The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (2.3.2025)
Looking down the road, HB69 has a $1bn price tag; with the #akleg backing out of the Cook Inlet, it’s now up to the RCA to protect Alaskans & what the 2026 #AKgov candidates need to start focusing on now
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
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 February 3rd 2025. 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.
Speaker 1:I join Michael weekly in the first hour of Tuesday's show from 6.10 to 7 am for a 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 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 First, while some want to focus only on the short-term cost. We explain why, looking down the road, hb 69 is really a $1 billion appropriation bill. Second, we explain why, with the legislature backing out of the Cook Inlet debate, it's up to the Regulatory Commission of Alaska to protect Alaska consumers. And third, as the positioning starts, we discuss what we think is the big thing on which potential candidates for the 2026 governor's race should be focusing on now and now let's join Michael.
Speaker 2:So let's get started. The weekly top three starts with the literal literally one billion dollars. You get a billion and you get a billion $1 billion appropriation bill. That's what HB 69 could end up being. Brad, please try, Don't get too suicidal in the middle of the show. All right, we can't deal with that. Just go ahead and get started on this bill.
Speaker 1:So the fiscal note on HB 69 finally came out over the weekend Thanks to Rob Myers for pointing it out to me when it came out and so I started through the fiscal note and it just got worse and worse and worse and worse. I had done some calculations last week based on the news stories of what what an estimate of HB 69 over the long haul would be, and I got the first year right $330 million but the subsequent years I didn't get right at all. So the fiscal note setup if you've got it, if you've got that first page I sent you, you can throw it up or not. I can talk through it. But the fiscal note shows the appropriation for FY26, the first year of the bill. Nope, it's the other page, the first year of the bill and then it shows the increments on top of that for the subsequent years of the bill. So the first year of the bill, fy26, the addition in FY26 is $325 million. The increment on top of that this is where I started going wrong the increment on top of that, yeah. So for those able to see this, look at the total operating line, which is about a little bit above halfway through the page, or fund source that gives you the same number little bit above halfway through the page. Or fund source that gives you the same number, and you can see the increment on top of the $325 million for FY27 is $173.9 million, $174 million. The increment on top of that, on top of the addition of the 325 and the 173, the increment on top of that for FY28 is 144. Those are the step additions that are in the bill a big bump in 26, and then another bump in 27, then another bump in 28. And then it goes to inflation, adjusted by inflation. But you can see these inflation adjustments on top of the bill, on top of the cumulative amount at that point is $51 million in 29, $55 million in 30, $56 million in 31.
Speaker 1:I've added those up as you've gone and so the total cost of the bill in FY26 is $326 million. The total cost in FY27 is $500 million, half a billion dollars. The total cost in FY28 is $644 million. The total cost in FY30 is $751 million. The total cost in FY31 is $800 million and then that's where the fiscal note cuts off. But I took the rate at which it is increasing along the way and added those increments in and the total. When you do that, the total in FY32 is $865 million, the total in FY33 is $923 million, the total in FY34 is $981 million and the total in FY35, 10 years from now, 10 years out, if this bill is passed as proposed, with these inflation increments going on, the total in FY35 is one just from this bill alone. This isn't the total. Education funding this is just from this bill alone is $1,038,000,000 in FY35.
Speaker 1:When you factor those in, when you factor those into the percent of the POMV I did a calculation in last Friday's Landmine. For anybody who wants to go read it what is happening to the percent of POMV? The percent of the POMV draw that is needed to support state spending. Now that we recognize that we've gone past that, we're blowing past 2575. When you factor those in, fy25 is at 76.5%. When you add in SB69 to the already existing budget, the alleged finance baseline, when you add in SB 69, we go to 98% of the POMV is required to balance government spending. And then in FY 27, we go over 100 and we stay over 100 through FY 35. We get up to something like 135% or 140% by FY35. I'll have those numbers in the detailed numbers in the coming Alaska landmine column this coming Friday. But we have now.
Speaker 1:In two years we're going to if we pass SB69 as proposed, we're going to blow through the 100% POMB mark and we're going to blow into the twilight zone because we will have no revenues to support the legislation that we're going to pass this year. All these debates that people are having right now are sort of humorous from the standpoint of oh, we got $200 million deficit this year and this is at 300. And that's bad. Where are we going to get the money? Oh, maybe we can draw it from the CBR or maybe we can just tax the PFD more to cover it.
Speaker 1:No one has yet stumbled on the out-year. As far as I can tell. No one's yet stumbled on the out-year effects. No one has yet stumbled on where this bill takes us, and it is a bill that is intended to be permanent. It's intended to direct spending, create a formula that directs spending to education permanently. So no one has stumbled to the extent I've seen.
Speaker 1:No one has yet stumbled on what the heck is going on once we get through this year and that may be from the proponents, that may be by design, it may be. Oh, it's just $330 million this year, don't worry about it, it's not that big a deal. We can handle it out of the CBR. We can handle it out of additional PFD cuts. Focusing on this year, because that's the last year they can say that, that's the only year they can say that Once we get into FY27, you blow out the entire PFD, you blow out the entire CBR, it's all gone. And by the time you get to FY35, this state is just one giant education appropriation with a little, with a little bit of other stuff, uh, uh, tagged on that would mean that the education budget was 2.2 2.3 billion dollars.
Speaker 1:Well, yeah, and that's not applying inflation to the other part of the education budget.
Speaker 2:That's right any one-time funding, which, which, if you think the one-time funding is going away, because you don't, you don't think that's going to happen, right? I mean, this is what they wanted was to get the BSA up there, but you don't think that they won't be fighting for one time funding on top of that? Yeah, michael it's just.
Speaker 1:I mean nobody, even conservatives, I mean Delaina Johnson, the supposed education experts in the House minority, the people in the Senate minority with no disrespect intended but the people in the Senate minority. Nobody is talking about the out-year consequences of what this bill does. It's all focused on battling over the FY26 appropriation and I think in doing that we're being sucked in to the game plan where, oh, let's just talk about FY36 and let's pass it because it's not that bad a deal, and then, oh my, and then FY27 is going to be Gary Stevens again. Oh, my God, you mean we pass this. Well, I guess we got to deal with it. I guess, because we just passed it, I guess we got to deal with it. I guess, because we just passed it, I guess we got to deal with it. It's, um, the, the out year effects.
Speaker 1:People are not thinking through, or they are and intentionally not discussing uh, the out year effects, uh, of of the bill. You were talking about sean dugan's piece. Uh, there's a similar one from in the Alaska Beacon a couple of few days ago. Looked like Sean was trying to play catch up with his piece. But you know, all of those pieces are talking about the one year effects. They're talking about what the effect would be this year. They're not talking through the budgetary effects over the long term. Talking through the budgetary effects over the long term, it'll be interesting to see if somebody asks Ledge Finance or if somebody puts up the calculation along the way of what those long-term effects are. But the fiscal note makes them absolutely clear about where we're going A billion dollars in 10 years.
Speaker 2:Now, this doesn't include the defined benefits. It doesn't include anything that they may or may not do with the oil and gas. It includes no other spending whatsoever. Just the education bill will consume all of the PFD in the next 24 months and it makes us look like geniuses, brad. We've been projecting for the last two years that it would be three to four years before the PFD would be gone, and now, if this gets passed, it will be the next 24 months. It will be totally gone.
Speaker 1:Yeah, and, and Michael, I mean everybody, under everybody, almost everybody, um recognizes that you can't. You can't set in motion new revenue approaches, revenue alternatives. You know, on the on the the flip of a dime or on the on the click of a button, that it takes time to get them in place. And so what we're going to hit, what we're going to, I can sort of see this game plan coming together.
Speaker 1:What we're going to hit is a situation in which next year, people say, or this year, or later this year, when they start recognizing what's going on, they'll say oh, yeah, we need to do that. We need to do that permanent fund reform that consolidates the earnings reserve and the and the corpus together. Uh, we need, we need to, we need to get on that and we need to go ahead and just sort of, you know, play like we're doing it, find ways to play like we're doing it, and, uh, and, and that's what we're going to need to. We need to do that. And they'll argue that's for a separate reason. But then what we're going to find is it's for the real reason of starting to pull down the corpus of the permanent fund to support spending.
Speaker 2:And the worst part of this whole thing is is that nobody's talking about the latest NEAP scores, where we fell even further. We fell out of the states. We were at 48th and 49th out of the 50, you know, 50 states plus the territories. Now we're 51st out of 53. We're falling, spending more money than ever, and we're falling and they want to spend more. It's, it's absolute madness.
Speaker 2:I mean, brad, this is it's. It's been so predictable. We knew it was coming. We've been talking about it. We, you know, we've been talking about it. We, you know, we've been touting, we've been blowing the horn and warning the bell and saying the bridge is out and nobody is just okay, all right, it's fine. And then gary's like oh, what's that? Is that bridge out out there? Oh man, maybe we should slow down a little bit. You're right, they're going to use this as an excuse to go right after the corpus of the permanent fund, because we need that, we can't have taxes now, and they'll drain the CBR. I mean, they'll drain the corpus of the fund, I mean, and of course they don't want to get into the CBR, because then the minority might have a voice on something if they get into the CBR. And so here we are. I mean here a billion dollars, and we still haven't seen the updated fiscal note on the defined benefits, and that's still in the pipeline somewhere. A billion.
Speaker 1:We may never see an updated fiscal note.
Speaker 2:I know, I know that's the insanity here, the nuttiness that's going on um. I, I just don't. I, I don't know how people can, I don't know how people can miss it. I, I really don't. I just don't know how people can see this and go. This is okay.
Speaker 1:This is totally fine well, michael, but they are. I mean, even the sean dugan article misses it. The sean dugan article focuses on the one near number. He doesn't get anybody and I and sean's a reporter, I assume he talked about sean mcguire.
Speaker 1:Not the good, I'm sorry yeah, sean mcguire I sean's a decent reporter and I assume that that he talked to enough people that at least somebody, if somebody was thinking about it, somebody would have said whoa, you think this is bad? Look at the 10th year. What happens in the 10th year? And nobody said that. At least he doesn't quote him in the article Right?
Speaker 1:We're also focused on trying to get through this next year and responding to the crisis of the moment that we're losing focus on where this all is taking us, and it's not. You know, you don't even hear. All you hear from legislators is yeah, we're going to have to give something. Everybody's in favor of something, for some increased spending for K-12, for education, but nobody is talking about revenue, the revenue side. Nobody's talking about how they're going to pay for it. So they're by. I mean, even the conservatives, even the so-called conservatives, by omission, are leaving it to PFD cuts, leaving it to deeper and deeper PFD cuts. But as as as the play out of SB, of HB 69 shows by FB, even next year, we're over that limit, we blow through that limit. So I, you know, I, I we've barely got current thinkers in the legislature. I guess we don't have forward thinkers in the legislature and the governor hasn't talked about it. I mean, he's talked about education. He's talked about increased education spending. He's talked about his $200 million that he wants to increase education spending by.
Speaker 1:And he's not talking about how the hell he's going to pay for it?
Speaker 2:Well, but I will say at least that is a one-time funding, it's not in perpet. How the hell he's going to pay for it? Well, but I will say at least that is a one-time funding, it's not in perpetuity. I mean, again, looking at your magic chart here, I just want to throw that out there Wrong one, let me get the right number. Looking at this chart again here, as you look at the increase, why will you not go there? We go. I mean it's $50 million plus $1 million every year, essentially. And it goes up because it's based on the total amount. So $51, $55, $56, it'll be $58 the next year. It's $59 or $60 the following year. It's $62 the next year, every year going up. And we already had a baked-in escalator of what $150 million a year, baked in escalator of what 150 million dollars a year. Now you're just going to see that means in 20 years it'll be close to, it'll be close to 1.8 billion dollars. Based on that math, right? I mean?
Speaker 1:it's in 20 years the us will want to give us back to russia. I mean, yeah, this is such sad shape.
Speaker 2:This is nutty. I mean, how do you continue to pay for it? I know everybody wants a fish in every pot, but I mean, how do you, how do you pay for it and keep people here? This is nutty. It is absolutely nuttier than squirrel poo. I do not understand what's going on. And you're right, these other, these legislators, they need to start shaking this fiscal note and saying what are we doing? What are we doing? I'm just shaking my head. I am shaking my head that they just like well, okay, you know, how did we? How did we get here, man?
Speaker 1:All right, incrementally, we got here thinking year to year to year to year, with very few people thinking about the long term.
Speaker 2:Yeah, I would agree with that 100%. Number two of the weekly top three. Well, the legislature may have bowed out. It looks like it's up to the RCA to protect Alaskans, which doesn't give me a tremendous amount of confidence based on their past record. But Brad, the RCA.
Speaker 1:Well, let's focus on the legislature first. There was some interesting developments this past week in the legislature about Cook Inlet energy and they get summed up well in a. Maybe it's Sean, no, yeah, this is a Sean McGuire article from yesterday on the Cook Inlet. The headline is Governor Dunleavy points to temporary and painful measures to address Cook Inlet gas crunch. As legislators say, their role may be limited After a year in which, you know, legislators couldn't talk about the solutions that they were going to have for the Cook Inlet enough. You know we're going to reduce the royalty that was going to lead to an explosion in Cook Inlet development. We're going to have phase one of the North Slope pipeline of the AKLNG project come down. That's going to solve it After a year of delay, frankly, in facing reality, while the legislators went through all of these fantasy solutions, they're finally facing up to the fact that they really can't do anything about it. Here's the quote from Sean's article Alaska legislators have broadly said energy reforms are a top priority this year, but they say the legislature's role could be limited in addressing a looming shortfall of Cook Inlet gas.
Speaker 1:Anchorage Republican Senator Kathy Giesel. Let's still call her a Republican, anyway. Anchorage Republican Senator Kathy Giesel, chair of the Senate Resources Committee, suggested critical decisions such as importing gas should largely be left to the utilities and the private sector. It's a business case. I don't think the legislature should insert themselves. We're just going to gum it up. You've already gummed it up. You've already gummed it up with the year delay, messing around with fantasy solutions like Cook Inlet, royalty Relief and Phase 1 of the AKLNG project. Thank you for finally backing out of it, thank you for finally recognizing the reality, economic reality. But you've already gummed it up by that year delay. And now we're a year closer to the shortfall. We're a year farther down the road and we've got NSTAR off in some other world talking about, you know, lining themselves up with a small cap, small capitalized, inexperienced player to bring in LNG supplies on land that they don't own Neither one of them owns, at a new LNG facility to be built in the cooking land. We've got a mess, but at least it's good news that the legislature is backing out of it, because the legislature can only make this worse, like they did last year, like they did delaying reality, the reality of it, by a, by talking about all these grand solutions that they were going to come up with. At least if the legislature is finally recognizing that they can't do anything about it, at least that's a good thing.
Speaker 1:But here's the deal. The RCA, the Regulatory Commission of Alaska, now needs to step in and do its job. What we've got are monopolists NSTAR, chugach, monopoly utilities that are granted certificates don't have competition protected against competition. What we've got now are them making unfettered decisions. You know John Sims likes to focus on the statute that says it's the utility's decision to make all of these choices about supply and they have an obligation for adequate service. They have an obligation for reasonable cost of utilities decision. Well, that's only half the truth. The other half of the truth is the RCA has a regulatory responsibility, created because the utilities have a monopoly position. The RCA is there to protect Alaskans against utilities screwing up and have statutory authority statutory authorities to be able to step in when the utilities are in the process of screwing up, because there's no fallback if the utilities screw up, they're monopolies. The RCA has statutory authorities to be able to step in and correct the utilities or at least understand what the utilities are doing. The RCA hasn't done that yet.
Speaker 1:The hearing Roger Marks wrote a piece in the an op-ed in the ADN that, michael, you sent to me this morning, is a good one to read. Last week, or last two weeks ago, nstar did a presentation on mid January and started a presentation in front of the RCA talking about what it's doing. The RCA's response was well, we're thinking, we think you're late, we don't think this is going to solve it. Well, if the RCA thinks it's not going to solve it, it's the RCA's responsibility to step in and do something that does solve it. It's not that you can just say utilities, well, you did a bad job, too bad on you.
Speaker 2:You don't just slap their hand.
Speaker 1:You actually do something and say well, since you're not doing it, here's what you're going to do, and instead of the legislature, you know, screwing around with what it screwed around last year and at least starting this year screwing around again before it finally wakes up. Instead of that, the RCA actually can do something about it by directing the utility and actually can do something about it by directing the utility and actually should do something about it. Nstar's made a proposal that makes no sense. Nstar's made a proposal to build a brand new LNG facility that's tied to someone who's doing the AK LNG project, or purportedly doing the AK LNG project, on land that neither of them own, with a proposal by an operator who has no experience doing projects of this type and is underfunded in doing the projects, that it's bitten off Right next to the land where this facility is located. Where this proposed facility is to be located is an existing LNG plant that's already certificated by the FERC to import gas. It's the old export facility but when Marathon bought it from Phillips they recertificated it to import gas because at the time Marathon was concerned, or probably still is concerned, about Hillcorp running out of gas or Hillcorp costing or charging so much that it was more economic to bring in LNG. Marathon got that facility recertificated to import gas. It's only certificated at the moment to import gas for Marathon, but it's no big step to expand that certification to include importation for Marathon and others. The big analysis of whether it should be used for importation has already gone by. It's already been certificated, already been approved for that purpose.
Speaker 1:So we've got Instar out there running around saying, oh, we're going to build a new facility, maybe with a company who's not had any experience doing this, with a company that's undercapitalized, with a company that has a clear conflict of interest that we talked about last week in focusing on the AKLNG project the big project at the same time as they're supposed to be focusing on this project with Instar. We have Instar going down that track, while we've got this existing LNG facility sitting right there on the ground, built right there next door, and we don't know. We have no clue where Chugach and MEA are, who have expiration dates on their Hillcorp contracts sooner than NSTAR's presumably, are going to run into this situation sooner than NSTAR have been talking about imported LNG, but we have no clue about what they're doing because they haven't even made a presentation to the RCA. They haven't even come up with a proposal about how they're going to go forward on this. So I'm thankful the legislature is backing out, because all they've done is delayed, focusing on the real issue, and all they've done is, to use Senator Giesel's words, gum up the works.
Speaker 1:I'm thankful the legislature is backing out. They needed to before they even got in last year. But now we need the RCA to step up. Now we need the Regulatory Commission of Alaska appointed, whose members are appointed by the governor. You want to point at somebody and say it's your responsibility, whose members are appointed by the governor. You want to point at somebody and say it's your responsibility, whose members are appointed by the governor. It's up to the RCA to step up. Uh and, uh, and and and take, take hold of the responsibilities the statute gives them to protect Alaska consumers.
Speaker 2:And that's been our big question this whole time is why isn't the? I mean, we thought, you know, when they had that meeting and and uh Hicks, everybody was, oh you know, slapping them down. But the problem is they're offering no other solution. They are the governing body, they're the ones that can direct. And I will say again, credit where credit's due. Kathy Giesel, I guess even a stopped clock is right twice a day. Kathy Giesel saying that this is not the legislative's purview was shocking, but surprising. I mean a welcome surprise, I guess I should say. Again, too little, too late. They spent all of last session dithering about what they were going to do about the gas issue and the whole election season, and then, coming into the beginning of this session, what were we going to do about it? And then they finally decided we're not going to do anything because it's not our place. Well, thank God, somebody finally figured it out and John Sims can't apparently keep kicking the can down the road hoping that somebody else will pick up the bill.
Speaker 1:That may be part of Sims' strategy. I mean, doing this deal with Glenn Farn may be part of his strategy to hopefully jerk the legislature in, Hopefully say, oh yeah, that didn't work out, so what are we going to do? Now Somebody bail us out. It is a proposal designed to fail. It's not a proposal designed to succeed. Maybe he's thinking that he's going to pull the legislature in, yet. Maybe he's thinking that he's going to pull the legislature in, yet. Hopefully he will wake up to the reality also that the legislature is not going to be a cavalry coming over the hill because, frankly, they don't have any guns, they don't have any way of fixing it coming over the hill. So hopefully he's going to wake up to that and hopefully the RCA is going to wake up to the fact that NSTAR really doesn't know what it's doing and we don't even know what Chugach and MEA are doing.
Speaker 2:Well, before we go here. We only got about two minutes here. But why? Why paint me a picture as an oil and gas guy former oil and gas guy, you've been in the business, for you were in the business for years, you're you know, you're intimately familiar with all that stuff. When you look at this, why would NSTAR propose standing up a whole new plant on a patch of land they don't even own in this potential, when there's one, like you said, right there, where probably I don't know 80% of the work has already been done. A lot of the heavy lifting has already been done. It only requires a monetary investment and recertification. Why would that just guess here? Why would that happen?
Speaker 1:Could be that Marathon's asking too high a price. I mean, the facility's owned by Marathon, they have the title to it, they are the ones that hold the permits and it could be that Marathon's asking too high a price. But that's a question the RCA ought to be asking. The question that the RCA ought to be asking why are you not pursuing something with Marathon? Why did you give up on the floating LNG project that you had, that you talked about and we approved $50 million in spending for on pipelines? Why did you give up on that? Go through in detail what your analysis is. The other thing is that you know sims may be hoping that that ultimately the legislature pays for the imported lng plant and and he knows his, his parent company knows if they do the deal with merit with nstar, they're going to have to pay, or do the deal with marathon, they're going to have to pay for it. So maybe he's still hoping, maybe they're still hoping that the legislature comes in and pays for it.
Speaker 2:With what money? With what money? I mean, I mean again, with what money? Oh man, this is, yeah, I mean, I'm just trying to, I'm just trying to pick this out. Hea, homer Electric Association. Their contract ends next month, Next month, and the president of HEA was in front of the RCA board when that big meeting went down and Hicks and everybody was slapping everybody on the wrist and they were asking him don't you lose? He goes. No, I don't lose any sleep over that and I'm like it's two months away and you're not losing any sleep. How much do you get paid again? Maybe I should take that job and do it part-time and and figure, I mean it's, it's crazy. I mean there, there really is a big, there's a, there's a, there is a, a reckoning coming and everybody's just walking around. Maybe they're just waiting to point the fingers at each other.
Speaker 1:I don't even know Well, in a state that doesn't have gas, or in a in a. So HEA, hea is defensible in this or explainable? How about this? Probably not defensible. Explainable in the sense that they're the tail way out, or they're way out on the tail of the dog and they've got an interruptible contract, as Matt Hertz has pointed out, an interruptible contract with, with N star, for additional supplies for a longer term. But but there's still the tail, there's still a fairly small player in the tail, out on the dog or out on the end of the tail of the dog, and they're saying look, this is going to get solved somehow and and we'll be part of the solution. So we can't do anything alone. We can't go in, we don't have enough money to go in and buy an LNG plant and set up an LNG import facility on our own. So whatever the big dogs, mstar Chugach and MEA, decide to do, we'll be part of. That is basically how Homer is looking at this thing.
Speaker 1:But the question is what are NSTAR Chugach and MEA doing? How are they addressing it? Particularly, I mean, nstar at least has come up with a plan, not a good one, not the right one, but at least they've come up with a plan. We don't know what Chugach and MEA are doing. The last thing we heard from Chugach was a December editorial in the ADN by the chairman of the board, their chairman of the board and the president, in which they said we're pursuing LNG period full stop. We haven't heard anything about that. Not a word since, yeah, about what the proposal is and about how they're going to do it, since and Sims went out of his way not to include MEA and Chugach as part of the discussion around what he's doing with Glen Farn.
Speaker 1:So we've got to, as the date comes closer, and I blame the legislature and I blame the governor for part of this, because they wasted all last year claiming that they could do something about it and saying they were going to do something about it. And so Sims said look, legislature's going to do something about it, I don't need to worry about it, legislature's going to do something about it. And they wasted all last year going in circles about things that they can't deal, that they can't do, that they aren't going to do, and so you know, we lost a year in that process. But now the year's over and now it's on the utilities. Now Senator Giesel says it's on the utilities. What are the utilities doing?
Speaker 1:And that's the question the RCA needs to be asking and the RCA needs to be evaluating. Problem is we've got some RCA commissioners that don't really have any utility experience, don't have any utility background, are Republicans who think they ought to be deregulating things anyway. But you don't deregulate to a monopolist, I mean. That's why the RCA is set up to protect consumers against the monopolist, to balance the negotiations, to balance the power between the monopolist and consumers. And the RCA has a role to play here. As much as they may not want to play it, they have a role to play here and they need to get on with playing that role or else we're going to waste yet another year of going in circles about people saying, well, we don't have the ball, who has the ball? You have the ball, you have the ball.
Speaker 2:Well, I mean, homer's is next month, but 2027 is right around the corner and it's early 2027 for everybody else. So you got what? 18 months to get your ducks in a row and figure all this out? It's not long, it's not long at all. And unless they do something, I just don't know. I don't know. And it's a 10% increase this year, what is it next year? What is it if they don't get this done in time and there's a stop gap of a year or two? While they're trying to figure it out, what's the heating and electricity costs go to then?
Speaker 1:I mean it's crazy Sims has talked about on a spot basis, if this thing doesn't get solved in time on a spot basis, if this thing doesn't get solved in time, trucking LNG up through Canada to Alaska, up on the Alaska Highway, trucking LNG over the Alaska Highway into South Central. I don't have any clue what the cost of that is, but it's got to be a hell of a lot more expensive than the proposals that have been on the table so far.
Speaker 2:Brad Keithley Alaskans, for Sustainable Budgets, the weekly top three. I thought the Roger Marks article was very good to kind of summate this as well. That was timely for today, so you can go look at it. I'll post it up here in just a sec. Brad Keithley Alaskans, for Sustainable Budgets, is our guest. The Weekly Top Three continues with number three, the Pig 3-0. What do we got here? Well, how's that bold leadership working out for us so far? Right, because some are calling for bold leadership. I mean, I guess you could be argued that all this spending is bold leadership. I don't know, brad, what. What do you say with a bold leadership that we're being asked to look for?
Speaker 1:Well, this is. This is people are starting to focus on the 2026 governor's race and they're starting to position themselves. And they're starting to position themselves. Those who are interested in running are starting to position themselves around themes that they're trying out for their campaigns. Some of them ClickBishop is a good example want to talk about infrastructure, rebuilding Alaska. You know, building new things, employing Alaskans to build new things. That's sort of the theme behind the AKL and G line as well Employing Alaskans to build new things, although Senator Giesel points out less than less than 50% of the people employed to build the pipeline would be Alaskans.
Speaker 1:It'd be people that were importing from the lower 48, but you know, build big new things, big bold. I've got a publisher, jeff Lahanfield, who's occasionally talked about running for governor, and his big bold new thing is building the Kinnick Arm Bridge. That's going to solve housing. That's going to solve, you know, homelessness. It's going to solve all sorts of things if we we build the connect our own bridge because it's going to open up the land over on the Mat-Su side of the bridge to to additional development and provide a second route up to up to the Mat-Su and all and all sorts of good things. So people are positioning themselves about, about to for this run by talking about being big and bold.
Speaker 1:You know taking major steps, but they all cost money and if the current debate about HB 69 is not focusing us yet on where we're headed, we'll get there at some point. We'll finally focus on it at some point. We don't have the money, the state doesn't have the money, to be big and bold. The state barely has well, doesn't even have enough money to pay its budget. I mean legislative finances, told us, in FY26, we're $200 million short of financing even a bare bones budget. At FY25 service levels, we're $200 million short at a 25S75 POMV split, 25 to the PFD, 75 to government we're two $200 million short Even at that. When you look at the numbers that play out over time, particularly with the HB 69 with you, when you look at the HB 69 fiscal note, we don't have the money we're, we're we, we run through the entire POMV completely eliminate, if we pass HB 69, completely eliminate the PFD next year.
Speaker 1:So when people talk about being big and bold, that may be a theme for a campaign that looks good two years out, but I think when we get to the time, it's going to look ridiculous, frankly, to be talking about spending additional money that the state doesn't have on big, bold, new projects. I think what we need to be thinking about now, what candidates need to be thinking about, what people need to be thinking about when they're encouraging certain people to run for office, is fiscal responsibility. We're going to need a governor in two years, looking two years down the road. We're going to need a governor who talks about, who talks and has plans for fiscal responsibility and that's not just talking about curbing spending, like Dunleavy did in. What was that? 2020, no, 2008, 2000, 2018, whatever the hell. You're right in yeah 2018.
Speaker 1:They all run together after a while 2018. It's not I mean, it's not just curbing spending, like Dunleavy talked about in 2018. We passed that point. We tried that in the legislative session in 2019, didn't work, and Dunleavy hasn't come back to it since. We've tried. That Didn't work.
Speaker 1:So we're going to need a governor who, candidates who reasonably talk about the revenue side, who reasonably talk about what's the responsible thing to do on the revenue side, and some of them may talk about wiping out the PFD, but that's only going to get you so far. If we do HB 69 or anything approaching HB 69, we're going to have wiped out the PFD by the time we get to the campaign. So we need people who are thinking about now and putting together their platforms now based upon the situation we're going to be in in 2026. And that situation that we're going to be in in FY26 is going to be a pretty bad one from a fiscal standpoint. Production will be ramping up and some will claim oh, with production wrapping up, happy days are here again. Well, it's not the way the oil tax credit works. The revenues from that, if they ever show up, show up way out in the future somewhere and they can be delayed even further than way out in the future. They can disappear entirely under the way the current oil tax structure works.
Speaker 1:So we need people who are going to address the fiscal reality that we face in FY26. Talking about big, bold solutions may seem to be the right thing to talk about now. Resolutions may seem to be the right thing to talk about now. Right, may seem to be the right thing. That appeals now. But you're not putting yourself two years out. You're not thinking through what happens in the meantime and where the state's fiscal situation is when we get to the 2026 election cycle.
Speaker 2:What we need. If you're talking about bold, what we need is somebody with bold vision, somebody who can see beyond the next election cycle, the next legislative session, somebody who can look down the road and say this is where we need to be. I mean, what you did with that fiscal note was not rocket science, right? You just extrapolated out the amount that because they put it on the second page there the percentage that they're multiplying it by and everything else. Anybody with a calculator and a piece of paper could figure out that this is going to cost us a billion dollars in 10 years, and nobody you know. A billion dollars a year in 10 years, and so nobody you know. But they're just not thinking beyond the next cycle, the next session, the next. We need somebody with bold, long-term vision, and that's something we complained about on the show for 25 years is that nobody is thinking beyond the next budget cycle.
Speaker 1:Yeah, and it's big, bold vision, michael. I mean, I think when we think about big and bold, click will want us to think about big and bold in terms of building things. Oh, we're going to build out the infrastructure. We're going to make Alaska great again by building out the infrastructure. Because Click comes from the construction trades. That's his bread and butter, that's where he wants people employed, that's where he thinks the jobs ought to be. When people think about big and bold, they think about building things.
Speaker 1:What we need is somebody who. I guess what we're saying in different ways is we need somebody who's big and bold about thinking about how you pay for things, because we've gotten to the point. We're getting to the point in this state. We've already gotten to the point. I mean the $200 million deficit, even at 75-25.
Speaker 1:We've gotten to the point in this state where we can't pay for everything that we've already said we want. We can't pay for it. There's not enough money to pay for even that, much less anything else. So we need someone who comes, who is to be big and bold, someone who comes in and thinks about how are we going to pay for this stuff and how are we going to pay for it in a way that has the lowest adverse impact on the economy and has the lowest adverse impact on Alaskans. How are we going to spread this burden in a way that makes life better off for all of us and gives us maybe the capacity to increase a little bit to do things that we need to do to sort of finish out Alaska?
Speaker 1:But we need somebody, first and foremost, who's focusing on the pay-for side as opposed to the I want to spend more, and here's how I'm going to spend more, and here's why you ought to vote for me, because I'm going to spend more going in this direction.
Speaker 2:Right, I don't know, brian, this whole thing is just. I mean, we can see it. Why, why is it so hard for the legislature to see what we've been talking about? I mean, you know, why is it so hard for them to see that it can't be? I mean, I guess, unless it's intentional and they want access to the big pot of money, and that's the whole plan, and it's been the plan, the whole, although I don't know if I would ascribe that much forethought to them or Machiavellian kind of you know, planning. It just seems like it's just more at this point. They just want more.
Speaker 1:They would explain it. So let's ask how they would explain it. So let's ask how they would explain it. They would explain it in terms of their constituents wanting more and their constituents not wanting to pay for it themselves, at least their donor class not wanting to pay for it themselves. They want more, but they don't want to pay for it. So how do you do that? I mean, they send the legislators off to the legislature to figure that out, and the way you do that is by shifting the cost of middle and lower income Alaska families through PFD cuts. You keep spending, but, but we're about to hit the point where you can't do that anymore. So so what's going to? What's going to happen in the and I think I think you know, as we've talked about on previous shows, I think this is all just a setup to merging, to the crisis, where we have to merge the earnings reserve with the corpus. That's the solution to everything, and then we'll start tinkering with how much we're going to be taking through our POMV draw in order to keep funding this stuff. But they would say it's the constituents that are driving it and I would lay some of the blame back with the so-called conservative legislators, who aren't talking about it in terms of how do you pay for this additional stuff, but are talking about it just in terms of raw opposition to the proposed spending.
Speaker 1:So, with HB 69, various legislators, conservatives and progressives, have said well, we're going to end up with something. We got to increase spending to the school system in some way. Well, there's not a discussion of how are you going to pay for that. There's not a discussion of are you ready for taxes? Is that what you want in order to, in order to pay for, in order to pay for this additional spending? I mean, to me, the way to push back sort of has me agreeing with Americans for prosperity, in a way, the me. The way to push back on this stuff is is to say look, you can have this stuff, but you're going to have to pay for it, and to pay for it, we're going to have to have taxes. And so I'm going to propose an amendment. It takes a strong conservative to do this, I suppose, but I'm going to propose an amendment that says if you pass this bill, then we're going to have taxes and this is how we're going to pay for it and create opposition, create a recognition in the state that this stuff doesn't come for free, that somebody's going to have to pay for it, and this is going to be the target audience for who's going to pay for it. We don't have. To my knowledge, we don't have one revenue bill in the legislature this time. We don't have anything about oil taxes. We don't have anything about oil taxes. We don't have anything about sales taxes. We don't have anything about any sort of revenue. So we're just admitting, everybody's admitting, it's going to come out of the PFD, but HB 69 runs us out of that in two years. So it's a combination.
Speaker 1:Michael, I guess the answer is it's a combination of constituents pushing for more. Legislators saying, okay, I'll give you more. Constituents saying, but I don't want to pay for it. Legislators saying, okay, well, I figured out a way where you don't have to pay for it. You, my donors, don't have to pay for it. You, my donors, don't have to pay for it. And that just keeps going and no one recognizing, no one identifying, no one educating constituents on where that takes us in the long term, on where that's going to take us in terms of who pays.
Speaker 2:Well, and that's. I mean, that's been part of the problem the whole time is that nobody's been asking who pays. Uh, donna just sent me a text that said ledge finance. Laid out the numbers for hb 69 at the house education committee. Brad may have missed it, um, but did they respond? I mean, did they look at it and go well, this is a billion dollars, this is.
Speaker 2:This is going to be problematic. How, if we can't pay for it today, how are we going to pay for it tomorrow? How are we going to be problematic? If we can't pay for it today, how are we going to pay for it tomorrow? How are we going to pay for it next year If we're already $200 million upside down at this point? How do we pay for it when it's a billion dollars a year, or $800 or $700 or $600 million a year? Nobody's asking. Maybe that's when Gary Stevens said wow, it's going to be so difficult. I mean, maybe I just don't it's going to be so difficult. I mean maybe that I just don't know. But this should not be a shock or a surprise to anybody that's been paying attention.
Speaker 1:No, no, and the House Education Committee was yesterday, so it got laid out yesterday, but Sean didn't include it in his article today.
Speaker 2:Which again is still I mean congrats to Sean McGuire for finally welcome to the party pal talking about the who pays function of it and what the costs are, although he doesn't really bring up who pays. He just talks about the costs of it, but it's not even the true costs, which is again, how are people supposed to make decision if they don't have? And this goes back to my whole problem and heartburn with some of the journalists in this state is that they're not talking about these things. We're talking about it on the show and nobody else really seems to be bringing up the ultimate cost of these things in the long run, which is frustrating for sure.
Speaker 1:Yeah, I would. I would encourage to the extent that members of the House minority or the Senate minority are listening to the show, I would encourage you to talk about it at your briefings. I would encourage you to talk about the long-term costs of these things and running through the PFD and where the hell is this taking us, because that's the only thing that the journalists are responding to. The journalists are responding to what the legislators talk about. They're not responding, or the special interests, the industry. They're not responding to anything else. They're not doing any thinking on their own. They're just responding to what people are saying down in Juneau. So I would encourage, to the extent there are minority members, either House or Senate, listening to the show, I would encourage you to talk about that All right, brad.
Speaker 2:one minute final thoughts here on today. I know it's been tough, but give us your final word for today.
Speaker 1:Long-term that's the word of the day. Think long-term. Think about what you're doing now in the long-term. Think about what you're doing now on the fiscal side in the long-term. Think about what you're doing now in the Cook Inlet legislature for the long term. Get out of the way. Let the RCA do its job.
Speaker 2:Boldness in thought and in how do we pay a billion dollar appropriation and the RCA not doing their job? That's the weekly top three, and it's kind of painful to keep bringing it up, but that's we. We got to start thinking this way because otherwise, well, two years the PFD is gone. That's, that's, that's the bottom line at this point. Brad Keithley Alaskans for Sustainable Budgets the Weekly Top Three. Thank you, my friend. I appreciate you coming on board.
Speaker 1:Michael, as always, thanks for having me. Well, that's a wrap for another 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 next edition of the Weekly Top Three.
