The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (1.6.2025)
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 January 6, 2025, our first of the new year.
This week, our top 3 issues are these: 1) we examine the effort by some, rather than focus on the endless string of deficits he is leaving behind, to reshape the “Dunleavy legacy” into one of even greater government spending (2:17), 2) we explain how, as the clock continues to run down, all of the posturing and discussion around Cook Inlet gas is getting us nowhere closer to a real solution (15:58), and 3) we discuss how, rather than shrinking in the face of budget reality, the proposed spending list for the coming legislature is actually growing (35:27).
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.
Hi, this is Brad Keithley, managing Director of Alaskans for Sustainable Budgets. Welcome to the Weekly Top Three the top three things on our mind here at Alaskans for Sustainable Budgets for the week of January 6th 2025, our first episode of the Weekly Top Three this year. The Weekly Top Three is a regular segment on the Michael Dukes Show. The show broadcasts on both Facebook Live and YouTube Live as well as via streaming audio from the show's website weekdays from 6 to 8 am. I join Michael weekly in the first hour of Tuesday's show from 6 10 to 7 am for discussion between the two of us about our three issues. We post the podcast of our discussion following the show on the Alaskans for Sustainable Budgets Facebook, youtube, soundcloud, spotify and Substack pages. Also on the Alaskans for Sustainable Budgets website, as well as the projects page on the national blog site mediumcom, you can find past episodes of the weekly top three also at the same locations. Keep in mind that, in addition to these podcasts during the week, you can also follow and participate in the discussion with us of these and other issues affecting Alaska's fiscal and economic condition by following us on the Alaskans for Sustainable Budgets Facebook page and through our posts on Twitter.
Speaker 1:This week. Our top three issues are these Rather than focus on the endless string of deficits he is leaving behind, we examine the effort by some to reshape the Dunleavy legacy into one of even greater government spending. Second, we explain how, as the clock continues to run down, all of the posturing and discussion around Cook-Hillett gas is getting us nowhere closer to a real solution. And third, we discuss how, rather than shrinking in the face of budget reality, the proposed spending list for the coming legislature is actually growing. And now let's join Michael.
Speaker 2:Let's dive into it, man. We got a lot of stuff to cover from the governor's budget to the, which we barely got a chance to brush over. And now more things happening. South Central Gas has been in the news over the last 10 days and there's a lot of vacillating going back and forth. So let's get started. We're going to start off with the governor's legacy, quote unquote what say you, brad? What say you?
Speaker 1:Well, there was an article in the ADN over the weekend, an op-ed by Tim Bradner, who I usually have a great deal of respect for you can tell that Tim's a little biased toward the producers but still have a great deal of respect for and the title of it just snapped my attention immediately and I thought, okay, we're going to get into some stuff here.
Speaker 1:The title was as he starts his final two term, two years, Alaska governor Dunleavy's mixed legacy and I thought, all right, we're going to, we're going to talk about. We're going to talk about the budget, we're going to talk about the fact that Dunleavy's legacy, right as it stands right right now, is running the biggest deficits in state, the biggest string of deficits in state history. Sean Parnell has the record for the biggest deficit in state history and I'm not sure that will ever be topped. But Dunleavy right now is on the precipice of running the record for the biggest string of deficits in state history, record for the biggest string of deficits in state history. And, as we discussed on the last program last year, in his 10-year plan, where he is supposed to propose how he deals with those deficits, propose how he gets to a balanced budget, he didn't, he just left the red, the deficits going through the end of the year.
Speaker 2:I love how he's just like yep, you figure it out, See ya.
Speaker 1:Yeah, it's exactly right. So I thought, okay, here's going to be an article by Tim Bradner, who's? You know, a budget guru, a fiscal guru, you know, a general, all-around knowledgeable guy about the state. He's going to talk about Dunleavy's legacy. We're going to get into the budgets. Nope, not a single word about the longest string of deficits in state history.
Speaker 1:Instead, tim uses this op-ed to talk about that the governor hasn't spent enough. About that the governor hasn't spent enough. He gives a report card for the governor and he counts off. These are the two primary things that Tim starts out with. One, the governor hasn't spent enough on education. The governor's legacy is suffering because he hasn't spent enough on education. He needs to spend more. And two, the governor's legacy is suffering because he hasn't supported defined benefits, the return to defined benefits for government employees, which also will cost the state, which also will deepen the deficits.
Speaker 1:So if this is the attitude of people in the state that Dunleavy is getting, dunleavy's legacy is in jeopardy because he hasn't spent enough. If this is the attitude of people who are writing the news columns in the state and Bradner writes a column, you know, writes news for the frontiersmen, writes news for the for the frontiersman. If this is the, if this is the attitude of people who are writing the news in the state, then then maybe, maybe all hope's gone. Maybe, maybe we're not, maybe, maybe we're not going to dig our way. Dig our way out of this.
Speaker 2:Well, and I think the worst part is that it's not just he wants to spend more. There was a chastisement in the beginning because he's like you know. He said you know what was his legacy. There's three negatives. This was the governor's disastrous first term budget, where he took a meat axe to state programs in the university. I think he got bad advice. He changed out advisors and reversed course. He had Donna Ardoin, who is acknowledged as one of the preeminent in the country, one of the preeminent budget fixers in the country, to bring states back from the brink. So they tried to start at the very beginning and Bradner's here, poo-pooing it, saying, well, that wasn't you know. Sorry, I mean, it's just. This whole thing is so tone deaf I don't even know what to say.
Speaker 1:Yeah, I really my opinion of Tim stepped down a couple of notches as a result of this op-ed. And then he gives the governor credit for energy. Well, we're going to talk about South Central talks, about the carbon credit program and the long delayed regulation of long distance power transmission and the creation of an entity to deal with long distance power transmission. It's just it, just it, just it goes on and on with things that that are yeah, okay, maybe when you get down to the sort of the lower level of things you want to talk about. But this is a governor who is on on track to set a record number of a record for the number of deficits run in state history. And, and there's not one mention of that, the whole last part of the column was just sort of a joke.
Speaker 1:I mean, it was Bradner going off talking about how, governor, how Dunleavy's proposal to establish a Department of Agriculture, which also would increase government spending, how Dunleavy's proposal to establish a Department of Agriculture is a good thing and goes, you know, and talks about food security and all that sort of stuff. So if this is how people are going to try to bend news people, news people because, remember, tim writes news for the Friends of the Heirsmen. If this is how news people are going to bend the narrative as we go into the last few years of Dunleavy's administration, then you know it's we're not. We're not focusing on the right things and you know, to add sort of insult to injury, personally also, larry also has a column at the New Year. Larry also has a column at the New Year the headline of which is Governor Dunleavy has a choice continue down his PFD path or work on a long-term solution.
Speaker 2:And basically Larry's pitch is you know you got to give up on the PFD. Yeah, that's a long-term solution. That's the long-term solution of many in the legislature.
Speaker 1:Just forget about the PFD. We're going to spend it. Move on. Families, people who claim to be focused on out-migration, people who claim to be focused on the economic impact, the economic travails that middle and lower income Alaska families are facing, talk a lot about that. Talk a lot about, you know, the need for the state to be more responsive to that. And then so that's on the one hand, and then, on the other hand, they go yeah, we need to cut the PFD. We need to cut out the PFD because that's just, you know, that's just wasted spending. Well, cutting the PFD, you know we might as well start the new year with this.
Speaker 1:Cutting the PFD is the most regressive tax ever proposed. It is the hardest. It hits the middle and lower income Alaska families hardest, harder than any other alternative. Alaska families hardest, harder than any other alternative. So when you get personally talking about, oh, we need to find ultimate solutions and they need to be, you know they need to be responsive to the economic times that Alaska families are facing. They need to be responsive to the you know, the fact that we're having out migration. They need to be responsive to the fact that costs are spiraling out of control. And we'll talk about. You know some of that in the third segment, but we need to be responsive to to all of these hardships that are being pressed down on working Alaska families. And then he goes and, by the way, we need to solve that by adopting the most regressive tax ever proposed, that that takes the most of all the alternatives alternatives takes the most out of, out of that segment's pocket.
Speaker 1:It's just, I mean, it's just humorous. So I had hopes, you know, as I said, I had hopes when I saw Tim's the title of Tim's article, the title of the op-ed piece being, as he starts his final two years, alaska Governor Dunleavy's mixed legacy. I had hopes that we were going to have somebody who was focused on the fact that this governor is running the longest string of deficits in the state history Deepest, second to Parnell, near deepest deficits in the state's history. I had hoped we were going to have somebody focused on that, but no, their concern is we aren't spending enough on all this stuff. We aren't digging the on all this stuff, folks. We aren't digging the deficits deep enough.
Speaker 2:Right. Well, and, like you, my opinion of Tim Bradner dropped several notches after reading this because, I mean, again, this is indicative of what's happening in most high places in the state the legislature, leadership, everything else. Nobody is talking about the deficits, nobody is discussing in deep terms what it looks like this year, next year, the next 10 years. They're all about well, we're just not spending enough. I mean, this is a theme that's going on and there's very few legislators who are talking about it, and it's not just disappointing, it's frightening that people are being willfully blind in this, in this area. I'm not joking. I mean, it's really kind of scary to see and watch the people who are supposedly in charge, who are supposedly our leaders, thought leaders, political leaders, political leaders and they are completely ignoring the 10,000 pound orangutan in the room with a stick that's about to beat us to death and they're just all like it'll be fine, don't worry about it, it'll be fine.
Speaker 1:Yeah, and particularly Tim. I mean I've said it a couple of times, I'll say it again Tim is a newsman. Tim writes news articles for the volunteers and others. And if that's his attitude going in and writing those news articles we're not going to get news. We're going to get that slant in the articles as well. It's going to be editorial bleed into his editorial position, bleeding into the news articles. Here's maybe I mean we're going to talk a little bit about this when we talk about South Central Gas in the next segment.
Speaker 1:But the budgets are hard. The budgets are presenting very hard issues, very hard choices. There are solutions, but they're hard and you have to go out and you have to sell them, you have to explain them, you have to develop them. They're hard. Going along with the flow of the unions of saying, oh, we need more money for defined benefits, and going along with the flow of the education industry of saying, oh, we need more money for education, and then God only knows what flow is going on with the Department of the education industry, of saying, oh, we need more money for education, and then God only knows what flow is going on with the Department of Agriculture. But going on with the flow. That's relatively easier because you got all these people around you that are saying, oh, we just need to spend more, we just need to spend more, we just need to spend more. The solution to out-migration is defined benefits. No, it's not, but that's what people are saying. So you're sort of going along the flow and that's a little bit easier.
Speaker 1:We don't have people. It starts with the governor, goes through many of the legislators, but now it's into the news industry. We don't have people who are willing to say wait a second, we're in a death spiral here and we're adding to it. We have out-migration and we're using tools to deal with out-migration that are increasing out-migration, that are taking money, increasing the economic position, the economic hardships faced by middle and lower income Alaska families, the people who are leaving the out-migrators. We are using tools that increase, that increase the death spiral.
Speaker 1:We don't have people who are willing to stand up and say, look, we're making this problem worse. There are ways to make it better, but we need to start talking about ways to make it better and we just don't have people to do that. I mean personally. He writes a weekly column for the newspaper he owns down in Wrangell. That often gets picked up statewide and basically his pitch is just wipe out the PFD, forget about the PFD, forget about middle and lower income Alaska families and just take all that money and just start spending it on other things. And it's just. We don't have people who are willing to talk about the hard issues and take on the hard issues and come up with with the solutions to the hard issues. We have people who are going with the flow and the flow is heading down. You know, if there's any doubt about that, the flow is heading down.
Speaker 2:Right, no, and and again. Until somebody acknowledges that there's a, you know it's, it's like the alcoholic. Until you admit there's a problem, there's no fixing the problem and there's no problem. The only problem they see is that they're not spending enough. Not spending enough, and you know eventually that gravy train will run dry. And then what will we do? That's the question. The Weekly Top Three continues Brad, keithley, alaskans, force sustainable budgets. As we continue. I mean, man, I did not want to start off the week with this. I mean just this tough, tough stuff Again, not only acknowledging, failing to acknowledge that there is a deficit problem, but just in talking about ever increasing. Number two is that the legislatures their spending list, again not acknowledging that we have a problem, not acknowledging that we're going into the year with a $1.5 billion deficit, plus probably a couple hundred million in the supplementary budget. No, no, no, that list is growing, Brad.
Speaker 1:Well, that's segment three, Michael. Segment two is South Central Gas.
Speaker 2:I'm sorry I got ahead of us. Let me go to South Central Gas, brad. Let me tell you about South Central Gas. Go ahead, brad. I screwed it all up. No, no, no, that's fine.
Speaker 1:So South Central Gas and I probably could just bounce to three and then come back to two, but I want to talk about South Central Gas. So Knappertz wrote what I think is a great article, a disturbing article, but a great article in that it at least outlines what the problem is on South Central Gas over the break and the title of it. It's in all of the papers. Maybe it hasn't made Fairbanks yet, but it's in all of the other papers. The title of it is Regulators Advocates Warn of Utility Inaction as Alaska Gas Shortfall Looms. And basically what that article is is we're just we're spinning. It discusses the fact we're spinning. We got a lot of solutions out there. We just keep spinning on those solutions without without actually acting on one those solutions without actually acting on one. And the date of the projected South Central gas shortage 2027, keeps getting closer and closer and we keep spinning and spinning and spinning. It takes time to implement solutions and so you know we keep spinning while the date's getting closer and the article really focuses on the concerns people have that we continue to spin. One of the things that's troubling, frankly.
Speaker 1:In the last part of the article, nat has some quotes from Bob Pickett, who's a long time, going all the way back to the Palin era. He was appointed during the Palin era, bob Pickett, commissioner, on the Regulatory Commission of Alaska, the utility body or the regulatory body that has jurisdiction over utilities and has the statutory responsibility to ensure that utilities are taking the steps necessary to provide adequate service at a reasonable cost. The one, the regulator, that stands in there and says you know, you're not supposed to say you're not doing X that ensures adequate service at a reasonable cost. The one, the regulator, that stands in there and says you know, you're not supposed to say you're not doing X that ensures adequate service. You know, do X. Or you know run, jerk your certificate or something. And he has a discussion with Pickett and has quotes from Pickett where Pickett's essentially spinning and where you know it's essentially saying I'm trying to point out. Pickett's essentially saying I'm trying to point out the utilities don't have plans for how they're going to deal with this shortfall, but without saying and the RCA is going to step in and make sure there isn't a shortfall by enforcing the obligation utilities have to ensure adequate service, that they have adequate gas supplies, and so you get this sense at the end of the article that we're just all spinning in a circle, everybody's looking at everybody else. There's a theme here, sort of like the budget. Everybody's looking at everybody else and saying, well, are you going to do something about this? No, are you going to do something about this? No, it's just this giant circle where everybody's looking at everybody else to make progress.
Speaker 1:Dunleavy held a press conference yesterday and the press conference was to focus on the advances that we're making on various energy projects. One was this new contract that Hill Corps entered into with HEX, with HEX Fury, john Hendricks' company down in the Cook Inlet that's supposed to deliver additional gas supplies, but Hendricks hasn't found the gas supplies yet. He hasn't drilled the wells necessary to develop the gas supplies yet. But that was a big part of it. And then the second thing was they put up Frank Richards from AGDC to talk about the progress that AGDC was making with respect to the AGDC line, the AKLNG line.
Speaker 1:Let me read just quickly read from the letter that AGDC sent to the legislature in April. This is AGDC board. We have instructed AGDC staff to secure commitments to initiate, feed, the remaining engineering costs estimating and construction preparation needed before making a final investment decision on the pipeline phase no later than the end of this year. Commitments to initiate feed If AGDC fails to secure funding for the entire project or for the initial pipeline phase of the project by that date. We have instructed AGDC staff to initiate the work required to shut down and either sell the Alaska LNG project assets or put them into storage if there is insufficient value realized for the state of Alaska.
Speaker 1:Hard and fast date End of the year. They put Richards up. Yesterday this is after the first of the year they put Richards up. Did he announce commitments to initiate feed? No, he announced that they're in talks with somebody who, if they reach finalized agreements with them months down the road, then maybe they'll be ready to go forward with feed, not at the third party's expense but backed up by a guarantee from ADA that the state would pay for feed. 50 million bucks yeah, 50 million bucks If AGDC fails to secure funding for the entire project.
Speaker 1:Did he or or? Or the initial pipeline phase of the project by that date, by the end of the year? Did he announce that AGDC had secured funding? No, but did they? Did they announce consistent with this letter from the board, signed by the board, sent to the legislature? Did they announce okay, we're closing it down. We didn't get it done. We said we were going to do it by this date. No, they didn't even reference the letter. It was like, ooh, we got a potential that somebody's going to actually sign agreements with us someday.
Speaker 2:You had it until the end of the year and now you're in the first of the year. Now you're like, oh, just give us a little more time. I mean it's insane. You know, what caught my eye on this, brad because I'm looking at electrical bills and everything else in this whole article from Nat Herz was the quote from the head of Homer Electric, brad Janorski, who went on to say oh, you know, the expiration of the NSTAR contracts is not an issue that keeps me up at night. You know, we've got no problem, Even though it's going to run out in three months. It's going to run out in March of this year. The end of March the contract with NSTAR ends. And he's like, oh, I'm not worried about it. And then Buddy was pressed and they said well, do you have a? No, we don't have any commitment yet. I mean, where is the urgency from the utilities to get this fixed? They're sitting around here. It's like a, the biggest circle jerk you've ever seen.
Speaker 1:They're just all looking at each other, glad handing, like, oh, it'll be fine, don't worry about it's fine, fine, just fine and like agdc, even when they meet a date, even when they hit a date that they themselves set for, for either you know fish or cut bait. We're gonna fish or cut bait. By the end of the year, when they they hit a date, it's like, ah no, no, we see a fish out there someplace and we know that we may be able to hit it if we just, you know, if we spend more and keep going down this road, so let us keep fishing. I mean, no one will say this is it. We're going to go in this direction because we haven't been able to land any other direction out there. Chugach, in an op-ed that we talked about in the last program right before Christmas, chugach said we're going forward with LNG, but have they filed anything to go forward with LNG? Have they filed anything with the RCA that sets their path to go forward with LNG? No, I mean it is. No. One wants to make the decision and again, the decisions are hard. I mean the decisions are we don't have gas in the cook inlet. It's too expensive to develop additional gas in the cook inlet. The contract we've entered into with HEX, with FURY, provides for a price that's higher than imported LNG prices we're demonstrating there's not gas at the price we need, at the economics we need.
Speaker 1:In the Cook Inlet no one's going to land. The AGDC line, the AKLNG line is not going to land anytime in this century. The way we're going, they can't even get it done by a date they set themselves. We keep spinning without making decisive steps and you know if we run, if we hit 2027 and we don't have gas supplies, it's not going to be because there weren't options. There were options. Lng, imported LNG was an option, a hard and fast option. It's out there on the water. You can see it going by on its way to Japan. It's economic. You can look at the current prices and the futures market for LNG and it's more economic than continuing to try to develop cook inlet supplies. There are solutions. If we hit 2027, it's going to be because everybody twiddled their thumbs and didn't make decisions.
Speaker 2:You know why they're waiting. They're waiting for the legislature to come in session. They want the legislature to come in and bail them out so they don't have to go to their ledgers and explain to their rate payers and their shareholders and their co-op members why they have to put out 50 million bucks to stand up a facility or do something like that. I mean, that's what they're waiting for. It's all a delay, delay, delay. They're hoping the legislature and the state will bail them out. Am I wrong?
Speaker 1:No, no, you can be exactly right. I mean, that's what Frank Richardson AGDC is. Obviously, frank is counting on the legislature to forget the letter that they got from the board last spring defining when AGDC was going to finally call it a day. They're counting on the legislature forgetting that and they're counting on the legislature appropriating the $50 million to ADA that ADA needs in order to provide the guarantee to get somebody to maybe because nobody stepped up to do it maybe get somebody to front $50 million for feed, knowing that they're going to get it back from ADA at the end. Yeah, maybe it's just to continue this crisis in hopes that the legislature somehow bails them out. But if that's right and we hit 2027, don't look at the fact that there wasn't a solution to this. Look at the so-called leaders, both in the industry John Sims for one at NSTAR and at the RCA for failing to lead, for failing to live up to the obligations they have for failing to lead, for failing to live up to the obligations they have.
Speaker 2:Yeah, well, and it was. I was encouraged to begin with when I started reading the article and I saw that the guy from the RCA was there asking questions. I'm like, man, did we finally get somebody's attention? But that's all it was. It was basically just it's not calling the RCA into session to say, hey, we need to hold their feet to the fire or anything else. It was more like what's going on here. I mean, maybe we've got one guy on the RCA who's actually asking the right questions, but where's the rest of them?
Speaker 1:Yeah, and I like Bob a lot, but he's not even asking the right questions. I mean Bob's asking the question how are you going to allocate supplies if you have a shortage? That shouldn't be the question. The question should be how are you going to avoid a shortage? What steps are you taking to avoid a shortage, to live up to your certificate obligation to have adequate supplies at a reasonable cost? Tell me what you're doing to do that, not tell me what you're going to do if you don't live up to it and you have a failure of supply. Tell me what you're going to do if you don't live up to it and you and you have a failure of supply. Tell me what you're doing to live up to your to your certificate obligation. And that's that's the question that should be asked. That's the question that should be pressed. That's the question that the rca should be ready to act on if utilities don't have good answers to that.
Speaker 2:Right, uh, but that's not the question they're asking well, and we're and we're, and and again this whole thing. This affects the entire state. This is all of the peninsula, all of South Central, the Mat-Su Anchorage, all the way up to Fairbanks. Everybody's affected and everybody's running around, like you know. The answer is obvious. The answer is LNG. And whether it's an emotional tie to Alaska gas, whether it's a dithering to make sure that the legislature comes in and bails them out, or whatever it is, we're all going to look back at this and go this was totally avoidable if we'd just done the right thing. And where's the second report? Every news story talks about the first report, but where is the? There's the. You can't find a mention of the second report.
Speaker 1:Well, because utilities don't talk about it. The news doesn't talk about what the utilities don't talk about and, Bob, I mean even Pickett's not talking about talking about the second report. For those that are just catching up, the utilities had a consulting group come in and do a report about what they should be doing about this in 2023. The report came out in 2023. It says you should be doing about this in 2023. The report came out in 2023. It says you should be doing imported LNG. That report also said there was going to be a second report that provided the steps. The second report was done. We know it was done because a lot of people mentioned it was done, but they've never released it, so we don't know what the second report says.
Speaker 2:Yeah, exactly. I mean we still have no idea because probably it says the one thing that nobody wants to hear, which is LNG is the way to go. I mean that's the problem and nobody wants to face that. They're hoping that the legislature will bail them out yet again. I'm becoming more and more convinced, brad, that this is all about delay in the hopes that the state will pick up the bill. That's kind of what I'm coming to.
Speaker 1:The conclusion on what bill is the state supposed to pick up? I mean, we know Cook Inlet does not have adequate supplies at a reasonable cost in order to meet the challenge. We know that. We know that. We know that from the Hendrix contract. We know that in order to elicit those supplies, nstar had to pay more than what it would have to pay for imported LNG. We know that it's cooking on a dozen of supplies. We know that phase one of AKLNG, which is now being touted as a solution, can't get here in two years. Hell, it can't even get here in eight years, but we know it can't get here in time. So we know those things.
Speaker 1:What is it the legislature is supposed to do? I mean, they can't create well, maybe they can't create gas out of if they talk enough, but create a lot of hot air. But they can create gas if they talk enough. But they can create a lot of hot air, but they can't create gas in the legislature. So what is the legislature supposed to do? It's just that nobody wants to make a decision. Sims doesn't want to make a decision because, in my opinion, he wants to run for governor and he doesn't want to be the guy that says we need to import LNG. So he doesn't want to say that. He just wants to keep spinning in circles to avoid saying that.
Speaker 1:Chugach is willing to say it, but they haven't followed up yet in terms of making a filing to. You know, these barges and the facilities you need to offload the barges don't appear just overnight. You got to have plans for them and we're two years away from the date that's projected when we have a shortage of supply. So you know you need to be making filings, you need to be getting underway to get permits, you need to, you know, actually get boots on the ground to get this stuff done. They're not doing it. Not doing it. Akl and G is just distracting everybody's attention by saying, you know, by saying we promise by the end of the year we will have something concrete or we will start shutting this thing down, and then we get. Then we get to the end of the year and just go. Yeah, forget that promise. We think we see something out there on the horizon, yeah.
Speaker 2:And then the governor sneaks in the $50 million and then says it's going to be on the supplemental. I mean what, the what? I mean you can't even get a private party to pay for the $50 million in feed money as a prospectus to do it, so you have the state do it. And then you'll be like we'll sneak this into the, but we're upside down a billion and a half dollars and you want to add another $50 million. It's madness, absolutely madness.
Speaker 1:Yeah, I mean, it's just like on the budget too, michael. I mean one of the segment. Two are basically the same theme People don't want to make the hard decisions, people don't want to face off the hard realities.
Speaker 2:And most people are not paying attention. Here's an interesting comment from Skeets. He says what's the number on importing LNG? What I've seen will triple the electric bill. What you don't understand is that even if it did triple the electric bill which is wrong but even if it did AK LNG is even more expensive than imported LNG at the ratepayers expense Even more. That's the thing. Why are we so hung up on this Alaska gas thing? Yes, it would be nice if we could get the 17 trillion cubic feet of gas from the slope to somewhere where it's usable. But it would also be nice if I had gold-plated pigeons fly out my backside. But it's just not going to happen. Not going to happen.
Speaker 1:To just focus on that for a second, the increase is about 10% because most of your electric bill comes from paying for the hardware, the generation plants and the distribution lines to get the electricity to you, and so the increase in the fuel cost is actually a fairly minor part of your electricity bill, and the increase in the fuel cost caused by importing LNG is, just frankly, a fairly minor part of that as well. So the estimates we've seen from Chugach are 5% to 10%. Let's just say 10% is the increase, but it's coming from people who are trying to misdirect Alaskans, cause fear about imported LNG because they want to pursue these other projects that are more expensive. So, a let's get the number right, it's 5% to 10%. And B let's focus on the fact, as Michael just said, imported LNG is not more expensive than the alternatives. It's compared to the alternatives and imported LNG is less than the alternatives. It's compared to the alternatives and imported LNG is less than the alternatives.
Speaker 2:We're back this morning, ready to go. Brad Keithley, alaskans, for Sustainable Budgets, is our guest. The final piece of this puzzle is again we've been talking about it all morning the willful blindness of everybody leaders, political leaders, thought leaders, thought leaders, journalists, everybody about ignoring the deficit problem. And uh, the legislature is not immune from this. Brad their answer spend more more.
Speaker 1:Well, it's not. It's not even. It's not even just the legislature, michael I mean. So let's just set the scene here Over the next 10 years, averaged over the next 10 years, the state is running about a billion nine in deficit of projected spending. Over the next 10 years is deficit uncovered? Huge red dollars, huge red as far as the eye can see. That's the baseline. And so, instead of confronting that baseline, saying what the hell are we going to do about that, what we've got is, like Tim Bradner that we talked about in the first segment, saying we need to spend more. Forget about I don't want to talk about the deficit, we just need to spend more. We need to spend more on K through 12. We need to spend more on defined benefits. We need to spend more to stand up a department of agriculture, a separate department of agriculture, with its own commissioner and its own staff and its own lawyers and its own everything. We need to spend more to do that. And now we've got other people, not even legislators, michael. We've got other people out there wanting to spend more, and these various things are rising to the top.
Speaker 1:The Fairbanks News news minor was the one that got my attention. They had an op-ed right after the first of the year alaska's this is the title alaska's rising health care costs. Rising health care costs demand immediate action. Bradner didn't even cover that, you know. Bradner was just adding it for k-12 and defined benefits. And here the alaska the news minor editorial board is saying if the state truly wants to be open for business and retain its residents, the alaska legislature and the governor must take immediate, decisive action to reduce health care and insurance costs. So now we we've got okay. Now we've got to spend on increased K-12. Now we've got to spend on defined benefits. Now we've got to spend to stand up the Department of Agriculture and now we've got to start getting the news minor. And we've also got to spend on health care costs. The state, the governor and the legislature must take immediate, decisive action.
Speaker 1:And then we've got a task force that came in at the end of the year that the governor had set up about child care and child care. You know the availability of child care because that's been an issue that a lot of people have raised. And among the 46 recommendations from the Alaska Child Care Task Force is more state spending on child care, more state spending in terms of subsidies, more state spending in terms of going out and hiring people to help facilitate child care, more and more and more of that. So you know it's and you can't find in any of these publications. You can't find hey, we got a $1.9 billion average deficit over the next 10 years. We're 35% in the red. We're more. Alaska is Alaska. State government is more in the red than the federal government. We've got we're running higher deficits than the federal government over. We've got we're running higher deficits than the federal government over the next, over the next 10 years. We can't find any editorials on that. You can't find any articles on that. You can't find any journalists willing to confront that and talk about it. They just want to talk about places where we do even more spending.
Speaker 1:K through 12 defined benefits stand up to the department of agriculture. The the news, minor health care costs. The state now has to help out with health care costs. Alaska Public Media, the Juneau Empire, boosting wages, among 56 recommendations from the Child Care Task Force. We're living in a fantasy world.
Speaker 1:And it's not just the legislature, michael, it is, it is the news publications themselves. I mean, I'm sure, the news, I'm sure if I go back I'll find a news, minor editorial that says, oh, and we got to get the budget balanced, but in the very next breath it's we've got to get the state involved in healthcare. And we got to get the state involved in paying for healthcare to reduce healthcare costs for Alaskans, because healthcare costs are too big. And then we got to get the state involved in childcare to reduce childcare costs. We can't afford all this. We can't. Alaska cannot afford all this. That's the article we need to see. And we need to see an article about how the hell are we going to deal with this, these deficits that we're digging? But instead we got Tim out there trying to create a governor's, the governor's legacy of oh, you know, he gets. He gets plus points because he stood up a separate department of agriculture.
Speaker 2:Yeah, Right, no, and that's again part of the problem here is that everybody is just being willfully blind to this. And you're right, A lot of this could be driven by a good you know, a journalist with integrity who looks at this and goes well, wait a second, I'm looking at these numbers and they look all bad going forward. And yet you keep saying and nobody's asking the question how do we pay for it? Okay, Childcare is great. How do we pay for it? Okay, you want to get into healthcare? Now, how? How do we pay for it?
Speaker 2:You want to increase the BSA by $1,900. That's a half a billion. How do we pay for it? You know, but define benefits. There's no real cost analysis reason. Did one, but they're the really only ones that really put real hard numbers to it. And it's again, it's half a billion dollars a year. How do we pay for it? We're already in the hole right now. We're starting off at zero. A billion and a half in the hole, and you want to add more. How do we pay for it? Well, obviously with the PFD. But when that's gone, how do you pay for it?
Speaker 1:Well, and it's, and it's more. I mean, we've talked about it before, but and and you and we talk about it occasionally and we'll talk about it now it's, it's more than how do you pay for it? Who pays for it? Because, because the same time we got all this going on, we got an out migration issue right. We've got middle and lower income Alaska families. We're on net. We're losing middle and lower income Alaska families. Hell, we're gaining top 20% families. If you look at the IRS data, the top 20% families are going up. The number of top 20% families in the state when we're losing, it is with middle and lower income Alaska families. That's where the bleeding is occurring Working age, middle and lower income Alaska families. We're not replacing the losses.
Speaker 1:We have a net out migration, and so the question should be not only how do you pay for allressive tax ever proposed, you're charging, you're disproportionately charging the very people who are leaving. You're making them pay more and more and more and more in order to get some additional services. That's the death spiral, guys. You're driving out the people. The people are leaving because the economic life here is too difficult and you're making their economic life even more difficult by making them pay for all these bells and additional bells and whistles you want to develop.
Speaker 1:If you want additional spending, then pay for it equitably. Pay for it across the board. Include non-residents as part of the revenue base. Residents as part of the revenue base include the oil companies, who are about $500 million a year down in terms of what they ought to be paying in terms of their constitutional obligation maximum revenues. Have them chip in the additional $500 million that they're keeping in their pockets instead of contributing to the state. If you want to spend more, have them contribute, but the way we're doing it is the who pay for it question is we're charging the very people that we're driving out of the state.
Speaker 2:And somebody just said that doesn't really. They're increasing. That math doesn't work, but that's what the labor data and the state data says is that the quintile, that is, the top income earners, that percentage of people as a workforce, those people coming in, actually increased, while the number of families in the lower quintiles also increased on the departure side. So we are losing people. We're losing more people in the middle and lower class than we are in the upper class.
Speaker 1:Yep, I did an article I mean the IRS data shows it clearly. I did an article a few weeks ago, maybe a few months ago now, for the Friday Landmine column that went into the IRS, looked at it by income bracket and looked at the change by income bracket and over the past five years the number of households in the upper income bracket has gone up as the number of households in the middle and lower income brackets have gone down. Clearly, and and why? Because because the top 20% doesn't doesn't contribute to the cost of government. Yeah, they don't, they. They contribute a very minor share in terms of the PFD cuts, the very minor impact on them. So it's a great place to be no taxes, right.
Speaker 2:You don't have to pay for cost of government. All of that's being pushed over on middle and lower income alaska families and they're walking. Yeah, yeah, brad. I mean I'm looking at all this and I'm just it's all I can think of is that these people are just willfully, willfully, um, not paying attention to any of this at this point. I mean it's just, it's so frustrating to watch.
Speaker 1:Well, the numbers are there, Michael. I mean you can see the numbers of where we are in terms of the budget. We publish them. I publish them on our various media sites. Every Friday, I publish what the budget's looking like based upon current oil prices and based upon the most recent permanent fund corporation projections of the, of the, of the POMV. I published those every Friday and you can see the numbers.
Speaker 1:You can see those deficits out there. You can see them even from the, from a static approach like the, like the governor's 10 year plan. You can see those, those deficits out there. You can see them. It's not, they're not, they're not being hidden. It's just that people, it's just that it's tough to face up to them, tough to talk about them, tough to talk about the solutions to them. People just don't want to do that. And you can see the numbers. On South Central Gas, I mean the 2023 utility report, the one we got to see says clearly that it's more expensive to build the gas line down from the north. It's more expensive to develop additional cook inlet supplies because we don't quite know where they are and the exploration it would take, the exploration effort it would take to find them, produces more expensive costs than imported LNG. I mean it would be great, for example, if Alaska grew all of its own food right, if we didn't have to rely on the outside. It'd be great if we had all of our own gasoline.
Speaker 2:It'd be great if we had all of our own gasoline.
Speaker 1:It'd be great if we had all of our own, if we were just a totally self-contained island, but we're not. We're dependent on. The economics are that it's cheaper to bring in some stuff from outside, including gasoline. Cheaper to bring in some stuff from outside than it is to the cost it would take to develop it here. And we've gotten to the point where South Central Gas is one of those, is one of those commodities it's cheaper to bring in from outside than it is to develop it here. The numbers are clear. Numbers are absolutely clear.
Speaker 1:I do a thing every Monday that look at prices, local prices compared to LNG, the futures market, and the numbers are clear. It's cheaper to bring in the gas from outside. We don't need that much. We need about $70 billion a year and it's cheaper to bring it in than it is to undertake the cost to develop it locally. The numbers are clear. But people don't want to talk about it. They'd prefer to spin in a circle and blame somebody else. You know just sort of this continual finger pointing all around the circle blame somebody else for not, for not doing something about it, in hopes that, you know, lightning strikes, I guess, and all of a sudden some other alternative becomes, becomes clear, but we're running out of time.
Speaker 2:Right on that. Brian says I can't believe that Brad has to explain the economics of gas over and over and over. But again, we're the only ones talking about it. The news media is not talking about it. The journalists are not talking about it, the governor's not talking about it, the legislature is not talking about it. The governor's not talking about it, the legislature is not talking about it.
Speaker 2:If they talk about it, it's all in terms of what can we do to help bolster this? What can we spend? How can we spend some money to make this work? And that's the problem. Nobody else is talking about it. And if we, if we just continue to go la la la, la, la la la, put our fingers in her ear, you know, when the yogurt hits the oscillating rotor, what are you going to do? You'll look back and go well, we could have fixed that if we, you know. But again, we could fix it. Now we just have to have, like you said earlier, brad, it's just, it's hard. Nobody wants to talk about austerity, which is what it would come down to.
Speaker 1:It's hard. Nobody wants to talk about austerity, which is what it would come down to, or who pays. Nobody wants to talk about the fact that, in order to help deal with the out-migration issue, we need to take some of the disproportionate burden off of middle and lower income Alaska families. I'm not even talking about subsidizing middle and lower income Alaska families to keep them here. I'm talking about just treating them fairly, middle and lower income Alaska families to keep them here. I'm talking about just treating them fairly, just taking the same share of income from them that we would take from everybody else to support a government here. We don't even do that. We don't even do that. We disproportionately burn the very people that are leaving. We disproportionately burden them more to fund government. People are leaving that are leaving. We disproportionately burden them more to to to, you know, to to to fund government, and so they go. You know the economics up there just don't work. Why would I go up there?
Speaker 2:Right, why would I do that? Why would I hurt myself by going there and doing that? And uh, they must be leaving. Randy said earlier they must be leaving because other States have a bigger PFD. I mean again, this is not about an issue of bringing free people up here. This is about keeping the state spending under control. You cannot I don't know how to explain this any clearer mathematics, arithmetic. You cannot continue to spend more than you take in indefinitely, and that's what we've become accustomed to in this state For the last 10 years, 12 years. We just continue to spend more than we take in and we expect that it's going to be forever, indefinite, and it's just not going to happen, brad. Final thoughts.
Speaker 1:Well, we're going to at least I, and in these segments and through my columns, I'm going to keep least I and in these segments and through my columns, I'm going to keep, I'm going to be keep whacking away at it and using numbers, you know, just using the actual numbers to so that people can focus on on what's going on. I don't I don't know how to motivate people any better than to show, than to show the actual numbers. And we need people, we need leaders to start talking about the actual numbers as opposed to the emotion of oh no, we need, we need alaska gas, we don't need that outside stuff, we need to be, we need our leaders to start talking about actual numbers yeah on the budget, on on energy, uh and uh, and start dealing with the numbers as they are, not as they would. I won't want them to be.
Speaker 2:I won't hold my breath Last 90 seconds here, Brad. Final thoughts for today.
Speaker 1:Well, it's the theme. We're not concentrating on the right things. We're not concentrating on the right things when we talk about Dunleavy's legacy. We're not concentrating on the right things when we talk about the budget. We're not concentrating on the right things, or doing the right things when we do South Central Gas. And we're not concentrating on the right things when people like the News Miners Editorial Board says we ought to be spending more on this, that and the other thing. We need clarity of thought and we need leaders who are focusing in on the things that matter, and we don't have that across the board.
Speaker 2:No, I mean again, they're ignoring it. They're completely ignoring it. The thought leaders, the politicians, the journalists nobody's talking about the 10,000 pound elephant in the room that's about to squash you, that says we have deficits, we can't keep spending more than we take in. End of story, end of sentence, full stop. Brad Keithley Alaskans for Sustainable Budgets. Thanks, brad, for coming on board.
Speaker 1:Michael, as always, thanks for having me. Well, that's a wrap for this week's edition of the weekly top three from Alaskans for Sustainable Budgets. Thank you again for joining us. Remember that you can find past episodes on our YouTube, SoundCloud, Spotify and Substack pages, and keep track of us during the week on Facebook and Twitter. This has been Brad Keithley, Managing Director of Alaskans for Sustainable Budgets. We look forward to you joining us again next week for the Weekly Top Three. Thank you,
