The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (12.1.2025)
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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 December 1, 2025.
This week, our top 3 issues are these: 1) we discuss the significant uncertainty regarding oil price, and with that oil revenues, that the Legislature will face this coming session (2:10), 2) we explain why we have asked whether Lt. Governor Dahlstrom is duplicitous or just dumb when it comes to the Permanent Fund (18:56), and 3) we explain why, while we like Ralph Samuels, we believe he is a horrible pick for the Board of the Permanent Fund Corporation (36:59).
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 December 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 a.m. I join Michael weekly in the first hour of Tuesday's show from 6.10 to 7 a.m. 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 at medium.com. 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. This week, our top three issues are these. First, we discuss the uncertainty regarding oil price, and with that, oil revenues that the legislature will face this coming session. Second, we explain why we have asked whether Lieutenant Governor Dolstrom is duplicitous or just dumb when it comes to the permanent fund. And third, we explain while we like Ralph Samuels, we believe that he is a horrible pick for the Board of the Permanent Fund Corporation. And now, let's join Michael to get to it.
SPEAKER_01:It's not really that bad. There's some interesting stuff that Brad's digging into. First of all, uh there's going to be charts and homework on this first one, which is going to be tough for me this early in the morning, but Brad, uh Brad's going to talk about the challenge facing the fall forecasts for this year. Brad, what are we what do we got here? Give me the give me the rundown.
SPEAKER_00:Well, by December 15th, the governor is supposed to provide his budget, and along with the budget is supposed to be the fall revenue forecast from the Department of Revenue. And usually um I have a pretty good feel for for both. Um, and and I guess I do also for this year, although there's been some rumors the governor's going to propose, uh make a new revenue proposal. Um, but usually I have a good feel for what the revenue forecast is going to look like. And and this year, if they follow the rules they've followed, I know what it's going to look like. But the question is, is it going to be realistic? Um, if you'll throw this chart up, uh, Michael, uh, I'll I'll try to I'll try to talk through it because it's it's important.
SPEAKER_01:Every and for those of you who are at home, this chart is complex. I feel like I need a slide rule for this chart, but you can you can view it over on the website or over on the Facebook page at facebook.com slash Michael Duke Show slash live, and you can look at the chart and follow along. Go ahead, Brad.
SPEAKER_00:Well, it's the chart I use for my 8:30 a.m. chart every day, uh, six days a week. I don't publish it on Sunday, but it's the chart that I use uh that I publish at 8:30 every day. And it's got a lot of things going on. I mean, trying to do a lot of things with it. But the thing that the thing that's really interesting as we're coming up on the fall revenue forecast is what this says about uh the the remaining the FY26, which we're in currently, the FY26 revenue forecast for oil, and what it says about the FY27 revenue forecast for oil. The predictions or the the fall revenue, the spring revenue forecast that the Department of Revenue issued uh last uh spring predicted projected$68 a barrel uh for oil. By the time we got to, by the time we got to the governor's uh to the time, by the time the the the appropriations bill passed and it got to the governor, oil prices had taken a dive. And so there was a revised revenue forecast that came out from the Department of Revenue um uh in support of the governor's vetoes that projected$64 a barrel oil. So it was down for this is for FY26, it was down four dollars from the spring revenue forecast down to the revised spring revenue forecast that the Department of Rev, that the Commissioner of Revenue uh at the time issued. Um, and it looks like if you look at the futures market, it looks like that$64,$68 we're we've we've we've blown through, but the$64 that the that that was the revised revenue forecast on which the governor premised his vetoes looks like looks like it's gonna be a good number. If you look at the futures market right now, uh over the remainder of the fiscal year, the average for the fiscal year is about$65. So that$64 looks fairly reasonable. Here's the challenge. Um the Energy Information Administration, the Federal Energy Information Administration, issues what it calls its short-term energy outlook. We've we've talked about this on the show before. And the short-term energy outlook is is the probably the best of the price projections that you that you get out there from independent sources, from non-market sources, if you will. You'll get the investment banks, it'll come out with, you know, Bank of America will come out with one, Chase will come out with one, others will come out with various projections. But the EIA has a pretty good computer program factoring in supply and demand, uh, and is pretty good at projecting at projecting price. They're projecting, it's the it's the dotted red line or the dashed red line uh in the middle of this chart. Uh they're projecting a big drop in oil prices uh over the first part of the first half of uh of next calendar year, the last half of fiscal year 26. And that projection, that projected drop uh would take the average price for FY26 down to$60 a barrel. Again, in perspective, DOR's spring forecast was 68. The revised revenue forecast that came out in support of the governor's vetoes was 64. And if you look at EIA, it takes it down to$60 a barrel over the year. Some think that's too pessimistic, pessimistic. But the thing about EIA is they've been they've been showing this trend down for a while now. We talked about it in October, maybe. They've been showing this trend down for a while now, and the market has sort of started bending toward what EIA's projections have been. The futures market is still elevated from that. The futures market is still showing 65 a year for FY2026. Um, so the futures market hasn't bent all the way down to EIA, but there's a lot of a lot of explanation behind EIA's projection that is pretty solid in terms of terms of the muted demand that we have, oil demand in the world, global oil demand, and the increased production that's coming out of out of uh OPEC's announcements, OPEC plus announcements, plus the additional uh findings uh around the world or the additional projects that are coming on stream around the world. So it'll be interesting to see what Department of Revenue will do, will likely do is do what it always has done, which is take the 10 days, the futures market 10 days in advance of the date they publish the projection and base the price on that. Um and so we'll likely see out of out of Department of Revenue somewhere in the 64 to 65 range, which is what the futures market tells you now. But it may be, we may be facing a really a much steeper price decline in the first half of next year, uh that that over the course of the legislative session is going to price is going to deteriorate and it's gonna make for a really interesting legislative session because the discussion is gonna start with the fall revenue forecast, but you're gonna you may see the market trending away from that. The even bigger issue is FY27, the the budget that the legislature will be putting together this coming year, this coming spring for the following, for the subsequent fiscal year, FY27. And Department of Revenue in the spring revenue forecast projected$67 for FY27. The futures market currently is telling you$63 for FY27. The EIA forecast for FY27 right now is$56,$11 less than was in the spring revenue forecast, and$7 less that is than is in the uh than the futures market would tell you right now. So if DRR DOR makes a projection for FY27 based upon the 10 days that we're gonna see in advance of the projection coming out, if they're gonna make that, then we're gonna see a projection in the range of$63, which is down significantly materially from the$67 in the spring forecast. Can you break it out for us just a little bit?
SPEAKER_01:I mean, the difference is here. I think some people are like, okay,$67,$63,$56. When we're talking about an$11 difference, what kind of revenue hit are we talking about for the state?
SPEAKER_00:So so we're talking about probably$35 a barrel uh in terms of uh in terms of the the difference per per dollar, it gets a little bit shallower the deeper you go because the minimum uh floor kicks in. But uh we're probably talking$30,$35 a barrel. So with a$10 difference, which is what we're talking about for FY20, more than a$10 difference for FY27, but with a$10 difference, we'd be talking about a$350 million difference in revenues between what was projected in the spring revenue forecast uh versus uh for FY27 spring revenue forecast versus what EIA is telling us to look for uh in the in the in FY27 now. So from 67 to 63, what is that? Four times 140 million dollars between what the spring revenue forecast projected and what the futures market tells you now between 67 and 63. When you go down to 56, we're going down another uh another what uh seven seven dollars. So we're going down another 250 million dollars, maybe uh between those two projections. Those are big numbers when you're looking at the when you're looking at the revenue side. I mean, we're we're only getting$2 billion or plus or minus out of out of oil now. Uh, and if you're talking about dropping that$250 million, you're talking, you know, that's a fairly big drop. That's a right. So so these are these are fairly big. And and the the drop on the on the um uh the FY25 from 68 down to 65. So 68's what the what the Department of Revenue said in the spring forecast for FY25 down to 60. So that's eight dollars. That's what 300 and 300 or some odd million plus uh plus or minus um uh uh for uh uh for the drop in what FY25 may or FY26 may show between what was in the spring revenue forecast and so again a potential for what we're already looking at at another two to three hundred million dollars in losses if this holds true. Yeah, yeah. So it's I mean, it's the I I wouldn't want to be a legislator for a lot of reasons, but but there's gonna be a very difficult situation when they come back to Juneau in January, because their their fall revenue forecast will likely have told them, based upon the 10 the the traditional uh futures market base, will likely have told them that they're gonna be they're gonna be down, but not bad down hugely from where they thought they were gonna be on FY26. Um and they're gonna be down a lot, but not down massively from where they thought they were gonna be on FY27. But if the EIA's projections hold, uh they've come true, then in the course of the session, they're gonna find the oil market just the bottom just dropping away from them. Um and you know, when when they're when you have people up there talking about, oh, we need more money for education and we need more money for this, we need more, it the the revenue side is gonna be dropping away from them. So it's gonna be a it's it's gonna be a very challenging legislature um uh uh as they as they hit the ground. We we will probably know by February or March uh whether whether EIA's forecasts are coming true, whether the drop that EIA has forecast is coming true. Uh but it's gonna be like February or March before we know that. So I don't it it's just gonna be a very challenging time for the legislature to deal with this.
SPEAKER_01:All right. Well, we'll have to uh see what this looks like, especially if you look at this chart and you see the the uh uh IEEE drop in January, February, and March, of course, right at the beginning of the session. If oil does bottom out towards the low 50s in that point, the pet it could set in. I mean, it could be some really interesting things. All right, well, we'll uh we'll keep a look for this, and of course, we're looking for the governor's budget on the 15th to see what they are projecting, uh predicting and what they're gonna build the budget on and everything else, and we'll see what that uh we'll see what that looks like there as well. Jim just said there's a new gas line. Oh, not even talking about that this week, but uh no, Jim, there's not uh new uh there's not a new budget. There's not a new gas line coming. Uh in fact, this is kind of like the old gas line argument at this point. We're not even gonna really talk about that this week, but uh it uh especially after that meeting, Brad, with the fiscal certainty component of it in front of the legislature, you could just see that the wheels are starting to come off the bus on this deal.
SPEAKER_00:You know, it the the whole thing, the whole thing was, oh, we're gonna we're gonna go out and get these market commitments, we're gonna build the line. It's a private enterprise now. Glenn Farn's got a hold of it. We don't need state support, don't worry about it. We got it under control. We're gonna go out and get private financing. And and I could just, you know, I've been around this a long time, and I could just see they're trying to build up expectations before they walk into the legislature and say, oh, and by the way, we need these 20 things from you, uh, uh, these 20 supports and 20, you know, commitments and 20 financial concessions in order to in order to make this thing work. I knew this was coming. Um and uh and you could just see it, but that they tried this whole build-up about it's a private venture, and we're gonna get private financing, and we're gonna, you know, enter into all these, all these market commitments, it just and and here it is, sure enough. Uh it's um it's it's it's coming in. I I will say for those who have been around this long, it is the the the the contract they're talking about, the commitments they're talking about, are essentially the same commitments that Governor Murkowski proposed in uh 20 2006 in connection with the producer line, in connection with the line that was then proposed by Coneco, BP, and Exxon that was a line to the lower 48 at the time. Um and and it's the same package of things uh that Glenn Farn's talking about as was in the package that Governor Murkowski proposed to the legislature in 2006. And that just blew up. Um, I mean, by the end of it, by the end of 2000, you can remember you remember 2006 was a pretty bad year for Murkowski. The legislature sort of rebelled on him. Uh, he lost the primary to Palin. Um, and then you know, at in the election of 2006, Palin beat uh Tony Knowles, and uh Murkowski was out by the end of 2006. So it's it's not I'm I I remember that time clearly. Um, and and the legislature just could not deal with all of the various pieces that it was being asked to provide assurance on and support on and and and and supplement on. Um, it was it included the fiscal the the property tax you know fix at the time. And right and and so I'm just I'm I'm just sitting here seeing this play out again. And the legislature, I mean, boy, talk about deer in the headlights.
SPEAKER_01:They uh that was back that was back when we had 15 billion dollars in the bank, right? I mean, that was back in the day we had money, yeah. And uh and and they still were like whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa.
SPEAKER_00:Yep. And so I, you know, and and and if if this plays out the same way it did with Murkowski, if if if that if that whole package hits the legislature and they do the same thing the 2006 legislature did, which was we can we're not gonna approve all this. If they do that, I mean you can see you it'll be interesting to see what goes on in the governor's race during during the session as as that package hits the legislature. I mean, are are governor or gubernatorial candidates going to endorse that sort of thing? Um, if so, they may find the same erosion in support that uh that Murkowski had in uh in 2006. And I know there was a lot of other things going on with Murkowski, but but it was it was that was a that was a bad, bad, bad uh session from the standpoint of the legislature trying to comprehend all that it was being it was being asked to do.
SPEAKER_01:No, I could hear the I could hear the sphincter slamming shut from here when they had that meeting with Glenn Farn. They're like, oh, we need all that just I mean you could just hear the oxygen leave the room at that point. But uh and I think a lot of people have started to realize that that is well, the kind of the beginning of the end of that discussion on the gas line. Let's uh continue on. Brad Keithley, Alaskans for sustainable budgets, the weekly top three continues. We just had a conversation about the gas line during the break. Oh man, that's gonna be that's gonna be fugly. That's gonna be really, really uh uh nasty. Um, all right, but now we're on to number two of the weekly top three, where Brad asks the question Is Lieutenant Governor Dolstrom duplicitous or just dumb? I mean, I just it's just dumb. I mean, you know, okay, Brad, um, hit me with it here. What are we talking about?
SPEAKER_00:So, so Lieutenant Governor Gulf Dolstrom, candidate for governor Nancy Dolstrom, wrote an op-ed in um in the ADN entitled An Endowment Can Guarantee a Reliable PFD for Generations. And it's just dumb. It's just, I mean, it it is she the the headline says a reliable PFD for generations. The body said, the body of it says, you know, if we do all these things, then we're going to have a reliable PFD. It starts out by attacking the$1,000 PFD. Fast forward to FY to 2025 after the smallest PFD in decades, just$1,000. Families are hurting and furious. And then she goes on and she has this long, this, this long about how we're going to fix the permanent fund, turn it into an endowment, and that's going to fix the PFD. The endowment approach that that is in legislation before the before both bodies, before the Senate and the House, and that Dahlstrom talks about in this article, does nothing, nothing with respect to the PFD. It doesn't guarantee any level of PFD. Indeed, it doesn't guarantee a PFD at all. All it does is is change the way in which the structure of the permanent fund is set up. We currently have the two attack, uh, two account structure. We've talked a lot about it on the show. The proposal is to merge the two together. That does nothing with respect to the PFD. There's no provision in what's been proposed in the legislatures in the in either body. There's no provision in what Dolstrom's talking about here that guarantees any sort of PFD. All it does is is is tighten the permanent fund into one account and and and the provisions that are before the bodies would open the back door into it. Dolstrom at least sort of checks that. But there's nothing in there that that provides a guaranteed PFD of any amount. It doesn't say you'll get$1,000, it doesn't say you'll get$500, it doesn't say you'll get$2,000. It is silent. And it leaves the legislature with the continued ability, as it's done since 2017, leaves the legislature with the continued ability to continue to cut the PFD, use PFD cuts to fund to fund government, to divert that money, withhold PFDs and divert that money over to government. So when she says, you know, it's going to fix the PFD and it's going to ensure that uh, let's see, this isn't about politics or Juno games, and it's about giving families certainty, a dividend you can count on every single year, no more$1,000 surprises, no more last-minute fights. It doesn't do that. It doesn't do any of that. It doesn't fix that problem at all. It doesn't address that problem. And so here the question I have is she being duplicitous, intentionally duplicitous, intentionally misleading by a headline that says an endowment can guarantee a reliable PFD for generations. A body of the of the article that says, you know, we're not going to have many more$1,000 PFDs. That was a horrible thing to do to cut the PFD down to$1,000. We're not going to do that anymore. Is she being duplicitous, intentionally misleading Alaskans with this article by saying, hey, I'm going to fix your PFD by doing nothing, by by by making these changes over to the permanent fund, the the permanent fund? Is she being intentionally misleading or is she just dumb? Right. That she that she does she doesn't understand and understand what she's saying. There are other things in this commentary or in this op-ed by her that I find sort of falling into the same category. She talks about the fact that the merger of the two will, let's see, what's it it enables it enables the the per Alaska Permanent Fund Corporation to invest in aggressively for maximum growth instead of being forced to hold cash just in case the legislature demands it. A fully protected endowment earning higher returns, compounds faster, independent modeling shows this approach delivers more. There's nothing. I went back and looked at the first quarter financials for the permanent fund corporation. What they're holding in cash is$2.6 billion. 3% of the overall amount is what they're holding in cash. They ought to hold that in cash anyway. And so there's no they're not holding a ton of cash away from and not investing a ton of cash, waiting on on, you know, depending upon what the legislature is going to do. They're gonna they've gone ahead, relied on the statute as they should. They've gone ahead and invested a heavy amount as they should for maximum return. They're not investing it the right way, but they've even gone ahead and invested a heavy amount, and they're holding a little minimum in cash. And that's exactly what they what they ought to do. It's exactly what they would do, it's exactly what they would do under the new model as well. There's not this, there's not this hidden the the permanent fund corporation is using this argument as an excuse for how bad their investment returns have been. Oh, you know, we got to hold all this cash because we don't know if the legislature is gonna call for more than 5%. Uh they're gonna call they're gonna take more out of the earnings reserve than the 5% provided by, oh, yeah, so we got to hold all this cash. And that's why our returns have been so bad. That's not right. Their returns have been bad because they've invested badly. But, but, and and and it's not been because they've been holding cash because when you look at the first quarter, results are only only holding 3% of the balance, balance in cash. So Dolstrom, Dalstrom is off, Dolstrom is is it looks like she's bought the permanent fund corporations argument, hook line and sinker. And and talk about a sinker. I mean, she's sinking with it. She doesn't understand, she either doesn't understand what she's saying or she's intentionally misleading people by what she's saying.
SPEAKER_01:Right, because again, people don't understand the disconnect in this argument between combining the permanent fund and the payout of the PFD. Because as the as of this point, the payout of the PFD is decided by the legislature. They've ignored the statute. There's nothing in this combining of the funds that would force the legislature to then follow the statute or make any other changes. There, you know, if it gives them more money, they will just spend more money because there's no regulator, there's no mechanism by which you can hold them accountable to change that. And if if she did this because she won, just doesn't understand, or if she's being duplicitous, either one disqualifies her as a legitimate gubernatorial candidate.
SPEAKER_00:Absolutely. There, there, I don't uh there's no reason to spend any time thinking about Nancy Dahlstrom after this. I mean, if this is the kind of financial thinking that we've got uh in in a candidate, I mean, Tom Begage is better than this. There, there, there are a lot of candidates that are better than this. There are a lot of candidates that at least understand it's gonna be interesting, Michael. This may be a litmus test on gubernatorial candidates. It may be it may be a good question to put to gubernatorial candidates. What is your position on merging the two account uh uh permit fund corporation system or permit fund system into a one account system? And and if they say, well, I'm for the merger, then ask them why. And and if they spew this sort of stuff, then we can take them off the list too. We we may get to who our candidate is by elimination of what the candidates are saying about this proposal because it demonstrates they have no understanding of how A, the permanent fund works, B, how the permanent fund dividend works, or C, the reality of how the permanent fund corporation right now is investing money and the amount that they're holding in cash uh right now. So it's I mean, it's a disqualifier for her for sure. Um, and if other candidates take this position about supporting the the the merger on these grounds, or frankly any other grounds, if other candidates take this position, it's a disqualifier for them as well.
SPEAKER_01:It's uh it's disappointing because I'm seeing more and more of this talk about the combining of the funds and some of the different um uh some of the different uh uh people that I've that I've run into. Uh but when you pick at that, when you picket that that that position, um, then they start going, what? What? See, they're they're buying they're buying the the top level gloss of this story, and they're no because nobody really, not many people really understand how the permanent fund works or how the dividend works or how any of those things are tied together. So on the surface, they're buying the surface argument of, oh, combining the funds will save us all, not realizing that it opens up the back door of the corpus, and that of course there's no connection between the payout of the PFD and the combining of the funds and everything else. And they don't even understand the investment strategy. Nobody, nobody is really talking about that. And that is to me the most dangerous thing because if they're able to sell the public on this, then they can get access to that, and that's what's going to lead to some real problems.
SPEAKER_00:All this, all this is, all this proposal is, is a proposal to put off taxes, a proposal to take money out of the permanent fund. I mean, I uh Dolstrom does say, I'll give her this. She says at one point, uh, limit the draws to the lesser of 5% or actual realized returns. This will eliminate the fear some have of tapping into and draining the corpus itself. Well, there's this whole question about what the hell actual how they're going to calculate actual returns, because you can rig that game uh in order to, in order to uh, you know, continue to to draw more out, take more out when you're when when it's more than than what's coming in. Um but it's but all this all this proposal is is a way of ensuring that there's continued cash flow into government spending. There's no guarantee it goes to the PFT. Continued cash flow into government spending. And and the the proposal that's in both bodies right now lets them have the backdoor into the permanent fund corpus to keep that to keep that flow going to support spending. And all that really is, is an effort by non residents, the top 20%. And the oil companies to avoid taxes, to avoid a discussion of taxes by increasing the amount of money and stabilizing the amount of money that's coming out of the uh out of the permanent fund corpus. So I mean that's that's that's the real genesis behind the proposal. And and and and and whatever else it does, I mean, you can argue about whether that's a good thing or bad thing, but whatever else it does, it sure as hell doesn't guarantee a PFD. And it sure as hell isn't a solution to the PFD issue. And that sure as hell is where Dolstrom goes wrong. Yeah, exactly.
SPEAKER_01:Well, think about I think about it like this. I think about the combining of the permanent funds is their attempt to build more road to kick the can down. That's what it is. That's that's all it does, is it kicks the it just it builds more road to kick the can down a few more years until they've drained down the corpus of the fund to the point to where the returns are not they don't equal the expenditures, and and then we're in real it, then it's a real brown spot, uh, if you know what I mean. Frank says, which candidate has the correct plan then? Well, I I don't know if anybody's got the correct plan yet, but I you will know that the candidate is not correct if they're calling for a combining of the permanent fund. That's an immediate red flag, should be an immediate red flag to you uh as well.
SPEAKER_00:Absolutely. Have you asked, I I I've listened to some of the interviews you've had with some of the gubernatorial candidates. Have you asked them about this, about this issue as you've gone along?
SPEAKER_01:Yeah, you know, I I've I've asked it as kind of a uh as a sidebar topic. Uh Bernadette is the one that I've had the most conversation with, and I've actually had it on the air with her about what you've talked about, about the returns of the fund and you know, changing out the board members and things like that. And she's the one that's actually, I think she's the only one that's actually referenced some of the things that you've talked about uh in that. But no, I have never talked to Nancy Dolstrom. I tried to get her on the program last go-around when she was running for Congress, and they just never, you know, didn't want to be bothered to come on, apparently, is uh is the thing. But this is this is the problem. And I think Bradley maybe has knocked onto something here. He says the problem is we're getting less, less, less and less qualified candidates, but uh, but is that because those who are qualified are smart to not get involved in government? Too many hands able to control whose hand gets in the cooking jar and how to spread the cookies wisely. I mean, maybe that's it. Maybe the smart ones are like, I'm not touching that with a 10-foot pole. I mean, because I mean, why this is my question, and this is really my question for a lot of the gubernatory. Why would you want to be governor now? I mean, is it to save us? Uh, because I surely wouldn't want to step into that brown mess, uh, is what's going on right now, because you're gonna be one person fighting against 60 Yahoos, all they want to do is spend money, right? I mean, that's what we're looking at right now.
SPEAKER_00:Yeah, I I I don't know, I don't know if we're gonna get the right candidate to step up, but but this is I mean, all this what what we've got so far, if you sort of look around with some of the candidates, is you've got special interest sponsors. Uh Dolstrom clearly has allied herself with the top 20% of the old oil companies, non-resident industries with with this proposal. Um, but you've got Tom Beggage, who's really, you know, appealing to the to the to the K through to the education community. And you've got other candidates, you know, click once infrastructure, he wants construction, you know, construction spending, capital spending. You've got you've got other candidates who are sort of aligning themselves with special interests. And that's frankly one of the problems with ranked choice voting. I mean, to get into the to get into the top five or top five or four, whatever we use. Four, to get into the top four, you've got to come out of the primary with enough numbers to to you know be one of the one of the top four. And the way people are are looking at that, it's I've got to gather a base of about you know 10 to 15 percent of the voting population behind me. If I get that, I'll get it, I'll get into the top four and I'll be able to run my campaign. So you've got you've got people who are really appealing. I mean, what ranked choice voting is doing is really forcing people to appeal to to very, very narrow segments. And that's I don't again, I don't know if Dalstrom's just dumb or if she's being duplicitous about this in her discussions about the PFD. But but whichever it is, she's really trying to appeal to a uh uh a very uh a fairly narrow slice of people who want to see the permanent fund tapped.
SPEAKER_01:And the more that yeah, and the more this argument goes mainstream, the more uncomfortable I get about it, this combining of the funds argument. And the more that it gets thrown around, the more I'm just like, I mean, I don't know why people can't see what this is. And tying it to the permanent fund dividend on top of that is the biggest false flag that I've seen. It's a red herring by, like you said, because there is no connection at all. You could change how the fund works a hundred different ways, and none of it would matter us as to how the PFD is paid out, because that is 100% decided by the legislature at this point.
SPEAKER_00:You know, if they tied, if if if the proposal that comes out of the Senate or the if the proposal that's in the legislature is to is to put in a provision in that constitutional amendment that guarantees the PFD at a certain amount, uh and we can evaluate what the amount is if they do that, if if that's the proposal that comes out, that may be something worth talking about. But right now, it's not that. It is it is it is much more tap tap the permanent fund or you know, rationalize how we're gonna get more money out of the permit fund by by this proposal, uh and without addressing the PFD issue at all. And if that's all this proposal is, then it's it's a complete non-starter. If Dalstrom, if Dolstrom would have said, if one of her points would have been, and we need to include a guarantee for a permanent fund dividend of a certain amount, uh, we need to adopt 50-50, we need to adopt 3367, we need to adopt constitutionalize some kind of formula or something, right? Yeah, I mean it if if she had included that, entirely different discussion. But she didn't. There's no mention of actually doing that. It's just, oh, if we do all these other things, none of which relate to the PFD, if we do all these other things, we'll get a bigger PFD. No, you won't. There's no there's no tie between those two. Yeah. So if some candidate wants to endorse this proposal, but but endorse it conditioned on the adoption of a guaranteed PFD, then maybe we can talk about it. But that's that's not what's going on here.
SPEAKER_01:No. And Kim says, then you've got Click Bishop blocking his constituents who question anything about the way the PFD is appropriated. I mean, yeah, these these candidates for governor are kind of self-selecting themselves, I think, at this point for discard at this point. Uh all right, Brad Keithly, the weekly top three, continues. Uh, we're gonna jump back into it here. Number three of the weekly top three starts out with, oh, you know, Ralph Samuels is a nice guy, but uh Brad, Ralph Samuels is a nice guy, but is he PFC material?
SPEAKER_00:Look, I I like Ralph Samuels. I've I've spent time with Ralph Samuels. I like him as a person. Uh, I've supported him in the Republican primary in 2010 when he ran against uh uh Sean Parnell in the in the primary. He was a good uh he was a very alert and very intelligent uh uh legislator when he was in the House of Representatives before that. He's been a good ambassador for Alaska over the last since since uh since he lost the race for governor in various positions of supporting uh uh supporting trade associations, heading trade associations and supporting uh various uh activities in that regard. Nice person. But he's not what we need on the permanent fund corporation. Dunleavy's appointment of him to the permanent fund corporation, I think, is is a big is a big wasted opportunity on the on the part of the administration. Um look, the permanent fund corporation ought to be all about investment professionals and people who understand the investment industry and understand how to make investments and understand how to listen through the bullshit when investment advisors are telling you you ought to go with their product as opposed to some other product. And it's and it's somebody who understands that we ought not to be paying a billion dollars a year in terms of investment advisory fees like like we are now, and and is able to sort of parse through how we get rid of that, and somebody who's able to think about alternative, alternative investment strategies that uh, for example, the Buffett approach, the 9010 approach that we've talked about on the show before. It ought to be somebody who's conversant. We ought to have people on the PF uh permanent fund board who are conversant with those sorts of investment issues and knowledgeable about those investment investment issues, because that's what the permanent fund board, the permanent fund corporation, is supposed to be doing. They're supposed to be maximizing our return through investments. Ralph and Jason and others would be great appointments to ADA, which is how you invest money appropriated by the legislature to them, invest money into the community to build business, they would be great appointments to ADA. They are horrible invest uh uh uh uh uh appointments to uh uh to the permanent fund corporation. We've talked about this on the show before, but I want to go back to it for a second. Um the uh uh University of Texas uh Texas has uh a combined Texas and Texas AM combined investment uh company called uh UTEMCO. Uh the University of Texas Texas AM investment management company. And UTEMCO is probably the most comparable sovereign wealth fund out there to what we we have. I mean, they they take resource revenues uh uh uh uh earned by the legislative earned by the universities through their ownership of lands in Texas, and then invest them, and they're investing them for maximizing the return. Here's what here's what how UTEMCO is described. UTEMCO is a not-for-profit corporation modeled after investment management companies organized by Harvard, Princeton, Stanford, and Duke Universities to invest their respective assets. It was the first investment corporation formed by a public university system and is governed by a nine, a nine-member board. This is the membership, a nine-member board consisting of at least three members of the UT System Board of Regents, four members appointed by the UT System Board of Regents, three of which, so we got a nine-member board, three of which that are appointed by UT, University of Texas, must have a substantial background and expertise in investments, and two members appointed by the Texas AM System Board of Regents, one of which must have a substantial background and expertise in investments. So out of so three from the UT appointees and one from the AM appointees must have a substantial background and expertise in investments. That's four of the nine of the UTEMCO board that then must have have to have that sort of background. In Alaska, with the permanent fund corporation, we have zero. Uh has been to rely on that business management related field, uh business management experience, to appoint members of the board. We have Jason Bruni, who's the chair, uh who uh headed uh was was the commissioner of uh Department of Environmental Quality uh in the early stages of the Dunleby administration, but before that was really a trade association chair. Ethan Shutt, who's the chair of Doyan, uh Ryan Anderson, I think it's Doyan. Oh, Ethan, no, it's his brother that's the chair of uh Doyan. Ethan is uh uh vice president general counsel for Bristol Bay. Ryan Anderson, who's the commissioner of transportation, John Binkley. Binkley may come the closest, but Binkley really Binkley's background really is in small business and in running a trade association, the the Alaska Trade uh uh one of the Alaska Trade Associations, Janelle Earls, who's the commissioner, current commissioner of revenue, and Ralph Samuels. None of those would would would fit on the UTIMCO board, none of those would meet the criteria of having a substantial background and expertise in investments. So Ralph's a nice guy, Jason's a nice guy, they'd be great over on the ADA board, they'd be great in in addressing how you spend money or how you invest money that the the legislature appropriates you to build Alaska businesses. They'd be great at that. They are horrible picks for for a board that's supposed to be focused on investing Alaska's nest egg to provide the the maximum return. And it's just, I mean, I I don't know why Don Levy did it. I don't know what his what what he what's in his mind. Um maybe this would be this is this is speculation, but maybe he wants Ralph on there, another good lobbyist, because Ralph's a good lobbyist, another good lobbyist on there to help push the permanent fund corporation's proposal to merge the two funds together. Maybe that's why he's got Ralph on there. But it's not because Ralph has any great expertise uh in in making investments or in the in how the investment industry operates. And I think I think it just like when he put Johnny Binkley on the board, just like when he put Jason on the board, um Dunlavy's just wasting opportunities to get people on the board that understand the investment industry, that can ask the sharp questions that need to be asked to better read to redefine the investment strategy we're pursuing, that can ask the questions that need to be asked to substantially reduce the outside payments, the billion dollars a year we're making in outside payments to uh to investment advisors. It's just another wasted opportunity in getting somebody on the board that would be capable of doing that. We we would be much better off. The next governor would be much better off following the UTEMCO standard of persons who have a substantial background and expertise in investments would be much better off in doing that than appointing people that frankly ought to be on the ADA board as opposed on the permanent fund corporation board. Right.
SPEAKER_01:Brad Keithley, Alaskans for Sustainable Budgets. You can find him at aK4SB.com. Um, I would love to see a governor go in there and just kind of uh clear clean house, you know, just kind of clean house and again put investment professionals on the board uh with the question of hey, the Vanguard SP is doing this, we're doing this, how do we get closer to that and reduce our 800 million to a billion dollars a year in fees on top of that? That that should be the first thing a governor does. 90 seconds here, right?
SPEAKER_00:No, exactly right, exactly right, Michael. And there are people out there that can do that. I mean, we've got investment advisors in this state, we've got bankers that probably the best uh permanent fund board member we've had in in the recent past was Bill Moran out of Ketchcan, who was who ran a bank down there and he asked those hard questions and he focused on those things. I mean, we've got bankers out there that could do that, we got investment advisors that could do that, and we're just you know, we're appointing, you know, these these people who have you know good political resumes uh and have an understanding of the Alaska industry, and so would be great appointments to ADA, but you know, we're not doing that, we're doing we're doing putting them over on the permanent fund corporation.
SPEAKER_01:It's become more political than anything else, right? I mean, this has become a political tool rather than an actual financial tool. Uh, and that's part of the problem, and that's led to this whole discussion about combining the funds because those actions have led to a lessening of the value and the ability for it to generate revenue. And instead of fixing it, they're going to accelerate that revenue consumption to the point of where it just doesn't matter anymore. This is what gets me. They politicized the whole board, which has led to the to the to the reduction in the returns, which has led to a lessening of the amount of revenues and an attempt to recapture those revenues, instead of reversing that course, they've decided to combine the funds to eat into the seed corn and basically just accelerate the demise of the fund. That's the answer. Instead of fixing it and putting people on there who care about the returns or just pinning it to the SP or doing whatever they need to do, they they do this. And that's just crazy. Just think about how long they've been paying those billion dollar per year of investment fees. And if that money had instead gone directly back into the fund, what would that have done over the last 10 or 12 or 15 years?
SPEAKER_00:Yeah, and it's not, it's just, I mean, Michael, it's not like there aren't people out there that could do this. I mean, they aren't fleishy, they don't have the political resumes or the or the public profile, but Ralph Samuels, but you don't want people like that on the board. You want the green eye shade people, you want the Bill Moran's, you want the the people who you know under who've spent their life in the investment industry, understand, understand the BS. I know we're not on the air now, so I could say it, but understand the BS that are that that that that is being spewed by a lot of these investment advisors and can cut to the chase and say, why aren't we doing this? Why aren't we doing that? You know, we don't need to be doing this, we don't need to be doing that. Ralph, Ralph may, you know, may maybe he's done great with his 401k. I don't know. But but it's not, he doesn't have that background and expertise uh in that area. Put him on the ADA board. God, he'd be great on the ADA board. He's a fiscal conservative, he'd be great at evaluating whether we're getting the bang for our money in terms of investing in Alaska business. He understands Alaska businesses, he understands where that money would actually would actually do some good and where and where we're just wasting it. It would be great. It would be great to have him on the ADA board, but he's just being wasted on the permanent fund corporation. And it's just and and it's just so but disappointing when we have one of these opportunities come up uh to put somebody on the board that understands this stuff, you know, we we we we just waste it. The administration, this administration has just wasted it.
SPEAKER_01:Uh, we got about three minutes here, Brad. So what do you what do you see coming into the end of the year here? Obviously, the governor's budget is gonna be a big deal. We're two weeks away from that. That'll be our final, I'm sure that'll be our final uh uh weekly top three. Uh, but what what do you what do you think here? What what do you think is is is uh that we're gonna be looking at uh what are you gonna be watching?
SPEAKER_00:I it's it's just gonna be a a particularly challenging legislature next year. I mean, you're gonna have the potential that oil prices drop away from you, the floor drops away on on revenues, you're gonna have a lot of pressure. I mean, that's what the whole K-12 education task force is sitting there, right? I mean, they're to bring a lot more pressure to to to uh increase spending on K-12. Now you're gonna have all this LNG the line stuff showing up saying, oh, we need this guarantee and that guarantee and that guarantee and that guarantee and this and this agreement. And, you know, those all have revenue implications. Um, some of them have spending implications. And so we're gonna be the legislature is gonna be hitting all of those. Um, you got defined benefits that are sitting out there, everybody thinks that, you know, this is the time to push for defined benefits. You're just gonna have a lot of issues hitting them with in a very uncertain revenue, uh, with a very uncertain revenue picture. And even if even if oil prices firm up through the rest of FY26, we don't know where they're gonna go in FY27. I mean, EIA is seeing some serious issues out there with where oil prices go. Uh, basically, it's that OPEC wants to regain market share, and OPEC's willing to take a reduction in price in order to regain market share. And and EIA is saying seeing some very serious issues out there in FY27. So it's um it's just gonna be a very difficult legislature. The governor's budget will start that. I hope the governor proposes some sort of makes some sort of revenue proposal because we desperately need that uh in order to replace PFD cuts. But but I it's just gonna be a very difficult legislature uh in the next session.
SPEAKER_01:The to any talk of revenue is almost a death knell at this point. I mean, we've had uh, you know, uh Bernadette has said she's vehemently opposed to new taxes, Shelley said that, uh, everything else. And again, it's not that we want taxes, it's not that I want taxes, but there's got to be a discussion about where the money comes from. And you've got to start, you know, so either you have to cut$2 billion out of the budget or you have to find some other way to make it work. But they're always and there has to be some kind of downward pressure uh with some kind of spending cap of some kind. I mean, this has all got to happen, but it's nobody is like nobody's willing to take that first step. Yeah, well, and my let me say let me say this Ben Carpenter tried to take the first step and immediately got butchered on the field. Yeah, so everybody else is like, whoa, whoa, whoa.
SPEAKER_00:Yeah, I it um I I mean the thing we need to keep in mind when we talk about revenues, and the reason I'm an advocate of the governor proposing revenues, because we already have taxes. PFD cuts are taxes, they're the most regressive tax ever proposed. We already have taxes, hitting middle and lower income Alaska families a lot harder than a flat tax or a broad-based, a hugely broad-based sales tax, ultra broad price sales tax, hitting Alaska. PFD cuts are hitting middle and lower income. And by middle, I mean the middle, the full middle 60%, upper middle, middle, middle, and lower middle, hitting the middle 60% harder than any other form of alternative tax would. So it's not, I'm not advocating, and I've never advocated increased revenues. I'm at advocating revenue design to replace the the regressive taxes we have currently with a much broader base, much uh lower impact on the overall economy, much lower impact uh approach out there. And and so that's why when some say, well, the governor may be proposing that, that would be that would be a good thing. Yeah.
SPEAKER_01:All right. Well, that does it for us, Brad. Go put your fire out. We'll see you uh we'll see you later, my friend. Thank you for coming on board.
SPEAKER_00:Michael, thanks as 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.
