
contingency right now.
Speaker 1 (29:29):
Well, yeah, and Michael, I mean they could say
the very same thing.
They can say the very samething about it today that they
said about the thousand dollarsa week ago, which is we can't
afford it, we don't have themoney to cover this,
particularly since Rob's takingaway the small increase in
revenue we might be getting.
He's taking that away anddedicating it to even more
spending.
You could have said the samething yesterday.
(29:52):
You said a week ago, which iswe can't afford it.
Yes, it's less, yes, the impacton the deficit is less, but we
still have a deficit and westill have a deficit going
forward.
We can't do this, we can't payfor this as long as we haven't
solved the revenue side on anequitable basis.
They could have said the samething, but they didn't, and it's
(30:15):
.
I mean, the politicalmotivation behind it must be so
strong that you've got to votefor increased spending without
revenues to offset.
It must be so strong that itjust, you know, bowled them over
in some fashion.
But the same thing's true, Imean, from a number standpoint I
got the number sitting hereright in front of me.
(30:36):
From a number standpoint, thedeficit is less because it's 700
as opposed to 1,000, but thedeficit is still there and the
deficit grows.
This is a permanent bill.
The deficit grows over time andyou've passed that.
You, the 19 that voted for it.
You passed that withoutaddressing the revenue side.
(31:00):
You voted to increase thedeficits.
I mean you voted to increasethe deficits without having a
revenue offset to it, and it'sjust.
I mean that's irresponsiblefiscal policy.
Yeah, yet it passes 19-1.
Speaker 2 (31:16):
Yeah, and they can't again.
There's, no, there is no futureplan.
What happens next year, whenit's even worse?
Now we're 700 million, or nowwe're $700 per student more in
the hole.
You know 120 million, whateverit is, I mean we're 185 million.
It's 18 hole.
You know, 120 million, whateverit is.
I mean we're, we're, we're 85million, 185 million, michael,
185 million and we're.
(31:37):
You know we're still in thehole even more.
It's just add additive,additive, additive, just keep
going.
And that's not even talkingabout which we haven't discussed
and we don't have time todiscuss in this segment, but the
fact that they added a trackingbill where now they're going to
track high school students for20 years, until they're 38 years
old.
I don't know if you saw thatlittle piece in there where
they're going to track thedetails of these people's lives
for some kind of study, or Imean, who's paying for that?
(31:58):
You're going to track all thesehigh school students for 20
years.
I mean, not only is it creepyas hell and Orwellian, who's
going to pay for that?
I mean what's the, what's the?
I mean pay for that.
I mean what's the, what's the?
I mean it's.
The whole thing is just, it'sinsane.
Speaker 1 (32:18):
It's.
You know it's insane, it is andand for.
For those who, who you know,run around saying I'm a fiscal
policy concern, I'm a fiscalconservative, I I believe in
balanced budgets.
I believe in, you know, pay asyou go.
I believe in if we don't havethe revenues, we don't increase
spending.
That all went out the windowfor 19 of them, the, the, that
portion of the 19 who say thosethings all went out the window
yesterday, yeah, yeah.
And I just and why?
(32:40):
What did you get out of it?
What did you get out of givingaway on the spending side
without getting anything over onthe revenue side?
Why?
Speaker 2 (32:50):
Yeah, absolutely Absolutely, and very little on
the spending side, withoutgetting anything over on the
revenue side.
Yeah, absolutely Absolutely,and very little on the policy
side.
I mean, not even you know.
I guess if they'd giveneverything that the governor
wanted, I could see the argumentfor it.
I still wouldn't have voted forit, but I could see the
argument for it if you got allthe but you didn't, you got, you
got.
You got basically, uh, you gotshined basically the whole time.
That was what it was.
(33:10):
Kevin just said that trackingthe DOL Department of Labor
already does that, but for 20years, kevin, you're going to
track somebody from the timethey leave high school for 20
years to look for trends.
I mean, I guess my big questionis why?
Second of all, it's creepy asit's, you know, as creepy as
(33:32):
hell.
That's all I'm saying.
And what exactly did they getfrom the governors?
I mean, the articles werepretty vague about you know.
Oh, they open it up a littlebit on the charter school and
made it harder to close charterschool, but that was it.
The governor had like a fulllist of things that he wanted
and they got the one thing andthen they voted yes on it.
(33:53):
And I mean, do you really thinkthat maybe the governor is
going to say, okay, I just gotsick and tired of everybody
telling me saying, well, youknow, the school really does
need a little bit more educationfunding?
I'm like, okay, one-timefunding.
Well, no, we probably shouldput it in the BSA.
You know, mike Kronk was like Ican't really decide if it
should be in the BSA.
Which means you want it to bein the BSA.
You're just too afraid to sayyou want it in the BSA.
(34:15):
It's just irritating.
Speaker 1 (34:17):
But he doesn't want to pay for it.
I mean he wants to pay for it,I assume, I guess because
there's no revenue side on this.
Rob used up the only revenuethere was out there On the
revenue side.
I guess he wants to do itthrough PFD cuts.
He wants to take it out of thepockets of middle and lower
income Alaska families.
I'm stunned After the speechesthat I thought were great
(34:38):
speeches, particularly by theSenate finance co-chairs, after
the speeches last week about wecan't afford this.
We've got to face up to the factthat we can't afford everything
we want.
We've got to limit our appetite.
After those speeches this weekto come back and say, oh, $85
million, yeah, we can afford it.
(34:58):
We can't afford it.
We can't afford I guess I oughtto say it $185 million
permanent increase.
We can't afford $185 millionpermanent increase.
I mean you look at the numbers,you look at the revenue numbers,
you look at where oil's going,you look at what the POMV draws
are doing, both of which haveprojections out there, and you
(35:19):
look at that spending.
The only way we're going towe're still $100 million over
this year, but the only waywe're and the Senate finances
are going to get it balanced.
The only way we're going to dothat is by pulling nickels and
dimes as we talked last week outof the couches, out of the
couch cushions, every place wepossibly can match it.
We're going to bring thecapital budget down to its
(35:41):
absolute minimum and we're goingto barely scrape by this fiscal
year.
Are you telling me now thatyou're going to do that every
year for the next 10 years?
No, you're not going to do thatevery year for the next 10
years.
You know you're not.
And even if you did, even ifyou did, we're going to be in
deficit every other one of thosenext 10 years because of the
(36:02):
permanent nature of thisincrease.
For the 19 that voted for it,particularly for the five out of
six who voted for from theminority, you just gave up.
You just gave up on fiscalpolicy.
Your, your, your, your claimsof being fiscal concert is just
puffed up in smoke with thatvote.
Speaker 2 (36:24):
Yeah, I agree.
I just, you know, I wonder andI haven't had a chance to talk
to Shower yet he was quoted assaying with he voted for it with
heavy reservations or something.
And I'm just like, but I mean,at that point you knew it was
going to, why would you vote ofit?
I mean, I, I don't know, butthe fact that they're going to
(36:51):
put this on forever in thefuture when we're already
struggling to, you know, fillthe deficit hole that we have
already, is, you know?
Speaker 1 (37:02):
the house.
The house vote's going to beinteresting.
Are we going to see theequivalent in the house minority
that we saw out of the Senateminority?
We're just going to see a broadscale cave and a broad scale
adoption of this sort of thing.
If so, michael, I don't know ifwe ever get this thing solved.
I mean, if people can't holdwhen you're facing a deficit,
(37:25):
when you're already facing adeficit and you're making the
deficit in future years worse bypassing it, if you can't hold
the line at that point and saybefore I'm going to vote for
this, we need to addressrevenues.
We need to know how we're goingto pay for this.
We need to have it be part ofthis bill, just like Rob's done
(37:45):
with paying for the additionalspending he wanted to do.
Before we vote for this, weneed to know how we're going to
pay for it.
If we can't hold the line onthat, if the House minority
can't hold the line on that, Idon't know if we ever get
anything solved.
Speaker 2 (38:01):
Well, this has always been my fear.
Right that this is theParkinson's principle they will
spend every available dollar,and the second that they get
more dollars, they'll spend thattoo, but they don't have the
more dollars.
Well, even I mean, this is yunt, this is yunt making it
contingent on the new.
you know what I'm saying.
This is like as soon as the newdollars prop up, they're like
oh, we just spend that too, butwait that now you were doing
(38:26):
it's, it's madness.
It is total, complete and uttermadness at this point.
And, like you said, they won'teven look at, you know,
potentially looking at the oilindustry or anything else.
Everything's bad except fortake the PFD and spend
everything we have and more.
That's the answer.
Okay, the weekly top threecontinues.
Brad Keithley Alaskans forsustainable budgets.
We're on to number three.
(38:47):
Sustainable budgets we're on tonumber three.
And he's talking about we're atthe start of Alaska's third
fiscal wave.
What do you mean?
Fiscal wave, brad?
Explain this to me.
What are you talking aboutspecifically here?
Speaker 1 (39:02):
Well, there's a number of ways to do it, but
I'll try this one In the stockmarket.
One of the technical approachesto following the stock market
and trying to time purchases andsales in the stock market is to
look at waves.
The stock market goes throughwaves.
It'll have a rise for a certainperiod of time and then it'll
sort of fall off.
Then it'll have another riseand it'll sort of fall off.
(39:23):
The third wave.
According to the people whoadopt this technical approach,
the third wave is always thebiggest wave.
Uh, and it's always the one.
I mean, it goes in reverse too.
You'll have a fall and thenyou'll have a brief rising, a
fall and a brief rise and then afall in the third wave.
The fall is that always thebiggest, and sometimes it swamps
(39:44):
the boat in terms of what your,your stock position is.
There are other references tothe third way, but that's the
one I had in mind when I wrotethe title for this segment.
And we're beginning at leastI'm beginning to see the
formation of the third wave, theAlaska's third fiscal wave,
(40:05):
sort of sitting out there.
We don't talk about federalpolicy much on the show, because
there's enough to talk aboutfrom a state fiscal policy
standpoint.
But if you follow federalfiscal policy which I do for
other purposes, other groups I'ma member of if you follow
federal fiscal policy, you'rebeginning to see an increased
(40:25):
effort at the federal level topush costs down to the state
level.
One that I picked on was arecent Alaska Beacon article.
In the Alaska Beacon it saysTrump denies disaster aid, tells
states to do more and basicallywhat had happened was Arkansas
and other states even Ruby Red,arkansas and other states states
(40:48):
had requested disaster aid inconnection with tornadoes and
other natural phenomena that hadhit them, that were causing big
costs, and Trump essentiallydenied as thus far essentially
denied giving them federaldisaster aid, telling the states
that they ought to be takingcare of that by themselves.
(41:09):
If you read Politico again as Ido for other purposes if you
read Politico, there was anarticle yesterday titled Mike
Johnson's tight mega billtimeline is on a collision
course with reality through inthe House to hit their deficit
(41:29):
reduction targets that they putin the reconciliation bill that
they're trying to push through,and one of the approaches that
they're taking this summerpushing is to shove is not to
reduce, because it gives themthe ability to say, oh, we
didn't do it, but to shove abunch of Medicare and SNAP,
(41:52):
supplemental nutritionalassistance program, food stamps,
push a bunch of federal spentof what's otherwise federal
spending for Medicaid and forSNAP off on the states by
reducing the federal, thefederal share of of those
programs and leaving the states,leaving the programs in place,
(42:16):
so that the people in Congresscan say, well, we didn't reduce
the programs, leaving theprograms in place, but pushing
the burden for funding thoseprograms.
Increasing the burden forfunding those programs to the
state, snap in particular, wouldbe an eye-opener.
Right now the state only paysfor the administration of the
SNAP programs at the state level.
(42:37):
The federal government pays allof the amount of the benefit
and what at least some proposalsin Congress would be would be
to reduce the federal sharebelow 100 and push a share of
that burden to the states.
We just talked about in the lastsegment that Alaska is
underwater as it is,particularly with this bill, the
(43:01):
education bill that's goingthrough.
You start piling onto thatincreased share of Medicaid
costs and a share of SNAPbenefits off on the state.
And to go back to my third waveanalogy, that may be the third
wave that swamps the boat.
That may be the wave that we'rejust not able to handle, and it
(43:27):
wouldn't be just a one-timedeal.
I mean, what Congress istalking about is reducing it on
a permanent basis and shiftingan increased share of the burden
back to the states on apermanent basis all the Medicaid
(43:50):
to take all the optionalprograms.
Speaker 2 (43:51):
They kept saying, oh, this is free money, this is
free money.
And when I said you and Italked about this at the time
and we both said, yeah, but whatwhen the federal government
stops paying for it?
Oh, they would never do that.
And here they are.
They're going to be pushing offcosts of Medicaid and SNAP a
portion of those onto the states.
Every state is running adeficit Every state, and here we
are.
Every state is running adeficit, every state, and here
(44:11):
we are.
Speaker 1 (44:12):
This is a big deal, but it's sort of out of the
sight line of people who arecurrently focusing on state
fiscal policy because it'soccurring at the federal level.
But it will come back with ahuge impact at the state level
(44:33):
if these sorts of things areadopted at the federal level.
And I don't.
I mean, when we talk aboutfederal policy, you and I talk
about the need to reduce thedeficit, the need to, you know,
to get spending under control atthe federal level.
So I'm not opposed to reducingspending at the federal level.
The problem is it doesn'treduce overall spending, it just
shifts the burden of thatspending.
(44:55):
Because Congress doesn't wantto confront the problem of
reducing the programs.
They want to be able to saythat, oh, we didn't reduce the
programs, it just shifts theburden of those programs out of
the federal level into the statelevel.
So it's I mean, the disasteraid may be bad enough If we have
(45:18):
a big disaster in Alaska wehave a lot of fires in Alaska If
we have a fire in Anchorage,for example, or if we have an
earthquake of any sort thatlooks like the 64 earthquake.
If we don't get disaster aidfrom the federal level, sort
that that that looks like the 64earthquake.
If we don't get disaster aidfrom the federal level for that,
that's going to be a big enoughhit to us.
But these additional add-ons ontop of it are just you know, you
(45:41):
can see this wave building upsort of outside Alaska's
boundary, this fiscal wavebuilding up and just about ready
to crash, crash down on top,crash down on top of the Alaska
budget.
And here we are, you know,seeing that, being able to read
that, understanding that'swhat's going on, that that's
(46:01):
what the administration andCongress is up to.
Here we are passing permanentincreases, permanent increases,
substantial increases inspending, by 19 to 1 vote.
Got to go back to that Passingpermanent increases in spending
when we don't even have enoughmoney to cover that.
(46:21):
And we aren't talking about howto get enough money to cover
that.
Here we are doing that withthis third wave about to come
crashing over.
So it is not.
This is not the good news.
This is not a good news segment.
Speaker 2 (46:36):
And the Medicaid component of that is somewhere
in the $800 million range, Imean for the total bill.
So whatever portion of that is,even if it's another 25% of it,
you know where are we going tocome up with another quarter of
a billion dollars at the end ofthe year, after we just funneled
170 million out the door inperpetuity on this education
span.
I mean it's.
(46:57):
You know.
Somebody said stop saying it'smadness, they're doing it on
purpose and they want to takethe PFD.
The problem is they could takethe whole PFD and still be
upside down.
Speaker 1 (47:07):
Yeah, yeah, and this is stuff.
I mean, this is stuff.
The, the federal, the, the, the.
The transfer of the federalburden of the state is stuff
that Bert and Lyman talked abouta week ago, monday.
I mean I'm just still sort ofspinning from this.
It's stuff they talked about aweek ago, monday, about how we,
why we, couldn't afford athousand dollars, and yet they
vote for 700 and we still can'tafford it, and and yet no
(47:30):
discussion.
No discussion during theirpresentation about about this
third wave sitting out there,about the transfer of the
federal burden.
It's just, it was.
It was a dramaticallyirresponsible vote yesterday.
From a fiscal standpoint, Imean from a, from an education
standpoint, from a, from a unionstandpoint, probably a great
vote, but from a fiscalstandpoint it was an abysmal
(47:53):
vote yesterday.
Speaker 2 (47:54):
Well, yeah, a long-term fiscal plan vote and
from a long-term stability,fiscal stability issue.
It's crazy, is what it was.
And Kevin says he expects it topass.
He said he won't vote for it,but he expects it to pass in the
House, which, again, that'snuttier than squirrel poo.
Why would you do?
I just I can't even wrap mybrain around it.
Are you that afraid thatthey're going to try and use it
(48:16):
as a campaign issue in the nextelection?
Is that what you're afraid of?
Because otherwise make it a onetime funding and then come back
.
Then you could say I paid forit, but not put us on the hook
for it forever.
Speaker 1 (48:33):
Giving up the leverage to be able to discuss
revenues at the same time asyou're discussing spending.
Giving up that leverage buying,agreeing to the spending
without addressing revenues isjust insane.
Speaker 2 (48:44):
This is a huge deal, and especially the SNAP.
I don't know how much money theSNAP program puts in the state.
I imagine it's a significantamount.
But, like I said, the numbersthat were being floated around
with Medicaid because theytalked about this in the
legislature here a month or soago, a month and a half ago, and
I could say, ooh, now we couldsee their next little funding
spike it was $800 million inspending for Medicaid in the
(49:08):
state and if we have to pick upany significant portion of that,
that's huge.
That is huge from where we'reat right now.
Speaker 1 (49:17):
You know, and some people will say, oh well, the
state will just reduce.
The state will take action toreduce its share by limiting the
Medicaid program or limitingthe SNAP program.
The problem is you can't dothat.
Problem is they're federalprograms.
If you take any federal moneyyou've got to have the full,
whatever the full federalprogram is.
Maybe Congress will introducesome flexibility in that, but
(49:42):
they'll be pressed not to.
The proponents of the programswill be pressing them not to.
So we would have to essentiallyopt out of Medicaid and opt out
of the entire Medicaid programand opt out of the entire SNAP
program to be able to dosomething like that, to
reconstruct it with narrowerparameters.
The way the law currently works.
(50:03):
So that's not an option either.
There is not a good option.
And in the face of thatpotential very real potential,
because Congress will reducespending and they will reduce
spending in part by pushing itback on the states In the face
of that very real potential, tobe passing a permanent increase
(50:27):
in spending without addressingthe revenue side, a substantial
increase in spending withoutaddressing the revenue side, a
substantial increase in spendingwithout addressing the revenue
side, is just, it's beyondfiscally irresponsible.
I'm not sure what the next wordis beyond irresponsible, but
it's beyond fiscallyirresponsible.
Speaker 2 (50:44):
And I don't know.
This is what we were talkingabout last week.
I don't know how to fix itanymore, brad.
I mean we've talked about thistill we're blue in the face.
I mean, anybody who has run ahousehold budget or a business
budget can see it.
But they seem to think, youknow, we've all heard the
argument of, well, you can't runthe government with budget like
a business.
You know, that's just not howit works.
(51:05):
But it doesn't mean that youcan get away from basic math,
which is you can't spend morethan you take in in perpetuity,
right?
So I mean, okay, maybe youcan't run it exactly like a
business, but there's stillarithmetic that you have to deal
with.
Speaker 1 (51:21):
Yeah, yeah, there's still arithmetic you have to
deal with.
I mean, it's hard for me now togive any credibility in all
honesty and I and you know Iwant to but it's hard for me to
give any credibility to peoplelike shelly hughes and mike
shower when they vote forsomething like this, when they
vote for a permanent increasewithout having the revenue to
(51:43):
back it up, knowing it changed,it increased, it retains a
deficit, um, uh, into the future.
I mean, they claim to be fiscalconservatives, they claim to be
looking out for the PFD, theyclaim to be looking out for the
taxes, but they just voted usinto a position where a lot of
those things, if not all thosethings, are going to hit us in
(52:05):
order to deal with the deficitincrease they've just created.
Speaker 2 (52:09):
And Rob said even more good.
Rob said even more good news,even more good news.
There's been talk in thelegislature of changing the high
, or talk around of changing thehighway matching funds from the
feds from 90-10, where thestate has to match 10% of those
funds, to now 80-20 on top ofthat.
Speaker 1 (52:27):
That's a big number.
That's a big number.
Speaker 2 (52:29):
That's a huge number you start talking about now.
The feds will only pay 80%.
We have to come up with anadditional 10%.
On top of everything else, itjust again, it just accelerates
the problem that we're havingthis whole time, which is
essentially, you know, we justdon't have the money.
And again it's not just us,it's every state in the union is
(52:51):
running a deficit and it justcan't continue.
Speaker 1 (52:55):
Yeah, and I don't I mean, but not every state union
is increasing their deficit,Michael every state not every
state union is going out andvoting for a bill that
affirmatively increases thedeficit, increases the deficit
permanently, normativelyincreases the deficit
permanently.
We may be in line witheverybody else in the fact we're
(53:16):
running deficits, okay, butwe're voting to make it worse.
Our legislature is voting tomake it worse.
Speaker 2 (53:20):
I'm not using it as an excuse that we're doing the
same thing everybody else isdoing.
I'm just saying everybody'sdoing it and I'm like how can
you guys not see thecatastrophic results of that?
If you don't get a handle onthis, it makes no sense.
I mean, what happens, brad, ifthey do take the full PFD?
What happens then?
I mean it doesn't solve theproblem anymore.
(53:42):
It used to be.
If you took the full PFD itwould solve the problem.
Now you can't even do thatbecause it's beyond what the
revenues that the PFD would give.
Speaker 1 (53:53):
Yeah, and if the third wave hits, if the federal
wave hits, we're way beyond that.
I mean, it's just we've leftourselves.
No after.
A week ago, monday, aftertalking about the need to leave
ourselves a wiggle room, talkingabout needing to put ourselves
in a position to be able toabsorb the shock that would come
(54:15):
if the feds upstream this stuffto the states, after having
great speeches in that regard,we didn't really mean it.
We sort of thought about it,but we didn't really mean it.
We were just going to putourselves in that position
anyway, a little bit less, $80million less, but but
(54:35):
nevertheless we're going to putourselves in that position
Anyway.
Speaker 2 (54:38):
We have a spending problem.
So somebody said we don't.
We don't have a revenue problem, we have a spending problem.
And Kevin said and a promiseand expectation problem.
He said I found that everysingle Alaskan wants budget cuts
, just not in their communityprogram, school hockey team,
airport road repair, librarywork, all this kind of stuff.
I mean it's right, he's right,that's what's going on.
(55:00):
We want a cut, but just not mystuff.
Speaker 1 (55:04):
We learned that in 2019, right, we learned that
when Dunleavy proposed the cutsin the budget and you couldn't
even get 16 legislators I thinkthe Republicans were in the
majority of that sessionCouldn't you, or that
legislature couldn't even get 16legislators from from the House
and Senate combined, to backhim up on the level of cuts that
(55:24):
he proposed to make.
I mean, we learned that lessonthat everybody, everybody said
cut everybody else, just don'tcut me.
Speaker 2 (55:31):
Just don't cut me All right, brad.
Thank you so much.
My friends Good to talk withyou.
Speaker 1 (55:35):
We'll see you next week.
Michael's always thanks forhaving 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
(55:58):
for Sustainable Budgets.
We look forward to you joiningus again next week for the next
edition of the Weekly Top Three.
Thank you.
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