The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (4.28.2025)
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 April 28, 2025.
This week, our top 3 issues are these: 1) we explain how a recent op-ed by Larry Persily essentially lays out the same fiscal approach as the Legislature’s 2021 Fiscal Policy Working Group, and discuss how to implement both (2:13); 2) we discuss the impact of the Senate’s vote yesterday permanently to increase state spending on K-12, and with it, the state’s long-term deficit (20:19); and 3) we discuss the likely impact on Alaska of coming decisions at the federal level to shift a material share of the federal spending burden to the states (38:41).
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
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 April 28, 2025. The weekly top three is a regular segment on the Michael Duke 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 610 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, we explain how a recent op-ed by Larry Persily essentially lays out the same fiscal approach as the legislature's 2021 fiscal policy working group and explores how we implement it. Second, we discussed the impact of the Senate's vote yesterday to increase state spending and, with it, the state's long-term deficit. And third, we discussed the likely impact of coming decisions at the federal level to shift a significant share of the federal spending burden to the states. And now let's join Michael.
Speaker 2:Brad Keithley, of course, from Alaskans for Sustainable Budgets. He comes in every week to give us his take on what's happening out there and the big three stories. And today we're going to start with number one, which I never thought we'd hear, which is kind of like. Maybe we agree with Larry Persily, which is, I mean, that would be unheard of, but he may have just endorsed the fiscal policy working group plan. I don't know, brad, what do you mean by this? Give me your take here.
Speaker 1:So last week personally penned an op-ed in the ADN and I'm sure it'll show up elsewhere. The title is Alaska doesn't have a spending or revenue problem, it has an expectations problem. And I've seen this op-ed picked up by a bunch of people on Facebook and Twitter and elsewhere Blue Sky praising it and talking about you know, larry's, you know finally, you know, broken through, and he's articulating the problem well. Well, it's not novel, it's not new, it's not a new articulation of the problem. It is for him, but it's not generally. Here's the crux of what Persley says in his op-ed the most effective treatment and he's talking about the budget, of course, the most effective treatment is going to include everything from everyone taxes and spending cuts and a smaller dividend, taxes on oil companies, other businesses and individuals share the burden, and taxes can be held to a reasonable level that will not destroy industry or families. Well, let's go back to the 2021 Legislative Fiscal Policy Working Group and look at what their recommendation was. Their recommendation was a holistic, what we've called on the program, a holistic approach, which was a little bit of everything A little bit of spending cuts, a little bit of PFD restructuring, a little bit of taxes, a spending cap, a variety of things and here was their concluding paragraph.
Speaker 1:The FPWG, which is the Fiscal Policy Working Group, believes the legislature must pass a comprehensive solution. Fpwg members do not support addressing only one or two issues to the exclusion of others. The FPWG believes addressing these issues requires a comprehensive solution that solves not only a fiscal challenge but a political challenge as well. In other words, a little bit from everyone. Go back to the governors this is the thing that always amazes. From everyone. Go back to the governor's this is the thing that always amazes me.
Speaker 1:I go back to the governor's FY21 10-year plan and that 10-year plan had a number of scenarios. It was sort of like the three bears right. It was tax me too much, cut the PFD too much, spend too much. But scenario five, which I praised at the time and have continued to think was a great insight into how to solve this, scenario five was called the balanced approach and it had a little bit of everything. It had a little bit of PFD cuts, it had a little bit of spending cuts, had a little bit of taxes spread across a very broad base so that no one group, a little bit of oil taxes, no one group was hit too much.
Speaker 1:The concluding paragraph of scenario five was this the past several legislative sessions have illustrated that solutions need to be moderate to earn the people's approval. Previous proposals involving budget reductions or PF decreases or taxes faced skepticism when the Alaska citizenry believed that they went too far on any one group. Proponents of a balanced approach suggest that everyone give a little so that no group of Alaskans faces undue harm. That goes, that's the, that's the governor's 20, the governor's 2021 OMB scenario. Scenario five, which, after the, after the three bears was, was sort of the, the uh, the solution that, that, that that proposed, not adopted by the legislature, but just right, yeah, yeah, the just right solution.
Speaker 1:Goldilocks that was a Goldilocks and the three bears I knew I'd. I knew I'd come back to that at some point, so it so personally isn't saying anything new. It's new for personally because personally it's typically been beat up on PFDs that are horrible. They're free money. We ought to take that for government or beat up on the old companies. Persily's typically been sort of one of the focus on one and take it all from them approach. This is new for him, but it's not new overall. If you go back and look at the fiscal policy the 2021 fiscal policy working group. If you go back and look at the governor's fiscal year 2021 budget, which would have been written in 2020, the year before the fiscal policy working group. If you go back and look at what others have said all along, what personally is saying is consistent with that a little bit from everyone, and that, in fact, is what Ben Carpenter tried to do last year, last session. Rather with Ways and Means, he tried to develop a group of proposals that, taken together, would solve the budget issue overall, but it's just never. It has never gelled.
Speaker 1:I wrote a column a couple of years ago that said, the title of which was we all know what the answer is, why aren't we doing it? And it was built on the governor's, the OMB's FY21 10-year plan, following up on the fiscal policy working group, and said we all know what the answer is it's a little bit from everyone it's a little. Everybody takes a little bit, including spending with a spending cap built on top of it. Everyone takes a little bit to including spending with a spending cap built on top of it. Everyone takes a little bit to resolve this. And the question I put in that column was why aren't we doing it? And the answer is that no one will give. The answer is the oil companies won't give. You propose even a dime tax on them. It's oh my God, the sky's falling. We can't do that, even though the state's take from the oil industry over the next 10 years is hugely lower than what the state's take has been from the oil industry just the last 10 years. The way SB21 is operating, it's lowering the take even more from the oil industry. But no, no, we can't give up a dime on that PFD cuts. We can't give up a dime on that Taxes we can't give up a dime on that. And so when you take all this stuff in component pieces, people pile on one piece of it or one piece of it and say we can't do that and without that, without each piece contributing, what happens is the burden falls on the other pieces and increases the burden remaining on the other pieces. And so it's going to take an approach like the fiscal policy working group talked about, like the governor talked about in the FY21 10-year plan and like personally he's talking about. It's going to take an approach that takes a little bit from everyone, including spending cuts and some spending cuts and the spending cap.
Speaker 1:The problem with Ben's approach looking back on it, the problem with Ben's approach was it came up in component pieces and so you voted up or down on each component piece. You weren't voting on a package, you were voting up or down on each component piece. And I understand and I know that the problem was ledge, ledge, legal, uh gave an opinion that you couldn't, that you couldn't tie it all together. But what we, what we've learned over time and we saw it again yesterday We'll talk about this in the second segment but what we saw yesterday in the education vote was you can tie pieces together. You can make a piece contingent on other pieces falling into place Right.
Speaker 1:What they did yesterday with Rob Yance amendment was he said we want to increase spending in a certain area but it's contingent on passing this tax that we have up before the House, now passed through the Senate, up before the House, contingent on passing that to fund that additional spending that he wanted to do.
Speaker 1:We know that we can tie them together through these contingent pieces and I think what it's going to take in this session or the next session or some session to get to a solution is a package that's tied together in some fashion with contingencies or otherwise, or just done as a total package and said the subject of the package is fiscal policy, as opposed to each of these individual pieces.
Speaker 1:Tie it together and then put personally to the test, put the governor to the test, put the fiscal policy working group members to the test and say, look, you guys said it had to be a holistic approach, it had to be an all-in approach. All right, that's what this does Now. Are you going to vote on that approach in total or are you going to? Are you going to vote that down, inconsistent with what you said otherwise? That it sort of gives it another impetus, another voice behind this, all of the above approach, and I think people ought to take advantage of that. Legislators ought to take advantage of that to say, look, we don't always agree with what he has to say. We certainly don't always agree with what he has to say, but in this case it makes some sense to get the holistic approach and put together that package. Try to recreate the Humpty Dumpty that Ben had in ways and means that the fiscal policy working group put out there. Try to recreate that and get it on the floor as a total package, as opposed to the component pieces.
Speaker 2:Well, and I agree, I think the fiscal policy working group idea is a good idea. It has to be holistic. What I found interesting about Persily's piece is that he analyzed every piece of it, except of course for the effect of the PFD taking on the economy or anything else. It was, you know, the effect of what would oil taxes do, oh, and what would that be, oh, and what would this do. But he didn't look at anything that had to do with the PFD because of course, again, that's his nemesis. That's what he wants to see struck down. He'd rather see that all spent on government, but he's even coming around to the idea that it can't. Even that can't fix the hole. I mean, that's the problem is now, the gap is so big that even taking the full PFD would not fix the hole Right.
Speaker 1:And I think to some degree he's reflecting some of what's going on in the legislature. We seem to have finally hit the bottom among a lot of legislators not all of them, but we seem to finally have hit the bottom of PFD cuts, the 2575,. The Senate Finance Committee seems to have drawn a line under that. The House didn't, but my understanding is from talking to people, that there's a lot of members of the House that believe that that should be the line as well and sort of relied on the Senate to create that line when the House budget went over to the Senate.
Speaker 1:So to some degree I think we may be hitting the floor of what people are willing to tolerate. So to some degree I think we may be hitting the floor of what people are willing to tolerate, at least in this legislature, what people are willing to tolerate in terms of PFD cuts, and so that's leading personally and others to say, okay, well, if that's the floor, then I got to deal with the fact that we still don't have enough revenue to cover all the spending that we want to do or that we've passed even, and so I'm going to have. We're going to have to talk about other things as well. So I think to some degree what he's reflecting in here is is the is the discussion going on among some legislators that that we're not going to go below 2575. And so he's having to deal with that.
Speaker 2:This is going to be interesting, especially after the Senate had to claw back that education bill from yesterday because that contingency that they put in the language turned out to be unconstitutional the way that it was written, and they're going to have to pull it back. But you know, I don't know, Maybe somebody's waking up to something there quickly here.
Speaker 1:Well, the contingency itself wasn't, isn't unconstitutional the way it was written. They used the word shall, as opposed to may, right um, and that was the. That was the problem with the contingency, not the contingency itself we'll see.
Speaker 2:We'll see what it looks like here as we continue on. I gotta say that, uh, this whole thing is just so, uh, irritating for me to watch because, again, persilly has been so consistent in his banging on the pfd and yet not a single, not a single word about what that effect is on the, on the uh, on the economy, when stuff like that that happens. It's, it's truly infuriating. Um, let's see. I saw a comment from um. The only one who gives, says Kevin McCabe, are Alaskans who lose their PFD without a choice. I mean, it's true, you know, we, we've got to right. They're the only ones that are giving at this point. Nobody else really wants to give, the oil companies, like you said. You you talk about a nickel and they start having a freak out and every other organization out there. We couldn't possibly live on less. The only ones who give are the Alaskans.
Speaker 1:Yeah, certainly that's been the case up until this point. The question is whether that can be changed going forward. I have to think, maybe because maybe it's the optimist in me which would shock everybody that there's an optimist part of me but maybe it's the optimist in me. I have to think that if there was a comprehensive package where everybody was giving a little bit, not broken into component pieces, but a comprehensive package where everybody was giving a little bit, I would think that oil companies would be more hard, would find it more difficult to argue against their piece of it. Because the response is well, look, we're getting middle and lower income Alaska families to give up a share of accept taxes on the PFD, a share of their income. We're getting the top 20% and the non-residents to give up a share of their income by having a broad-based tax that affects them. We're doing the same thing with respect to other fees.
Speaker 1:And so you know, you're just part of this. We're not singling you out, we're not treating you unfairly compared to to the others. We're, you're part of a comprehensive solution. You haven't had your tax, your tax rates haven't been changed. The tax structure hasn't been changed since 2013. That's over more than a decade old. We're seeing some problems show up with with sb21 in the current decade, in the current environment. We just need to read, we just need to to adjust to address those problems and I would think the oil companies would be more hard-pressed to argue about it at that point because they're not being singled out. There's not a bill that's targeting just them. It's a comprehensive solution that includes them in part.
Speaker 2:Well, you'd think so. But again, even again, when you were talking about creating a contingent language that basically said this is for a fiscal policy or something, you don't have a bill that says this bill is about fiscal policy and then including all the components so that it falls under the one the single rule thing, kevin says the same thing. He says there's zero appetite for that, zero appetite for that in the legislature, which is the. That is part of the problem. And he goes on to say the problem is the Democrats don't want to give anything. All they want is for more for the government, more for the government programs, and that's that's. The problem is that there is no give and take here. It's all take and take.
Speaker 1:Yeah, I don't share that view. I talk to Democrats as well as Republicans and I don't find all Democrats taking that attitude. So maybe it's piecing it together, piecing the coalition together in a way that supports what Persily is saying, supports what the fiscal policy working group said which did include Democrats as well and supports what the governor said in the FY21 10-year plan. Maybe it's piecing it together in a way that bypasses some of those who are saying that I mean I know COPS says no oil taxes period. I mean cops now become the representative from the oil companies, basically, and cops, that cop says no oil taxes period. Uh, but I know there's other uh Democrats who would say oil taxes are fine or they would accept some, some taxes, even the sales tax. Um, and I, and I think I think viewing it Republican Democrats, republican Democrats split is the wrong way to do it.
Speaker 2:Yeah well, we've said that for quite a while that it's not Democrats versus Republican, it's big government versus smaller government. That's what it's all about. We're continuing now. Brad Keithley Alaskans for Sustainable Budgets the weekly top three. We continue on now into number two of the weekly top three and this has to do with the vote from the Senate yesterday on their new education policy. Brad says if we couldn't afford a thousand dollar BSA increase without new revenues, we can't afford a permanent $700 increase without the same thing, which I mean kind of yeah, that's been the whole problem. How do you pay for? It has always been the question, brad.
Speaker 1:Yeah, I was. I was, I gotta admit, I was surprised, almost to the point of being shocked, over the course of last week. Last Monday, remember, we had the vote up or down on the governor's veto of the thousand dollar BSA increase and we even had the three co-chairs of Senate Finance voting to uphold the governor's veto, saying we couldn't afford the thousand dollar, we couldn't afford the thousand dollar increase, that that that you know there wasn't money, money in the budget for that. And then, three days later or four days later, all of a sudden the $700 BSA increase, plus an increase in transportation, came out of that same Senate finance, with no discussion of how we pay for it. Now, it is true that it is about $80 million less, that the $700 BSA increase is about $80 million less than the $1,000 BSA increase. But the deficit, the gap that we're dealing with, is a heck of a lot bigger than $80 million. And if you add that $700 into where spending otherwise is, we still are running a deficit in FY26, even at 2575, even at POMB 2575, we're running a deficit in FY26 of about $100 million. And that deficit gets worse in the period ahead.
Speaker 1:I guess the thing, that thing, that is two things just sort of just. I'm sort of spinning in a way to try to understand how we got from where we were a week ago, monday, to where we are now. Not only is the $700 million still unfundable, not only does it still result, um, in a deficit, uh, but but we're making it permanent. The vote was to make it permanent over the you know, just permanent. And we increasingly can't afford it. The deficit increases with that $700, 700 BSA over the course of the next 10 years, over the course of the current projection period. It drives the deficit deeper and deeper and deeper over that period. Yet not only did the Senate finance co-chairs who the week before and said we can't afford it, so we're voting against it, not only did the Senate finance co-chairs vote for it, but it passed 19 to one, with, with five members of the Senate minority voting for it, but it passed 19 to one, with five members of the Senate minority voting for it A permanent increase. Not only can we not afford it this year, we increasingly can't afford it in the out years, but yet they voted for a permanent increase. I don't understand what's going on in the sense that if what they said last Monday we can't afford. A week ago, monday, we can't afford the $1,000 increase. But now what they're saying is we can't afford a $700 increase. And not only can we afford a $700 increase, we can afford it permanently. It's just there is no great logic to that.
Speaker 1:I will say that if this passes the House, it's pretty much the death knell for ever getting back to the statutory PFD and probably a fatal blow or a near fatal blow with getting back to POMB 50-50 PFD, because it's taking a negotiating tool that you had you want to increase spending? Okay, we need to increase revenues other than through PFD cuts. It's taking that negotiating tool off the table and saying, okay, you can have spending. We don't have still have a problem, we still don't have a solution to the to the revenue side other than PFD cuts. But you can have, you can have your spending without, without dealing with, without dealing with the revenue side of the equation, and I think that's. I think not only does it increase spending permanently going forward, but I think it also has the because it takes that negotiating tool, that balance off the table. I think it has the effect of, as I say, permanently undermining the claim to go back to the statutory PFD and probably also permanently undermining the position of going back to POMV 50-50. Because now you know, those who want to increase spending on education have got what they want, or got most of what they want, and now they don't have to negotiate. I will say this, I will give Rob Yount credit for this step.
Speaker 1:So during the course of yesterday for those who haven't read the paper or didn't keep up with what went on yesterday during the course of yesterday the increased spending came on the floor. Rob Yount proposed an additional spending, an additional payment of a certain amount per student for students who were at grade level, learning at grade level or above, to reward the schools for students achieving that level. He proposed that amendment Right Contingent on having revenue to match that, and the revenue would come from the tax bill, the tax bill we discussed last week, the SB 113, right, the business, non-resident business tax bill. It would come from that source. So at least Rob in this instance, at least Rob recognized that we need to tie increased spending, which he proposed, to increased revenues. Here's the problem, though that really isn't increased revenues.
Speaker 1:Here's the problem, though, that really isn't increased revenues, that's revenues. That was already at least through the Senate and on its way to the House and was going to help reduce the overall deficit. It's not new revenue. He's just grabbing some existing revenue that was on its way almost existing revenue that was on its way through the legislature and using it as an offset for increased spending. So it really, when you look at it that way, it doesn't have a deficit reducing impact. The deficit reducing impact was from that tax bill already. Rob's just taken that revenue from that tax bill and applied it over to his favorite increased spending. So he's increased spending, used existing what was almost existing revenues to offset that increased spending and said, hey, we're good. So credit to him for at least recognizing that revenue needs to be tied to increased spending. But he gets a big minus for using what's essentially an existing revenue source or on its way to being an existing revenue source to fund that increased spending.
Speaker 2:Reducing the deficit reduction essentially is what's going on. That's the you know, reducing the reduction is how it goes. You know, the whole thing was, and I was shocked because I was traveling yesterday and so I wasn't paying attention. And I got up early this morning and I was trying to get caught up from the weekend and I saw this go on and I'm like what? There's no real policy, there's a minor policy change. Do they really think the governor is going to sign on to this? I mean, that's what. That's what kind of shocks me.
Speaker 2:And then I saw that the paper was quoting saying that Schauer would vote against it if the governor vetoes it Okay, great, but that Kronk and Kaufman and Yunt would all continue. Even if the governor vetoed it, they would continue to vote for it. I'm just like guys, there's been no, nothing else has been given. And you're going to add this. And this is what has been my heartache this whole time is that we're not talking about one-time funding where we can come back and revisit it. It's going to be in perpetuity. All this does is add to the pain and it's you know, it's. It's astonishing. It's astonishing that this has gone through and that everybody, except for Rob Myers, voted for it, even if they were planning on, even if they knew in their hearts that the governor was going to veto it and they were going to uphold his veto. I just I don't understand this at all. I do not understand this contingency right now contingency right now.
Speaker 1:Well, yeah, and Michael, I mean they could say the very same thing. They can say the very same thing about it today that they said about the thousand dollars a week ago, which is we can't afford it, we don't have the money to cover this, particularly since Rob's taking away the small increase in revenue we might be getting. He's taking that away and dedicating it to even more spending. You could have said the same thing yesterday. You said a week ago, which is we can't afford it. Yes, it's less, yes, the impact on the deficit is less, but we still have a deficit and we still have a deficit going forward. We can't do this, we can't pay for this as long as we haven't solved the revenue side on an equitable basis. They could have said the same thing, but they didn't, and it's. I mean, the political motivation behind it must be so strong that you've got to vote for increased spending without revenues to offset. It must be so strong that it just, you know, bowled them over in some fashion. But the same thing's true, I mean, from a number standpoint I got the number sitting here right in front of me. From a number standpoint, the deficit is less because it's 700 as opposed to 1,000, but the deficit is still there and the deficit grows. This is a permanent bill. The deficit grows over time and you've passed that.
Speaker 1:You, the 19 that voted for it. You passed that without addressing the revenue side. You voted to increase the deficits. I mean you voted to increase the deficits without having a revenue offset to it, and it's just. I mean that's irresponsible fiscal policy. Yeah, yet it passes 19-1.
Speaker 2:Yeah, and they can't again. There's, no, there is no future plan. What happens next year, when it's even worse? Now we're 700 million, or now we're $700 per student more in the hole. You know 120 million, whatever it is, I mean we're 185 million. It's 18 hole. You know, 120 million, whatever it is. I mean we're, we're, we're 85 million, 185 million, michael, 185 million and we're. You know we're still in the hole even more. It's just add additive, additive, additive, just keep going.
Speaker 2:And that's not even talking about which we haven't discussed and we don't have time to discuss in this segment, but the fact that they added a tracking bill where now they're going to track high school students for 20 years, until they're 38 years old. I don't know if you saw that little piece in there where they're going to track the details of these people's lives for some kind of study, or I mean, who's paying for that? You're going to track all these high school students for 20 years. I mean, not only is it creepy as hell and Orwellian, who's going to pay for that? I mean what's the, what's the? I mean pay for that. I mean what's the, what's the? I mean it's. The whole thing is just, it's insane.
Speaker 1:It's. You know it's insane, it is and and for. For those who, who you know, run around saying I'm a fiscal policy concern, I'm a fiscal conservative, I I believe in balanced budgets. I believe in, you know, pay as you go. I believe in if we don't have the revenues, we don't increase spending. That all went out the window for 19 of them, the, the, that portion of the 19 who say those things all went out the window yesterday, yeah, yeah. And I just and why? What did you get out of it? What did you get out of giving away on the spending side without getting anything over on the revenue side? Why?
Speaker 2:Yeah, absolutely Absolutely, and very little on the spending side, without getting anything over on the revenue side. Yeah, absolutely Absolutely, and very little on the policy side. I mean, not even you know. I guess if they'd given everything that the governor wanted, I could see the argument for it. I still wouldn't have voted for it, but I could see the argument for it if you got all the but you didn't, you got, you got. You got basically, uh, you got shined basically the whole time. That was what it was.
Speaker 2:Kevin just said that tracking the DOL Department of Labor already does that, but for 20 years, kevin, you're going to track somebody from the time they leave high school for 20 years to look for trends. I mean, I guess my big question is why? Second of all, it's creepy as it's, you know, as creepy as hell. That's all I'm saying. And what exactly did they get from the governors? I mean, the articles were pretty vague about you know. Oh, they open it up a little bit on the charter school and made it harder to close charter school, but that was it.
Speaker 2:The governor had like a full list of things that he wanted and they got the one thing and then they voted yes on it. And I mean, do you really think that maybe the governor is going to say, okay, I just got sick and tired of everybody telling me saying, well, you know, the school really does need a little bit more education funding? I'm like, okay, one-time funding. Well, no, we probably should put it in the BSA. You know, mike Kronk was like I can't really decide if it should be in the BSA. Which means you want it to be in the BSA. You're just too afraid to say you want it in the BSA. It's just irritating.
Speaker 1:But he doesn't want to pay for it. I mean he wants to pay for it, I assume, I guess because there's no revenue side on this. Rob used up the only revenue there was out there On the revenue side. I guess he wants to do it through PFD cuts. He wants to take it out of the pockets of middle and lower income Alaska families. I'm stunned After the speeches that I thought were great speeches, particularly by the Senate finance co-chairs, after the speeches last week about we can't afford this.
Speaker 1:We've got to face up to the fact that we can't afford everything we want. We've got to limit our appetite. After those speeches this week to come back and say, oh, $85 million, yeah, we can afford it. We can't afford it. We can't afford I guess I ought to say it $185 million permanent increase. We can't afford $185 million permanent increase.
Speaker 1:I mean you look at the numbers, you look at the revenue numbers, you look at where oil's going, you look at what the POMV draws are doing, both of which have projections out there, and you look at that spending. The only way we're going to we're still $100 million over this year, but the only way we're and the Senate finances are going to get it balanced. The only way we're going to do that is by pulling nickels and dimes as we talked last week out of the couches, out of the couch cushions, every place we possibly can match it. We're going to bring the capital budget down to its absolute minimum and we're going to barely scrape by this fiscal year.
Speaker 1:Are you telling me now that you're going to do that every year for the next 10 years? No, you're not going to do that every year for the next 10 years. You know you're not. And even if you did, even if you did, we're going to be in deficit every other one of those next 10 years because of the permanent nature of this increase. For the 19 that voted for it, particularly for the five out of six who voted for from the minority, you just gave up. You just gave up on fiscal policy. Your, your, your, your claims of being fiscal concert is just puffed up in smoke with that vote.
Speaker 2:Yeah, I agree. I just, you know, I wonder and I haven't had a chance to talk to Shower yet he was quoted as saying with he voted for it with heavy reservations or something. And I'm just like, but I mean, at that point you knew it was going to, why would you vote of it? I mean, I, I don't know, but the fact that they're going to put this on forever in the future when we're already struggling to, you know, fill the deficit hole that we have already, is, you know?
Speaker 1:the house. The house vote's going to be interesting. Are we going to see the equivalent in the house minority that we saw out of the Senate minority? We're just going to see a broad scale cave and a broad scale adoption of this sort of thing. If so, michael, I don't know if we ever get this thing solved. I mean, if people can't hold when you're facing a deficit, when you're already facing a deficit and you're making the deficit in future years worse by passing it, if you can't hold the line at that point and say before I'm going to vote for this, we need to address revenues. We need to know how we're going to pay for this. We need to have it be part of this bill, just like Rob's done with paying for the additional spending he wanted to do. Before we vote for this, we need to know how we're going to pay for it. If we can't hold the line on that, if the House minority can't hold the line on that, I don't know if we ever get anything solved.
Speaker 2:Well, this has always been my fear. Right that this is the Parkinson's principle they will spend every available dollar, and the second that they get more dollars, they'll spend that too, but they don't have the more dollars. Well, even I mean, this is yunt, this is yunt making it contingent on the new.
Speaker 2:you know what I'm saying. This is like as soon as the new dollars prop up, they're like oh, we just spend that too, but wait that now you were doing it's, it's madness. It is total, complete and utter madness at this point. And, like you said, they won't even look at, you know, potentially looking at the oil industry or anything else. Everything's bad except for take the PFD and spend everything we have and more. That's the answer. Okay, the weekly top three continues. Brad Keithley Alaskans for sustainable budgets. We're on to number three. Sustainable budgets we're on to number three. And he's talking about we're at the start of Alaska's third fiscal wave. What do you mean? Fiscal wave, brad? Explain this to me. What are you talking about specifically here?
Speaker 1:Well, there's a number of ways to do it, but I'll try this one In the stock market. One of the technical approaches to following the stock market and trying to time purchases and sales in the stock market is to look at waves. The stock market goes through waves. It'll have a rise for a certain period of time and then it'll sort of fall off. Then it'll have another rise and it'll sort of fall off. The third wave. According to the people who adopt this technical approach, the third wave is always the biggest wave. Uh, and it's always the one. I mean, it goes in reverse too. You'll have a fall and then you'll have a brief rising, a fall and a brief rise and then a fall in the third wave. The fall is that always the biggest, and sometimes it swamps the boat in terms of what your, your stock position is. There are other references to the third way, but that's the one I had in mind when I wrote the title for this segment. And we're beginning at least I'm beginning to see the formation of the third wave, the Alaska's third fiscal wave, sort of sitting out there.
Speaker 1:We don't talk about federal policy much on the show, because there's enough to talk about from a state fiscal policy standpoint. But if you follow federal fiscal policy which I do for other purposes, other groups I'm a member of if you follow federal fiscal policy, you're beginning to see an increased effort at the federal level to push costs down to the state level. One that I picked on was a recent Alaska Beacon article. In the Alaska Beacon it says Trump denies disaster aid, tells states to do more and basically what had happened was Arkansas and other states even Ruby Red, arkansas and other states states had requested disaster aid in connection with tornadoes and other natural phenomena that had hit them, that were causing big costs, and Trump essentially denied as thus far essentially denied giving them federal disaster aid, telling the states that they ought to be taking care of that by themselves.
Speaker 1:If you read Politico again as I do for other purposes if you read Politico, there was an article yesterday titled Mike Johnson's tight mega bill timeline is on a collision course with reality through in the House to hit their deficit reduction targets that they put in the reconciliation bill that they're trying to push through, and one of the approaches that they're taking this summer pushing is to shove is not to reduce, because it gives them the ability to say, oh, we didn't do it, but to shove a bunch of Medicare and SNAP, supplemental nutritional assistance program, food stamps, push a bunch of federal spent of what's otherwise federal spending for Medicaid and for SNAP off on the states by reducing the federal, the federal share of of those programs and leaving the states, leaving the programs in place, so that the people in Congress can say, well, we didn't reduce the programs, leaving the programs in place, but pushing the burden for funding those programs. Increasing the burden for funding those programs to the state, snap in particular, would be an eye-opener. Right now the state only pays for the administration of the SNAP programs at the state level. The federal government pays all of the amount of the benefit and what at least some proposals in Congress would be would be to reduce the federal share below 100 and push a share of that burden to the states.
Speaker 1:We just talked about in the last segment that Alaska is underwater as it is, particularly with this bill, the education bill that's going through. You start piling onto that increased share of Medicaid costs and a share of SNAP benefits off on the state. And to go back to my third wave analogy, that may be the third wave that swamps the boat. That may be the wave that we're just not able to handle, and it wouldn't be just a one-time deal. I mean, what Congress is talking about is reducing it on a permanent basis and shifting an increased share of the burden back to the states on a permanent basis all the Medicaid to take all the optional programs.
Speaker 2:They kept saying, oh, this is free money, this is free money. And when I said you and I talked about this at the time and we both said, yeah, but what when the federal government stops paying for it? Oh, they would never do that. And here they are. They're going to be pushing off costs of Medicaid and SNAP a portion of those onto the states. Every state is running a deficit Every state, and here we are. Every state is running a deficit, every state, and here we are.
Speaker 1:This is a big deal, but it's sort of out of the sight line of people who are currently focusing on state fiscal policy because it's occurring at the federal level. But it will come back with a huge impact at the state level if these sorts of things are adopted at the federal level. And I don't. I mean, when we talk about federal policy, you and I talk about the need to reduce the deficit, the need to, you know, to get spending under control at the federal level. So I'm not opposed to reducing spending at the federal level. The problem is it doesn't reduce overall spending, it just shifts the burden of that spending. Because Congress doesn't want to confront the problem of reducing the programs. They want to be able to say that, oh, we didn't reduce the programs, it just shifts the burden of those programs out of the federal level into the state level. So it's I mean, the disaster aid may be bad enough If we have a big disaster in Alaska we have a lot of fires in Alaska If we have a fire in Anchorage, for example, or if we have an earthquake of any sort that looks like the 64 earthquake. If we don't get disaster aid from the federal level, sort that that that looks like the 64 earthquake. If we don't get disaster aid from the federal level for that, that's going to be a big enough hit to us.
Speaker 1:But these additional add-ons on top of it are just you know, you can see this wave building up sort of outside Alaska's boundary, this fiscal wave building up and just about ready to crash, crash down on top, crash down on top of the Alaska budget. And here we are, you know, seeing that, being able to read that, understanding that's what's going on, that that's what the administration and Congress is up to. Here we are passing permanent increases, permanent increases, substantial increases in spending, by 19 to 1 vote. Got to go back to that Passing permanent increases in spending when we don't even have enough money to cover that. And we aren't talking about how to get enough money to cover that. Here we are doing that with this third wave about to come crashing over. So it is not. This is not the good news. This is not a good news segment.
Speaker 2:And the Medicaid component of that is somewhere in the $800 million range, I mean for the total bill. So whatever portion of that is, even if it's another 25% of it, you know where are we going to come up with another quarter of a billion dollars at the end of the year, after we just funneled 170 million out the door in perpetuity on this education span. I mean it's. You know. Somebody said stop saying it's madness, they're doing it on purpose and they want to take the PFD. The problem is they could take the whole PFD and still be upside down.
Speaker 1:Yeah, yeah, and this is stuff. I mean, this is stuff. The, the federal, the, the, the. The transfer of the federal burden of the state is stuff that Bert and Lyman talked about a week ago, monday. I mean I'm just still sort of spinning from this. It's stuff they talked about a week ago, monday, about how we, why we, couldn't afford a thousand dollars, and yet they vote for 700 and we still can't afford it, and and yet no discussion. No discussion during their presentation about about this third wave sitting out there, about the transfer of the federal burden. It's just, it was. It was a dramatically irresponsible vote yesterday. From a fiscal standpoint, I mean from a, from an education standpoint, from a, from a union standpoint, probably a great vote, but from a fiscal standpoint it was an abysmal vote yesterday.
Speaker 2:Well, yeah, a long-term fiscal plan vote and from a long-term stability, fiscal stability issue. It's crazy, is what it was. And Kevin says he expects it to pass. He said he won't vote for it, but he expects it to pass in the House, which, again, that's nuttier than squirrel poo. Why would you do? I just I can't even wrap my brain around it. Are you that afraid that they're going to try and use it as a campaign issue in the next election? Is that what you're afraid of? Because otherwise make it a one time funding and then come back. Then you could say I paid for it, but not put us on the hook for it forever.
Speaker 1:Giving up the leverage to be able to discuss revenues at the same time as you're discussing spending. Giving up that leverage buying, agreeing to the spending without addressing revenues is just insane.
Speaker 2:This is a huge deal, and especially the SNAP. I don't know how much money the SNAP program puts in the state. I imagine it's a significant amount. But, like I said, the numbers that were being floated around with Medicaid because they talked about this in the legislature here a month or so ago, a month and a half ago, and I could say, ooh, now we could see their next little funding spike it was $800 million in spending for Medicaid in the state and if we have to pick up any significant portion of that, that's huge. That is huge from where we're at right now.
Speaker 1:You know, and some people will say, oh well, the state will just reduce. The state will take action to reduce its share by limiting the Medicaid program or limiting the SNAP program. The problem is you can't do that. Problem is they're federal programs. If you take any federal money you've got to have the full, whatever the full federal program is. Maybe Congress will introduce some flexibility in that, but they'll be pressed not to. The proponents of the programs will be pressing them not to. So we would have to essentially opt out of Medicaid and opt out of the entire Medicaid program and opt out of the entire SNAP program to be able to do something like that, to reconstruct it with narrower parameters.
Speaker 1:The way the law currently works. So that's not an option either. There is not a good option. And in the face of that potential very real potential, because Congress will reduce spending and they will reduce spending in part by pushing it back on the states In the face of that very real potential, to be passing a permanent increase in spending without addressing the revenue side, a substantial increase in spending without addressing the revenue side, a substantial increase in spending without addressing the revenue side, is just, it's beyond fiscally irresponsible. I'm not sure what the next word is beyond irresponsible, but it's beyond fiscally irresponsible.
Speaker 2:And I don't know. This is what we were talking about last week. I don't know how to fix it anymore, brad. I mean we've talked about this till we're blue in the face. I mean, anybody who has run a household budget or a business budget can see it. But they seem to think, you know, we've all heard the argument of, well, you can't run the government with budget like a business. You know, that's just not how it works. But it doesn't mean that you can get away from basic math, which is you can't spend more than you take in in perpetuity, right? So I mean, okay, maybe you can't run it exactly like a business, but there's still arithmetic that you have to deal with.
Speaker 1:Yeah, yeah, there's still arithmetic you have to deal with. I mean, it's hard for me now to give any credibility in all honesty and I and you know I want to but it's hard for me to give any credibility to people like shelly hughes and mike shower when they vote for something like this, when they vote for a permanent increase without having the revenue to back it up, knowing it changed, it increased, it retains a deficit, um, uh, into the future. I mean, they claim to be fiscal conservatives, they claim to be looking out for the PFD, they claim to be looking out for the taxes, but they just voted us into a position where a lot of those things, if not all those things, are going to hit us in order to deal with the deficit increase they've just created.
Speaker 2:And Rob said even more good. Rob said even more good news, even more good news. There's been talk in the legislature of changing the high, or talk around of changing the highway matching funds from the feds from 90-10, where the state has to match 10% of those funds, to now 80-20 on top of that.
Speaker 1:That's a big number. That's a big number.
Speaker 2:That's a huge number you start talking about now. The feds will only pay 80%. We have to come up with an additional 10%. On top of everything else, it just again, it just accelerates the problem that we're having this whole time, which is essentially, you know, we just don't have the money. And again it's not just us, it's every state in the union is running a deficit and it just can't continue.
Speaker 1:Yeah, and I don't I mean, but not every state union is increasing their deficit, Michael every state not every state union is going out and voting for a bill that affirmatively increases the deficit, increases the deficit permanently, normatively increases the deficit permanently. We may be in line with everybody else in the fact we're running deficits, okay, but we're voting to make it worse. Our legislature is voting to make it worse.
Speaker 2:I'm not using it as an excuse that we're doing the same thing everybody else is doing. I'm just saying everybody's doing it and I'm like how can you guys not see the catastrophic results of that? If you don't get a handle on this, it makes no sense. I mean, what happens, brad, if they do take the full PFD? What happens then? I mean it doesn't solve the problem anymore. It used to be. If you took the full PFD it would solve the problem. Now you can't even do that because it's beyond what the revenues that the PFD would give.
Speaker 1:Yeah, and if the third wave hits, if the federal wave hits, we're way beyond that. I mean, it's just we've left ourselves. No after. A week ago, monday, after talking about the need to leave ourselves a wiggle room, talking about needing to put ourselves in a position to be able to absorb the shock that would come if the feds upstream this stuff to the states, after having great speeches in that regard, we didn't really mean it. We sort of thought about it, but we didn't really mean it. We were just going to put ourselves in that position anyway, a little bit less, $80 million less, but but nevertheless we're going to put ourselves in that position Anyway.
Speaker 2:We have a spending problem. So somebody said we don't. We don't have a revenue problem, we have a spending problem. And Kevin said and a promise and expectation problem. He said I found that every single Alaskan wants budget cuts, just not in their community program, school hockey team, airport road repair, library work, all this kind of stuff. I mean it's right, he's right, that's what's going on. We want a cut, but just not my stuff.
Speaker 1:We learned that in 2019, right, we learned that when Dunleavy proposed the cuts in the budget and you couldn't even get 16 legislators I think the Republicans were in the majority of that session Couldn't you, or that legislature couldn't even get 16 legislators from from the House and Senate combined, to back him up on the level of cuts that he proposed to make. I mean, we learned that lesson that everybody, everybody said cut everybody else, just don't cut me.
Speaker 2:Just don't cut me All right, brad. Thank you so much. My friends Good to talk with you.
Speaker 1:We'll see you next week. Michael's 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. Thank you.
