The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (8.4.2025)
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 August 4, 2025.
This week, our top 3 issues are these: 1) we explain how the votes on the veto override do much to explain the state's deep fiscal problems (2:15); 2) we discuss again, whether they realize it or not, how those advocating for a one-account Permanent Fund approach are pushing to create a back door into the Permenent Fund corpus (24:13); and 3) we explain why, whether he intended to or not, Rep. Bill Elam has suggested a helpful way to exercise better control over K-12 spending (35:41).
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
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 August 4th 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 the votes on the veto override do much to explain the state's deep fiscal problems. Second, we discuss again, whether they realize it or not, how those advocating for a one-account permanent fund approach are pushing to create a backdoor into the permanent fund corpus. And third, we explain why, whether he intended it or not, representative Bill Elam has suggested a useful way to exercise better control over K-12 spending. And now let's join Michael.
Speaker 2:Brad Keithley comes in every week to deliver us some great insight. We always give Brad a hard time because you know we make him. I mean, I feel like Brad should be like twirling his mustacheing his mustache, evilly in the background, because he's giving all the bad news. But it's not all bad news, it's just truth and sometimes it feels you know, sometimes hashtag feels bad man. You know, sometimes the truth is hard. But that's why we have him on, because he brings in some good insights. So let's get started today, brad. Of course you know, not really surprising what happened with the special session. We knew it was going to be close and it was. It was just enough votes to get him over the threshold. But there's some insight that you're trying to bring to us on this. As to you know, what do the votes mean? Double rainbow, what does it mean? The votes of people like Julie Colom and Dan Sadler and David Nelson typify you say typify what's going on. Give us the full rundown here. What are we looking at?
Speaker 1:Well, a lot's been said about the veto override. A lot will continue to be said about the veto override and I don't. I'm not this is this segment isn't going to be just a broad brush To me. As I look through the vote board, something really stood out at me that that sort of defined the fiscal issues that we're facing in the state. It's sort of a microcosm of the problem that we've gotten ourselves into from a fiscal perspective. And the three votes that really stood out to me as I looked down the board was Julie Colombs, dan Sadler's and David Nelson's. They stood out because those three have long since said that there are no taxes, that they are firm in the belief that Alaska can solve its problems by some way, some means other than taxes, and they're anti-tax. Nelson, on top of that, says that he's pro-PFD, that he firmly believes. During his campaign he said he firmly believes in a full PFD and would not take any votes against a full PFD.
Speaker 1:All three of them voted for taxes, all three of them in one of two senses In the sense either that PFD cuts are taxes, and I believe they are. So they voted immediately for taxes because the only way you pay for this increased spending that the legislature authorized through overriding the veto is through additional PFD cuts. Remember that it's not only that this bill was on the appropriation for this year, but the bill that they were really the underlying bill they were voting on, is now a permanent bill for increasing K-12 spending. So if you believe that PFD cuts are taxes and I think they are and economists think they are then they voted immediately for increasing PFD cuts because the only way, in the absence of the revenues, the only way you pay for this spending, is through PFD cuts. Even if you don't believe that PFD cuts are taxes, by taking even more of the PFD they've moved us on the doomsday clock closer and closer to the point which we run out of the PFD and have to move to taxes to pay for additional spending. So in that sense, in the long term, they voted for taxes as well. But Nelson, who you can view as the 45th vote, you can view as the deciding vote. I know some people want to say Forrest Dunbar was to extol him for having come back from Poland, or others want to say others were the 45th vote, but I really think David Nelson was the 45th vote. David Nelson not only voted for taxes. He voted directly for PFD cuts, something that he said during his campaign he would not do, and I think they sort of capture the fiscal issues that we're going through.
Speaker 1:People talk a good game about oh, I'm going to hold the line, I'm not going to vote for taxes, I'm not going to vote for PFD cuts, I'm not going to vote for any new revenues. I'm going to hold the line until they have to vote on the line and they push the line. They push the line more in terms of additional spending and in terms of additional PFD cuts and additional taxes. And that's where we are. People don't walk the talk, particularly in the case of Nelson, because he voted immediately for PFD cuts. People don't walk the talk that they make during their campaigns. When push comes to shove, they crater and do exactly the opposite of what they said they were going to do during their campaign. So how do you? There's no way out of this box. We're sort of building this box where people talk about good game during the campaign. You vote for them, you support them, you give them money, you say that they're the right candidate on budget issues, the right candidate on fiscal issues, but then, when it comes time when push comes to shove and the time and it's time for their vote to go up on the board, they vote against themselves. They voted in the exact opposite way that they said they would during the campaign, and that's where we are.
Speaker 1:Michael to 2025, you can see this collapse of virtually every representative and every senator, every legislator during that time. You can see the collapse that they'll talk a good game oh, they're fiscal conservatives. Oh, they're in favor of a balanced budget. Oh, they're against taxes. Oh, they're against PFD cuts. But when we get to where push comes to shove, when it's time to stand up and take a stand on that issue, they collapse and we end up in a situation where we continue to spend more and spend more, and spend more and spend more.
Speaker 1:If we're going to spend more, if that's indeed where we are and it seems to be that's where we are that's also what this vote typifies.
Speaker 1:If we're going to spend more, we need to develop the revenues to pay for it, because we're continuing to go deeper and deeper and deeper into deficits. If you look at we've talked about this on the show before if you look at the next 10 years, spending continues to go up. Revenues actually go down over the next 10 years because oil taxes are going down something we've talked about the last couple of times on the show and so the deficit already is getting just moving. Spending at inflation, the deficit already is projected to get deeper over the next decade, eating up more and more of the PFD, ultimately eating all the PFD and ultimately moving on to taxes. And so we're already in that situation. And now people pile on top of that by voting for things like this veto override. If you're going to do that and this is sort of focused on David Nelson if you're going to do that, then be honest about it and vote for revenues. Right, admit that you can't get off the link to spending and start talking about reasonable, equitable, low impact revenues.
Speaker 2:Yeah, I mean it's interesting to watch because, you know, david Nielsen was one of the surprising votes, although, as you said, many people could be called the 45th vote. You know what I was. Although it wasn't surprising, it's frustrating to watch somebody like Will Stapp ask in every meeting how do we pay for it? How do we pay for it? How do we? He was asking all the right questions and yet when it comes, the rubber meets the road. At the end, will Stapp votes, votes to dip into the PFD and votes to do it.
Speaker 2:You know we've got, and I can understand in some ways because, as David Boyle in the chat room makes the point he said, you know David Nelson was in a left-leaning district. He was fighting against Cliff Groh. It was a very close vote to get him in there, so he's trying to straddle the line. But Dan Sadler, who is totally different, he's in a completely different direction. Like you said, we're building ourselves this box where we buy into the madness that everybody says and then when they get down there, they're like pod people, they get consumed and they are just the thing in the wall thing. I mean, that's exactly what it's like.
Speaker 1:Yeah, I'm not going to let David Nelson off the hook. I mean, yes, he is in a tough district, but he got elected on a platform that said he was a fiscal conservative. He was going to vote to preserve that, he was going to preserve the PFD. He was going to vote against taxes. That's what he said. That's what he got elected on. People who voted for him presumably voted for that platform. And then he gets down to Juneau and he abandons it. So, yeah, I know he's in a tough district with Cliff Groh. I know that some parts of it are left-leaning, some parts of it are right-leaning.
Speaker 1:Nelson got elected by saying he was a fiscal conservative. Nelson got elected by saying he was going to protect the PFD. Nelson got elected by saying he was no taxes. That'sd Nelson got elected by saying he was no taxes. That's how he got elected. That's the platform on which he got elected and he abandoned it. So I don't, I'm not going to, I'm not going to excuse him because he's in a tough district. In that tough district he got elected on a platform that said no taxes, no PFD cuts, and he voted for both in voting for the veto override.
Speaker 2:Yeah, no, I mean no excuses, I'm just saying it's interesting to see how each and every one of these could have gone the other way. That's the thing, and you're right 100%. David Nelson was the surprise to me of all the votes out there, because we knew it was going to be close. And now, and now it's not. Now it's it's said and done. And again, just a reminder this was a one time veto. They still were going to get five hundred dollars for the base student allocation. This was a one time veto, and now, of course, we're on the hook in perpetuity for this $700 per kid, which is roughly what $178 million a year from now until, well, we crumble into dust or whatever. That's what we're at right now.
Speaker 1:Yep, it's faster than the rate of inflation. So we've just, if you look, if you look at the next next 10 years and you say spending was going to go up by inflation, revenues are going down. I want to, I want to emphasize that for people who say, oh, we're going to produce our way out of this. We're not. Revenues are going down over the next 10 years because of the way oil taxes work. We're escalating our problems just on the way it is. And now we've layered in with this bill that the governor tried to stop for a year through the veto. But with this bill we've layered in a faster than inflation increase in K-12 spending over the period. So it's I just, I mean, this is it, this is the problem. So when people say, oh, you can't talk about revenues, okay, let's elect the right people. Let's elect the people that say they're going to hold the line. Let's elect the people that say no taxes. Let's elect the people that say no PFD cuts.
Speaker 2:We did that the people that say no pfd cuts. We did that. Wait, wait, wait. You're saying vote harder, vote harder that's. I mean, that's always the answer. Right, vote harder, vote, vote the right people. And yet we vote the right people in and the madness continues.
Speaker 1:We did exactly that with david nelson. We voted in the person who, who said the right things, who said he was going to stand up for the right things, and we've seen where that goes. So next time somebody says, oh, all we need to do is elect the right people, we've done it. We tried Not working.
Speaker 2:At least we know somebody just made the point. At least we know with Cliff Groh, we at least know he's consistent, we know where he was going, we know where his vote was going to be. That's the problem with the fiscal conservatives.
Speaker 1:Quote-unquote is because we can never tell which way they're going to blow in the wind, yeah and Groh believes in revenues and I know people get upset about that, but look, that's where we're going. The deficit's getting greater. David Nelson has made it even greater. Yeah, so that's where we're going.
Speaker 2:Who are we talking to?
Speaker 2:Folks? We talked to so many people here in the last week. Was it Shelly Hughes or was it Edna DeVries that said they wanted to bring Brad on as one of the financial guys in their administration? Brad, has anybody reached out to you, because I can't remember who it was? Somebody said I think it was. Was it folks you have to remind me, was it Edna or Shelly that were like I think it was Edna. It was like, yeah, we want to bring Brad on because he's got the.
Speaker 2:You know, I'm just like, okay, I mean that's, that sounds like a great. It was Edna. It was Edna. Okay, yeah, I mean Brad, you're. You're preaching to the choir here, brother. That's the thing. And and we don't know any more than you I mean, how do we fix it? If? If we're going to send these jokers down there and they're going to roll over and wet on themselves and become one of the pod people, what's the solution? I mean we, you know, number the charter and change it, change out the players. We did that. 65 plus percent of the legislators have changed out since. I wrote that little placard that says all the changes, and here we are.
Speaker 1:Yeah. So the real answer is and this vote encapsulates it, and David Nelson more than any other, Colombe and Sadler also, but David Nelson more than any other really, really encapsulates it. You can't trust them. They're not going to do it. When push comes to shove, they're going to flip over. David Nelson voted the same way Cliff Groh would have. So you know, for the people who say, oh, Cliff Groh would be worse, no, he wouldn't. David Nelson voted the way Cliff Groh did. Arguably, Groh at least recognizes, if he's going to vote that way, he has to fill in the deficits in some fashion no-transcript.
Speaker 2:I mean not that I'm a fan of taxation and everything, but that's the thing. We keep getting suckered by these people, that they go in there and they're like oh yeah, of course I'm a fiscal conservative, of course I am. Yes, I'll vote yes. I'll vote yes. Go ahead, yep, give me more money, more money. I want to bang my head against this desk until I'm unconscious and then wake up and start again. That's what it feels like. That's what it feels like I'm just beating my head against the desk until I'm unconscious and then we wake up and start again.
Speaker 1:I mean, it's the same lesson we learned in 2019, right? The lesson in 2019 was the governor comes in, dunleavy, in dunleavy's going to veto us down. He's going to balance the budget, uh, against traditional revenues through vetoing down spending and a few other tricks along the way, and he comes in and he's going to do it. He couldn't get 16 legislators to back him up on the level of cuts he wanted to make. By the time it was all said and done, we were back up almost to where we hit, where we had come in.
Speaker 2:I want to cut, but don't cut my area. Oh yeah, I'm all for cuts but don't cut me. I mean, that's the, that's the, that's the thing, and and you know what, and Dunleavy's not even off the hook. Shelley Hughes put out a press release after the vote and said you know, they could have looked at the governor's plan, because the governor, his and I hadn't, even I hadn't read the full thing on it. But the governor's written plan that he wrote specifically for the special session included an automatic inflation escalator in the BSA. If they, if they, had given him what he wanted, he would have given them an escalator inside of. I mean, god damn, I mean, there is just nothing left that just spend, spend, spend, that's all and so when people get upset with me for talking about revenues, what the hell?
Speaker 1:we're not going to hold the line. When you elect people like David Nelson, who says he's going to hold the line and then he doesn't, we're not going to hold the line. You can see the deficits building over the next decade. What the hell You've got to start talking about revenues because there isn't any other way to fill that gap.
Speaker 2:Because the PFD is gone. The PFD is gone. You just put $400 million or $500 million a year into the school systems. That's the rest of the PFD, moving forward as it goes up. It's just, that's it, you're done. You know what I've been preaching the? I've been preaching the gospel of Brad Keithley to Bernadette. I've mentioned it to Shelly, I've mentioned it to all this, you know, I mean the things with the permanent fund and the spending and all this stuff and I don't know. I'm get. I feel like I'm getting a lot of lip service, even to candidates that I'm kind of liking what they're saying. Again, I'm fearful, just like the David Nelsons, that they're saying all these great things and yet when it's time to hit, it's going to be more of the same. That's my fear.
Speaker 1:Yeah, and Shelly. I mean we talked about this last week on the show, right? Shelly has the perfect opportunity because she was a member of the fiscal policy working group, because she has touted the fiscal policy working group in the past as an example of how she can work, how she and others can work to bring things together. She has the perfect opportunity to talk about things like balancing revenues with spending. If you're going to continue to spend, you have to have revenues. That's part of what the fiscal policy working group said, and so she has the ability to do that.
Speaker 1:I think in a way that the other candidates can say but Shelly was a part of the group, the legislative group, that brought that together and so if you want to use, if she wants to use, have an example of how she can bring, how she can participate in a group that brings things together and has an overall comprehensive approach, that's the perfect opportunity. If she's not leaning on that, if she's not saying that, then you really got to wonder, I mean, if we're ever going to get to a solution.
Speaker 2:Did you catch the interview with her on the program? Okay, so, because I asked her specifically that question about the fiscal policy, where I set up the question perfectly, she could have taken it and said, yes, it's a perfect plan, we could have, you know, perfect framework, we could have she walked right around it. She just kind of, you know, dodged right around. She went on to the sunset commission and some other stuff, which is a great thing. I think the sunset commission is a great thing, don't get me wrong. It's a valuable piece of what we're talking about. But she, just she didn't embrace it, and that's just.
Speaker 1:You know, michael some people like to say that that you know rank choice voting is working and so and it's bringing everybody toward the middle. It's really not. I mean, the reason that Shelley would walk around the fiscal policy working group is because it talks about revenues and she looks at what she needs to get into the top four and she doesn't want to be talking about revenues because that sort of affects her core. So it's driving those people when they look at what they need to get into the top four, driving those people when they look at what they need to get into the top four. It's driving those people to more extremes because they have to appeal to even a smaller segment to get themselves into the top four. I think it's working in the exact opposite way that Scooter Kendall claims it's working. That's driving people in the middle. I think it's driving people more to the extremes.
Speaker 2:Well, like you said, I mean, you know I'm starting to come to the we only got 30 seconds here but I'm starting to come to the conclusion that you know what? We might as well just ride this pony right into the ground. I might as well just sign up for every program and take every government dollar I can until this whole thing collapses, because that's where we're going and nobody wants to see, nobody wants to acknowledge that there is an end to this madness that does not end. Well, let's just put it that way. Let's continue on.
Speaker 2:Brad Keithley, alaskans for sustainable budgets the weekly top three. Brad, some people just don't understand the PFD, and you, you you've got a prime example of this. Now, full disclosure. I didn't read this full article that Brad is about to reference from the Daily Newsminer because I, on principle, have just refused to give the Newsminer any money and they won't let you read a single article until you subscribe. So anyway, it's an article from Joshua Church, who's an investment advisor in Fairbanks, entitled Alaskans Deserve a Smarter, stronger Permanent Fund, and Brad says, proof positive that some people still don't understand it. Brad, give us the rundown here.
Speaker 1:So this is the vampire segment of the.
Speaker 2:Good evening.
Speaker 1:Welcome to my house, Okay got it of the weekly top three because this is a vampire that will not die and I guess we're just going to have to keep pounding the stake into its heart over and, over and over again to make sure it finally dies. The discussion of this issue had gone away for a while after we and others had raised issues with the permanent funds proposal, permanent fund corporations proposal to eliminate the two account approach and go to a one account approach. It had gone away for a while and I thought well, ok, people finally are seeing the light, but I don't know. Here's an article in the Fairbanks News Minor, an op-ed in the Fairbanks News Minor from Joshua Church extolling the Permanent Fund Corporation's proposal to go from a two account system to a one account system.
Speaker 1:For those that don't recall, the Permanent Fund Corporation or the P, the permanent fund is set up under the constitution as a two account system. There's the corpus that is not to be spent, not to be invaded, not to be used in any way, shape or form, that's to be invested to spin off earnings. That earnings go into the second account, what's called statutorily is the earnings reserve account, and the only spending that is authorized is from the earnings, is from the earnings reserve account, the legislature can go in and appropriate money from the earnings reserve account. That's the two account system and it was set up that way to protect the corpus. To say you cannot absolutely, ever, ever, ever, ever spend from the corpus. That's what the constitution says. Maybe they left out one ever, but ever spend from the corpus. That's what the constitution says. Maybe they left out one ever. But you cannot spend from the corpus and you can only spend from the earnings reserve.
Speaker 1:Permanent fund corporation comes along and the permanent fund corporation is saying, ah, that's, that's out of date. What we need to do is we need to merge the second, the two accounts together into a single account that will spin off earnings and the legislature can spend those earnings and we will set the level at which, by constitutional provision new constitutional provision we will set the level at which they can draw from this single account and that will guarantee revenues to the state and it will, in their terms, protect the permanent fund. Well, the problem with that is that that all assumes that the permanent fund corporation earns in its investments from the permanent fund, earns an amount equal, at least equal to the amount that's being drawn out to be spent, the amount that's set by constitutional provision. Now that's being drawn out to be spent by the legislature. If the permanent fund corporation doesn't earn that amount that's being spent, the constitutional provision that's been proposed nevertheless continues to draw that 5% from the permanent fund and continues to fund the legislature to spend it. So if the permanent fund corporation isn't earning the 5%, but they're nevertheless drawing the 5% out, what's going on? That permanent fund is being drained. It opens a back door into the permanent fund. Corpus Doesn't say it does, but by allowing a 5% draw, even though the permanent fund corporation isn't earning 5%, it opens a back door into the permanent fund. And over time, if you look back over time, the permanent fund corporation has not been earning for several years now, has not been earning the 5%. If you look forward, they're barely earning the 5%. You know under circumstances that they get to describe oh, we think we're going to continue to earn 5%, and so it's creating this system where you've got a backdoor into the permanent fund. So those who are advocating this system, when you think about it, what they're really doing is they're setting up for the day when you can't cut permanent fund dividends anymore, you're out of money and they're setting up and the permanent fund corporation is not earning 5%. They're setting up for the day where they can start drawing from the permanent fund in order to supplement revenues and keep on spending.
Speaker 1:Those who advocate spending growth are big advocates of merging these two accounts together. Those who want to avoid taxes the top 20% who aren't paying any taxes now want to continue. Thated is a big advocate of it for that very reason, to continue the gravy train, even if the Permanent Fund Corporation isn't earning 5%, and so it is all set up to create a backdoor into the Permanent Fund Corpus. They try to justify this by saying well, the earnings reserve isn't, isn't, isn't getting enough now, Well, yes, because it's not earning 5%. The permanent fund corporation is not earning 5% and the and the, the, the.
Speaker 1:The rationale in the, in the, in the existing constitutional provision, is if you're not earning enough to support the earnings reserve, then you should stop spending from the earnings reserve. There's a hard wall there. You can't go into the permanent fund corpus. The one account system won't allow them to go into the permanent fund corpus. So let's be clear Whenever Joshua Church or anyone who are writing op-eds that support the proposed merger into the one account. Whenever they're doing that, what they're really saying in the subtext is hey, we need a backdoor into the permanent fund because we're not confident the permanent fund corporation is going to continue to earn this 5% like they haven't been the last few years. We're not confident they're going to continue to earn it.
Speaker 2:And so we need a way to get into the corpus. And well, tell me if I'm wrong, brad, here's how they're going to sell it. Well, unless you want to tax, we need to combine the funds, unless you want to be taxed and Alaska is so tax adverse and again, I'm not a fan of taxes. Folks, don't hear me wrong, but I'm telling you this is where we're going. We're going to some form of. We're already being taxed on the PFD. I know I'm waiting for Randy to jump in and tell me how. That's not right. We're already being a quasi-taxed on the PFD. But here's what they're going to do. They're going to say well, you know, unless you guys want to be taxed, we really need to roll this up together.
Speaker 2:No, and people will just blindly jump on that bandwagon because they won't see the truth. And the truth is to dumb it down for the rest of us is that they're trying to eat the seed corn. They're trying to strangle the golden goose that's laying the golden eggs and they're trying to strangle it. That's what happens If they get access to the corpus. They will slowly eat away at it until there's nothing, and then we will have no permanent fund. They'll drain the permanent fund down to 30 or $40 billion, and then they'll have to tax us anyway because there's not enough money coming out of it. That's that's where we're. Am I wrong, brad?
Speaker 1:No, no, but that would be a couple of generations off. Yeah, exactly, it'll take them a while to get down to the $30 billion. So those who are currently in existence will be fine because, yeah, we'll just drain the permanent fund on down. But what we're doing is we're setting up a huge, huge problem for future generations in being able to fund themselves in Alaska I mean the Commonwealth North and others say, oh, we're looking out for future generations. That's what we're really about. We're looking out no, you're not. You're looking out for yourselves, you're looking out for your top 20% selves in trying to get access into the permanent fund corpus. So again, it's sort of like this is the vampire segment. We've put that stake in the heart once before. We put it in several times over the course of these programs. Evidently we have to keep putting it in because you got people like Joshua Church who says he's an investment advisor. Makes me a little curious about that. People like Joshua Church who are out there advocating for, continuing to advocate for this one account system.
Speaker 2:I'm wondering if, as an investment advisor, he would advise that his clients invest in the permanent fund rather than the S&P 500, because the S&P or the Harvard fund or any of these other funds that are generating 8% to 10% every year and the permanent fund struggles to generate. I wonder where he's advising that people invest their money. I wonder if he's going to put his whole portfolio into the permanent fund. I mean, dude, this is madness. This is total and complete and utter madness. What's going on here? There's just no more common sense here and, like you said, it'll take two generations and I think, ultimately, that's the goal. The goal here is just to kick the can down the road until whoever's in power now is retired and living in Hawaii or someplace else, uh, where they could be like well, you know, I got mine, and so they'll deal with whatever they need to deal with, and whoever's left in Alaska turn the lights off on the way out, because that's that's. That's what we're going to end up with.
Speaker 1:Yeah, it converts. I mean there's various ways to put this, but it converts the permanent fund into an impermanent fund, an unpermanent fund, yeah, yeah. And the permanent fund was originally set up by, by, by those in in the in the seventies and eighties to be there for all generations of Alaskans all Alaskans in terms of the PFD, and. And. And be there for all generations of Alaskans to be permanent. And the and and then the key part of this is going to a single account makes it impermanent because of the way they're setting up the draw, regardless of whether the permanent fund corporation earns enough to pay for the draw or not.
Speaker 2:Some of you Bill Elam's take on personal responsibility is actually resonating in part with Brad, even though Bill Elam voted to override the governor. So, brad, what do you mean by this? He's got an opinion piece, which I'll drop the link to, in the Peninsula Clarion, which is actually a very good piece. I did read it. But what's your take on this right now? Because people I mean there's a lot of people who've already mentioned Elam in the chat room several times this morning to say he's joined the dark side. You know, he's got this, he's got that and again, I wouldn't have voted the way that he voted. But then he turns around and makes this, puts this opinion piece together, which seems at odd with his vote in some way. But tell me what your thoughts are, brad.
Speaker 1:So so Elam, yeah, elam voted the wrong way. He voted for increased taxes and increased PFD cuts and I don't understand that. But but let's set that aside for the moment because I think I think he has his. His opinion piece has a kernel of a very good idea. The opinion piece in both the Clarion and the Juno empire since they're owned by the same organization anymore, they're now publishing cross pieces between the two. The opinion piece is education accountability starts at home, not just in Juno. Response Elam's response to getting a lot of heat about K-12 and about the votes on K-12 and positions on K-12 policy and statewide policy and things like that.
Speaker 1:The pushback is look, the Kenai Borough controls or the Kenai Borough School Board controls the Kenai Borough K-12. School board controls the Kenai Borough K-12. They're the local institution in control of it. They set the local policies, they finance. The Kenai Borough finances a significant share of the local school board, the local school district. So you really ought to be looking not only at him as a representative to do whatever people want him to do at the state level. You really ought to be looking not only at him as a representative to do whatever people want him to do at the state level. You really ought to be looking to the local school boards and local funding as a way of affecting change or controlling the outcomes in the local districts. And I started to think about that and I went back to an issue we discussed several years ago when the state was still funding a significant share of new school construction. You remember the old issue of the state funds new school construction. So why do the local districts care? They want a gold-plated new school because that's going to be paid for by the state. It's not going to be paid for by the local district and our point at the time was more and more of that cost needs to be shoved onto the local district because they're the ones making the decision and they ought to bear the burden of any decisions they make to gold plate a new school that their district ought to pay for it. The school board ought to be on the line for making a decision to do that, and the state did that plus or minus over a period of several years by reducing the state contribution to new school construction. That's sort of the same thing.
Speaker 1:As I read Elam's column, it started striking me that that's really part of what we ought to be doing with school funding. We ought to be pushing more and more of the responsibility to the districts, because the districts are able to get the spending under control. If there's too much administration and the state's funding it, the local school district doesn't care because the state's paying for that excess administration. But if there's too much administration and the local district is paying for it local taxpayers are paying for it then there's going to be pushback on too much administration. There's going to be an effort to cut that administration down. If there's only so many dollars out there and you have to make choices between this sort of spending or that sort of spending or this sort of program or that sort of program, if that's decided at the state level, then the local districts don't care. Give it all to us so we can use less of that and have more to spend on things that we do think are important.
Speaker 1:That led me to do a little bit of research, which I need to do more of to really turn this into a column or turn this into a theme. But that led me to do a little bit of research on how Alaska compares in terms of local funding compared to state funding to the nation overall and, what I found interesting, the census actually does an analysis of this. What I found interesting was, nationwide, about 13% of overall school funding comes from the federal government. That's going to be going down under the Trump administration, but to date, about 13% not as big as I thought it would be, but about 13%. The remainder is split almost evenly nationwide is split almost evenly between the state and the localities. The states, nationwide, pick up about 45% of overall school funding. The localities pick up about 43% of overall funding.
Speaker 1:According to the census data, which breaks this stuff out by state, alaska is different. Alaska has roughly 55%. So Alaska has roughly 21% coming from the federal government, higher than the overall average Alaska has. Of the remainder, alaska has 55% coming from the state, more than 55% coming from the state and less than 23% coming from the locality.
Speaker 1:Alaska is one of those states and there are several, but one of those states that are heavily state-dominated in terms of state funding and, as a consequence, when a local district looks at choices they're really looking at oh well, we need more money from the state to do this, because we don't want to make a choice ourselves, we just need the well, we need more money from the state to do this, because we don't want to make a choice ourselves.
Speaker 1:We just need the state to send us more money. I think Elam's onto something. This isn't where he went in the op-ed, but it's the kernel that started from when he started talking about we need more local control, more local voices, more local activity, more local involvement with respect to K-12. I think Elam's on to something in talking about we need to push more of not only the responsibility but the cost for K-12 spending onto local government and have local government have to bear, not only get to make the decisions about where the money is spent, but also have to raise the money Right, and that will force them then to make choices in a way that they're not doing now, and I think that's reflective of where the nation as a whole is.
Speaker 2:Well, I think the problem here is that they've had access to all this money for so long that none of them have been forced to face the fiscal reality of you have to live within your means. That's the problem. The state has been the spigot for so long. We've had so much money that they've just been like well, we never have to worry about fiduciary responsibility. We just you know you give us the money and we spend it have to worry about fiduciary responsibility. We just you know you give us the money and we spend it. And that's where we're at right now, when you got 55% coming from the state, a 20% coming from the federal government, they've just been living, you know, they've been living high on the hog and, and there's no school boards who are, um, who, who are having to live within their means at this point, um, and, and that's that's the reality we're going to have to face.
Speaker 1:Yeah, and I think Elam really. I mean maybe he didn't intend to go there, but I think Elam's onto something in terms of talking about pushing more responsibility and more burden back on the district, so they have to make the choices about their local school districts. I grew up in a state which is almost the reverse of Alaska, had very little state funding, had a lot of local funding, and so there were a lot of local decisions that had to be made, and if you wanted to increase spending in one place and talk about going to the taxpayers, that created a stop on that additional spending, and I think looking at something like that for Alaska in the current environment certainly is making a lot of sense.
Speaker 2:That's the problem, right, brad? I mean, alaska is a dependency state. We're dependent on federal dollars, we're dependent on state dollars At every level. We become dependent and we think that the well is never going to run dry. And now that we're down at the bottom scraping for rocks and everything else and just bringing up mud, we're. You know people are in a panic. How do we make this? How do we stretch this further? They don't want to face the fiscal reality of you've got a declining enrollment, you've got less money coming in, you've got poor outcomes. They don't want to talk about any of that, they just want to they want to shove it off on the state.
Speaker 1:They want the state to just appropriate more and more and more and more and take them off the hook. I mean, local control is best, right. State control is better than federal control. Local control is better than state control Because when you have to face, when you are on a board, school board that's what I found when I grew up when you are on a school board, you have to go face your peers in the local cafe and they say wait, you're going to raise my taxes, I'm not going to put you back in office. When you have that local responsibility and local burden, you tend to make much more conservative fiscal decisions. And when you can say oh well, that's often Springfield in the case of Illinois, or that's often Juneau in the case of Alaska, I don't have any control over that, I know how to spend it, but they need to send me more, so Johnny can have this and that and that Right, instead of making choices. I think Elam's got a point, a good point, about pushing more of that responsibility down to the localities.
Speaker 2:Well, and we've got a participatory problem too. Right, because David makes the valid point Local control equals NEA, bought and paid for school boards Only if the local individuals are not engaged. Right, and remember government happens to you when you're not paying attention. We've been so comfortable and fat, dumb and happy and there's been so much money flowing, we've just kind of unplugged as an electorate, as a people, we're just like oh yeah, we got the money, we'll let somebody else handle it. And then the special interests come in and they set up shop and they start leeching off the system and then they don't want to let go, they don't want to let go, they don't want to let that money train go. And so then they use that money against you. And this is where we're at in the state of Alaska.
Speaker 1:Yeah, and I think it's the reverse of what David's thinking.
Speaker 1:I mean, I think if you have local responsibility, if your property taxes in Anchorage were going to go up, you know another 20% to fund what the school board wanted to do, what the NEA school board wanted to do, I think there would be pushback on the NEA school board and on the NEA school board elected members in wanting to do those programs.
Speaker 1:I think, just like we experienced when we had the state funding, the new school construction and people going, oh well, I want this and I want that and I want that and I want that and I want this really turning it into a local construction program, when we had the state funding, that I think we saw a change when more responsibility for that got pushed back to the local district. I think the same thing would be true if we push back more responsibility for the operating budget, the school operating budgets, back to the local district. So Bill Elam may not may not appreciate the credit for this thought and it's a little bit different from what he had in the in the column, but I think it's a good thought and I think it's one that that we'll be talking about more on the show as we go along.
Speaker 2:Yeah, no, I mean, I agree. And again, that's the thing. These systems have created the power structures and the power bases, like I said, because we have been unplugged, because we're not contributing at the local level as they are in other states to the same level, because we're not being affected in the same way. Was free money Right? And we feel like we're not affected? Oh sure, I'd like a new swimming pool. Oh sure I'd like a new building. I mean, we don't have to pay for it. So sure, who wouldn't want more free stuff?
Speaker 2:But when the gravy train is grinding to a halt and the systems who have leached on latched onto the system to leech off of it and created whole business models based around that, be it construction or education or whatever, all of a sudden they start panicking and utilizing that money to convince you that what you're doing is the right. Oh, we've got to keep doing it. The train cannot continue. And until we bolster the private economy to the point to where we feel that direct connection between what the spend is and what our taxes are, we're not going to feel that.
Speaker 1:Yeah, and I think the point about well, we need a stronger private economy? Yes, we do, and maybe this would be one way to encourage it If we push more responsibility down to the localities. Localities say we need a stronger private economy and that starts resonating as an issue. As long as the state is the sugar daddy for all the school districts, as long as it's the source of the bulk of the money going to the school districts, there is no need for a push for a private economy in the local districts because they've got the state funding it all. If we change that dynamic and the state and the localities have to pick up a significant share of the burden like happens elsewhere in the country and the states have to pick up a significant share of the burden, then the localities start thinking about well, how do we build our private economy so we can have a tax base, so that we can afford the schools that we want, if we no longer have the state to leech off of?
Speaker 2:And, of course, special interest begets special interest. You know they're going to put their people in there, and because people are not paying attention, that's what we get People who are just like you know. The more money that goes in, the less attention they pay because they're like it's not my money, I don't care. How do we get them engaged?
Speaker 1:How do we get it? And taxes reverse that. Local taxes reverse that by engaging the localities, the local people, in the decision-making, because it's going to affect them, it's going to affect their pocketbook directly.
Speaker 2:I hate the fact that you're making sense on this. I mean really because, again, I dislike taxes at so many levels, but at this point, is it the only way we're ever going to get them under control? I mean, I just hate that.
Speaker 1:That's what David Nelson voted for. He voted for more taxes because he voted to continue the spend without revenues to match it. So we've got to have some way to close the gap.
Speaker 2:Brad Keithley of Alaskans for Sustainable Budgets. Wrap up one minute here. Final thoughts for today.
Speaker 1:Well, big disappointment in the veto override, not so much the additional spending, but the people who voted for the additional spending, claiming to be fiscal conservatives, claiming to be anti-tax, claiming to be pro-PFD, caving and ultimately voting for the additional spending. If that's where we're going and that seems to be where we're going that people cave when push comes to shove, that's where we're going. That increases the need to be talking about revenues, because we got to pay for this somehow.
Speaker 2:Yeah, jeffrey makes a good point. Brad, we need a robust private economy to get to that style of school funding and that's part of the problem. We've become such a dependency state in so many ways. This is the trickle-up effect of all that dependency state stuff. For sure, brad Keithley Alaskans for Sustainable Budgets. Brad, thanks for coming on board, michael as always, thanks for having me.
Speaker 1:Alaskans for Sustainable Budgets, Brad, thanks for coming on board. 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 on the Weekly Top Three. Thank you.
