The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (9.1.2025)
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 September 1, 2025.
This week, our top 3 issues are these: 1) we explain, using the Permanent Fund Corporation’s own numbers, how its high-cost “active asset management” program is failing Alaskans by badly underperforming even its own Passive Index Benchmark (2:25); 2) we explain why we applaud Senator Mike Cronk’s point that developing a successful K-12 funding plan is contingent on first developing an overall, solid fiscal plan for the state (18:45); and 3) we explain how the recent op-ed’s from gubernatorial candidates Click Bishop and Tom Begich blatantly ignore the central issue facing the next Governor: the huge and continuing current law budget deficits the state is projected to run over the next decade (37:12).
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 September 1st 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. I join Michael weekly in the first hour of Tuesday's show from 6 10 to 7 am for a discussion between the two of us about our three issues. We post the podcast of our discussion following the show on the Alaskans for Sustainable Budgets Facebook, youtube, soundcloud, spotify and Substack pages. Also on the Alaskans for Sustainable Budgets website, as well as the project's 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 using the Permanent Fund Corporation's own numbers, how its high-cost active asset management program is failing Alaskans by underperforming even its own passive index benchmark. Second, we explain why we applaud Senator Mike Kronk's point that developing a successful K-12 funding plan is contingent on first developing an overall solid fiscal plan for the state. And third, we explain how the recent op-eds from gubernatorial candidates Click Bishop and Tom Begich blatantly ignore the central issue facing the next governor the huge and continuing current law budget deficits the state is projected to run over the next decade. And now let's join Michael.
Speaker 2:Let's get started. Uh, brad, we've got a lot of things to uh, to crack in about and uh, we're going to start off, um, with some, with some hot stuff, a hot take from you on the permanent fund. Um, and the permanent fund is uh well, uh, they're not. They're not doing everything. They cannot be all they can be. Let's put it that way, it's a big, big investment for very little return. Let's get down to it, shall we?
Speaker 1:Well, michael, this is another in our ongoing series of the performance of the Permanent Fund Corporation, and I think it's important to continue to differentiate between the Permanent Fund Corporation and the Permanent Fund, the Permanent Fund Corporation and the Permanent Fund. The Permanent Fund Corporation is the manager of the fund. The fund is the $80 billion plus or minus that we've got in the fund, but the management of that fund is by the Permanent Fund Corporation. In essence, it's the same as a Goldman Sachs or any of the other managers of funds, and we're talking about the performance. We've been talking about the performance of that corporation, the performance of the manager of the fund, and the reason I keep going back to this is, frankly, permanent fund returns. Given the state of play that we're in right now, returns on the permanent fund are more important than oil. The revenues that we're getting from the POMV draws for the general fund and for the PFD are greater than what we're getting from oil. Oil. The future, in terms of growth of where the revenues are coming from, is bigger for the permanent fund corporation, particularly given where oil taxes are is bigger for returns from the permanent fund than for oil. So I keep coming back to this because it's a big deal from the standpoint of the state's fiscal situation and the state's revenue situation. The development this past week is that the Permanent Fund finally published what they call their Management Fees and Expenses Report. That's a quarterly report that they do that totals up the management fees and expenses that they've incurred during the quarter and shows how much it's costing us to have this active management that the Permanent Fund Corporation keeps claiming is important and valuable to Alaskans. How much it's costing us to do that. Now I take that report and I use it in conjunction with a monthly report that the Permanent Fund Corporation does that shows its returns, the returns that the Permanent Fund Corporation has managed to achieve on the Permanent Fund.
Speaker 1:Compared to some benchmarks that the Permanent Fund Corporation's adopted, one of those is particularly important when you're looking at the management fees. One of those benchmarks is what's called the passive index benchmark, and this is how the permanent fund corporation defines or explains the passive index benchmark A blend of passive indices reflective of a traditional portfolio consisting of public equities, fixed income and real estate investments. Outperformance of the total fund versus the passive index benchmark is representative of the value added by APFC staff in generating higher returns through active asset allocation through active management, active asset allocation through active management, active asset allocation and portfolio management. Let me read that last sentence in reverse because I want you to understand what I'm going to be talking about Underperformance. The sentence goes outperformance of the total fund versus. So the reverse of this is underperformance of the total fund versus. This passive index benchmark is representative of the value destruction by APSE staff in generating lower returns through active asset allocation and portfolio management. So, just the same way that you can look at the passive index benchmark, and if they exceed the passive index benchmark, then that is value added through the permanent fund corporation's active management. If they fall lower than the passive index benchmark, then that's indicative of the fact that the active management that the permanent fund corporation is engaged in is destroying value, is taking value away, all right. So let's look at the numbers. Engaged in is destroying value, is taking value away, all right.
Speaker 1:So let's look at the numbers, and here is just a fascinating chart. What this chart does is, year by year, look at the permanent fund return that they achieved, the permanent fund corporation's return that they achieved on assets, versus the passive index benchmark that we just talked about, and then the difference between is the value added, what they said, what they themselves described. If it's positive, it's the value added compared to the passive index benchmark, compared to just letting it on autopilot. If it's negative, it's the value destruction from their active management compared to the passive index benchmark, just putting it on autopilot. And then, next to that, next to that column, I've got the management incentive fees as a percent of assets that the permanent fund corporation has spent on this active management, and then, next to that, is the dollar amount and then you can look at the value added after fees and the return on fees.
Speaker 1:Here's the thing the last three years look at 2023, 2024, and 2025. The last three years have been negative. Consecutively, consecutive years have been negative by not a little bit. The passive, the permanent funds return was short of the passive index benchmark in 2023 by 3.6%, was short in 2024 by 4% and was short in 2025 by 3.84%. That is the comparison of their returns, the returns the PFC achieve, compared to the passive index benchmark. And so that, by their own words, that is the value destruction, the negative value that was added compared to autopilot, the negative value that was created by the permanent fund corporation's active management of the fund.
Speaker 1:How much did that active management cost us? That's what the new report that came out last week, the quarterly report, tells us. How much did that active management cost us and you can see in the next column over the columns that are entitled management incentive fees, first in terms of percent of assets and second in terms of dollars how much did that active management cost us and the total for the last three years. The total for the three years that we're showing negative returns from the active management. The total is $2.4 billion. The Permanent Fund Corporation spent $2.4 billion over the past three years on its so-called active management to earn a negative return, negative against what they would have achieved had it been on autopilot. If you look at that $2.4 billion as an investment that they spent it they invested it in this active management to produce these returns If you look at that $2.4 billion as an investment, it's a negative return over the three years it's a negative return of 492%, a negative 492%, 492%.
Speaker 1:I posted this up over the weekend and there was a comment by Brian Fector that I think just captures this. Brian is former deputy director of the Department of Revenue in Alaska. He formerly was with the OMB in Alaska. He's now in Idaho because of Adam Crum, but that's another story. But here's Brian's take on this.
Speaker 1:There are two ends of the spectrum in terms of active management. There's Yale's endowment, which is superly active management. Their fees are something like 1.5% of the assets under management, but they've averaged 3% excess returns 3% over the autopilot. Excess returns long-term, super well-connected people, very highly compensated he's talking about the Yale Endowment Fund, but able to get in on the ground floor of a lot of startup activities. Then there's Nevada and Idaho, both of whom have one guy running the show whose fees are less than $200,000 and just puts it in an index, in other words, puts it on autopilot at a low expense ratio and calls it good.
Speaker 1:The APFC, the permanent fund corporation, seems to be in the middle in the worst way. They pay their people way too much, their fees are way too high and they're not able to generate any excess returns for what they're paying management companies. In fact, they're generating negative returns. That's what the red is. They are generating less than what's on autopilot. I think this is a huge, huge, huge problem that is more important than oil, than whatever we're doing with the oil companies, more important than oil and is falling under the radar. So we've talked about it on the show before. We're going to keep talking about it until people really finally understand what's going on with the management by the Permanent Fund Corporation of the Permanent Fund and we have exactly opposite of what the former deputy director talked about as far as people who are connected, and we've got political appointees.
Speaker 2:We don't have professionals in a lot of those positions on the board and things like that. They had what's her face in there. Ellie Rubenstein was in there. She was connected, but she was seen to be doing it for her own thing. There's a lot of shenanigans going on, I guess, between the board and the management system.
Speaker 1:I think this needs to be a campaign issue. I think gubernatorial candidates need to talk about what their vision is for the Permanent Fund Board. The governor appoints the Permanent Fund Board, appoints the members of the Permanent Fund Board. There is no legislative oversight, there is no requirement for legislative confirmation of the Permanent Fund Board members, so it's entirely on the governor. These returns, these negative returns, are entirely on the Dunleavy administration. All of the members of the permanent fund board have been appointed or reappointed by the Dunleavy administration and the board is the one that's driving the show. They have an executive director, but the board's the one that makes the allocation decisions that are producing these negative returns. So I think this needs to be an issue that is asked of gubernatorial candidates what is your vision for the permanent fund board and, more importantly, what's your vision? I mean to sort of test whether they really understand what's going on. What's your understanding of what's been going on with the Permanent Fund Corporation over the last several years?
Speaker 2:I mean it's kind of when you look at the numbers and you threw those numbers up there not quite as much as I expected. But when we look at them still, when you're talking about a 489% negative return and some people would say, well, yeah, but they got us this really nice positive return. The year before they were 900% over, yada, yada, yada, and you're like, okay, but when it averages it out, wouldn't it just be better to not pay the fees and be on the S&P benchmark average? I mean, when you look at it, it's not that great.
Speaker 1:Well, I would settle now in this situation, for the passive index. Just put it on autopilot until we can get our arms around this. Just put it on autopilot, put it on the passive index benchmark. The S&P is better, produces better returns, has been producing better returns than the passive index benchmark, but at least put it on the passive index benchmark. And yeah, people say well, look, yeah, look at those big numbers. But when you average it over three years, let's take these numbers and average them. Average them over three years it's a negative 492% return. When you average it over five years, even taking in 2022, which was a really bizarre year that's the year that we came out of COVID, stock market plunged, all sorts of weird things went on but even when you take into account that year, we're still at a negative 38% return on what they're spending on the active management.
Speaker 1:Something's gone wrong. I mean these numbers weren't always like this. When you look back at 2017, 2018, 2019, 2020, these numbers, I mean you had down years in there, but they weren't triple digit down years. They weren't triple digit negative return down years. They had some good years, they had some bad years, but something in the last three years has gone wrong. Some would point out that sort of runs simultaneous with the change in the executive director that occurred a few years ago at the Dunleavy administration's urging. But something's going wrong and this is so important the permanent fund and the performance of the permanent fund and the earnings from the permanent fund are so important to to the state's fiscal outlook that we need to, we need to identify the problem and we need to get the problem corrected.
Speaker 2:Yeah, but again, I'm trying to get you know what I've. I've talked to a couple of candidates and they get kind of a glazed look in their eyes when I ask them about this. It's something that's I mean, this is important. This is the future income of the state of Alaska right here. This is the lion's share of it. The PFC, the permanent fund draw, is the largest share of revenue in the state right now, well beyond oil and gas or fish or timber, or even the PFD take. I mean it is the biggest chunk.
Speaker 1:Yeah, and it's something going wrong. I mean, we've identified we've talked a lot about what's going wrong with SB21, right With what's going wrong with oil taxes, and something is going wrong with oil taxes as we've gotten into the current decade and we need to look at that and correct it. But this is even more important than getting oil taxes corrected. This is more of the state's revenue generation than oil taxes. And if we have a continuation of this I mean, the last three years have been consecutive down years we have a continuation of this then we're going to have some serious issues. I mean, some people get confused.
Speaker 1:It's not that we're losing money. It's that we're not earning the money we should out of the permanent fund, and it is losing money in this sense If we put it on autopilot. This is telling us. If we put it on autopilot the permanent fund corporation's own benchmark, own autopilot benchmark we put it on autopilot and got rid of the $2.4 billion that we've spent in management fees we'd be doing better and we need to be doing better. When you look at the state's fiscal outlook we'll talk about this in a moment but when you look at the state's fiscal outlook, we need to be doing better. We need to be clicking on all cylinders in terms of returns from the state's assets, including the permanent fund.
Speaker 2:Welcome back the Michael Duke Show, common Sense, liberty-based Free Thinking Radio. Brad Keithley our guest. We continue on now talking about the weekly top three. Number two has to do, of course, with education, and, uh, brad sprinkles some kudos out there. He says senator cronk is exactly right, which, uh, it's not something I expected to hear, brad. What are you? What are you talking about here?
Speaker 1:well, uh, we had a mini segment on this, uh, during the break, uh last week, and I want to. I want to give it a mini segment on this during the break last week and I want to. I want to give it a full segment because I think this is this is important in the opening session of the of the of the K through 12 task force, the legislative K through 12 chat task force that's charged with looking at funding for education funding for the state and coming up with a new approach or revised approach, revisions to the approach we take on education funding for the state, and coming up with a new approach or revised approach, revisions to the approach we take on education funding to get to get education funding back to where, to where people think it should be, including including any any uh uh uh tests or assessments that that ought to be used to assess whether we're going in the right direction on education. In the course of the opening meeting of the legislative K-12 task force, senator Cronk, mike Cronk, said this. Cronk, a former school teacher, pointed to one. This is in an ADN article on the opening meeting. Cronk, a former school teacher, pointed to one looming factor not within the task force official purview the state's fiscal plan. For years, most lawmakers have agreed that the state is not bringing in enough revenue to pay for all the services that Alaskans expect, including public schools. A fiscal plan working group convened in 2021, brought together a bipartisan group of lawmakers to discuss specific questions, much like the Education Task Force seeks to do now, but most of the fiscal plan recommendations were never adopted. Cronk's point and it's an absolutely correct one was you can spend all day, you can spend all the time you want on a K-12 funding plan, but if it doesn't, if there's not an overarching fiscal plan within which the K through 12 funding works, you're just setting yourself up for failure.
Speaker 1:A lot of times in Alaska and I wrote a column on this a few weeks ago in the landmine a lot of times in Alaska we argue about trees, trees within the forest, and we argue about specific trees and whether that tree is growing fast enough or whether that tree ought to be pruned or whether that tree ought to be replanted in some other place. We argue about the trees and we lose sight of the overall forest of the fiscal plan. We lose sight of how that tree fits in the overall forest and if moving that and whether moving that tree we lose sight of analyzing whether changing that tree or moving that tree destroys the forest, does things to the overall forest that the overall forest can't manage. And that's exactly what's going on here with the K-12 Funding Task Force. We're looking at the tree of K-12 funding and we're saying, oh, we need to change this or we need to change that, or we need to evaluate this or we need to evaluate that. There's going to be a lot of push for increasing the BSA. There's going to probably be a lot of push for increasing the factors that are attached to the BSA that result in the overall funding. There's probably going to be a lot of focus on the K-12 tree and whether the K-12 tree needs to be changed. But if you don't have an overall forest that you're looking at at the same time as you look at the K-12 tree, if you don't understand what impact that has on the overall forest, you're doomed to failure.
Speaker 1:And the problem with this task force, the problem with any debate about any given level of spending in the state corrections, education, the university the problem with focusing on any given segment of spending is if you don't fit that within the entire fiscal plan, you're making problems worse. We're running and I'll talk about this a bit more in the next segment but we're running a $1.7 billion annual current law deficit. When you look out over the next 10 years, an average of $1.7 billion annually in deficits, that's a huge number. That's like 20, 25% of total spending. That's the deficit number we have. If you say, oh, k-12 needs no more, without addressing the overall, the overarching fiscal plan, the overall forest, the fiscal forest that we're dealing with, if you just add more on top of that, we're just adding more on top of the deficit.
Speaker 1:We have to get the. We have to deal with the current law deficit. We have to deal with the fiscal plan. First get the forest defined and then start dealing with the trees and make sure that when you're dealing with these individual trees oh, the university needs more money. Oh, k-12 needs more money. Oh, corrections needs more money. Oh, public safety needs more money If we keep dealing with these individual trees without dealing with the overall context, we're just going to keep going further and further and further down the hole. So Senator Cronk has it right. Senator Cronk's point is look, the K-12, yes, k-12 task force, good thing. Let's talk about a lot of stuff, but we need to get it in the context of an overall fiscal plan, or else this whole thing is doomed to failure, just like everything else in the forest is doomed to failure, because we're overtaking the amount of revenue that we have in the state.
Speaker 2:You know, what was interesting in this whole conversation is that KTUU had a story about the task force and their meeting and everything else, and they mentioned that both Kronk and Ruffridge were focused heavily on how the state was going to be able to fund the education, giving us our fiscal situation. They quote Andy Story as saying the situation is a funding conundrum, which is, I think that's the understatement of the year. But then Loki Tobin says she anticipated learning more about funding schools from the Alaska Education and Early Development Department at the next meeting. Wait a second. You're the ones that fund the. What would you find out from the Department of Education and what would Deed tell you about funding? You guys are the ones with the purse strings. You're the ones that have the money and control it. I mean, to me it's just like, oh okay, she obviously either doesn't get it or is intentionally trying to just delay and mislead, and I mean I don't understand this at all.
Speaker 1:Well, I think every meeting I mean I'm not a member of the task force so I can say, you know, just spout whatever I want. But I think every meeting ought to start with you know how in Alaska we start industry meetings with safety moments, right, some articulation of how to be safe out there in the oil patch, how to be safe out in the field Good thing to start meetings with. I think we ought to start every session of the K-12 task force with a fiscal policy moment, a fiscal overview moment. Look, we're running $1.7 billion deficits every year on average every year through the next 10-year period. We've got to find a way of fitting K through 12 in that $1.7 billion deficit and we have to resolve the $1.7 billion deficit with and we have to resolve that overall deficit before we can really resolve what we're going to do with K through 12.
Speaker 1:I think that is the starting point. That should be the starting point with every meeting to understand the forest before you start digging in and trying to shuffle around the trees. Cronk's got it right. Hopefully Cronk and Refridge continue to make this point, even if the majority wants to ignore it or wants to just keep focusing on this tree and sprinkle more money at this tree without understanding what it's doing to the forest. I think Kronk and Refridge have it right and and I hopefully they will continue to repeating that point during every meeting.
Speaker 2:Well, it's not going to matter, because, again, the big thing about this whole, this whole you know education working group, is that it's not even, it's not even supposed to deliver its findings until year after next. Right early 2027 is when they're going to deliver their, their I mean we're going to go through a whole cycle here, a whole budget cycle and then some and an election. Um, trying to figure this is a it, this is my take. My hot take on this is that this is just another one of those delaying ploys where they can push it outside of Governor Dunleavy's preview because he'll purview, because he'll be out of office, and they could push it past the, the election season and everything else and have to deliver this sometime next year, year after next, and so this is just more of a delaying tactic. It's theater. I mean, it feels like theater to me.
Speaker 1:I don't know about what you think, but it is theater, but I think it's also designed, frankly, to try to shape the debate during next year's campaign cycle. I mean, so one of the consequences of not delivering the report until the end of next year is that they will have hearings during the, during the entire year, next year during the campaign year, and they will, they will be able to call witnesses up and they'll be able to spout you know statistics that that they've, that they've cherry picked or handpicked to be able to prove their point and that'll be repeated in the news site and news cycles. That's going on during the campaign year. So I think, as much as maybe getting it past Dunleavy, setting up the time schedule so that it's past the end of the Dunleavy administration, I think it's as much to give it credibility or to give it a position during the entire campaign cycle so that they can continue talking about this and try, through those hearings, to control what, the, what, the, what the campaigns are talking about during the cycle.
Speaker 2:Don't you? I mean, don't you think that again she's? If somebody just mentioned, isn't, isn't Loki Tobin? Wasn't she an expert in educational math? I mean, shouldn't the whole? And between being a legislator who's in charge of the purse strings and being an educational expert, I mean shouldn't she know what's going on with the budgetary issues? I mean, again, this whole thing of well, we've got to wait for Deed to tell us what's going on with the funding.
Speaker 1:Wait a second. It is theater in the sense that, michael, it's designed to elevate this issue during the campaign cycle. It's designed to give them a platform. The platform they have during the legislative session is confined to the spring right, and it's going to be even more confined next year because it's an election year. People are going to want to adjourn early and go out and campaign, so it's confined to that. Their attention span or their ability to pierce into the news media is confined to that legislative session.
Speaker 1:What this is doing is expanding them. It's essentially for this one issue, this one tree, it's expanding the legislative session over an entire 18-month period. One tree it's expanding the legislative session over an entire 18 month period, right, and. And so it gives them the ability, the forum, to continue to talk about this in a way that captures the news cycle, uh, over that entire period. It's not an individual legislator, so you know, the news cycle doesn't treat it as an individual legislature, treats it as a committee, as a task force. That, you know, is is, I assume people will think, oh, it's fair and impartial, and, and they're going to do this over the entire, over the entire campaign year, so I think the entire election year. So I think it's much more. It's much more than simply, yeah, loki knew this stuff, and shouldn't she know it already? It is a forum creation of a forum to continue to do this over the election year.
Speaker 2:Well like you said, I hadn't considered the fact that they'll be able to call hearings all throughout the election cycle and everything else, and it'll be. They'll be able to bring it front and center, smoke and mirrors, but also with a purpose. I just look at this and I, and you're right, it's theater, but with a purpose. I hadn't considered the fact that they would try and basically leverage this. I thought this was just a good way to kind of you know everything that they're going to, anything that somebody's going to bring up about education, will be answered with oh well, we'll, we've got a task force working on that. We'll let you know what they decide. Any new idea, any new thought, any new? Oh, the task force was working on that and we'll have recommendations in 2027 on that. Which that that was. But now to utilize it too as a tool to be able to craft the narrative for the election season. Yeah, that's a whole nother kettle of fish right there. That's a whole nother kettle of fish right there.
Speaker 1:That's a whole nother level of of theater for a purpose at this point, brad, yep, and and it's to keep the focus on this particular tree. It's to keep the focus on K through 12 funding. Forget the rest of it. Keep the focus on K through 12 funding. That's why I think it's it's particularly important for Kronk and Refridge to keep repeating during all these sessions, during all the committee meetings, to keep repeating the need to put this within the context of the overall forest, within the context of the overall fiscal plan.
Speaker 1:This is a waste of effort because all we're doing is we're growing one tree bigger or we're directing one tree another way, without consideration of what it's doing to the overall forest, and we may be destroying the overall forest for the sake of growing this one tree. So I think, yes, I think it's designed to go on during a campaign year for a reason. I think it's going to. I think it. I think it's designed to go on during a campaign year for a reason. I think it's designed to keep the focus on this one issue during the campaign year and I think it's critical that cronk and roughridge continue to raise the, the overall forest, the fundability of the overall forest, uh, uh, during the year, to to counterbalance what they're, what, what other, what the other members are going to be trying to do to keep this, keep this narrow focus on uh, on the K through 12 tree.
Speaker 2:Not to not to suborn your, your tree analogy, forest and tree analogy but really it's rearranging deck chairs on the Titanic, right I mean, where it's like you know you're focused on this, but we're crashing into this ice. We should steer the ship, right. I mean that's kind of the whole thing Forest trees, titanic, whatever but it's obviously, you know, it's obviously coming and nobody is talking. I mean that's why it was so surprising when Kronk came out about this, because really nobody's really talking about what is going to be affecting us next year. I mean, they paid some lip service to it last session, but again member Stedman didn't. Let's not focus on that. We're going to focus on well, wait a second, this is the biggest crisis we're facing, but don't focus on it. I mean, come on, it just seems like again we're getting the pats on the head and telling us it's all going to be okay.
Speaker 1:That's how we've got, that's how Alaska has gotten into this situation. I mean, we focused on the deck chairs. I'll continue that one. I like that one too. We focused on the deck chairs throughout this last decade. Oh, the deck chairs of. We need we need, you know, oil and gas credits to spur additional production from the Cook Inlet, credits to spur additional production from the Cook Inlet. We need to, you know, address corrections. To pick up on Will Stapp's comments a few weeks ago on the show, we need to address corrections by, you know, bringing all the prisoners home, even though it's going to cost us an arm and a leg. We need to do that.
Speaker 1:Everything has been on the deck chairs, focused on an individual deck chair, and we really haven't, we have not had in mind what it's doing to the overall ship as we've gone along. Cronk is raising the issue. I think Senator Cronk deserves credit for raising that issue and I hope he stays at it, because if he doesn't, if he sort of collapses into where everybody else in the task force wants to go, which is focusing on this one deck chair, if he collapses into that, then it's just going to be a year of committee meetings and headlines about oh my gosh, we need to do this on K-12, or we need to do that on K-12. And we'll lose focus on the overall ship. So I think Senator Cronk is well positioned, well placed, and I hope he stays at it.
Speaker 2:Well, and this is something that you and I have been harping on for over a year and a half now, specifically, is the forecast of this deficit, and nobody I mean it's like everybody, you know put them in rocking chairs and they all nod, oh yes, oh yeah, but then nothing happens, they don't talk about it, they don't engage it. Even candidates that you know I would think would be, would be, would jump at this, have kind of, you know, avoided. I brought Shelley Hughes on board to talk about her candidacy. She was part of the fiscal policy working group. She was in the thick of it policy working group. She was in the thick of it and when I asked her about, you know, putting that into motion, her answer was about the sunset committee, which is just a one piece. That's great, but that's her. I mean, we've got to acknowledge that we're in trouble and nobody seems to want to acknowledge that. 20 seconds.
Speaker 1:Well, this is going to be a great segue into the third segment, but, shelly, we need a candidate who steps up and makes fiscal policy the center of their campaign, because that is the overriding issue. We're not going to be able to do anything else because we've drained the SBR, the CBR and we're about to drain the permanent fund dividend.
Speaker 2:We're continuing now. Brad Keithley, alaskan Source, sustainable Budgets, the weekly top three, the messaging we're starting to get it from the candidates, and we were just talking about how nobody wants to talk about the nine million pound elephant in the room which is the upcoming deficit spending and a fiscal plan. Brad, you've you've had some chance to analyze some of this with these opinion pieces that are starting to come out. Give me your, give me your thoughts here.
Speaker 1:Yeah, this is probably going to be another of those continuing segments. We had a gubernatorial candidate write an op-ed piece and what's the reaction to that? We had two of them in the past week. Two of the candidates wrote op-eds in the ADN. That's appearing in the other papers as we go along and they both share a common theme. One of them was from Click Bishop and the headline is I can get things done. Here's why I'm applying for the job of Alaska governor. And the other one was from Tom Begich, which was building Alaska's future by putting education first, why I'm running for governor.
Speaker 1:Neither of these, neither of these op-eds acknowledged that we're dealing with a fiscal outlook that is trash. Neither of these talked about the deficits we're facing. Neither of these talked about the fiscal constraints that the state's going to be operating under. Neither of these talked about even oil taxes. I mean, begich had talked about oil taxes before, but it doesn't make it to this op-ed. Neither of these talk about the permanent fund corporation and the absence of returns from the permanent fund corporation or the lack of full returns from the permanent fund corporation.
Speaker 1:All of them both of them just talk about spending. Bishops talks about I can get things done. I can do infrastructure. I can do big things. I've done it. I've known how to do it. I can accomplish it. Spending baggage, building Alaska's future by putting education first, why I'm running for governor. We need to spend more on education Spending. Neither of these talk about where the revenues are supposed to come from. Neither of these talk about how you fit what they want to spend on in the overall picture of our fiscal constraints, of our fiscal reality. It's just more and more what I can spend on, and that's sort of where we come to in Alaska. We have candidates who are running on what I can spend on Vote for me because I'll spend it on this. We don't have it, we don't have the revenue to support it, but I'll spend what we don't have on this Vote for me and I'll spend it on that. I mean, clickbishop especially is a little irritating. I can get things done here's why I'm applying for the job of Alaska governor because I can get things done. And others to cut the PFD because they didn't have the courage to step up and have an overall fiscal plan that sort of put together an equitable way through. The CBR started cutting the PFD and we still don't have anything to show for it. I mean, that's Click Bishop's record. Tom Begich's record is not much different. He spent less time in the Senate but during his term they blew through the end of the CBR and they continue to cut the PFD, are and they can continue to cut the PFD, and yet both of these candidates are writing op-eds about. I can get things done because I will spend more in this particular area.
Speaker 1:Your comment about Shelly Hughes, I think, is a perfect one. Shelly Hughes is perfectly positioned because of the role she played on the Fiscal Policy working group. Shelly Hughes is perfectly positioned to be the candidate of fiscal reality and the candidate of fiscal sanity. She can bring forward what the fiscal policy working group did, which was actually talking about a real balanced budget, as opposed to these fake balanced budgets that the legislature has been claiming for the last several years. She's a candidate who can bring forward that experience and do it. We need a candidate that's going to do that. If we don't, we're just going to stumble our way through another election cycle and stumble our way into another governorship, another administration that's just going to keep digging the hole deeper. Digging the hole deeper, uh, while they, while they spend what we don't have on their favorite things.
Speaker 2:Yeah, well, I mean, and I feel like you know, there's a ton of candidates out there and we've talked to a few of them and there's been a lot of, you know, and some of them have got a great talk, but not, you know, we don't have any walk yet. And when I particularly put that question to Shelly Hughes when she was on the program about a overall fiscal plan and she came back with the sunset commission, which again is great in that deeper dialogue of how do we fix the overall, you know, and I know it's big and scary and it's probably people's eyes glaze over or whatever, but $1.7 billion average deficit for the next 10 years, with this next year potentially being two, two and a half billion. I mean, somebody's got to be the adult in the room.
Speaker 1:Yeah, and it's one of the consequences. We've talked about this a little bit on the show before. It's one of the consequences of ranked choice voting, I think, because everybody's trying to position themselves for the top four right and the numbers given this many candidates, the numbers to get into the top four, I mean you may have somebody probably not, but you may have well, you're going to have somebody in double digits in the teens who has a, who has a percent vote in the teens in the initial round. That's going to make it to the top four. So everybody's trying to position themselves around. What's my core, what can I define as my core group? To get myself in the teams, to get myself in the high teams so that I make the final four and then they'll tell themselves then I'll be a real candidate once I make it to the top four. And part of what I think may be going on with Shelly although this is speculation on my part, but part of what I think may be going on is Shelly sort of defined her teens, her top teens, vote around just talking about spending cuts and about how we're going to control spending, as opposed to talking about a real fiscal plan, and she thinks she can get her top teens percentage out of just talking about that and is concerned that if she talks about a full fiscal plan that would have revenues, that has some discussion of revenues, she might take away from her top teams.
Speaker 1:I think that's what's going on. I think that's why people are scared to get into it. But we don't need a scared governor. We need a governor who actually recognizes the reality that we're in, the fiscal reality we're in. We need a governor that recognizes a candidate, that recognizes that we're staring at a $1.7 billion deficit and we need a full fiscal plan to deal with it. That is the core issue that will define Alaska over the next decade and hopefully some candidate will step up and do that.
Speaker 1:I mean, you and I talked initially when Bernadette came out as a candidate oh, she's a strong conservative, she'll be a good candidate, but all she's doing is repeating Dunleavy 2018, which is I'm going to cut my way out of this and we saw where that went. We saw where that went. Even with the Republican majority in the legislature. It didn't go anyplace. I mean, you get into a situation where everybody has their sacred cow that they're going to defend. By the time you add up 60 sacred cows, you're still in a deficit situation. We need a candidate who's going to talk about a full fiscal plan. Shelley's positioned to do it, but if she doesn't do it, then somebody else needs to step up and do it. Somebody needs to be, as you say, the adult in the room. Neither Click Bishop nor Tom Begich auditioned for being the adult in the room. They auditioned for being the special interest. I can continue spending. Just vote for me and I'll spend it on this Right, I'll fill your coffers or fill your pockets or do your special interest.
Speaker 2:You know, and I passed some of this information on the permanent fund stuff and all this other stuff to Shelley and to Bernadette's people and everything else, and I'm hoping that they will come up and start to tackle some of these things Because otherwise, like you said, it's just a repeat of the same things we've heard in the last two election cycles for governor. It's just the same kind of the same kind of verbiage. There's a lot of talk, but how are you going to walk it when it gets there? And that's the big thing. I mean, that's the thing, brad.
Speaker 2:I've had some conversations with some people behind the scenes and they're like well, you know our candidate, we, you know we. They believe in what you're talking about, but they've got to position themselves and they don't want to let too many of their cards. They want to play their cards close to the vest right now because otherwise other candidates might steal their good ideas. I mean, at some point you've got to stick your head up above the crowd. You may take a tomato or two, but you've got to do it at some point. You can't with a crowd of a field of 10 people running for governor.
Speaker 1:at some point you've got to do something to differentiate yourself from the crowd right, yeah, and basically what they're all saying I mean what Click and Begich both said is I don't want to be the adult in the room, I want to be the panderer. I want to be the one who says, oh, I can do all this, uh, magically, uh, by, uh, uh without, without the revenue to support it, without a fiscal plan to support it. I can. I can be the builder, which is clicks, clicks, claim, or I can be the education governor, which is Tom's claim, uh, but with, without mentioning the revenue, and they just they're pandering to a base, a particular base that you know, in their calculation, gets them to the top teens and gets them to the final four, where they can pander some more, expand their pandering.
Speaker 1:We need somebody who, from the get go, stands up and writes the-ed that says look, we need a fiscal plan, I'm going to be your fiscal governor. This is why we need a fiscal plan. We can't do any of this other stuff if we don't have a solid foundation on which to do it, if we don't see the iceberg coming and redirect our way away from the iceberg, and then, once we do that, we can do things inside the boundary of that fiscal plan. But until we do that, we're just whistling in the wind. We need somebody who writes that op-ed, some candidate that writes that op-ed.
Speaker 2:Randy says, is the adult in the room the governor candidate who wants to institute his income tax or one who is brave enough to list possible spending cuts? The answer is both. I mean really, because again, again, with a two billion dollar deficit, if you don't think taxes are on the table right now, you're not paying attention. With a two billion dollar deficit, if you don't think that there's some form, because they could take all of the pfd, every bit of it, and there's still 1.5 billion dollars in the hole, right, $1.4 billion in the hole. If you don't think it's going to happen, it's happening right now.
Speaker 1:All we need I mean, it's not like the plan isn't already written All you need is to go back to the 2021 Legislative Policy Working Group, take that, fill in, turn it into bullet points or however you want to do it and then talk about that and you can say look, this is what the legislature came up with when they were set, when they took a group of them and set them off to one side and said be adults in the room and come up with a policy. Both liberals and conservatives come up with a policy. This is what they came up with and it's the correct one. And all you need to do as a candidate, is to fill in the blanks and say, look, I'm going to build on that and I'm going to come back to the legislature and say, look, this is what you guys came up with at one point. This is the right thing to do.
Speaker 1:Let's go do that, and it's not rocket science. You don't have to go create a whole bunch of stuff. You do have to worry about the permanent fund corporation now because they've gone off track, but it's not rocket science to do all this stuff and it's just. I mean, all you do is you take the fiscal policy working group document recommendations from 2021, write the op-ed around that, put that on a piece of paper and do the editing around that and you've got a plan. You've got a plan that you can sell hard, but nobody's done that yet.
Speaker 2:Well, nobody wants to be the candidate that says, oh, by the way, we're $1.7 billion in deficit every year for the next 10 years. Nobody wants to be that. The first person that steps up and is that candidate is the one that's going to stir some outrage, going to freak some people out, going to do all that, but they'll also be the ones that can help shape the narrative around it. And so somebody needs to be the adult and be the first one to take that large step and it's a step of faith, there's no doubt about it, but you're going to actually have to, somebody's going to have to do it.
Speaker 1:Yeah, and you're going, you know, and, and, and you're going to have to think through how do I get in the top teens in terms of, in terms of my group, by doing that, and it may be, it may be a challenge to do it, but that's what the state needs. I mean, we don't need more panderers, we don't need more people who's saying the solution is more education, that's all we need to do. More education, or more infrastructure in Click's case, that's all we need to do. Or just cut it away in Bernadette's case, that's not going to happen either. We need a candidate who understands that there's not a simple answer and that there's a complex answer. And simplify the complex answer, but give a total answer as opposed to, as opposed to these, these, these pandering that we're having, that we're, that we're starting to see come across now.
Speaker 2:Right? No, it's, it's madness, man. I don't know how many. I don't know how many more times we can keep doing the same thing and same thing and keep, you know, kicking the ball down the road. Whether it's the education working group to try and delay, delay, delay and then shape the narrative, whether it's just saying the same things of we can totally cut our way to this 100%, because now we're so far into it, there's just, I mean, how do you cut $1.7 billion out of the budget without cut, you know, creating some kind of huge cratering hole somewhere? I mean, somebody's got, somebody's got to address this, and I don't. I don't know who's going to, I don't know who it's going to be, I don't know who's going to grab the bull by the horns, but somebody's going to have to, and if not, we're going to be facing some serious issues in the next year or two.
Speaker 1:Well, we know it's not going to be Click, who's been part of the problem by spending down our savings and cutting into the PFD. We know it's not going to be Click. We know it's not going to be Tom, who just wants to spend more on K-12 without worrying about the overall force. We know it's not going to be Tom. So you know, by the process of elimination we're finding out who it's not going to be. Maybe we'll get down and find somebody who you know, who goes the opposite direction, and we'll find. And we'll find they're the one.
Speaker 2:I have some hopes, but, man, I don't know what's going to happen. 90 seconds, brad. Final thoughts for today on this. What do we? What do we do?
Speaker 1:Well, we need a governor who stands up and appoints a good permanent fund corporation board to get the permanent fund corporation back on track. We need somebody who talks about a full fiscal plan, as opposed to just the trees inside the fiscal plan of education or corrections or whatever they want to talk about. And we need a governor, we need somebody writing their platform in the ADN that talks about a full fiscal plan, an equitable fiscal plan, a fair fiscal plan and a complete fiscal plan that puts the state back on track. That's the core issue.
Speaker 2:Well, I mean, we can only hope that there's people out there, or candidates out there, that are attracted to this idea. I know some of it is politics. You've got to get through the primary yada, yada, yada, but you've got to at least give us an inkling of it on the way through. All right, Brad Keithley Alaskans for Sustainable Budgets. Brad, thanks for coming on board. I appreciate you being a part of it today.
Speaker 1:Michael, as always, thanks for having me. Well, that's a wrap for another week's edition of the weekly top three from Alaskans for Sustainable Budgets. Thank you again for joining us. Remember that you can find past episodes on our YouTube, soundcloud, spotify and Substack pages, and keep track of us during the week on Facebook and Twitter. This has been Brad Keithley, managing Director of Alaskans for Sustainable Budgets. We look forward to you joining us again next week on the Weekly Top Three.
