The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (2.2.2026)
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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 February 2, 2026.
This week, our top 3 issues are these: 1) we explain how the new ISER study shows, by shifting a significant part of the responsibility for revenue to non-residents, the Governor’s seasonal sale tax proposal materially reduces the burden currently being borne by Alaska families through PFD cuts (2:23), 2) we explain how, by misrepresenting and ignoring the effect of the Governor’s seasonal sales tax proposal, the editorial boards of the Anchorage Daily News and Fairbanks News Miner are intentionally obfuscating its significant benefits to Alaska families (19:08), and 3) we discuss the parts of the Governor’s proposal that are problematic, such as its failure to close the state’s full deficits and its painfully inadequate adjustments to oil taxes. (36:22).
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.
This is Brad Keithly, Managing Director of Alaskans for Sustainable Budgets. Welcome to the Weekly Top Three, the Top Three Things on Our Mind here at Alaskans for Sustainable Budgets for the week of February 2nd, 2026. 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 a podcast for 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, 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 explain how the new ICER study shows by shifting a significant part of the responsibility to nonresidents, the governor's seasonal sales tax proposal materially reduces the burden currently being borne by Alaska families through using PFD cuts. Second, we explain how, by misrepresenting and ignoring the effect of the governor's seasonal sales tax proposal, the editorial boards of the Anchorage Daily News and Fairbanks Newsminer are ignoring its significant benefits to Alaska families. And third, we discussed the parts of the governor's proposal that are problematic, such as its failure to close the state's full deficits and its inadequate adjustments to oil taxes. Now, let's join Michael.
SPEAKER_00:Let's dive into this and get things started, Brad. The weekly top three, uh, big week last week. Um, kind of a under the radar. Um ICER came in, was apparently invited by the governor. Uh he spent$90,000 having Icer redo their 2016 study. Um, and uh some there's a lot of interesting stuff. I watched some of the presentation and I was like, hmm, uh give me your give me your thoughts here on the ICER presentation and what does it actually what does it actually show us here uh in uh in the in this last go-around?
SPEAKER_01:Well, as you say, ICER came in on Thursday and did a presentation. For those who didn't see it and would like to see it, uh it's online on the Icer page, uh also on Gavel to Gavel. And they're also doing it tomorrow afternoon at four o'clock Anchorage time. Uh and you can sign up for watching it there, the web, the web view version of it uh on uh on the ICER Icer page. Well worth for those who are interested in the in this sort of stuff, well worth uh well worth the time spent uh listening to it. The ICER presentation is sort of is sort of two things. One, it's it's it is sort of an affirmation of all of the things that we have said since 2016. It affirms that using PFD cuts to fill government deficits has the largest adverse impact on middle and lower income Alaska families has the largest adverse impact of all of the revenue options on uh on the overall Alaska economy. Um and it and it in a lot of ways it confirms the same thing that we found in the the same thing that ISER found in the 2016 study. But it also finds some changes that are significant and important. Um and those changes relate to the the share of revenue that would be produced by various alternatives, uh the share of revenue between essentially non-residents and residents of Alaska that would be produced by uh various alternatives. And I am sure we're gonna be talking about, I'm gonna be talking about these charts, a lot of these charts uh uh in future shows. But there's two charts in particular that I want to talk about in this segment that I think are hugely important. Uh they both relate to the share of uh share of revenue that would be generated under various options divided between non-residents and and residents. And if Michael, if you can throw up the first chart, uh thank you. So this is early in the ICER presentation, and it breaks down the share of the impact on residents, which is in the dark, uh, the bottom uh part of the column, the impact on residents from uh various options. The yellow is the impact on federal income taxes, um, which we can talk about in some detail at some point. The green, uh the light green that's between the yellow and the dark, uh is the impact on non-residents. And what you can see is the the bar at the left is PFD reductions. And you and the analysis is that using PFD reductions as the revenue source to close the deficit takes 80 percent, 86 percent of the dollars from Alaska families. Alaska families pay um 86 percent of the of the dollars uh using PFD cuts. The other of the yellow portion is the amount that a federal income tax that's reduced uh by by using that option. But the important the important number for this purpose is the 86 percent. So Alaska families pay 80 per 86 percent using PFD cuts. Alaska families pay 86 percent uh of the of the dollars to fund to close the deficits. Those percentages go down significantly, and I'm not gonna talk about property tax, which is at the other end, but those percentages go down significantly uh with other revenue options. For example, a progressive income tax, which we don't advocate uh, but but nonetheless is on the chart, shows that Alaska families would only pay 83% instead of 86% of closing of the dollars to close the deficit. Alaska families would only pay 83% if we used a progressive income tax. 80% Alaska families would only pay 80%, 6% less than they're paying under PFD reductions if we use a flat income tax. 76% uh Alaska families would only pay 76% uh instead of the 86%. 10% less, uh Alaska families would have 10% less taken out of their pockets. It'd be shifted to uh non-residents, 10% less uh if we used a sales tax with less exclusions. And by less exclusions, we mean the South Dakota style uh sales tax that uh Governor Dunlingy has proposed with a twist that we'll get to in just a second. And 73% Alaska families would only pay 73% of the of the burden, would only pay 73% of the dollars to close the deficit uh by using a sales tax uh with more exclusions. Significant, significant numbers. These are different from the 2016 study in that the impact of going to sales taxes uh is greater, uh, and and that's in part a reflection of the increased amount that of tourism dollars that are being spent in the state. So by going to a sales tax, you're beginning to pick up those tourism dollars uh and reducing significantly the burden on Alaska families. The other chart uh that that I want to use with this chart because it's so uh important. So the 76%, remember on the last chart, we got down to uh sales tax uh uh less exclusions, um, or and sales tax more exclusions. So we had 76%, Alaska's bearing 76% uh of the uh of the burden uh with a sales tax with less less exclusions. Look at the drop that occurs uh when you start kicking in a seasonal sales tax. And this is this is actually, if it's not the motivation behind the governor's uh proposal to go to go to a sales season seasonal sales tax, it certainly proves the the the intelligence uh of using that option. So sales tax uh we drop from uh 76%, less exclusions, the South Dakota style sales tax, down to 74%. If we use a seasonal sales tax, that is, put the the higher sales tax on uh the the months during which tourists are heavy. Tourists can pose a significant share, a higher share of overall Alaska uh purchases than uh than in the non uh non-tourism months. 74% if you go to seasonal sales tax. And then here's the big numbers: 73% uh Alaskans would bear 73% of the cost uh if a sales tax with more exclusions. And then look at the seasonal effect. If you go to a seasonal sales tax with more exclusions, Alaskans bear only 68% uh over the over of the overall cost of closing the deficits. Non-residents are bearing a huge share. So if you put these, and I'll do this in the column on Friday, but if you put these two slides together, what you would see is Alaskans going from 86%, bearing the cost of 80% and 86% of closing the deficit uh by using PFD cuts down to 68%, almost a 20% drop uh in terms of the share of the dollars to close the deficit, almost a 20% drop uh uh between uh using PFD cuts and the seasonal sales tax uh with more exclusions. You know, candidates talk a lot about diversifying the Alaska economy, diversifying Alaska's revenue streams, uh getting more uh outside money in to help uh bear the burden uh of Alaska government. This that this is exactly what this is doing. Going to a seasonal sales tax with either less or more exclusions significantly diversifies the revenue stream uh that's being used to pay for government. A huge amount of it is coming then from, I mean, a 20% drop between PFD cuts and a seasonal sales tax uh with more exclusions. A huge drop in the share being borne by Alaska families and in an offloading of a significant share to non-residents. Now, some people say, oh, well, non-residents shouldn't bear that. Every time an Alaskan goes to another state, either in terms of sales tax or if they work in terms of income tax, they're paying that Alaskan is paying money to that other state to help to help fund that state's government. Alaska's never done that. I mean, we've never had a tax like is like is exists in the other 49 states. We've never had a tax that had non-residents bear a significant share of the cost of government. That's exactly what's going on here. And in terms of diversifying and in terms of lessening the impact on Alaska families, these are huge slides and showing a huge effect by uh by going to uh uh sales taxes uh and reducing the burden on uh on Alaska families significantly.
SPEAKER_00:As you look at this, and of course, uh there's a lot of chastisement going on about how how could we? We shouldn't do this, we shouldn't do that. But again, as you point out, this is this is standard fare for every other state in the nation, pretty much. Uh I mean, Washington even did away with their, they used to have an Alaskan exemption where you could show your Alaska driver's license and not have to pay the tax, but that's not even that's they don't even do that anymore. So this is uh this is uh I guess turnabout fair play uh at some point. But again, if we do grab more money from outside, the key cornerstone to this is still has to be that spending limit to be to prevent them from being able to spend this excess money, right? Yeah, yeah, exactly right.
SPEAKER_01:All of these numbers are replacement numbers, substitute numbers. So none of them are saying we grow the, grow the grow spending. And and Governor Duneliby's been clear, he wants to, he wants to make sure that doesn't happen. All of these are just substitute. You're substituting in one revenue source for another. And when you and and and what this is telling you, when you substitute in a sales tax or you substitute either type of sales tax, but particularly when you substitute a seasonal sales tax with with more exclusions, which tends to protect residents because residents are the ones buying groceries and doing medical services up here as opposed to non-residents. When you when you substitute in those sources of revenue, you're significantly reducing uh the burden on Alaska families. So it's um it is turnabouts fair play. Um and and Alaskans are helping fund other states when they go to those other states, when Alaskans go vacation in Hawaii, when Alaskans go visit relatives in Texas, when Alaskans go to Arizona to, you know, to soak up the sun. They are helping fund those state governments through the sales taxes they pay uh in those states. This is simply saying, look, when people from other states or other countries come to Alaska and they do impose a burden on government, when they come to Alaska, they need to pay a share of the cost of government. And and these are the shares, what this what these slides are showing is the shares that will be picked up by non-residents outsiders when uh when when they come here.
SPEAKER_00:David said, why should tourists pay for the cost of government when unorganized boroughs don't pay for that? Well, that's a I mean it's a valid question, but again, I don't think it hides or obfuscates, I don't think it obfuscates the responsibility for you know people who are busy. I mean, I never thought I'm not gonna go to California, I'm not gonna go to Washington because I have to pay a sales tax while I'm there. You know, I've never I've never taken a vacation and thought I'm not gonna pay uh, you know, whatever I traveled to Homer uh to uh to enjoy Homer before I moved down here. I never thought I'm not going to Homer because I don't want to pay the Homer City sales tax when I'm having dinner or I'm buying something at the store, you know. Um it's just again the kind of the cost of doing business, so to speak, Brad.
SPEAKER_01:Well, that that's a that's a classic, uh, that's a classic shoot yourself in the foot uh uh question. It's like, you know, well, we shouldn't, we shouldn't lower the impact on Alaska families. We shouldn't reduce the burden on Alaska families from 86% down to 68%, nearly 20%. We shouldn't do that because something else is going on. I I mean that's just stupid. That's just stupid. We should be on the lookout and we should implement things that reduce the burden on Alaska families, reduce the cost of government, Alaska families without increasing the cost of government overall. We should reduce the share of the burden being being uh taken by um uh Alaska families. And if we need to clean up other stuff, let's go clean up other stuff. But let's not continue to burden Alaska families by more by an additional 20%. Let's not continue to burden them because we need to clean up other stuff on aisle six over there, right? Let's let's do the things that are important for Alaska families.
SPEAKER_00:The bottom line is we're already paying for it. They're taking it right out of our PFD. We're paying for all the services that any of these tourists would use or anything else. So why shouldn't we capture a portion of that market as they're here visiting? Uh just like they do in their states and every other state and every other nation in the in the world does. Why shouldn't we otherwise we're paying for it right out of our PFD?
SPEAKER_01:Yeah, exactly right. Exactly right. I mean, it it's the most it's the most um uh self-wounding thing you can possibly to do. When you look at these numbers and you see one approach that takes 86% out of the pockets of Alaska families, 80% six percent of the cost-the fund government out of the pockets of Alaska families, and you see another approach that takes 68% out of the pockets of Alaska families, it should be a no-brainer to say we're gonna take the approach that only takes 60. I mean, especially the time that we're losing, you know, population. It should be a no-brainer to say we're gonna take the option that takes 68% out of the pockets of Alaska families. But but you know, some people run around say, oh my God, we can't do that because of, you know, this or that or the other thing. Well, that's just stupid, folks. It's just stupid. You take the opportunities that are there to reduce the impact of the cost of government on Alaska families. You take them, particularly when they're that when they're so significant as to as to lower that share uh that has to be borne by Alaska families by by 20%.
SPEAKER_00:Uh I was watching the ICER presentation and there was the whole thing on workforce. And of course, uh they were talking about the impacts of the various types of revenue measures or taxes on the workforce. And they kept coming back to the fact that, oh, well, you can't do because the state workforce is and and what the warning that I took away from it, and I don't know if you're going to get into this later or not, but the warning that I took away from it was look at how much the state workforce is a component of the overall economy. If you're worried about making cuts to government and the effect that it would have on the workforce, that means government is too big. Did you did you come away with the same thing?
SPEAKER_01:Absolutely, Michael, and that's and that's another segment for another time. But I don't want to get that in the I don't want people to say, oh my God, you know, we we can we should be reducing the workforce. I don't want to get that in the way, right? Get that in the way of talking about how you pay for this stuff. Let's say you reduce government in half. There's still a question about how you pay for that half.
unknown:Right.
SPEAKER_01:And if you have an option that has Alaska families paying less, we should be taking that option.
SPEAKER_00:I just wanted to make sure that I wasn't the only one that was going, well, that's worrying. That's confr that's that's concerning right there. Continuing now, the Michael Luke show, uh, we got Brad Keithly, our guest, Alaskans for Sustainable Budgets, the weekly top three. Number two, the Binkley Family Blog, otherwise known as the Anchorage Daily News, has come up with some new stuff, and Brad is not amused. Brad.
SPEAKER_01:Well, so the ADN um uh ran uh an op-ed from the op-ed editorial board, and the op-ed editorial board is Ryan Binkley and one other, one of his employees. So it's hard to say it's a board. It's sort of Ryan and whatever he thinks. Um came up with an op-ed on Sunday that attacked the governor's um uh um fiscal proposal uh and tried to make fun of it and tried to make line of light of it. And and basically what they did, what Ryan did in the middle of that was just sort of reveal, you know, his own biases uh about how he thinks about things. Um here's the here's the key. Uh as proposed, Alaska would tax its residents with one hand only to pass out government checks in the form of a PFD with the other. That's classic redistribution of wealth. Well, two things about that. One, it's not uh redistribution of wealth. PFDs, I I'm I'm I I repeat myself, but it's important. PFDs are paid for out of permanent fund earnings. They're paid for out of the commonly owned wealth of the state. And what Governor Hammond and and the founders of the PFD decided to do was take the commonly owned wealth and use half of it to help you know uh fund the cost of government, essentially protect people against taxes, and the other half to be uh directly distributed to um uh to Alaska families. That's the source of PFDs. It comes from the permanent fund earnings. It is not, they would not be paid for by um uh the taxes that the governor's fiscal plan proposes. The taxes would go to cover the deficits in government spending that we that we currently have have been incurring or we're currently incurring and have been incurring by the last decade. They wouldn't go into permanent fund earnings, they wouldn't go to the permanent fund dividend, they would go to cover the deficit. So this whole argument that, oh, it's a redistribution of wealth because we're taking it out of one hand and we're giving it with the we're not doing that. The PFD is coming from the commonly owned wealth of the state, permanent fund earnings. And we're just in and consistent with the the intent of the founders, we're just distributing half of that. The the concept is to distribute half of that directly to Alaska families and put it in their pockets as opposed to dispersing it in a way through government spending that that has 51 people deciding where it goes. Instead of all of Alaska families. But the other thing about this that is really infuriating is that it does not give any weight, none, doesn't even mention it. So the fact that using a sales tax would diversify the revenue source, reduce the impact on Alaska families from 86% to 68% if you use the seasonal sales tax with the more exclusions, reduce the impact on Alaska families by by that amount. And create a portion of the burden that's being currently being borne by Alaska families, put that off on non-residents. This op ed doesn't say one word about that, doesn't give one breath to the impact of Alaska families. What's going on here is this. Ryan, whose family is engaged in tourism, and Ryan, who's in the top 20%, probably the top 5%, and maybe even the top 1%, is do is cruising along nicely by using PFD cuts to fund government because it doesn't affect him. Doesn't affect his business, doesn't affect him personally, takes a trivial amount of uh of dollars out of his pockets. Sales tax might affect him a little bit more. And even though, but even though it reduces the impact on all Alaska families, reduces the total impact on Alaska families by diversifying the revenue source and putting it putting a portion of it to non-residents. Even though it has that benefit, and even though Alaska families would would benefit hugely by changing by changing the revenue source, Ryan in his own peculiar, greedy way, is is arguing at using these old arguments, wrong arguments, to argue against it. So it's just, I mean, it's it is it is the Binkley family blog at its worst, uh coming out and trying to protect the top 20% and protect certain industries at the expense of Alaska families.
SPEAKER_00:Well, what's interesting is this this presuppose this uh presupposition, which you know, which he's laying out here again, that you know, basically your your it's wealth redistribution and everything else always ignores the fact that, and something that we've been bringing up lately a lot more is that the permanent fund, the the dividend is fully funded. Uh that's the thing. They don't, it's fully funded by the earnings in statute. That's the way the framers made it. They understood it. The money is going to be there. And what it is, is that it's it's a disingenuous argument because instead of saying, well, we've got to raise taxes to pay for the PFD, the PFD has already paid for. What you've done is you've taken that revenue and taxed Alaskans and spent it on something else. So this is this is, you know, this is more about a misappropriation of funds or poor budgeting and poor planning on the part of the legislature. We're not re-redistributing wealth. That is Alaskans' wealth. That's a thing. We're not redistributing it to everybody else. That is Alaskans' wealth from the earnings reserve, collectively owned by the people. And instead of giving it to them, they're taking it. That's the thing. It's not a redistribution of wealth.
SPEAKER_01:Yeah, and and and it's it's it is it is the problem that we've got in this state is that we have deficits in government spending. We do not have enough revenue to pay for government. We don't have enough revenue from the other 50% of permanent fund earnings, plus the traditional sources to pay for the type of government we've built. And so we need revenue in order to do that. What PFD cuts do is tax Alaskans only, tax Alaskans to provide that additional revenue by taking it out of, by taking it out of the PFD, taking it out of their share of the commonly owned wealth. What Governor Dunleavy's proposal does is reduce the burden on Alaskan families by creating a portion of the burden coming from non-residents. There's one other thing. The Fairbanks Newsminer, not to be outdone by Ryan, the Fairbanks Newsminer had an op-ed that says this after years of budgetary drift, veto theatrics, and ideological stubbornness, the governor now presents a plan that asks ordinary Alaskans to pay more for nearly everything by offering only modest concessions from the industries that have profited most from Alaska's resources. It's not asking Alaskans to pay more. The sales tax is a substitute for PFD cuts. Alaskans end up getting more in their pockets even after paying PFD, even after paying the sales tax, they will end up more with more in their pockets because the PFD, the PFD goes back to its full level. And a portion, a significant portion of that burden of the sales tax is borne by non-residents. Alaskans end up, what this proposal actually does is increase the income of ordinary Alaskans. It proposes that Alaskans end up with more money in their pockets. The trade-off between increased PFDs and reduced and paying sales taxes asks, it proposes that Alaskans end up with more money in their pockets. So it's not just Ryan, it's not just the ADN that's off in this frolic and detour. The the Fairbanks newsminer is doing the same. They're saying things that are wrong in order to attack the governor.
SPEAKER_00:Well, and the tone of a news miner article is even worse and more snarky. But and again, the things that they ignore uh is the fact that you know Dunleavy did at least put some new taxes on the oil companies, maybe not as far as you or I would like to go, but he does at least uh increase the wellhead cost and a per barrel cost. So, I mean, there is something there, not as much as we want. And what about closing the loophole? I mean, those things. So there are some things that are being done, but as you said, we're already paying these things. It's not asking Alaskans to pay more. We're already paying it. We're just not seeing the money, and it's not flowing through the economy because it's going straight to government in the form of a sales tax. The money would go to the people first, turn in the economy, be used for investment, be used to purchase things, and then go back to the government in the form of a tax.
SPEAKER_01:But it's not the same, it's not the same amount of money. I mean, that's the key. 20% more uh a share of the sales tax than than Alaskans than they're bearing uh under PFD cuts, which is zero. So it it is it is not only the fact that Alaskans are gonna do it in a different way, pay government in a different way, they're gonna pay less for their government because the same amount of government, it's not, it's not, I mean, I'm not this isn't in the midst of an argument about cutting spending. We're not, we're not, that's another issue. Alaskans are gonna end up paying less for their government because non-residents are gonna start bearing a share, like happens in the other 49 states.
SPEAKER_00:Right. And again, as a cornerstone to this, this all is predicated on the fact that we have to have a spending cap uh because we have to hold back the size and scope of government. Yes, there would be more taxes going into the the if we had those taxes, they would have more money in their pockets because you'd have to have a spending cap to redistribute how they're spending it. That's what that's what the whole point is here. No, generally speaking, if you had another tax, you would have less money in the pockets of middle class. But if you have that cornerstone of the spending cap, then they would have to then look at how they spent it, and the money would have to come, excuse me, from the tax. And then the PFD would then be bolstered by that. That has to be the cornerstone of everything.
SPEAKER_01:Yeah, right, right. I mean, it has to be it all of the ICER analysis is is based upon each of these being substitutes for the other, all of them producing the same amount of money. And and so if you if you if what you did was was keep the PFD cuts and then add a sales tax on top, that's something to complain about. But that's not what the proposal is. The proposal is to restore the PFD back to POMV 5050 and to have non-residents pay through sales tax, non-residents bear a significant share of the cost of government, reducing the overall burden of the cost of government to Alaska families, enabling Alaska families to keep more money in their pockets.
SPEAKER_00:Oh, taxes are going to mean more dollars in the pockets of middle class question mark. I mean, that's again all predicated on the fact that there's some kind of spending cap. Because again, that's been my uh argument with Brad for years when we talked about a flat tax or a sales tax or anything else is oh, that government's you know, spending, Parkinson's principle for government will expand to consume all available monies. This only works if we have a spending cap, a spending limit of some kind, so that then it becomes a substitution for something else.
SPEAKER_01:Yeah, I I'm just I'm astounded that that that some people don't get it. Some people don't understand that when you get more money uh coming back into you in terms of the PFD and you have to pay out less money than you've been paying out in terms of over here on terms of taxes, that you end up with more money. I mean, if you get more money back in your pockets through restoring the PFD, you have you have to pay out a share of it, true, but you pay out less through sales taxes, significantly less uh through sales taxes because non-residents are funding a big share of it. If you're paying out less through sales taxes, you're ending up with more money in your pocket. Yes. That's exactly what's going on. If you think about the PFD cuts as taxes, you're substituting one tax source for another tax source. The tax source you're substituting in sales cuts is lower, takes less out of your pocket because of the impact of non-residents. So it's a it's a plus for Alaska families. And I'm and I'm always surprised when people don't understand that.
SPEAKER_00:I'm I don't know why I engage. Alaska has a spending cap. That's just disingenuous, Harold, and you know it. The spending cap that we have right now is useless as tits on a bull. Okay. I mean, it's just it's it doesn't work. That's what we're talking about. That's why the fiscal policy working group made a spending cap the cornerstone of their plan. That's why every time we've talked about this, we need to have a constitutional spending cap that makes sense, that actually has some teeth. That's the problem. Um, and and so again, and this whole thing, by the way, all these pieces that the governors put forward are all contingent on each other, and that spending cap is the number one thing. If you don't get a spending cap, then none of it matters. None of it matters at that point, Brad.
SPEAKER_01:No, exactly. If we if these aren't substitution, if we're stacking one tax on another, if we're going to stack a sales tax on top of PFD cuts, that's bad. You have to make sure they're substitution. You have to make sure that all you're doing is replacing one revenue source, a lower impact revenue source for a higher impact revenue source. And the way to do that is a spending cap to make sure, uh, or a revenue cap, actually, to make sure that you don't you're not increasing revenue as a result of overall revenue as a result of doing it. You're doing a substitution. And the governor's got that as part of as part of his package. I mean, it all needs to be debated, it all needs to come out as a comprehensive plan. But you, but don't think that just because he's proposing a substitution revenue source, sales taxes, that somehow that's additive. Think through the impact of replacing one revenue source, lower impact revenue source for the revenue source we've been using, um, and understand why that's beneficial to Alaska families, hugely beneficial to Alaska families by reducing the impact on them.
SPEAKER_00:What do you think? As you've seen, uh, I mean, I've already seen phrases like lukewarm, uh uh, you know, uh hotly and you know, not anticipated, uh, some other phrases to the legislature's response to this uh package from the governor. In fact, we were talking about it yesterday in one of the one of the ADN's uh uh articles about the governor and the reception from the legislature was well, they just don't have the time to really get down into the weeds of the governor's plan. They wish they had more time to to dissect it. They're just not going to have time this session to go through it. What's your what's your take on that and where do you think it ends up being in the end?
SPEAKER_01:Michael, I think we're seeing, I think we're actually seeing a division between those legislators who focus on Alaska families and those legislators who focus on special interests. PFD cuts are better for special interests because they don't have to go, the legislature already has the money and they don't have to explain to Alaskans why they need more money. They just take more and more and more uh out of the PFD through legislative action. It's easier on them. The focus is on 60 plus one, the focus is on what lobbyists can deliver as opposed to what you can justify to Alaska families. And I think those who are raising issues about this proposal are those who want to preserve that sort of approach to revenues, as opposed to those who are actually, those legislators who are actually thinking about Alaska families and the impact on Alaska families of various revenue sources and are thinking through and understanding the point we've been making that that using sales taxes reduces uh the impact uh on Alaska families. So I when you see a legislator complaining about this and saying, oh no, we can't do this, or it takes too long, or I can't think through it, or, you know, well, but what about this? And what about that? And what about the unorganized borough? What they're really doing is they're trying to deviate or or misdirect the discussion down some rabbit hole to avoid focusing on the fact that the governor's proposal is better for Alaska families uh overall, although it does it at the expense, I guess, of the special interests who are just fine now, just fine and cozy, continuing to to suck the PFD dry because they only haven't convinced 660 plus one to do it.
SPEAKER_00:Okay, continuing with Brad Keithly, Alaskans for sustainable budgets, the weekly top three continues with number three. This time we're talking about uh the end of the governor's plan where he talks about uh he talks about oil production and taxes and AKLNG, and he's baked all this into his plan, uh which is very reminiscent to me of the whole carbon sequestration thing and betting on the if come of all these things that are you know somewhere down the road. Brad, uh, give us your thoughts on number three here.
SPEAKER_01:Well, the governor plan the governor's plan isn't perfect, and um, and there's there's some significant problems with it, particularly in the latter half of the 10-year uh uh forecast that he's got. We I did a chart for the for the landmine column last week uh that looked at the that the revenue to be generated by the new revenue measures, the governor's proposed new revenue measures compared to the deficits that he showed in the original 10-year plan. And as you can see, the the solid line at the top are the deficits that he showed in the original 10-year plan. The dotted line, the dashed line is the revenue produced by the new revenue measures he's proposed. Um, the red bars are the remaining deficit, the difference between the line at the top uh and the dashed line, the difference between the the uh uh deficits that he showed in the original 10-year plan, uh less the new revenue measures. And what you can what you see is that he sort of gets close. The proposed revenue starts out low. Um, so we continue deficits in in fiscal year 27 and 28. Doesn't start out with uh with with high revenues. And then when we get to 29 and fiscal years 29 and 2030, we're sort of getting close. His proposed revenue measures sort of get it sort of get close to uh to closing the uh uh closing the deficit that he should in the original plan. And then they really sort of collapse from there. And what's going on at the back end is a number of things. The sales tax comes off. Uh the sales tax is proposed for five years and then to expire. Um that's what gets him close. The sales tax is what starts to get us close in 2029 and 2030. Uh, when you take the sales tax off, when it expires, uh revenues collapse, and but the but the deficits don't. The deficits don't, the new revenues collapse. Um the other thing that's going on is he's taking the corporate income tax to zero in those um in those latter years. And just like you know, uh terming the sales tax when you uh when you take corporate tax revenues, both general corporate income tax as well as the petroleum corporate income tax, when you take those to zero, revenues collapse and uh and the deficit grows again. There's there's a couple of things I think uh to be said about the governor's proposal. We shouldn't be we shouldn't be terming uh we shouldn't be taking the corporate income tax to zero uh because it costs too much in terms of revenue. No other state, I don't think, uh uh has uh has zero corporate income tax. Uh we shouldn't be uh terming the sales tax. I mean, all that would do is say, yes, we've replaced PFD cuts with the sales tax, but the sales tax is only gonna be there for five years, and then we're gonna take away that revenue too. Well, what that's gonna lead people to think is okay, well, we need to go back to PFD cuts because we're gonna need revenue, not even increasing spending. We're gonna need revenue uh to fill the gap that the expiration of the sales tax is gonna do. So um uh the sales tax, the term of the sales tax uh needs to be something that we that that's looked at very closely, and I don't think we need to have an automatic termination of it. But the other thing this chart's telling you is that the proposal on oil taxes uh isn't very solid. Um it is yeah, the the governor's proposal to uh uh for a term, take the minimum uh oil tax, minimum uh uh production tax from 4% to 6% doesn't produce a whole lot of revenue. We've talked about the fact on previous segments, we'll talk about it again in future segments, that oil taxes are about 400 to 500 to 600 million dollars low, below the level that they should be. If you just look at the last 10 years, the level of production, the level of revenues that production taxes produced, and you look at closing the the Hillcore blue pole, the revenues we should be getting from oil permanently are about 400 to 600 million dollars more than we're getting. What the governor's proposing is a change that produces a little over$100 million uh and only does it for a short term. So if you did oil taxes the way they should be done, as opposed to this sort of very slight touch that the governor's putting on it, if you did oil taxes the way they should be done, you're gonna end up with another$300 to$500 million uh in uh in additional revenue. And you're gonna end up, you're gonna have it for the entire period as opposed to the limited period uh that the governor's proposed to has proposed to increase the minimum. What that would do is increase the dot dash line. You would increase the dashed line by$300 to$500 million, um, and you would uh close the remaining gap, come very close to closing the remaining gap in the years where you also have sales taxes and you still have corporate taxes in effect, and that and that gap would remain closed uh on out uh into the future by closing the um by also continuing sales taxes and uh and keeping uh uh corporate taxes uh alive. You'd also maybe in some years be able to reduce. I mean, you'd have to look at the impact of uh uh raising uh oil taxes to where they need to be, but you also might be able to reduce the sales tax from a two to four percent seasonal sales tax down to a one to three percent sales tax if you're getting full oil revenues. So it's something we need to look a lot at the at the governor's proposal on oil revenues. It doesn't raise oil taxes, it doesn't raise the revenues that a lot that Alaskans are entitled to in terms of uh the share of oil revenues that are going uh going to uh going to the state. Um there's one other thing. The governor will say uh in 2030, 2031, you start looking at that drop on the chart, the huge drop in uh in revenues, the dashed line going down and the and the bars increasing. The governor says that's closed by two, the governor's proposal says that's closed by two things. One, increased oil production. Problem is the oil production, the only oil production we see out there, and no one's foreseeing any different, is the big fields of the willow field and the PICA field, and the additional revenues that they are that they're gonna produce, those are already baked into these numbers. So there's no additional oil revenues that are out there that are gonna help close that gap. The governor says the other thing that's gonna help close the gap is the AKLNG uh uh line. But the AKLNG line is highly speculative. It's it's ludicrous to to start basing your fiscal policy five years down the road on the AKLNG line coming in. If it doesn't come in, and it's not. If it doesn't come in, that dashed line is going to continue to. show where your where your revenues are going. So we need to we need to clean this up and I'll do this in the Friday column. We need to clean this up to show how much the governor is depending on these phantom increased oil revenues and on AKLNG to close this gap and and to highlight that that gap is likely not going to be closed. Highly unlikely that it's going to close those gaps and that we need to continue to have revenue sources to meet the gap that we've shown in there. And this isn't increasing spending at all. This these numbers incorporate the effect of the governor's proposed spending gap. This isn't piling taxes on top of other things in order to increase spending. This is this was keeping spending within the within the limits proposed uh proposed by the governor. So the deficits are showing up because revenues are going away and um and we need to keep those revenues there.
SPEAKER_00:And in the case of oil taxes we need to build uh additional revenues to get up to the the 400 to five to six hundred million dollar level that that uh alaskans are uh are entitled to right well and again this is betting on that this is uh history repeating itself betting on the if com oh we think that this is what's going to happen we thought we were going to get tens of million dollars in carbon sequestration we thought that this was going to go on uh brian in the chat room just said we could also bet on a on oil at$110 a barrel as well right I mean we can just make stuff up at this point and that's part of the problem is that we got kind of this pie in the sky attitude this is why we should be changing the way we do budgeting and do funding uh for the for the budget in the state and create a and create a five year rolling average so we can look at historically what our revenue has been instead of this oh here's what we think it's going to be uh in the future right I mean this is again pie in the sky it is what what one interesting thing about this Michael is the the the proposed the the projections we've seen of revenues from the Alaska LNG project are heavily influenced by the proposed corporate income tax that would be imposed on the Alaska LNG project.
SPEAKER_01:A big share of the revenue coming from the Alaska LNG project is through the corporate income tax on the project. The governor proposes to to eliminate the corporate income tax. So a lot of the revenue that that his own projections, the administration's own projections have said are going to come from the AK LNG project even if it occurs come from a revenue source the governor's eliminating. So there's a lot of adjustments that you need to make as you as you look at these numbers going out uh in terms of in in terms of uh of the revenues that they're going to produce.
SPEAKER_00:Brad Keithly Alaskans for sustainable budgets down to the last uh minute and a half two minutes here Brad if uh if you were king for a day and you you know again this governor's plan is from four to six and just this mile, 13 cents a barrel kind of what would you do to get that full fair share for Alaskans of their resources from the oil companies?
SPEAKER_01:Yeah I just I just take the the oil tax which is highly complex and I know why we did it uh but it's proven too complex and it just sort of implodes on itself I'd just take the the oil tax and just change it back into a share of the gross and make the share of the gross the same the percentage of the gross the same that we that we experienced in the last decade under the first decade of SB21. That produces four to five hundred million dollars um uh and it keeps Alaskans take level going into the future level with the level of take they've had uh in the last day in the last decade doesn't increase taxes it maintains the tax levels that Alaska has had uh so instead of playing around with the minimum I would just go straight to a share of the gruttles and set that share at the same level that we've experienced in the last decade and that means an additional four to five hundred million dollars in revenue for the state in taxes on the oil companies on our resource which according to the Constitution they're supposed to be getting the maximum benefit for but we'll we'll see how that works.
SPEAKER_00:Corey says and not a single mention of better investing the PFD such as an SP style that he doesn't even the governor doesn't even touch that right I mean this is something and I'm so surprised that more candidates aren't coming to you for more details on this because again this could be again another uh couple hundred million dollars a year that we could be seeing right off the bat if we just changed how we were investing that right yeah and all that goes to increased oil taxes uh all that and and better returns from the from the from the permanent fund all of that would go to reduce the sales tax all of that would go to reduce the amount of revenue we need to be raising uh from from some source of tax so you know sales tax is better than the pfd cuts certainly in terms of their impact on Alaska families but oil taxes at the at the historic rate at the last 10 years not not trying to get an increase just trying to maintain the level of gross revenues that uh that come to the state through oil taxes um uh oil taxes certainly uh improve are better than a sales tax because they reduce the amount of sales tax that we need to fill in the yeah in the remaining gap um bradley asks uh he says Brad is it even possible to have a sales tax and a state income tax but get rid of a property taxes completely in Alaska and get the majority of the PFD most Alaskan property taxes have gone up roughly 40% in the last four years as we all know now keep in mind I'm not the brightest light bulb just trying to learn this stuff better.
SPEAKER_01:Yeah so property taxes are uh are a revenue source for local gov for local governments and and all that money is going to local governments to try to replace to try to substitute out sales and income taxes for for property taxes you'd have to do one of two things either it's the local governments that would have to institute those additional tax levels to to replace the property tax or the state would have to start sharing more revenue that it's getting through the sales and say its sales tax down through to local governments to reduce their need on on property taxes. It's complicated by the fact that you're talking about two different levels of of government and how they're raising revenues to fund themselves.
SPEAKER_00:Right. And again a tax or a spending cap would have to be cornerstone to that so that they wouldn't consume the additional revenue uh the additional taxes and spend those as well on top of uh on top of everything else um and that's that's the that's the biggest problem um it uh you know I don't know Brad give me a give me Vegas odds here on this as you see it are the are the is the legislature even going to take this up or are they just going to ignore it for one more year you know spend the money out uh what what do you think is going to happen here?
SPEAKER_01:I think I I I the dynamics are going to be interesting. If the governor will go on a sales pitch, if the governor truly believes in this approach and it looks like he does uh and the governor will go on a sales pitch in conjunction with ICER and we'll talk about and we'll talk about replacement revenues as opposed to increased revenues the governor will go on a statewide sales pitch uh it'll bring a lot of pressure on the legislature if the governor doesn't do that and legislators are just left to their own natural instincts I mean as I said we're seeing a division between the legislators who are looking out for special interests and the legislators who are looking out for Alaska families and basically the legislators who are looking out for special interests are are the committee chairs and the and the ones in control of the pace of at which legislation gets considered right now. So the governor has to over has to overcome that through a public relations campaign to stir up understanding to to to create uh pressure on the legislature to make those changes to reduce the impact on Alaska families and if he does that I think there's I think there's an increased likelihood uh of it getting through if he doesn't if he stands back if he doesn't get out there and talk about it a lot if he doesn't write op-ends uh then I think the natural instincts of the legislature will be to you know just protect the special interests and keep on going the way they're going taking money out of Alaskan's pockets pockets taking most of the money out of Alaskan's pockets.
SPEAKER_00:I'd be interested I mean I think if we got a constitutional spending cap on the ballot for people I think that they would vote for it. I really do. But it would have to be one that would work. The scariest part for me on this whole ICER report was how how much one of the pillars that they were focused on was a statewide property tax. And that just gave me the heebes uh every time I looked at that they talked about that as well it just that's all I could think of I'm already paying a borough property tax that's all I need to do now is pay a state property tax on top of it.
SPEAKER_01:It was it's not a realistic option that they put in there it was in there it was in the 2016 study so when they picked up when they said they were they were redoing the 2016 study it got picked up as part of that. But if you look at who the burden hits uh uh the burden of doing a statewide property tax in terms of the impact in terms of the share coming from Alaska families is is as great or almost as great from a property tax as it is from PFD cuts. Sales taxes sales taxes are much are much better than that. So I I don't think that the statewide property tax is a realistic proposal. It's just one that got put in there because it was there in in 2016.
SPEAKER_00:Final thoughts Brad uh we've got about a minute and a half here final thoughts uh for today and where we're going in the legislature in the session this year.
SPEAKER_01:Well I think the ICER I think the ICER study has has changed the dynamics here. I think the ICER study makes very clear and I think the continuing discussions about this will make make very clear that Alaska families would would pay less under a statewide sales tax than they're currently paying under PFD cuts. They'll end up with more money in their pockets. Alaska families will have more money in their pockets uh by uh by restoring PFDs and even if they were paying a state sales tax and I think that's a huge sea change in how people have been have been looking at uh at this all along that sort of gap between what a sales tax would would do in terms of non-residents and PFD council was not there in the 2016 study.
SPEAKER_00:The gap was very small demonstrates the growth of our visitor industry demonstrates the go growth of non-resident dollars uh between 2016 and uh and 2026 but now if that gap's there that's important Brad Keithly Alaskans for sustainable budgets you can find him again over on uh Facebook on Twitch uh or Twitter rather X everywhere else Brad thanks so much for coming on board good for talking thanks for having me appreciate you being part of it today well that's a wrap for another week's edition of the weekly top three from Alaskans for sustainable budgets.
SPEAKER_01:Thank you again for joining us remember that you can find past episodes on our YouTube, SoundCloud, Spotify, and Substack pages and keep track of us during the week on Facebook and Twitter. This has been Brad Keithley, managing director of Alaskans for Sustainable Budgets. We look forward to you joining us again next week for another edition of the weekly top three
