August 5, 2025 • 53 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 August 4, 2025.
This week, our top 3 issues are these: 1) we explain how the votes on the veto override do much to explain the state's deep fiscal problems (2:15); 2) we discuss again, whether they realize it or not, how those advocating for a one-account Permanent Fund approach are pushing to create a back door into the Permenent Fund corpus (24:13); and 3) we explain why, whether he intended to or not, Rep. Bill Elam has suggested a helpful way to exercise better control over K-12 spending (35:41).
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 August 4th 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
(01:38):
the votes on the veto overridedo much to explain the state's
deep fiscal problems.
Second, we discuss again,whether they realize it or not,
how those advocating for aone-account permanent fund
approach are pushing to create abackdoor into the permanent
fund corpus.
And third, we explain why,whether he intended it or not,
(02:04):
representative Bill Elam hassuggested a useful way to
exercise better control overK-12 spending.
And now let's join Michael.
Speaker 2 (02:15):
Brad Keithley comes in every week to deliver us some
great insight.
We always give Brad a hard timebecause you know we make him.
I mean, I feel like Brad shouldbe like twirling his
mustacheing his mustache, evillyin the background, because he's
giving all the bad news.
But it's not all bad news, it'sjust truth and sometimes it
feels you know, sometimeshashtag feels bad man.
(02:37):
You know, sometimes the truthis hard.
But that's why we have him on,because he brings in some good
insights.
So let's get started today,brad.
Of course you know, not reallysurprising what happened with
the special session.
We knew it was going to beclose and it was.
It was just enough votes to gethim over the threshold.
(03:00):
But there's some insight thatyou're trying to bring to us on
this.
As to you know, what do thevotes mean?
Double rainbow, what does itmean?
The votes of people like JulieColom and Dan Sadler and David
Nelson typify you say typifywhat's going on.
Give us the full rundown here.
(03:21):
What are we looking at?
Speaker 1 (03:23):
Well, a lot's been said about the veto override.
A lot will continue to be saidabout the veto override and I
don't.
I'm not this is this segmentisn't going to be just a broad
brush To me.
As I look through the voteboard, something really stood
out at me that that sort ofdefined the fiscal issues that
(03:47):
we're facing in the state.
It's sort of a microcosm of theproblem that we've gotten
ourselves into from a fiscalperspective.
And the three votes that reallystood out to me as I looked
down the board was Julie Colombs, dan Sadler's and David
Nelson's.
They stood out because thosethree have long since said that
(04:13):
there are no taxes, that theyare firm in the belief that
Alaska can solve its problems bysome way, some means other than
taxes, and they're anti-tax.
Nelson, on top of that, saysthat he's pro-PFD, that he
(04:36):
firmly believes.
During his campaign he said hefirmly believes in a full PFD
and would not take any votesagainst a full PFD.
All three of them voted fortaxes, all three of them in one
of two senses In the senseeither that PFD cuts are taxes,
and I believe they are.
So they voted immediately fortaxes because the only way you
(05:00):
pay for this increased spendingthat the legislature authorized
through overriding the veto isthrough additional PFD cuts.
Remember that it's not onlythat this bill was on the
appropriation for this year, butthe bill that they were really
the underlying bill they werevoting on, is now a permanent
(05:22):
bill for increasing K-12spending.
So if you believe that PFD cutsare taxes and I think they are
and economists think they arethen they voted immediately for
increasing PFD cuts because theonly way, in the absence of the
revenues, the only way you payfor this spending, is through
(05:43):
PFD cuts.
Even if you don't believe thatPFD cuts are taxes, by taking
even more of the PFD they'vemoved us on the doomsday clock
closer and closer to the pointwhich we run out of the PFD and
have to move to taxes to pay foradditional spending.
So in that sense, in the longterm, they voted for taxes as
(06:06):
well.
But Nelson, who you can view asthe 45th vote, you can view as
the deciding vote.
I know some people want to sayForrest Dunbar was to extol him
for having come back from Poland, or others want to say others
were the 45th vote, but I reallythink David Nelson was the 45th
vote.
David Nelson not only voted fortaxes.
(06:29):
He voted directly for PFD cuts,something that he said during
his campaign he would not do,and I think they sort of capture
the fiscal issues that we'regoing through.
People talk a good game about oh, I'm going to hold the line,
(06:53):
I'm not going to vote for taxes,I'm not going to vote for PFD
cuts, I'm not going to vote forany new revenues.
I'm going to hold the lineuntil they have to vote on the
line and they push the line.
They push the line more interms of additional spending and
in terms of additional PFD cutsand additional taxes.
And that's where we are.
(07:16):
People don't walk the talk,particularly in the case of
Nelson, because he votedimmediately for PFD cuts.
People don't walk the talk thatthey make during their
campaigns.
When push comes to shove, theycrater and do exactly the
opposite of what they said theywere going to do during their
(07:39):
campaign.
So how do you?
There's no way out of this box.
We're sort of building this boxwhere people talk about good
game during the campaign.
You vote for them, you supportthem, you give them money, you
say that they're the rightcandidate on budget issues, the
right candidate on fiscal issues, but then, when it comes time
(08:00):
when push comes to shove and thetime and it's time for their
vote to go up on the board, theyvote against themselves.
They voted in the exactopposite way that they said they
would during the campaign, andthat's where we are.
(08:22):
Michael to 2025, you can seethis collapse of virtually every
representative and everysenator, every legislator during
that time.
You can see the collapse thatthey'll talk a good game oh,
they're fiscal conservatives.
Oh, they're in favor of abalanced budget.
(08:42):
Oh, they're against taxes.
Oh, they're against PFD cuts.
But when we get to where pushcomes to shove, when it's time
to stand up and take a stand onthat issue, they collapse and we
end up in a situation where wecontinue to spend more and spend
more, and spend more and spendmore.
(09:02):
If we're going to spend more, ifthat's indeed where we are and
it seems to be that's where weare that's also what this vote
typifies.
If we're going to spend more, weneed to develop the revenues to
pay for it, because we'recontinuing to go deeper and
deeper and deeper into deficits.
If you look at we've talkedabout this on the show before if
(09:24):
you look at the next 10 years,spending continues to go up.
Revenues actually go down overthe next 10 years because oil
taxes are going down somethingwe've talked about the last
couple of times on the show andso the deficit already is
getting just moving.
Spending at inflation, thedeficit already is projected to
(09:46):
get deeper over the next decade,eating up more and more of the
PFD, ultimately eating all thePFD and ultimately moving on to
taxes.
And so we're already in thatsituation.
And now people pile on top ofthat by voting for things like
this veto override.
(10:07):
If you're going to do that andthis is sort of focused on David
Nelson if you're going to dothat, then be honest about it
and vote for revenues.
Right, admit that you can't getoff the link to spending and
(10:29):
start talking about reasonable,equitable, low impact revenues.
Speaker 2 (10:34):
Yeah, I mean it's interesting to watch because,
you know, david Nielsen was oneof the surprising votes,
although, as you said, manypeople could be called the 45th
vote.
You know what I was.
Although it wasn't surprising,it's frustrating to watch
somebody like Will Stapp ask inevery meeting how do we pay for
(10:54):
it?
How do we pay for it?
How do we?
He was asking all the rightquestions and yet when it comes,
the rubber meets the road.
At the end, will Stapp votes,votes to dip into the PFD and
votes to do it.
You know we've got, and I canunderstand in some ways because,
as David Boyle in the chat roommakes the point he said, you
know David Nelson was in aleft-leaning district.
(11:15):
He was fighting against CliffGroh.
It was a very close vote to gethim in there, so he's trying to
straddle the line.
But Dan Sadler, who is totallydifferent, he's in a completely
(11:44):
different direction.
Like you said, we're buildingourselves this box where we buy
into the madness that everybodysays and then when they get down
there, they're like pod people,they get consumed and they are
just the thing in the wall thing.
I mean, that's exactly whatit's like.
Speaker 1 (12:01):
Yeah, I'm not going to let David Nelson off the hook
.
I mean, yes, he is in a toughdistrict, but he got elected on
a platform that said he was afiscal conservative.
He was going to vote topreserve that, he was going to
preserve the PFD.
He was going to vote againsttaxes.
That's what he said.
That's what he got elected on.
People who voted for himpresumably voted for that
(12:22):
platform.
And then he gets down to Juneauand he abandons it.
So, yeah, I know he's in atough district with Cliff Groh.
I know that some parts of itare left-leaning, some parts of
it are right-leaning.
Nelson got elected by saying hewas a fiscal conservative.
Nelson got elected by saying hewas going to protect the PFD.
(12:43):
Nelson got elected by saying hewas no taxes.
That'sd Nelson got elected bysaying he was no taxes.
That's how he got elected.
That's the platform on which hegot elected and he abandoned it
.
So I don't, I'm not going to,I'm not going to excuse him
because he's in a tough district.
In that tough district he gotelected on a platform that said
no taxes, no PFD cuts, and hevoted for both in voting for the
(13:07):
veto override.
Speaker 2 (13:12):
Yeah, no, I mean no excuses, I'm just saying it's
interesting to see how each andevery one of these could have
gone the other way.
That's the thing, and you'reright 100%.
David Nelson was the surpriseto me of all the votes out there
, because we knew it was goingto be close.
And now, and now it's not.
Now it's it's said and done.
(13:33):
And again, just a reminder thiswas a one time veto.
They still were going to getfive hundred dollars for the
base student allocation.
This was a one time veto, andnow, of course, we're on the
hook in perpetuity for this $700per kid, which is roughly what
$178 million a year from nowuntil, well, we crumble into
(13:57):
dust or whatever.
That's what we're at right now.
Speaker 1 (14:01):
Yep, it's faster than the rate of inflation.
So we've just, if you look, ifyou look at the next next 10
years and you say spending wasgoing to go up by inflation,
revenues are going down.
I want to, I want to emphasizethat for people who say, oh,
we're going to produce our wayout of this.
We're not.
Revenues are going down overthe next 10 years because of the
way oil taxes work.
(14:22):
We're escalating our problemsjust on the way it is.
And now we've layered in withthis bill that the governor
tried to stop for a year throughthe veto.
But with this bill we'velayered in a faster than
inflation increase in K-12spending over the period.
(14:43):
So it's I just, I mean, this isit, this is the problem.
So when people say, oh, youcan't talk about revenues, okay,
let's elect the right people.
Let's elect the people that saythey're going to hold the line.
Let's elect the people that sayno taxes.
Let's elect the people that sayno PFD cuts.
Speaker 2 (15:01):
We did that the people that say no pfd cuts.
We did that.
Wait, wait, wait.
You're saying vote harder, voteharder that's.
I mean, that's always theanswer.
Right, vote harder, vote, votethe right people.
And yet we vote the rightpeople in and the madness
continues.
Speaker 1 (15:17):
We did exactly that with david nelson.
We voted in the person who, whosaid the right things, who said
he was going to stand up forthe right things, and we've seen
where that goes.
So next time somebody says, oh,all we need to do is elect the
right people, we've done it.
We tried Not working.
Speaker 2 (15:35):
At least we know somebody just made the point.
At least we know with CliffGroh, we at least know he's
consistent, we know where he wasgoing, we know where his vote
was going to be.
That's the problem with thefiscal conservatives.
Speaker 1 (15:48):
Quote-unquote is because we can never tell which
way they're going to blow in thewind, yeah and Groh believes in
revenues and I know people getupset about that, but look,
that's where we're going.
The deficit's getting greater.
David Nelson has made it evengreater.
Yeah, so that's where we'regoing.
Speaker 2 (16:06):
Who are we talking to ?
Folks?
We talked to so many peoplehere in the last week.
Was it Shelly Hughes or was itEdna DeVries that said they
wanted to bring Brad on as oneof the financial guys in their
administration?
Brad, has anybody reached outto you, because I can't remember
who it was?
Somebody said I think it was.
Was it folks you have to remindme, was it Edna or Shelly that
(16:31):
were like I think it was Edna.
It was like, yeah, we want tobring Brad on because he's got
the.
You know, I'm just like, okay, Imean that's, that sounds like a
great.
It was Edna.
It was Edna.
Okay, yeah, I mean Brad, you're.
You're preaching to the choirhere, brother.
That's the thing.
And and we don't know any morethan you I mean, how do we fix
(16:51):
it?
If?
If we're going to send thesejokers down there and they're
going to roll over and wet onthemselves and become one of the
pod people, what's the solution?
I mean we, you know, number thecharter and change it, change
out the players.
We did that.
65 plus percent of thelegislators have changed out
since.
I wrote that little placardthat says all the changes, and
(17:15):
here we are.
Speaker 1 (17:18):
Yeah.
So the real answer is and thisvote encapsulates it, and David
Nelson more than any other,Colombe and Sadler also, but
David Nelson more than any otherreally, really encapsulates it.
You can't trust them.
They're not going to do it.
When push comes to shove,they're going to flip over.
David Nelson voted the same wayCliff Groh would have.
(17:40):
So you know, for the people whosay, oh, Cliff Groh would be
worse, no, he wouldn't.
David Nelson voted the wayCliff Groh did.
Arguably, Groh at leastrecognizes, if he's going to
vote that way, he has to fill inthe deficits in some fashion
(18:05):
no-transcript.
Speaker 2 (18:06):
I mean not that I'm a fan of taxation and everything,
but that's the thing.
We keep getting suckered bythese people, that they go in
there and they're like oh yeah,of course I'm a fiscal
conservative, of course I am.
Yes, I'll vote yes.
I'll vote yes.
Go ahead, yep, give me moremoney, more money.
I want to bang my head againstthis desk until I'm unconscious
(18:29):
and then wake up and start again.
That's what it feels like.
That's what it feels like I'mjust beating my head against the
desk until I'm unconscious andthen we wake up and start again.
Speaker 1 (18:39):
I mean, it's the same lesson we learned in 2019,
right?
The lesson in 2019 was thegovernor comes in, dunleavy, in
dunleavy's going to veto us down.
He's going to balance thebudget, uh, against traditional
revenues through vetoing downspending and a few other tricks
along the way, and he comes inand he's going to do it.
He couldn't get 16 legislatorsto back him up on the level of
(19:03):
cuts he wanted to make.
By the time it was all said anddone, we were back up almost to
where we hit, where we had comein.
Speaker 2 (19:12):
I want to cut, but don't cut my area.
Oh yeah, I'm all for cuts butdon't cut me.
I mean, that's the, that's the,that's the thing, and and you
know what, and Dunleavy's noteven off the hook.
Shelley Hughes put out a pressrelease after the vote and said
you know, they could have lookedat the governor's plan, because
the governor, his and I hadn't,even I hadn't read the full
thing on it.
But the governor's written planthat he wrote specifically for
(19:42):
the special session included anautomatic inflation escalator in
the BSA.
If they, if they, had given himwhat he wanted, he would have
given them an escalator insideof.
I mean, god damn, I mean, thereis just nothing left that just
spend, spend, spend, that's alland so when people get upset
with me for talking aboutrevenues, what the hell?
Speaker 1 (20:00):
we're not going to hold the line.
When you elect people likeDavid Nelson, who says he's
going to hold the line and thenhe doesn't, we're not going to
hold the line.
You can see the deficitsbuilding over the next decade.
What the hell You've got tostart talking about revenues
because there isn't any otherway to fill that gap.
Speaker 2 (20:19):
Because the PFD is gone.
The PFD is gone.
You just put $400 million or$500 million a year into the
school systems.
That's the rest of the PFD,moving forward as it goes up.
It's just, that's it, you'redone.
You know what I've beenpreaching the?
I've been preaching the gospelof Brad Keithley to Bernadette.
(20:41):
I've mentioned it to Shelly,I've mentioned it to all this,
you know, I mean the things withthe permanent fund and the
spending and all this stuff andI don't know.
I'm get.
I feel like I'm getting a lotof lip service, even to
candidates that I'm kind ofliking what they're saying.
Again, I'm fearful, just likethe David Nelsons, that they're
saying all these great thingsand yet when it's time to hit,
(21:07):
it's going to be more of thesame.
That's my fear.
Speaker 1 (21:10):
Yeah, and Shelly.
I mean we talked about thislast week on the show, right?
Shelly has the perfectopportunity because she was a
member of the fiscal policyworking group, because she has
touted the fiscal policy workinggroup in the past as an example
of how she can work, how sheand others can work to bring
things together.
She has the perfect opportunityto talk about things like
(21:32):
balancing revenues with spending.
If you're going to continue tospend, you have to have revenues
.
That's part of what the fiscalpolicy working group said, and
so she has the ability to dothat.
I think in a way that the othercandidates can say but Shelly
was a part of the group, thelegislative group, that brought
that together and so if you wantto use, if she wants to use,
(21:54):
have an example of how she canbring, how she can participate
in a group that brings thingstogether and has an overall
comprehensive approach, that'sthe perfect opportunity.
If she's not leaning on that,if she's not saying that, then
you really got to wonder, I mean, if we're ever going to get to
(22:15):
a solution.
Speaker 2 (22:16):
Did you catch the interview with her on the
program?
Okay, so, because I asked herspecifically that question about
the fiscal policy, where I setup the question perfectly, she
could have taken it and said,yes, it's a perfect plan, we
could have, you know, perfectframework, we could have she
walked right around it.
She just kind of, you know,dodged right around.
(22:36):
She went on to the sunsetcommission and some other stuff,
which is a great thing.
I think the sunset commissionis a great thing, don't get me
wrong.
It's a valuable piece of whatwe're talking about.
But she, just she didn'tembrace it, and that's just.
Speaker 1 (22:52):
You know, michael some people like to say that
that you know rank choice votingis working and so and it's
bringing everybody toward themiddle.
It's really not.
I mean, the reason that Shelleywould walk around the fiscal
policy working group is becauseit talks about revenues and she
looks at what she needs to getinto the top four and she
(23:13):
doesn't want to be talking aboutrevenues because that sort of
affects her core.
So it's driving those peoplewhen they look at what they need
to get into the top four,driving those people when they
look at what they need to getinto the top four.
It's driving those people tomore extremes because they have
(23:36):
to appeal to even a smallersegment to get themselves into
the top four.
I think it's working in theexact opposite way that Scooter
Kendall claims it's working.
That's driving people in themiddle.
I think it's driving peoplemore to the extremes.
Speaker 2 (23:47):
Well, like you said, I mean, you know I'm starting to
come to the we only got 30seconds here but I'm starting to
come to the conclusion that youknow what?
We might as well just ride thispony right into the ground.
I might as well just sign upfor every program and take every
government dollar I can untilthis whole thing collapses,
because that's where we're goingand nobody wants to see, nobody
(24:07):
wants to acknowledge that thereis an end to this madness that
does not end.
Well, let's just put it thatway.
Let's continue on.
Brad Keithley, alaskans forsustainable budgets the weekly
top three.
Brad, some people just don'tunderstand the PFD, and you, you
you've got a prime example ofthis.
Now, full disclosure.
(24:27):
I didn't read this full articlethat Brad is about to reference
from the Daily Newsminerbecause I, on principle, have
just refused to give theNewsminer any money and they
won't let you read a singlearticle until you subscribe.
So anyway, it's an article fromJoshua Church, who's an
investment advisor in Fairbanks,entitled Alaskans Deserve a
(24:49):
Smarter, stronger Permanent Fund, and Brad says, proof positive
that some people still don'tunderstand it.
Brad, give us the rundown here.
Speaker 1 (25:00):
So this is the vampire segment of the.
Speaker 2 (25:05):
Good evening.
Speaker 1 (25:07):
Welcome to my house, Okay got it of the weekly top
three because this is a vampirethat will not die and I guess
we're just going to have to keeppounding the stake into its
heart over and, over and overagain to make sure it finally
dies.
The discussion of this issuehad gone away for a while after
(25:30):
we and others had raised issueswith the permanent funds
proposal, permanent fundcorporations proposal to
eliminate the two accountapproach and go to a one account
approach.
It had gone away for a whileand I thought well, ok, people
finally are seeing the light,but I don't know.
Here's an article in theFairbanks News Minor, an op-ed
in the Fairbanks News Minor fromJoshua Church extolling the
(25:54):
Permanent Fund Corporation'sproposal to go from a two
account system to a one accountsystem.
For those that don't recall, thePermanent Fund Corporation or
the P, the permanent fund is setup under the constitution as a
two account system.
There's the corpus that is notto be spent, not to be invaded,
not to be used in any way, shapeor form, that's to be invested
(26:16):
to spin off earnings.
That earnings go into thesecond account, what's called
statutorily is the earningsreserve account, and the only
spending that is authorized isfrom the earnings, is from the
earnings reserve account, thelegislature can go in and
appropriate money from theearnings reserve account.
That's the two account systemand it was set up that way to
(26:37):
protect the corpus.
To say you cannot absolutely,ever, ever, ever, ever spend
from the corpus.
That's what the constitutionsays.
Maybe they left out one ever,but ever spend from the corpus.
That's what the constitutionsays.
Maybe they left out one ever.
But you cannot spend from thecorpus and you can only spend
from the earnings reserve.
Permanent fund corporation comesalong and the permanent fund
corporation is saying, ah,that's, that's out of date.
(26:58):
What we need to do is we needto merge the second, the two
accounts together into a singleaccount that will spin off
earnings and the legislature canspend those earnings and we
will set the level at which, byconstitutional provision new
constitutional provision we willset the level at which they can
(27:22):
draw from this single accountand that will guarantee revenues
to the state and it will, intheir terms, protect the
permanent fund.
Well, the problem with that isthat that all assumes that the
permanent fund corporation earnsin its investments from the
permanent fund, earns an amountequal, at least equal to the
(27:46):
amount that's being drawn out tobe spent, the amount that's set
by constitutional provision.
Now that's being drawn out tobe spent by the legislature.
If the permanent fundcorporation doesn't earn that
amount that's being spent, theconstitutional provision that's
been proposed neverthelesscontinues to draw that 5% from
(28:13):
the permanent fund and continuesto fund the legislature to
spend it.
So if the permanent fundcorporation isn't earning the 5%
, but they're neverthelessdrawing the 5% out, what's going
on?
That permanent fund is beingdrained.
It opens a back door into thepermanent fund.
(28:34):
Corpus Doesn't say it does, butby allowing a 5% draw, even
though the permanent fundcorporation isn't earning 5%, it
opens a back door into thepermanent fund.
And over time, if you look backover time, the permanent fund
corporation has not been earningfor several years now, has not
been earning the 5%.
If you look forward, they'rebarely earning the 5%.
(28:56):
You know under circumstancesthat they get to describe oh, we
think we're going to continueto earn 5%, and so it's creating
this system where you've got abackdoor into the permanent fund
.
So those who are advocatingthis system, when you think
about it, what they're reallydoing is they're setting up for
(29:18):
the day when you can't cutpermanent fund dividends anymore
, you're out of money andthey're setting up and the
permanent fund corporation isnot earning 5%.
They're setting up for the daywhere they can start drawing
from the permanent fund in orderto supplement revenues and keep
(29:41):
on spending.
Those who advocate spendinggrowth are big advocates of
merging these two accountstogether.
Those who want to avoid taxesthe top 20% who aren't paying
any taxes now want to continue.
Thated is a big advocate of itfor that very reason, to
(30:08):
continue the gravy train, evenif the Permanent Fund
Corporation isn't earning 5%,and so it is all set up to
create a backdoor into thePermanent Fund Corpus.
They try to justify this bysaying well, the earnings
reserve isn't, isn't, isn'tgetting enough now, Well, yes,
(30:30):
because it's not earning 5%.
The permanent fund corporationis not earning 5% and the and
the, the, the.
The rationale in the, in the, inthe existing constitutional
provision, is if you're notearning enough to support the
earnings reserve, then youshould stop spending from the
earnings reserve.
There's a hard wall there.
(30:51):
You can't go into the permanentfund corpus.
The one account system won'tallow them to go into the
permanent fund corpus.
So let's be clear WheneverJoshua Church or anyone who are
writing op-eds that support theproposed merger into the one
account.
Whenever they're doing that,what they're really saying in
(31:12):
the subtext is hey, we need abackdoor into the permanent fund
because we're not confident thepermanent fund corporation is
going to continue to earn this5% like they haven't been the
last few years.
We're not confident they'regoing to continue to earn it.
Speaker 2 (31:30):
And so we need a way to get into the corpus.
And well, tell me if I'm wrong,brad, here's how they're going
to sell it.
Well, unless you want to tax,we need to combine the funds,
unless you want to be taxed andAlaska is so tax adverse and
again, I'm not a fan of taxes.
Folks, don't hear me wrong, butI'm telling you this is where
we're going.
We're going to some form of.
We're already being taxed onthe PFD.
(31:50):
I know I'm waiting for Randy tojump in and tell me how.
That's not right.
We're already being aquasi-taxed on the PFD.
But here's what they're goingto do.
They're going to say well, youknow, unless you guys want to be
taxed, we really need to rollthis up together.
No, and people will just blindlyjump on that bandwagon because
they won't see the truth.
(32:11):
And the truth is to dumb itdown for the rest of us is that
they're trying to eat the seedcorn.
They're trying to strangle thegolden goose that's laying the
golden eggs and they're tryingto strangle it.
That's what happens If they getaccess to the corpus.
They will slowly eat away at ituntil there's nothing, and then
we will have no permanent fund.
(32:31):
They'll drain the permanentfund down to 30 or $40 billion,
and then they'll have to tax usanyway because there's not
enough money coming out of it.
That's that's where we're.
Am I wrong, brad?
Speaker 1 (32:42):
No, no, but that would be a couple of generations
off.
Yeah, exactly, it'll take thema while to get down to the $30
billion.
So those who are currently inexistence will be fine because,
yeah, we'll just drain thepermanent fund on down.
But what we're doing is we'resetting up a huge, huge problem
(33:04):
for future generations in beingable to fund themselves in
Alaska I mean the CommonwealthNorth and others say, oh, we're
looking out for futuregenerations.
That's what we're really about.
We're looking out no, you'renot.
You're looking out foryourselves, you're looking out
for your top 20% selves intrying to get access into the
(33:27):
permanent fund corpus.
So again, it's sort of likethis is the vampire segment.
We've put that stake in theheart once before.
We put it in several times overthe course of these programs.
Evidently we have to keepputting it in because you got
people like Joshua Church whosays he's an investment advisor.
Makes me a little curious aboutthat.
(33:48):
People like Joshua Church whoare out there advocating for,
continuing to advocate for thisone account system.
Speaker 2 (33:56):
I'm wondering if, as an investment advisor, he would
advise that his clients investin the permanent fund rather
than the S&P 500, because theS&P or the Harvard fund or any
of these other funds that aregenerating 8% to 10% every year
and the permanent fund strugglesto generate.
I wonder where he's advisingthat people invest their money.
(34:16):
I wonder if he's going to puthis whole portfolio into the
permanent fund.
I mean, dude, this is madness.
This is total and complete andutter madness.
What's going on here?
There's just no more commonsense here and, like you said,
it'll take two generations and Ithink, ultimately, that's the
(34:37):
goal.
The goal here is just to kickthe can down the road until
whoever's in power now isretired and living in Hawaii or
someplace else, uh, where theycould be like well, you know, I
got mine, and so they'll dealwith whatever they need to deal
with, and whoever's left inAlaska turn the lights off on
the way out, because that'sthat's.
That's what we're going to endup with.
Speaker 1 (34:58):
Yeah, it converts.
I mean there's various ways toput this, but it converts the
permanent fund into animpermanent fund, an unpermanent
fund, yeah, yeah.
And the permanent fund wasoriginally set up by, by, by
those in in the in the seventiesand eighties to be there for
(35:19):
all generations of Alaskans allAlaskans in terms of the PFD,
and.
And.
And be there for allgenerations of Alaskans to be
permanent.
And the and and then the keypart of this is going to a
single account makes itimpermanent because of the way
they're setting up the draw,regardless of whether the
permanent fund corporation earnsenough to pay for the draw or
not.
Speaker 2 (35:38):
Some of you Bill Elam's take on personal
responsibility is actuallyresonating in part with Brad,
even though Bill Elam voted tooverride the governor.
So, brad, what do you mean bythis?
(35:58):
He's got an opinion piece,which I'll drop the link to, in
the Peninsula Clarion, which isactually a very good piece.
I did read it.
But what's your take on thisright now?
Because people I mean there's alot of people who've already
mentioned Elam in the chat roomseveral times this morning to
say he's joined the dark side.
You know, he's got this, he'sgot that and again, I wouldn't
have voted the way that he voted.
(36:19):
But then he turns around andmakes this, puts this opinion
piece together, which seems atodd with his vote in some way.
But tell me what your thoughtsare, brad.
Speaker 1 (36:29):
So so Elam, yeah, elam voted the wrong way.
He voted for increased taxesand increased PFD cuts and I
don't understand that.
But but let's set that asidefor the moment because I think I
think he has his.
His opinion piece has a kernelof a very good idea.
The opinion piece in both theClarion and the Juno empire
since they're owned by the sameorganization anymore, they're
(36:52):
now publishing cross piecesbetween the two.
The opinion piece is educationaccountability starts at home,
not just in Juno.
Response Elam's response togetting a lot of heat about K-12
(37:15):
and about the votes on K-12 andpositions on K-12 policy and
statewide policy and things likethat.
The pushback is look, the KenaiBorough controls or the Kenai
Borough School Board controlsthe Kenai Borough K-12.
School board controls the KenaiBorough K-12.
They're the local institutionin control of it.
They set the local policies,they finance.
(37:38):
The Kenai Borough finances asignificant share of the local
school board, the local schooldistrict.
So you really ought to belooking not only at him as a
representative to do whateverpeople want him to do at the
state level.
You really ought to be lookingnot only at him as a
representative to do whateverpeople want him to do at the
state level.
(37:58):
You really ought to be lookingto the local school boards and
local funding as a way ofaffecting change or controlling
the outcomes in the localdistricts.
And I started to think aboutthat and I went back to an issue
we discussed several years agowhen the state was still funding
a significant share of newschool construction.
(38:19):
You remember the old issue ofthe state funds new school
construction.
So why do the local districtscare?
They want a gold-plated newschool because that's going to
be paid for by the state.
It's not going to be paid forby the local district and our
point at the time was more andmore of that cost needs to be
shoved onto the local districtbecause they're the ones making
(38:41):
the decision and they ought tobear the burden of any decisions
they make to gold plate a newschool that their district ought
to pay for it.
The school board ought to be onthe line for making a decision
to do that, and the state didthat plus or minus over a period
of several years by reducingthe state contribution to new
(39:05):
school construction.
That's sort of the same thing.
As I read Elam's column, itstarted striking me that that's
really part of what we ought tobe doing with school funding.
We ought to be pushing more andmore of the responsibility to
the districts, because thedistricts are able to get the
(39:26):
spending under control.
If there's too muchadministration and the state's
funding it, the local schooldistrict doesn't care because
the state's paying for thatexcess administration.
But if there's too muchadministration and the local
district is paying for it localtaxpayers are paying for it then
(39:50):
there's going to be pushback ontoo much administration.
There's going to be an effortto cut that administration down.
If there's only so many dollarsout there and you have to make
choices between this sort ofspending or that sort of
spending or this sort of programor that sort of program, if
that's decided at the statelevel, then the local districts
(40:11):
don't care.
Give it all to us so we can useless of that and have more to
(40:32):
spend on things that we do thinkare important.
That led me to do a little bitof research, which I need to do
more of to really turn this intoa column or turn this into a
theme.
But that led me to do a littlebit of research on how Alaska
compares in terms of localfunding compared to state
funding to the nation overalland, what I found interesting,
(40:56):
the census actually does ananalysis of this.
What I found interesting was,nationwide, about 13% of overall
school funding comes from thefederal government.
That's going to be going downunder the Trump administration,
but to date, about 13% not asbig as I thought it would be,
(41:17):
but about 13%.
The remainder is split almostevenly nationwide is split
almost evenly between the stateand the localities.
The states, nationwide, pick upabout 45% of overall school
funding.
The localities pick up about43% of overall funding.
(41:39):
According to the census data,which breaks this stuff out by
state, alaska is different.
Alaska has roughly 55%.
So Alaska has roughly 21%coming from the federal
government, higher than theoverall average Alaska has.
Of the remainder, alaska has55% coming from the state, more
(42:03):
than 55% coming from the stateand less than 23% coming from
the locality.
Alaska is one of those statesand there are several, but one
of those states that are heavilystate-dominated in terms of
state funding and, as aconsequence, when a local
(42:23):
district looks at choicesthey're really looking at oh
well, we need more money fromthe state to do this, because we
don't want to make a choiceourselves, we just need the well
, we need more money from thestate to do this, because we
don't want to make a choiceourselves.
We just need the state to sendus more money.
I think Elam's onto something.
This isn't where he went in theop-ed, but it's the kernel that
started from when he startedtalking about we need more local
(42:45):
control, more local voices,more local activity, more local
involvement with respect to K-12.
I think Elam's on to somethingin talking about we need to push
more of not only theresponsibility but the cost for
K-12 spending onto localgovernment and have local
(43:07):
government have to bear, notonly get to make the decisions
about where the money is spent,but also have to raise the money
Right, and that will force themthen to make choices in a way
that they're not doing now, andI think that's reflective of
where the nation as a whole is.
Speaker 2 (43:29):
Well, I think the problem here is that they've had
access to all this money for solong that none of them have
been forced to face the fiscalreality of you have to live
within your means.
That's the problem.
The state has been the spigotfor so long.
We've had so much money thatthey've just been like well, we
never have to worry aboutfiduciary responsibility.
We just you know you give usthe money and we spend it have
(43:50):
to worry about fiduciaryresponsibility.
We just you know you give usthe money and we spend it.
And that's where we're at rightnow, when you got 55% coming
from the state, a 20% comingfrom the federal government,
they've just been living, youknow, they've been living high
on the hog and, and there's noschool boards who are, um, who,
who are having to live withintheir means at this point, um,
and, and that's that's thereality we're going to have to
(44:11):
face.
Speaker 1 (44:12):
Yeah, and I think Elam really.
I mean maybe he didn't intendto go there, but I think Elam's
onto something in terms oftalking about pushing more
responsibility and more burdenback on the district, so they
have to make the choices abouttheir local school districts.
I grew up in a state which isalmost the reverse of Alaska,
(44:33):
had very little state funding,had a lot of local funding, and
so there were a lot of localdecisions that had to be made,
and if you wanted to increasespending in one place and talk
about going to the taxpayers,that created a stop on that
additional spending, and I thinklooking at something like that
for Alaska in the currentenvironment certainly is making
a lot of sense.
Speaker 2 (44:54):
That's the problem, right, brad?
I mean, alaska is a dependencystate.
We're dependent on federaldollars, we're dependent on
state dollars At every level.
We become dependent and wethink that the well is never
going to run dry.
And now that we're down at thebottom scraping for rocks and
everything else and justbringing up mud, we're.
You know people are in a panic.
(45:15):
How do we make this?
How do we stretch this further?
They don't want to face thefiscal reality of you've got a
declining enrollment, you've gotless money coming in, you've
got poor outcomes.
They don't want to talk aboutany of that, they just want to
they want to shove it off on thestate.
Speaker 1 (45:30):
They want the state to just appropriate more and
more and more and more and takethem off the hook.
I mean, local control is best,right.
State control is better thanfederal control.
Local control is better thanstate control Because when you
have to face, when you are on aboard, school board that's what
(45:52):
I found when I grew up when youare on a school board, you have
to go face your peers in thelocal cafe and they say wait,
you're going to raise my taxes,I'm not going to put you back in
office.
When you have that localresponsibility and local burden,
you tend to make much moreconservative fiscal decisions.
(46:13):
And when you can say oh well,that's often Springfield in the
case of Illinois, or that'soften Juneau in the case of
Alaska, I don't have any controlover that, I know how to spend
it, but they need to send memore, so Johnny can have this
and that and that Right, insteadof making choices.
I think Elam's got a point, agood point, about pushing more
(46:34):
of that responsibility down tothe localities.
Speaker 2 (46:36):
Well, and we've got a participatory problem too.
Right, because David makes thevalid point Local control equals
NEA, bought and paid for schoolboards Only if the local
individuals are not engaged.
Right, and remember governmenthappens to you when you're not
paying attention.
We've been so comfortable andfat, dumb and happy and there's
been so much money flowing,we've just kind of unplugged as
(46:58):
an electorate, as a people,we're just like oh yeah, we got
the money, we'll let somebodyelse handle it.
And then the special interestscome in and they set up shop and
they start leeching off thesystem and then they don't want
to let go, they don't want tolet go, they don't want to let
that money train go.
And so then they use that moneyagainst you.
And this is where we're at inthe state of Alaska.
Speaker 1 (47:18):
Yeah, and I think it's the reverse of what David's
thinking.
I mean, I think if you havelocal responsibility, if your
property taxes in Anchorage weregoing to go up, you know
another 20% to fund what theschool board wanted to do, what
the NEA school board wanted todo, I think there would be
pushback on the NEA school boardand on the NEA school board
(47:41):
elected members in wanting to dothose programs.
I think, just like weexperienced when we had the
state funding, the new schoolconstruction and people going,
oh well, I want this and I wantthat and I want that and I want
that and I want this reallyturning it into a local
construction program, when wehad the state funding, that I
think we saw a change when moreresponsibility for that got
(48:04):
pushed back to the localdistrict.
I think the same thing would betrue if we push back more
responsibility for the operatingbudget, the school operating
budgets, back to the localdistrict.
So Bill Elam may not may notappreciate the credit for this
thought and it's a little bitdifferent from what he had in
the in the column, but I thinkit's a good thought and I think
(48:25):
it's one that that we'll betalking about more on the show
as we go along.
Speaker 2 (48:29):
Yeah, no, I mean, I agree.
And again, that's the thing.
These systems have created thepower structures and the power
bases, like I said, because wehave been unplugged, because
we're not contributing at thelocal level as they are in other
states to the same level,because we're not being affected
(48:51):
in the same way.
Was free money Right?
And we feel like we're notaffected?
Oh sure, I'd like a newswimming pool.
Oh sure I'd like a new building.
I mean, we don't have to payfor it.
So sure, who wouldn't want morefree stuff?
But when the gravy train isgrinding to a halt and the
systems who have leached onlatched onto the system to leech
off of it and created wholebusiness models based around
(49:12):
that, be it construction oreducation or whatever, all of a
sudden they start panicking andutilizing that money to convince
you that what you're doing isthe right.
Oh, we've got to keep doing it.
The train cannot continue.
And until we bolster theprivate economy to the point to
where we feel that directconnection between what the
spend is and what our taxes are,we're not going to feel that.
Speaker 1 (49:35):
Yeah, and I think the point about well, we need a
stronger private economy?
Yes, we do, and maybe thiswould be one way to encourage it
If we push more responsibilitydown to the localities.
Localities say we need astronger private economy and
that starts resonating as anissue.
As long as the state is thesugar daddy for all the school
(49:56):
districts, as long as it's thesource of the bulk of the money
going to the school districts,there is no need for a push for
a private economy in the localdistricts because they've got
the state funding it all.
If we change that dynamic andthe state and the localities
have to pick up a significantshare of the burden like happens
elsewhere in the country andthe states have to pick up a
(50:19):
significant share of the burden,then the localities start
thinking about well, how do webuild our private economy so we
can have a tax base, so that wecan afford the schools that we
want, if we no longer have thestate to leech off of?
Speaker 2 (50:33):
And, of course, special interest begets special
interest.
You know they're going to puttheir people in there, and
because people are not payingattention, that's what we get
People who are just like youknow.
The more money that goes in,the less attention they pay
because they're like it's not mymoney, I don't care.
How do we get them engaged?
Speaker 1 (50:51):
How do we get it?
And taxes reverse that.
Local taxes reverse that byengaging the localities, the
local people, in thedecision-making, because it's
going to affect them, it's goingto affect their pocketbook
directly.
Speaker 2 (51:08):
I hate the fact that you're making sense on this.
I mean really because, again, Idislike taxes at so many levels
, but at this point, is it theonly way we're ever going to get
them under control?
I mean, I just hate that.
Speaker 1 (51:22):
That's what David Nelson voted for.
He voted for more taxes becausehe voted to continue the spend
without revenues to match it.
So we've got to have some wayto close the gap.
Speaker 2 (51:32):
Brad Keithley of Alaskans for Sustainable Budgets
.
Wrap up one minute here.
Final thoughts for today.
Speaker 1 (51:38):
Well, big disappointment in the veto
override, not so much theadditional spending, but the
people who voted for theadditional spending, claiming to
be fiscal conservatives,claiming to be anti-tax,
claiming to be pro-PFD, cavingand ultimately voting for the
additional spending.
If that's where we're going andthat seems to be where we're
(52:00):
going that people cave when pushcomes to shove, that's where
we're going.
That increases the need to betalking about revenues, because
we got to pay for this somehow.
Speaker 2 (52:10):
Yeah, jeffrey makes a good point.
Brad, we need a robust privateeconomy to get to that style of
school funding and that's partof the problem.
We've become such a dependencystate in so many ways.
This is the trickle-up effectof all that dependency state
stuff.
For sure, brad KeithleyAlaskans for Sustainable Budgets
.
Brad, thanks for coming onboard, michael as always, thanks
for having me.
Speaker 1 (52:30):
Alaskans for Sustainable Budgets, Brad,
thanks for coming on board.
Michael, as 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
(52:52):
for Sustainable Budgets.
We look forward to you joiningus again next week on 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 August 4th 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
(01:38):
the votes on the veto overridedo much to explain the state's
deep fiscal problems.
Second, we discuss again,whether they realize it or not,
how those advocating for aone-account permanent fund
approach are pushing to create abackdoor into the permanent
fund corpus.
And third, we explain why,whether he intended it or not,
(02:04):
representative Bill Elam hassuggested a useful way to
exercise better control overK-12 spending.
And now let's join Michael.
Speaker 2 (02:15):
Brad Keithley comes in every week to deliver us some
great insight.
We always give Brad a hard timebecause you know we make him.
I mean, I feel like Brad shouldbe like twirling his
mustacheing his mustache, evillyin the background, because he's
giving all the bad news.
But it's not all bad news, it'sjust truth and sometimes it
feels you know, sometimeshashtag feels bad man.
(02:37):
You know, sometimes the truthis hard.
But that's why we have him on,because he brings in some good
insights.
So let's get started today,brad.
Of course you know, not reallysurprising what happened with
the special session.
We knew it was going to beclose and it was.
It was just enough votes to gethim over the threshold.
(03:00):
But there's some insight thatyou're trying to bring to us on
this.
As to you know, what do thevotes mean?
Double rainbow, what does itmean?
The votes of people like JulieColom and Dan Sadler and David
Nelson typify you say typifywhat's going on.
Give us the full rundown here.
(03:21):
What are we looking at?
Speaker 1 (03:23):
Well, a lot's been said about the veto override.
A lot will continue to be saidabout the veto override and I
don't.
I'm not this is this segmentisn't going to be just a broad
brush To me.
As I look through the voteboard, something really stood
out at me that that sort ofdefined the fiscal issues that
(03:47):
we're facing in the state.
It's sort of a microcosm of theproblem that we've gotten
ourselves into from a fiscalperspective.
And the three votes that reallystood out to me as I looked
down the board was Julie Colombs, dan Sadler's and David
Nelson's.
They stood out because thosethree have long since said that
(04:13):
there are no taxes, that theyare firm in the belief that
Alaska can solve its problems bysome way, some means other than
taxes, and they're anti-tax.
Nelson, on top of that, saysthat he's pro-PFD, that he
(04:36):
firmly believes.
During his campaign he said hefirmly believes in a full PFD
and would not take any votesagainst a full PFD.
All three of them voted fortaxes, all three of them in one
of two senses In the senseeither that PFD cuts are taxes,
and I believe they are.
So they voted immediately fortaxes because the only way you
(05:00):
pay for this increased spendingthat the legislature authorized
through overriding the veto isthrough additional PFD cuts.
Remember that it's not onlythat this bill was on the
appropriation for this year, butthe bill that they were really
the underlying bill they werevoting on, is now a permanent
(05:22):
bill for increasing K-12spending.
So if you believe that PFD cutsare taxes and I think they are
and economists think they arethen they voted immediately for
increasing PFD cuts because theonly way, in the absence of the
revenues, the only way you payfor this spending, is through
(05:43):
PFD cuts.
Even if you don't believe thatPFD cuts are taxes, by taking
even more of the PFD they'vemoved us on the doomsday clock
closer and closer to the pointwhich we run out of the PFD and
have to move to taxes to pay foradditional spending.
So in that sense, in the longterm, they voted for taxes as
(06:06):
well.
But Nelson, who you can view asthe 45th vote, you can view as
the deciding vote.
I know some people want to sayForrest Dunbar was to extol him
for having come back from Poland, or others want to say others
were the 45th vote, but I reallythink David Nelson was the 45th
vote.
David Nelson not only voted fortaxes.
(06:29):
He voted directly for PFD cuts,something that he said during
his campaign he would not do,and I think they sort of capture
the fiscal issues that we'regoing through.
People talk a good game about oh, I'm going to hold the line,
(06:53):
I'm not going to vote for taxes,I'm not going to vote for PFD
cuts, I'm not going to vote forany new revenues.
I'm going to hold the lineuntil they have to vote on the
line and they push the line.
They push the line more interms of additional spending and
in terms of additional PFD cutsand additional taxes.
And that's where we are.
(07:16):
People don't walk the talk,particularly in the case of
Nelson, because he votedimmediately for PFD cuts.
People don't walk the talk thatthey make during their
campaigns.
When push comes to shove, theycrater and do exactly the
opposite of what they said theywere going to do during their
(07:39):
campaign.
So how do you?
There's no way out of this box.
We're sort of building this boxwhere people talk about good
game during the campaign.
You vote for them, you supportthem, you give them money, you
say that they're the rightcandidate on budget issues, the
right candidate on fiscal issues, but then, when it comes time
(08:00):
when push comes to shove and thetime and it's time for their
vote to go up on the board, theyvote against themselves.
They voted in the exactopposite way that they said they
would during the campaign, andthat's where we are.
(08:22):
Michael to 2025, you can seethis collapse of virtually every
representative and everysenator, every legislator during
that time.
You can see the collapse thatthey'll talk a good game oh,
they're fiscal conservatives.
Oh, they're in favor of abalanced budget.
(08:42):
Oh, they're against taxes.
Oh, they're against PFD cuts.
But when we get to where pushcomes to shove, when it's time
to stand up and take a stand onthat issue, they collapse and we
end up in a situation where wecontinue to spend more and spend
more, and spend more and spendmore.
(09:02):
If we're going to spend more, ifthat's indeed where we are and
it seems to be that's where weare that's also what this vote
typifies.
If we're going to spend more, weneed to develop the revenues to
pay for it, because we'recontinuing to go deeper and
deeper and deeper into deficits.
If you look at we've talkedabout this on the show before if
(09:24):
you look at the next 10 years,spending continues to go up.
Revenues actually go down overthe next 10 years because oil
taxes are going down somethingwe've talked about the last
couple of times on the show andso the deficit already is
getting just moving.
Spending at inflation, thedeficit already is projected to
(09:46):
get deeper over the next decade,eating up more and more of the
PFD, ultimately eating all thePFD and ultimately moving on to
taxes.
And so we're already in thatsituation.
And now people pile on top ofthat by voting for things like
this veto override.
(10:07):
If you're going to do that andthis is sort of focused on David
Nelson if you're going to dothat, then be honest about it
and vote for revenues.
Right, admit that you can't getoff the link to spending and
(10:29):
start talking about reasonable,equitable, low impact revenues.
Speaker 2 (10:34):
Yeah, I mean it's interesting to watch because,
you know, david Nielsen was oneof the surprising votes,
although, as you said, manypeople could be called the 45th
vote.
You know what I was.
Although it wasn't surprising,it's frustrating to watch
somebody like Will Stapp ask inevery meeting how do we pay for
(10:54):
it?
How do we pay for it?
How do we?
He was asking all the rightquestions and yet when it comes,
the rubber meets the road.
At the end, will Stapp votes,votes to dip into the PFD and
votes to do it.
You know we've got, and I canunderstand in some ways because,
as David Boyle in the chat roommakes the point he said, you
know David Nelson was in aleft-leaning district.
(11:15):
He was fighting against CliffGroh.
It was a very close vote to gethim in there, so he's trying to
straddle the line.
But Dan Sadler, who is totallydifferent, he's in a completely
(11:44):
different direction.
Like you said, we're buildingourselves this box where we buy
into the madness that everybodysays and then when they get down
there, they're like pod people,they get consumed and they are
just the thing in the wall thing.
I mean, that's exactly whatit's like.
Speaker 1 (12:01):
Yeah, I'm not going to let David Nelson off the hook
.
I mean, yes, he is in a toughdistrict, but he got elected on
a platform that said he was afiscal conservative.
He was going to vote topreserve that, he was going to
preserve the PFD.
He was going to vote againsttaxes.
That's what he said.
That's what he got elected on.
People who voted for himpresumably voted for that
(12:22):
platform.
And then he gets down to Juneauand he abandons it.
So, yeah, I know he's in atough district with Cliff Groh.
I know that some parts of itare left-leaning, some parts of
it are right-leaning.
Nelson got elected by saying hewas a fiscal conservative.
Nelson got elected by saying hewas going to protect the PFD.
(12:43):
Nelson got elected by saying hewas no taxes.
That'sd Nelson got elected bysaying he was no taxes.
That's how he got elected.
That's the platform on which hegot elected and he abandoned it
.
So I don't, I'm not going to,I'm not going to excuse him
because he's in a tough district.
In that tough district he gotelected on a platform that said
no taxes, no PFD cuts, and hevoted for both in voting for the
(13:07):
veto override.
Speaker 2 (13:12):
Yeah, no, I mean no excuses, I'm just saying it's
interesting to see how each andevery one of these could have
gone the other way.
That's the thing, and you'reright 100%.
David Nelson was the surpriseto me of all the votes out there
, because we knew it was goingto be close.
And now, and now it's not.
Now it's it's said and done.
(13:33):
And again, just a reminder thiswas a one time veto.
They still were going to getfive hundred dollars for the
base student allocation.
This was a one time veto, andnow, of course, we're on the
hook in perpetuity for this $700per kid, which is roughly what
$178 million a year from nowuntil, well, we crumble into
(13:57):
dust or whatever.
That's what we're at right now.
Speaker 1 (14:01):
Yep, it's faster than the rate of inflation.
So we've just, if you look, ifyou look at the next next 10
years and you say spending wasgoing to go up by inflation,
revenues are going down.
I want to, I want to emphasizethat for people who say, oh,
we're going to produce our wayout of this.
We're not.
Revenues are going down overthe next 10 years because of the
way oil taxes work.
(14:22):
We're escalating our problemsjust on the way it is.
And now we've layered in withthis bill that the governor
tried to stop for a year throughthe veto.
But with this bill we'velayered in a faster than
inflation increase in K-12spending over the period.
(14:43):
So it's I just, I mean, this isit, this is the problem.
So when people say, oh, youcan't talk about revenues, okay,
let's elect the right people.
Let's elect the people that saythey're going to hold the line.
Let's elect the people that sayno taxes.
Let's elect the people that sayno PFD cuts.
Speaker 2 (15:01):
We did that the people that say no pfd cuts.
We did that.
Wait, wait, wait.
You're saying vote harder, voteharder that's.
I mean, that's always theanswer.
Right, vote harder, vote, votethe right people.
And yet we vote the rightpeople in and the madness
continues.
Speaker 1 (15:17):
We did exactly that with david nelson.
We voted in the person who, whosaid the right things, who said
he was going to stand up forthe right things, and we've seen
where that goes.
So next time somebody says, oh,all we need to do is elect the
right people, we've done it.
We tried Not working.
Speaker 2 (15:35):
At least we know somebody just made the point.
At least we know with CliffGroh, we at least know he's
consistent, we know where he wasgoing, we know where his vote
was going to be.
That's the problem with thefiscal conservatives.
Speaker 1 (15:48):
Quote-unquote is because we can never tell which
way they're going to blow in thewind, yeah and Groh believes in
revenues and I know people getupset about that, but look,
that's where we're going.
The deficit's getting greater.
David Nelson has made it evengreater.
Yeah, so that's where we'regoing.
Speaker 2 (16:06):
Who are we talking to ?
Folks?
We talked to so many peoplehere in the last week.
Was it Shelly Hughes or was itEdna DeVries that said they
wanted to bring Brad on as oneof the financial guys in their
administration?
Brad, has anybody reached outto you, because I can't remember
who it was?
Somebody said I think it was.
Was it folks you have to remindme, was it Edna or Shelly that
(16:31):
were like I think it was Edna.
It was like, yeah, we want tobring Brad on because he's got
the.
You know, I'm just like, okay, Imean that's, that sounds like a
great.
It was Edna.
It was Edna.
Okay, yeah, I mean Brad, you're.
You're preaching to the choirhere, brother.
That's the thing.
And and we don't know any morethan you I mean, how do we fix
(16:51):
it?
If?
If we're going to send thesejokers down there and they're
going to roll over and wet onthemselves and become one of the
pod people, what's the solution?
I mean we, you know, number thecharter and change it, change
out the players.
We did that.
65 plus percent of thelegislators have changed out
since.
I wrote that little placardthat says all the changes, and
(17:15):
here we are.
Speaker 1 (17:18):
Yeah.
So the real answer is and thisvote encapsulates it, and David
Nelson more than any other,Colombe and Sadler also, but
David Nelson more than any otherreally, really encapsulates it.
You can't trust them.
They're not going to do it.
When push comes to shove,they're going to flip over.
David Nelson voted the same wayCliff Groh would have.
(17:40):
So you know, for the people whosay, oh, Cliff Groh would be
worse, no, he wouldn't.
David Nelson voted the wayCliff Groh did.
Arguably, Groh at leastrecognizes, if he's going to
vote that way, he has to fill inthe deficits in some fashion
(18:05):
no-transcript.
Speaker 2 (18:06):
I mean not that I'm a fan of taxation and everything,
but that's the thing.
We keep getting suckered bythese people, that they go in
there and they're like oh yeah,of course I'm a fiscal
conservative, of course I am.
Yes, I'll vote yes.
I'll vote yes.
Go ahead, yep, give me moremoney, more money.
I want to bang my head againstthis desk until I'm unconscious
(18:29):
and then wake up and start again.
That's what it feels like.
That's what it feels like I'mjust beating my head against the
desk until I'm unconscious andthen we wake up and start again.
Speaker 1 (18:39):
I mean, it's the same lesson we learned in 2019,
right?
The lesson in 2019 was thegovernor comes in, dunleavy, in
dunleavy's going to veto us down.
He's going to balance thebudget, uh, against traditional
revenues through vetoing downspending and a few other tricks
along the way, and he comes inand he's going to do it.
He couldn't get 16 legislatorsto back him up on the level of
(19:03):
cuts he wanted to make.
By the time it was all said anddone, we were back up almost to
where we hit, where we had comein.
Speaker 2 (19:12):
I want to cut, but don't cut my area.
Oh yeah, I'm all for cuts butdon't cut me.
I mean, that's the, that's the,that's the thing, and and you
know what, and Dunleavy's noteven off the hook.
Shelley Hughes put out a pressrelease after the vote and said
you know, they could have lookedat the governor's plan, because
the governor, his and I hadn't,even I hadn't read the full
thing on it.
But the governor's written planthat he wrote specifically for
(19:42):
the special session included anautomatic inflation escalator in
the BSA.
If they, if they, had given himwhat he wanted, he would have
given them an escalator insideof.
I mean, god damn, I mean, thereis just nothing left that just
spend, spend, spend, that's alland so when people get upset
with me for talking aboutrevenues, what the hell?
Speaker 1 (20:00):
we're not going to hold the line.
When you elect people likeDavid Nelson, who says he's
going to hold the line and thenhe doesn't, we're not going to
hold the line.
You can see the deficitsbuilding over the next decade.
What the hell You've got tostart talking about revenues
because there isn't any otherway to fill that gap.
Speaker 2 (20:19):
Because the PFD is gone.
The PFD is gone.
You just put $400 million or$500 million a year into the
school systems.
That's the rest of the PFD,moving forward as it goes up.
It's just, that's it, you'redone.
You know what I've beenpreaching the?
I've been preaching the gospelof Brad Keithley to Bernadette.
(20:41):
I've mentioned it to Shelly,I've mentioned it to all this,
you know, I mean the things withthe permanent fund and the
spending and all this stuff andI don't know.
I'm get.
I feel like I'm getting a lotof lip service, even to
candidates that I'm kind ofliking what they're saying.
Again, I'm fearful, just likethe David Nelsons, that they're
saying all these great thingsand yet when it's time to hit,
(21:07):
it's going to be more of thesame.
That's my fear.
Speaker 1 (21:10):
Yeah, and Shelly.
I mean we talked about thislast week on the show, right?
Shelly has the perfectopportunity because she was a
member of the fiscal policyworking group, because she has
touted the fiscal policy workinggroup in the past as an example
of how she can work, how sheand others can work to bring
things together.
She has the perfect opportunityto talk about things like
(21:32):
balancing revenues with spending.
If you're going to continue tospend, you have to have revenues
.
That's part of what the fiscalpolicy working group said, and
so she has the ability to dothat.
I think in a way that the othercandidates can say but Shelly
was a part of the group, thelegislative group, that brought
that together and so if you wantto use, if she wants to use,
(21:54):
have an example of how she canbring, how she can participate
in a group that brings thingstogether and has an overall
comprehensive approach, that'sthe perfect opportunity.
If she's not leaning on that,if she's not saying that, then
you really got to wonder, I mean, if we're ever going to get to
(22:15):
a solution.
Speaker 2 (22:16):
Did you catch the interview with her on the
program?
Okay, so, because I asked herspecifically that question about
the fiscal policy, where I setup the question perfectly, she
could have taken it and said,yes, it's a perfect plan, we
could have, you know, perfectframework, we could have she
walked right around it.
She just kind of, you know,dodged right around.
(22:36):
She went on to the sunsetcommission and some other stuff,
which is a great thing.
I think the sunset commissionis a great thing, don't get me
wrong.
It's a valuable piece of whatwe're talking about.
But she, just she didn'tembrace it, and that's just.
Speaker 1 (22:52):
You know, michael some people like to say that
that you know rank choice votingis working and so and it's
bringing everybody toward themiddle.
It's really not.
I mean, the reason that Shelleywould walk around the fiscal
policy working group is becauseit talks about revenues and she
looks at what she needs to getinto the top four and she
(23:13):
doesn't want to be talking aboutrevenues because that sort of
affects her core.
So it's driving those peoplewhen they look at what they need
to get into the top four,driving those people when they
look at what they need to getinto the top four.
It's driving those people tomore extremes because they have
(23:36):
to appeal to even a smallersegment to get themselves into
the top four.
I think it's working in theexact opposite way that Scooter
Kendall claims it's working.
That's driving people in themiddle.
I think it's driving peoplemore to the extremes.
Speaker 2 (23:47):
Well, like you said, I mean, you know I'm starting to
come to the we only got 30seconds here but I'm starting to
come to the conclusion that youknow what?
We might as well just ride thispony right into the ground.
I might as well just sign upfor every program and take every
government dollar I can untilthis whole thing collapses,
because that's where we're goingand nobody wants to see, nobody
(24:07):
wants to acknowledge that thereis an end to this madness that
does not end.
Well, let's just put it thatway.
Let's continue on.
Brad Keithley, alaskans forsustainable budgets the weekly
top three.
Brad, some people just don'tunderstand the PFD, and you, you
you've got a prime example ofthis.
Now, full disclosure.
(24:27):
I didn't read this full articlethat Brad is about to reference
from the Daily Newsminerbecause I, on principle, have
just refused to give theNewsminer any money and they
won't let you read a singlearticle until you subscribe.
So anyway, it's an article fromJoshua Church, who's an
investment advisor in Fairbanks,entitled Alaskans Deserve a
(24:49):
Smarter, stronger Permanent Fund, and Brad says, proof positive
that some people still don'tunderstand it.
Brad, give us the rundown here.
Speaker 1 (25:00):
So this is the vampire segment of the.
Speaker 2 (25:05):
Good evening.
Speaker 1 (25:07):
Welcome to my house, Okay got it of the weekly top
three because this is a vampirethat will not die and I guess
we're just going to have to keeppounding the stake into its
heart over and, over and overagain to make sure it finally
dies.
The discussion of this issuehad gone away for a while after
(25:30):
we and others had raised issueswith the permanent funds
proposal, permanent fundcorporations proposal to
eliminate the two accountapproach and go to a one account
approach.
It had gone away for a whileand I thought well, ok, people
finally are seeing the light,but I don't know.
Here's an article in theFairbanks News Minor, an op-ed
in the Fairbanks News Minor fromJoshua Church extolling the
(25:54):
Permanent Fund Corporation'sproposal to go from a two
account system to a one accountsystem.
For those that don't recall, thePermanent Fund Corporation or
the P, the permanent fund is setup under the constitution as a
two account system.
There's the corpus that is notto be spent, not to be invaded,
not to be used in any way, shapeor form, that's to be invested
(26:16):
to spin off earnings.
That earnings go into thesecond account, what's called
statutorily is the earningsreserve account, and the only
spending that is authorized isfrom the earnings, is from the
earnings reserve account, thelegislature can go in and
appropriate money from theearnings reserve account.
That's the two account systemand it was set up that way to
(26:37):
protect the corpus.
To say you cannot absolutely,ever, ever, ever, ever spend
from the corpus.
That's what the constitutionsays.
Maybe they left out one ever,but ever spend from the corpus.
That's what the constitutionsays.
Maybe they left out one ever.
But you cannot spend from thecorpus and you can only spend
from the earnings reserve.
Permanent fund corporation comesalong and the permanent fund
corporation is saying, ah,that's, that's out of date.
(26:58):
What we need to do is we needto merge the second, the two
accounts together into a singleaccount that will spin off
earnings and the legislature canspend those earnings and we
will set the level at which, byconstitutional provision new
constitutional provision we willset the level at which they can
(27:22):
draw from this single accountand that will guarantee revenues
to the state and it will, intheir terms, protect the
permanent fund.
Well, the problem with that isthat that all assumes that the
permanent fund corporation earnsin its investments from the
permanent fund, earns an amountequal, at least equal to the
(27:46):
amount that's being drawn out tobe spent, the amount that's set
by constitutional provision.
Now that's being drawn out tobe spent by the legislature.
If the permanent fundcorporation doesn't earn that
amount that's being spent, theconstitutional provision that's
been proposed neverthelesscontinues to draw that 5% from
(28:13):
the permanent fund and continuesto fund the legislature to
spend it.
So if the permanent fundcorporation isn't earning the 5%
, but they're neverthelessdrawing the 5% out, what's going
on?
That permanent fund is beingdrained.
It opens a back door into thepermanent fund.
(28:34):
Corpus Doesn't say it does, butby allowing a 5% draw, even
though the permanent fundcorporation isn't earning 5%, it
opens a back door into thepermanent fund.
And over time, if you look backover time, the permanent fund
corporation has not been earningfor several years now, has not
been earning the 5%.
If you look forward, they'rebarely earning the 5%.
(28:56):
You know under circumstancesthat they get to describe oh, we
think we're going to continueto earn 5%, and so it's creating
this system where you've got abackdoor into the permanent fund
.
So those who are advocatingthis system, when you think
about it, what they're reallydoing is they're setting up for
(29:18):
the day when you can't cutpermanent fund dividends anymore
, you're out of money andthey're setting up and the
permanent fund corporation isnot earning 5%.
They're setting up for the daywhere they can start drawing
from the permanent fund in orderto supplement revenues and keep
(29:41):
on spending.
Those who advocate spendinggrowth are big advocates of
merging these two accountstogether.
Those who want to avoid taxesthe top 20% who aren't paying
any taxes now want to continue.
Thated is a big advocate of itfor that very reason, to
(30:08):
continue the gravy train, evenif the Permanent Fund
Corporation isn't earning 5%,and so it is all set up to
create a backdoor into thePermanent Fund Corpus.
They try to justify this bysaying well, the earnings
reserve isn't, isn't, isn'tgetting enough now, Well, yes,
(30:30):
because it's not earning 5%.
The permanent fund corporationis not earning 5% and the and
the, the, the.
The rationale in the, in the, inthe existing constitutional
provision, is if you're notearning enough to support the
earnings reserve, then youshould stop spending from the
earnings reserve.
There's a hard wall there.
(30:51):
You can't go into the permanentfund corpus.
The one account system won'tallow them to go into the
permanent fund corpus.
So let's be clear WheneverJoshua Church or anyone who are
writing op-eds that support theproposed merger into the one
account.
Whenever they're doing that,what they're really saying in
(31:12):
the subtext is hey, we need abackdoor into the permanent fund
because we're not confident thepermanent fund corporation is
going to continue to earn this5% like they haven't been the
last few years.
We're not confident they'regoing to continue to earn it.
Speaker 2 (31:30):
And so we need a way to get into the corpus.
And well, tell me if I'm wrong,brad, here's how they're going
to sell it.
Well, unless you want to tax,we need to combine the funds,
unless you want to be taxed andAlaska is so tax adverse and
again, I'm not a fan of taxes.
Folks, don't hear me wrong, butI'm telling you this is where
we're going.
We're going to some form of.
We're already being taxed onthe PFD.
(31:50):
I know I'm waiting for Randy tojump in and tell me how.
That's not right.
We're already being aquasi-taxed on the PFD.
But here's what they're goingto do.
They're going to say well, youknow, unless you guys want to be
taxed, we really need to rollthis up together.
No, and people will just blindlyjump on that bandwagon because
they won't see the truth.
(32:11):
And the truth is to dumb itdown for the rest of us is that
they're trying to eat the seedcorn.
They're trying to strangle thegolden goose that's laying the
golden eggs and they're tryingto strangle it.
That's what happens If they getaccess to the corpus.
They will slowly eat away at ituntil there's nothing, and then
we will have no permanent fund.
(32:31):
They'll drain the permanentfund down to 30 or $40 billion,
and then they'll have to tax usanyway because there's not
enough money coming out of it.
That's that's where we're.
Am I wrong, brad?
Speaker 1 (32:42):
No, no, but that would be a couple of generations
off.
Yeah, exactly, it'll take thema while to get down to the $30
billion.
So those who are currently inexistence will be fine because,
yeah, we'll just drain thepermanent fund on down.
But what we're doing is we'resetting up a huge, huge problem
(33:04):
for future generations in beingable to fund themselves in
Alaska I mean the CommonwealthNorth and others say, oh, we're
looking out for futuregenerations.
That's what we're really about.
We're looking out no, you'renot.
You're looking out foryourselves, you're looking out
for your top 20% selves intrying to get access into the
(33:27):
permanent fund corpus.
So again, it's sort of likethis is the vampire segment.
We've put that stake in theheart once before.
We put it in several times overthe course of these programs.
Evidently we have to keepputting it in because you got
people like Joshua Church whosays he's an investment advisor.
Makes me a little curious aboutthat.
(33:48):
People like Joshua Church whoare out there advocating for,
continuing to advocate for thisone account system.
Speaker 2 (33:56):
I'm wondering if, as an investment advisor, he would
advise that his clients investin the permanent fund rather
than the S&P 500, because theS&P or the Harvard fund or any
of these other funds that aregenerating 8% to 10% every year
and the permanent fund strugglesto generate.
I wonder where he's advisingthat people invest their money.
(34:16):
I wonder if he's going to puthis whole portfolio into the
permanent fund.
I mean, dude, this is madness.
This is total and complete andutter madness.
What's going on here?
There's just no more commonsense here and, like you said,
it'll take two generations and Ithink, ultimately, that's the
(34:37):
goal.
The goal here is just to kickthe can down the road until
whoever's in power now isretired and living in Hawaii or
someplace else, uh, where theycould be like well, you know, I
got mine, and so they'll dealwith whatever they need to deal
with, and whoever's left inAlaska turn the lights off on
the way out, because that'sthat's.
That's what we're going to endup with.
Speaker 1 (34:58):
Yeah, it converts.
I mean there's various ways toput this, but it converts the
permanent fund into animpermanent fund, an unpermanent
fund, yeah, yeah.
And the permanent fund wasoriginally set up by, by, by
those in in the in the seventiesand eighties to be there for
(35:19):
all generations of Alaskans allAlaskans in terms of the PFD,
and.
And.
And be there for allgenerations of Alaskans to be
permanent.
And the and and then the keypart of this is going to a
single account makes itimpermanent because of the way
they're setting up the draw,regardless of whether the
permanent fund corporation earnsenough to pay for the draw or
not.
Speaker 2 (35:38):
Some of you Bill Elam's take on personal
responsibility is actuallyresonating in part with Brad,
even though Bill Elam voted tooverride the governor.
So, brad, what do you mean bythis?
(35:58):
He's got an opinion piece,which I'll drop the link to, in
the Peninsula Clarion, which isactually a very good piece.
I did read it.
But what's your take on thisright now?
Because people I mean there's alot of people who've already
mentioned Elam in the chat roomseveral times this morning to
say he's joined the dark side.
You know, he's got this, he'sgot that and again, I wouldn't
have voted the way that he voted.
(36:19):
But then he turns around andmakes this, puts this opinion
piece together, which seems atodd with his vote in some way.
But tell me what your thoughtsare, brad.
Speaker 1 (36:29):
So so Elam, yeah, elam voted the wrong way.
He voted for increased taxesand increased PFD cuts and I
don't understand that.
But but let's set that asidefor the moment because I think I
think he has his.
His opinion piece has a kernelof a very good idea.
The opinion piece in both theClarion and the Juno empire
since they're owned by the sameorganization anymore, they're
(36:52):
now publishing cross piecesbetween the two.
The opinion piece is educationaccountability starts at home,
not just in Juno.
Response Elam's response togetting a lot of heat about K-12
(37:15):
and about the votes on K-12 andpositions on K-12 policy and
statewide policy and things likethat.
The pushback is look, the KenaiBorough controls or the Kenai
Borough School Board controlsthe Kenai Borough K-12.
School board controls the KenaiBorough K-12.
They're the local institutionin control of it.
They set the local policies,they finance.
(37:38):
The Kenai Borough finances asignificant share of the local
school board, the local schooldistrict.
So you really ought to belooking not only at him as a
representative to do whateverpeople want him to do at the
state level.
You really ought to be lookingnot only at him as a
representative to do whateverpeople want him to do at the
state level.
(37:58):
You really ought to be lookingto the local school boards and
local funding as a way ofaffecting change or controlling
the outcomes in the localdistricts.
And I started to think aboutthat and I went back to an issue
we discussed several years agowhen the state was still funding
a significant share of newschool construction.
(38:19):
You remember the old issue ofthe state funds new school
construction.
So why do the local districtscare?
They want a gold-plated newschool because that's going to
be paid for by the state.
It's not going to be paid forby the local district and our
point at the time was more andmore of that cost needs to be
shoved onto the local districtbecause they're the ones making
(38:41):
the decision and they ought tobear the burden of any decisions
they make to gold plate a newschool that their district ought
to pay for it.
The school board ought to be onthe line for making a decision
to do that, and the state didthat plus or minus over a period
of several years by reducingthe state contribution to new
(39:05):
school construction.
That's sort of the same thing.
As I read Elam's column, itstarted striking me that that's
really part of what we ought tobe doing with school funding.
We ought to be pushing more andmore of the responsibility to
the districts, because thedistricts are able to get the
(39:26):
spending under control.
If there's too muchadministration and the state's
funding it, the local schooldistrict doesn't care because
the state's paying for thatexcess administration.
But if there's too muchadministration and the local
district is paying for it localtaxpayers are paying for it then
(39:50):
there's going to be pushback ontoo much administration.
There's going to be an effortto cut that administration down.
If there's only so many dollarsout there and you have to make
choices between this sort ofspending or that sort of
spending or this sort of programor that sort of program, if
that's decided at the statelevel, then the local districts
(40:11):
don't care.
Give it all to us so we can useless of that and have more to
(40:32):
spend on things that we do thinkare important.
That led me to do a little bitof research, which I need to do
more of to really turn this intoa column or turn this into a
theme.
But that led me to do a littlebit of research on how Alaska
compares in terms of localfunding compared to state
funding to the nation overalland, what I found interesting,
(40:56):
the census actually does ananalysis of this.
What I found interesting was,nationwide, about 13% of overall
school funding comes from thefederal government.
That's going to be going downunder the Trump administration,
but to date, about 13% not asbig as I thought it would be,
(41:17):
but about 13%.
The remainder is split almostevenly nationwide is split
almost evenly between the stateand the localities.
The states, nationwide, pick upabout 45% of overall school
funding.
The localities pick up about43% of overall funding.
(41:39):
According to the census data,which breaks this stuff out by
state, alaska is different.
Alaska has roughly 55%.
So Alaska has roughly 21%coming from the federal
government, higher than theoverall average Alaska has.
Of the remainder, alaska has55% coming from the state, more
(42:03):
than 55% coming from the stateand less than 23% coming from
the locality.
Alaska is one of those statesand there are several, but one
of those states that are heavilystate-dominated in terms of
state funding and, as aconsequence, when a local
(42:23):
district looks at choicesthey're really looking at oh
well, we need more money fromthe state to do this, because we
don't want to make a choiceourselves, we just need the well
, we need more money from thestate to do this, because we
don't want to make a choiceourselves.
We just need the state to sendus more money.
I think Elam's onto something.
This isn't where he went in theop-ed, but it's the kernel that
started from when he startedtalking about we need more local
(42:45):
control, more local voices,more local activity, more local
involvement with respect to K-12.
I think Elam's on to somethingin talking about we need to push
more of not only theresponsibility but the cost for
K-12 spending onto localgovernment and have local
(43:07):
government have to bear, notonly get to make the decisions
about where the money is spent,but also have to raise the money
Right, and that will force themthen to make choices in a way
that they're not doing now, andI think that's reflective of
where the nation as a whole is.
Speaker 2 (43:29):
Well, I think the problem here is that they've had
access to all this money for solong that none of them have
been forced to face the fiscalreality of you have to live
within your means.
That's the problem.
The state has been the spigotfor so long.
We've had so much money thatthey've just been like well, we
never have to worry aboutfiduciary responsibility.
We just you know you give usthe money and we spend it have
(43:50):
to worry about fiduciaryresponsibility.
We just you know you give usthe money and we spend it.
And that's where we're at rightnow, when you got 55% coming
from the state, a 20% comingfrom the federal government,
they've just been living, youknow, they've been living high
on the hog and, and there's noschool boards who are, um, who,
who are having to live withintheir means at this point, um,
and, and that's that's thereality we're going to have to
(44:11):
face.
Speaker 1 (44:12):
Yeah, and I think Elam really.
I mean maybe he didn't intendto go there, but I think Elam's
onto something in terms oftalking about pushing more
responsibility and more burdenback on the district, so they
have to make the choices abouttheir local school districts.
I grew up in a state which isalmost the reverse of Alaska,
(44:33):
had very little state funding,had a lot of local funding, and
so there were a lot of localdecisions that had to be made,
and if you wanted to increasespending in one place and talk
about going to the taxpayers,that created a stop on that
additional spending, and I thinklooking at something like that
for Alaska in the currentenvironment certainly is making
a lot of sense.
Speaker 2 (44:54):
That's the problem, right, brad?
I mean, alaska is a dependencystate.
We're dependent on federaldollars, we're dependent on
state dollars At every level.
We become dependent and wethink that the well is never
going to run dry.
And now that we're down at thebottom scraping for rocks and
everything else and justbringing up mud, we're.
You know people are in a panic.
(45:15):
How do we make this?
How do we stretch this further?
They don't want to face thefiscal reality of you've got a
declining enrollment, you've gotless money coming in, you've
got poor outcomes.
They don't want to talk aboutany of that, they just want to
they want to shove it off on thestate.
Speaker 1 (45:30):
They want the state to just appropriate more and
more and more and more and takethem off the hook.
I mean, local control is best,right.
State control is better thanfederal control.
Local control is better thanstate control Because when you
have to face, when you are on aboard, school board that's what
(45:52):
I found when I grew up when youare on a school board, you have
to go face your peers in thelocal cafe and they say wait,
you're going to raise my taxes,I'm not going to put you back in
office.
When you have that localresponsibility and local burden,
you tend to make much moreconservative fiscal decisions.
(46:13):
And when you can say oh well,that's often Springfield in the
case of Illinois, or that'soften Juneau in the case of
Alaska, I don't have any controlover that, I know how to spend
it, but they need to send memore, so Johnny can have this
and that and that Right, insteadof making choices.
I think Elam's got a point, agood point, about pushing more
(46:34):
of that responsibility down tothe localities.
Speaker 2 (46:36):
Well, and we've got a participatory problem too.
Right, because David makes thevalid point Local control equals
NEA, bought and paid for schoolboards Only if the local
individuals are not engaged.
Right, and remember governmenthappens to you when you're not
paying attention.
We've been so comfortable andfat, dumb and happy and there's
been so much money flowing,we've just kind of unplugged as
(46:58):
an electorate, as a people,we're just like oh yeah, we got
the money, we'll let somebodyelse handle it.
And then the special interestscome in and they set up shop and
they start leeching off thesystem and then they don't want
to let go, they don't want tolet go, they don't want to let
that money train go.
And so then they use that moneyagainst you.
And this is where we're at inthe state of Alaska.
Speaker 1 (47:18):
Yeah, and I think it's the reverse of what David's
thinking.
I mean, I think if you havelocal responsibility, if your
property taxes in Anchorage weregoing to go up, you know
another 20% to fund what theschool board wanted to do, what
the NEA school board wanted todo, I think there would be
pushback on the NEA school boardand on the NEA school board
(47:41):
elected members in wanting to dothose programs.
I think, just like weexperienced when we had the
state funding, the new schoolconstruction and people going,
oh well, I want this and I wantthat and I want that and I want
that and I want this reallyturning it into a local
construction program, when wehad the state funding, that I
think we saw a change when moreresponsibility for that got
(48:04):
pushed back to the localdistrict.
I think the same thing would betrue if we push back more
responsibility for the operatingbudget, the school operating
budgets, back to the localdistrict.
So Bill Elam may not may notappreciate the credit for this
thought and it's a little bitdifferent from what he had in
the in the column, but I thinkit's a good thought and I think
(48:25):
it's one that that we'll betalking about more on the show
as we go along.
Speaker 2 (48:29):
Yeah, no, I mean, I agree.
And again, that's the thing.
These systems have created thepower structures and the power
bases, like I said, because wehave been unplugged, because
we're not contributing at thelocal level as they are in other
states to the same level,because we're not being affected
(48:51):
in the same way.
Was free money Right?
And we feel like we're notaffected?
Oh sure, I'd like a newswimming pool.
Oh sure I'd like a new building.
I mean, we don't have to payfor it.
So sure, who wouldn't want morefree stuff?
But when the gravy train isgrinding to a halt and the
systems who have leached onlatched onto the system to leech
off of it and created wholebusiness models based around
(49:12):
that, be it construction oreducation or whatever, all of a
sudden they start panicking andutilizing that money to convince
you that what you're doing isthe right.
Oh, we've got to keep doing it.
The train cannot continue.
And until we bolster theprivate economy to the point to
where we feel that directconnection between what the
spend is and what our taxes are,we're not going to feel that.
Speaker 1 (49:35):
Yeah, and I think the point about well, we need a
stronger private economy?
Yes, we do, and maybe thiswould be one way to encourage it
If we push more responsibilitydown to the localities.
Localities say we need astronger private economy and
that starts resonating as anissue.
As long as the state is thesugar daddy for all the school
(49:56):
districts, as long as it's thesource of the bulk of the money
going to the school districts,there is no need for a push for
a private economy in the localdistricts because they've got
the state funding it all.
If we change that dynamic andthe state and the localities
have to pick up a significantshare of the burden like happens
elsewhere in the country andthe states have to pick up a
(50:19):
significant share of the burden,then the localities start
thinking about well, how do webuild our private economy so we
can have a tax base, so that wecan afford the schools that we
want, if we no longer have thestate to leech off of?
Speaker 2 (50:33):
And, of course, special interest begets special
interest.
You know they're going to puttheir people in there, and
because people are not payingattention, that's what we get
People who are just like youknow.
The more money that goes in,the less attention they pay
because they're like it's not mymoney, I don't care.
How do we get them engaged?
Speaker 1 (50:51):
How do we get it?
And taxes reverse that.
Local taxes reverse that byengaging the localities, the
local people, in thedecision-making, because it's
going to affect them, it's goingto affect their pocketbook
directly.
Speaker 2 (51:08):
I hate the fact that you're making sense on this.
I mean really because, again, Idislike taxes at so many levels
, but at this point, is it theonly way we're ever going to get
them under control?
I mean, I just hate that.
Speaker 1 (51:22):
That's what David Nelson voted for.
He voted for more taxes becausehe voted to continue the spend
without revenues to match it.
So we've got to have some wayto close the gap.
Speaker 2 (51:32):
Brad Keithley of Alaskans for Sustainable Budgets
.
Wrap up one minute here.
Final thoughts for today.
Speaker 1 (51:38):
Well, big disappointment in the veto
override, not so much theadditional spending, but the
people who voted for theadditional spending, claiming to
be fiscal conservatives,claiming to be anti-tax,
claiming to be pro-PFD, cavingand ultimately voting for the
additional spending.
If that's where we're going andthat seems to be where we're
(52:00):
going that people cave when pushcomes to shove, that's where
we're going.
That increases the need to betalking about revenues, because
we got to pay for this somehow.
Speaker 2 (52:10):
Yeah, jeffrey makes a good point.
Brad, we need a robust privateeconomy to get to that style of
school funding and that's partof the problem.
We've become such a dependencystate in so many ways.
This is the trickle-up effectof all that dependency state
stuff.
For sure, brad KeithleyAlaskans for Sustainable Budgets
.
Brad, thanks for coming onboard, michael as always, thanks
for having me.
Speaker 1 (52:30):
Alaskans for Sustainable Budgets, Brad,
thanks for coming on board.
Michael, as 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
(52:52):
for Sustainable Budgets.
We look forward to you joiningus again next week on the Weekly
Top Three.
Thank you.
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