The Weekly Top 3 (4.20.2026)

Welcome to The Weekly Top 3 — our look at the top 3 things on our mind here at Alaskans for Sustainable Budgets — for the week of April 20, 2026.

This week, our top 3 issues are these: 1) we analyze where the FY26 and FY27 budgets currently stand, focusing on the revenue sources that are being used to support them (2:12), 2) we discuss the current status of the AKLNG project, including the potential impact of yesterday’s Presidential Executive Order invoking the Defense Production Act (17:13), and 3) we discuss where the K-12 funding debate goes from here, particularly in light of the recent defeat of the two K-12-related bond propositions in this month’s Anchorage municipal election (36:49).

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.

Transcript

Weekly Top Three Setup

SPEAKER_01 0:10

This is Brad Keith, Managing Director of Alaskans for Sustainable Budgets. Welcome to the Weekly Top Three, the Top Three Things on Our Mind here Alaskans for Sustainable Budgets for the week of April 20th, 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 the podcast of our discussion following the show on the Alaskans for Sustainable Budgets Facebook, YouTube, SoundCloud, Spotify, and Substack pages, also on the Alaskans for Sustainable Budgets website, as well as the project 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 analyze where the FY26 and FY27 budgets currently stand, focusing on the revenue sources that are being used to support both. Second, we discuss the current status of the AKL and G project, including the potential impact of yesterday's presidential executive order invoking the Defense Production Act. And third, we discuss where the K-12 funding debate goes from here, particularly in light of the recent defeat of the two K through 12 related bond propositions in this month's Anchorage Municipal Election. And now let's join Michael.

Budget Breakdown Behind The Charts

SPEAKER_00 2:12

Today we start off with um the big things. Where do we stand on the budget? Is going to be number one. Where are things? Where are we at, Brad? What is going on? Give us the bad news. Let's let's do it right now.

SPEAKER_01 2:31

Well, Michael, uh, a lot of the budget materials that the legislature comes up with, frankly, are meant to obfuscate uh what's really going on. Uh, when they talk about the largest revenue source is the earnings off the permanent fund, they're really obfuscating that there's two components of that. One is the statutory PO, the portion of the statutory POMB draw that's designated for the general fund, and and PFD cuts uh are the other piece of that. And and they don't divide the two. They sort of they sort of just sort of meld the two together so you don't really see what's going on uh in terms of PFD cuts. Every so often I I do a chart that uh that breaks the uh breaks the budget down differently than what you see from the legislature in order to sort of reveal uh you know sort of look under the hood and look at what's going on uh with the budget. And I've done that uh uh this week for this week's program, and I'll do it, talk about it in uh in the Friday column. But it really is it really is sort of revealing. So the chart, uh, there's there's two sets of columns here. The sets the set of columns on the left-hand side is for FY26 as we wind up FY26, uh, and it reflects the latest uh revenue uh forecast from the Department of Revenue's spring revenue forecast. It reflects uh the supplemental spending that uh that has gone through the legislature already and been signed by the governor. Um it it's it will be fine-tuned as we end the year with it with additional revenues or well, presumably additional revenues as oil prices stay high and other things, but it's pretty much it's pretty much where the budget is. On the right hand side is the FY27 budget that's still in process. And to build the FY27 budget, I take what the what the House has done on the operating budget. The House takes the lead on the operating budget, and I've taken I've taken what the House has passed and forwarded and forwarded on to the Senate on the operating budget, and then I've taken the Senate's capital budget and added that on, at least the capital budget that's come out of Senate finance that's headed to the Senate floor, uh, and that'll be changed uh as the House reviews it and other things happen. Um and then um and then uh uh I've taken the Senate's what we anticipate to be the Senate's PFD, which is $1,000, and reflected the PFD cut that comes from that. On the on the on the in each set of the charts, on the left hand side is the spending broken down, and on the right hand side are the revenues supporting that spending uh broken down. And and where where the the legislature really obfuscates things is on the revenue side and looking at what's going on on the revenue side. So looking at FY26, for example, uh on the right hand side, you see the dark bar at the bottom of the of the right hand side of the the right uh uh set of bars on the left hand side, FY26. Uh you see that dark bar at the bottom and it says 990 million. That is oil royalties. And then on top of that, the slightly lighter blue bar is oil taxes, and then on top of that, uh the the bluish bar, the light bluish bar, is other traditional revenues. On top of that is the portion of the POMV draw that's statutorily designated for the general fund. And then the red on top of that is the PFD cuts. Now, what the legislature will say when they say, oh, most of the budget's being paid for by uh draws from the from the permanent fund, by the POMB draw from the permanent fund, what they're really doing is they're combining the red bar and the yellow bar into one because they don't want you to see what the what the PFD cut amount is. But in in this, I uh I in this presentation I break the PFD cut out separately. And you can see that on FY for FY26, the largest single source of revenue um uh by far in terms of in terms of uh paying for the FY26 budget is PFD cuts. It's $1.66 billion in in PFD cuts uh that are uh being used to provide revenue uh uh to the FY26 budget. Absent those PFD cuts, the revenues on the for FY26 would be $1.66 billion less, and we'd have a huge deficit. They're plugging that deficit, they're closing the deficit through the PFD cuts. Uh and what I've designed or what I've identified on the on the graph as personal taxes, because that's essentially what what PFD cuts are. They're they're taking money out of the pockets of Alaska families. On the right-hand side, we see what's going on with the FY29 budget or the FY27 budget. And the FY27 budget reveals shows something when you do it this way, shows something that that I think is is you won't hear from anybody down in Juneau uh because they just don't focus on it this way. The FY27 budget shows that the PFD, uh, the FY27 PFD would have been $300 million higher than the FY26 uh uh PFD. But all of that $300 million is being cut and directed to support higher spending levels in the FY27 budget than you've got in the uh in the FY26 budget. And again, when you build up from the bottom uh on the FY27 budget on the revenue side, we've got a billion, uh 30 million in oil royalties, 850 million in production taxes. And look, production taxes are going down between the two years. Even though oil prices are projected to go up, production taxes are going down between FY26 and FY27, 850 million in other revenues, 1.37 billion in the portion of the um permanent fund draw that's designated for, or the portion of the POMB draw that's designated for uh the general fund, and then 1.95 billion uh in nearly 2 billion in PFD cuts uh to support the budget. Again, absent the PFD cuts, you'd have that huge $2 billion deficit. And what they're doing again is taking $2 billion out of the PFD personal taxes, using personal taxes to plug, uh to plug the deficit that otherwise would be in the budget. I think this way of looking at the budget, frankly, is a lot more honest than the way that that uh Juno and uh Senate finance and legislative finance division and others try to get you to look at it. Uh it it follows the statute, uh not only in terms of what the PFD is and what the PFD cuts are, but also in terms of the portion of the statute that talks about the amount of the POMB draw that's designated for the general fund. There's only, I mean, the statute says that we'll that we have a statutory POMB draw, and the statute says a portion of that's for the general fund and it and it tells you how much, and a portion of that's for the POM for the PFD and it tells you how much. And so uh what the what they try to do in Juneau is to obfuscate that breakdown between the two so you don't see the amount of the PFD cuts that are being used to plug the hole in the budget.

SPEAKER_00 10:32

Right, which again are personal taxes. I mean, that's the thing. The PFD cut is a tax, whether they want to call it a tax or anything else, it has the effect of a tax. It essentially is going to take nearly $2 billion out of the private economy and put it into government spending for next year. Up from $1.66 billion to $1.96 billion, almost $2 billion is going to be taken. That's money that they could have given back in some form or another to the people. They could have put into the private economy, but instead they decided to expand government spending by, you know, what roughly $400, $400 million, something like that over the course of the whole thing.

SPEAKER_01 11:14

Uh well, it goes from $5.81. So it's $160 million in increased spending over the over the uh over between the between the two years. And if I did this back to 25 and 24, you'd see this creeping uh increase in spending, and you'd see the creeping increase in the PFD cuts. There's one other thing that I think is is significant, and again, this is not something you've heard from Juno, but when you look at FY26, we passed the legislature passed a $460 uh million dollar uh supplemental spending bill for all of the reasons that that that money got crammed in there. If you look at at the those bars on the left, before the supplemental spending, the budget was in surplus. And and and the the level of PFD cuts that were being taken was unnecessary because we had excess revenue, largely driven by the increase in oil prices between the two years. We had excess money in the uh FY26 uh budget. And part of that supplemental could have been to increase the PFD, could have been to take a portion of that excess money and to and to uh and to distribute it back as a supplemental PFD. But neither the governor proposed nor did the legislature when they enacted the supplemental do that. They just consumed all that surplus. Excuse me, they just consumed all that surplus um as additional supplemental spending.

SPEAKER_00 12:46

All right, Brad, wrap up number one, then give us your final thoughts on the state of the budget, is where it sits right now.

SPEAKER_01 12:52

Well, the state of the budget is we're running huge deficits, and we're papering them over through PFD cuts, through personal taxes. Um and and and that and that papering over uh is increasing at least between 26 and and 27. Huge increase, $300 million increase in PFD cuts between the between the two years. Budgets growing, deficits growing, and as a consequence of that, the personal taxes that were that the legislature is levying to cover those deficits are growing. You don't see that with what you get out of Juneau. This chart is a way to to to see what's going on in terms of the levels of government take.

SPEAKER_00 13:34

Your assertion that, well, the legislature's just not putting it out this way. Uh Jeremy Bynum begs to differ. He says, I appreciate Brad's work, but no one's trying to hide the $1.5 billion deficits being filled by reducing the PFD. Just watch the committees and the floor debates. Uh, and I'll let Brad respond to that. But my comment is, well, but Jeremy, nobody's breaking it out like Brad is showing it here. They talk about it in generalities, and they talk, and by the way, how many average Alaskans are going to sit down and watch the committees and floor debates? How many average Alaskans are going down for you want a quick snapshot of what's going on with your government? Charts like this, I think, really help. But Brad, what do you think?

SPEAKER_01 14:15

Oh, I've watched the committees and the floor debates, and I haven't seen anything that breaks out uh uh the the POMB draw uh between the the level of of that's designated for general fund and the and the and the level uh that's designated for the PFD and then the level of the PFD cut. Uh all I see is people talking about uh and ledge finance when they present and the committee members when they talk about it. All I see is a discussion of, well, our biggest revenue source is from the POMB draw. Thank you very much. Uh, and oil is second to that, and you sort of go on from there. I don't see this sort of breakdown. I mean, I've never heard anybody in Juneau, uh, respectfully, Jeremy. I've never heard anybody in Juneau talk about the fact that the that the PFD cuts are the single largest source of revenue year in and year out that the that the legislature is relying on. Um, and that's and that's what this shows. I mean, yeah, you can go you can go back years and years and years, and it shows that each year the PFD cuts are the single largest source of revenue the legislature's been relying on. That's right.

SPEAKER_00 15:25

And again, a tax, a $1.95 billion tax on the private sector to fund government for all you Republicans out there saying, well, we just don't want a tax. We don't want to $1.95 billion in taxes that Alaskans are having to pay, not just not just working Alaskans, their children, the elderly, the retired, everybody is paying it right now. So, I mean, again, uh I think this is a great way to look at it, Brad.

SPEAKER_01 15:56

Well, and again, I mean, it's it's taxes that's just on Alaskans. Governor Dunley proposed a revision to this, to the tax system that would spread the burden significantly to non-residents that would take more than 30% of the burden off of Alaska families. That 1.95, instead of being 1.595, it'd be whatever two-thirds of that is uh that would be on Alaska families. The other third would be paid by non-residents. Governor Dunleavy proposed a system like that. It got universally trashed in the House Finance Committee, including by Representative Bynum, uh, in favor of keeping a tax system that takes money only from Alaska families. So this chart tells you, I mean, I what I ought to do is compare what the results are under this chart to what the results would have been if we just used the governor's uh replacement tax system.

SPEAKER_00 16:51

Well, there's your homework, Brad. There's your homework for next week. We can uh we can get it all to it. Um and then uh Bynum also said, Jeremy also said, also the Senate added 88 million for the Capitol, expect an equal amount in the House as well. So, I mean, just more. Just more. Just more. I'm sorry. What would I say? That's what we just needed to do there. So Brad Keithly, Alaskans for sustainable budgets, the weekly top three. We just got into number one, which had to do with uh where we stand on the budget.

Alaska LNG Bill Chaos And Tax Fight

SPEAKER_00 17:22

The question is, uh, now, where do things stand on the LNG project? And somebody in the chat room, I think it was uh uh Rick, just asked, did he see the presidential executive order? Will it kick the pipeline in the butt? What's going on? So, Brad, where do we stand on this pipeline? I see Giesel is putting something else in right now because she wants to be queen of the world and et cetera, et cetera. There's a lot going on. Give me the give me the rundown here.

SPEAKER_01 17:46

Well, it's actually hard to keep up with what's going on uh in LNG. I thought I sort of had it under control late last week, and I wrote when I went through wrote the weekly column, and that was out of date by you know about three seconds after it got published. Uh and yesterday uh in Senate Resources, Senate Resources introduced, or Senator Geisel introduced uh a bill that combined 275, I hope I think I have the numbers right, Senate Bill 275, which has been the which has been the vehicle that she's been working on to sort of increase control by the legislature over the project and to change the tax system, combined 275 into 280, which was the governor's, which is the governor's proposed uh tax system, property tax uh uh system. And the and the explanation the the the the changed bill is now 30 pages long, uh, and the explanation alone of what was going on uh in a slide deck was 12 pages. It was a 12-page slide deck uh explaining the changes that were that were being made uh in uh Senator Giesel's uh amendment. So it's it's constantly evolving over on the House side. The House Resources Committee is still hearing the bill and working on various provisions of it. Neither of those have gone on, are yet out of the resources committee and headed on to the finance committee, where additional significant changes are usually made uh to bills. So we're we're we're entering the last 30 days of the session, but we are way the the LNG project is way behind uh in terms of the in terms of the power curve. Uh don't let me forget uh the the president's uh executive order from yesterday. I do want to discuss that uh in a moment, but I want to do one thing first before I get there. A couple of weeks ago, I I I threw up a slide that had been part of the Gaffney Klein presentation that had a bunch of numbers on it, and I was trying to describe how that slide showed how the economics work on the LNG project. Uh, and someone at the end of that pre at the end of that discussion said, Oh, a lot of numbers. Don't understand what it's saying. So I've been looking for a different way on how to on how to talk about these numbers. And Gaffney Klein came up with a new slide last week that uh, or I think it was last week, that sort of does a better job of describing uh the economics around the project. This slide by Gaffney Klein uh shows uh uh in the in the in the uh the uh lines shows LNG prices under two different approaches. One is uh the uh Japan import price. Uh Japan publishes the LNG import price over over time, and that's in the orange line. The blue line is uh the oil um LNG is sometimes priced on the basis of oil, the oil equivalent, because oil used to be or oil is is an alternate fuel for uh electric generation. And so the value of LNG in some of these countries, and some of the Asian countries, is as a substitute for oil, and so the LNG price is determined based upon a relationship uh to oil, and that's in the blue line. So the the lines show the price of LNG, these are historical prices, show the price of LNG from 2016 through 2027. Through most recently, it must be projective. Oh, yeah, it's because of the futures price. Historical price through 2026. Um, and so you're seeing you're seeing the price of LNG, the value of LNG uh in the Asian market on those lines. The the bluish background, and then so it and so this chart tries to show how much um what the economics are of the line uh with and without uh the uh the property tax. It's trying to show the incremental. Impact of the property tax. And you'll the bluish part is the part that shows the zone of profitability for the LNG project with the existing property tax. That is, when the line is in the bluish area, it is profitable. The LNG sales are profitable under the existing property tax. And then below the bluish line or the bluish area, you see a line that goes horizontal across the chart, about at the $7.50 mark, maybe. And that is that shows the zone of profitability under the governor's alternative volumetric tax property tax. So it shows the difference in the economics between the existing property tax and the governor's proposed alternative volumetric tax. And what you see is over the over the period that this that this line covers, over the period that the chart covers, that LNG is profitable sometimes under the existing property tax. It's profitable more times than that under the governor's alternative volumetric tax. But it also shows that LNG in the Asian market is not profitable even under the governor's alternative volumetric tax uh times when the when the two lines are below the uh uh the line, the horizontal line that goes across at about $7.50. So it's giving you a feel. What this does is give you a feel for the economics of the LNG project, something that I think we've lacked in the discussion for a for a long time, giving you a uh a feel for the economics and the profitability of the line. The the dashed line out at the far right uh in the chart is using the for the futures price for LNG in the in the Japanese market, well, Japanese Korean market, what's called the JKM marker, the Japanese Korean market marker, and it's showing uh the futures price uh as a result of the Iran uh situation. And it shows that price, those price levels at much higher than the historic price levels uh across the rest of the chart. What's basically going on, as best I can tell, uh in Senate finance uh and Senate resources with Senator Giesel and others, is they're trying to figure out when whether LNG is going to be profitable, and at what level it's going to be profitable, and how much the state can take from the project through the property tax, how much the state can take from the project uh in order to allow the project to still be profitable, but barely profitable. In other words, how much how much of the of the overall revenues that the project's projected to produce the state can take and leave the project profitable, but not with what I think Willikowski and Giesel would term excess uh profitability. And it's and it's a pretty good, I mean, as you as you listen to house resources, the house resources discussion, the Senate, particularly the Senate resources discussion, this chart's a pretty good tool to have in front of you to understand the debate that's going on. Basically, you know, Willikowski and Giesel are saying we we should have higher tax rates because there period there are periods of time, particularly the current period of time, when you look out at the dashed line to the right, uh what's going on with the Iranian situation, there are periods of time when LNG is going to be super profitable, what they would describe as well into the blue area. And so the state ought to be taking revenues during those periods. And and so they and then they just sort of don't address the situation. The discussions haven't really addressed the situations where the lines are below the periods where the lines are below not only the blue area, but indeed below the the horizontal line that cuts across at 750, which is what the governor's alternative uh volumetric tax would be, the economics resulting from the governor's volumetric tax. So the debate that's going on is sort of this push-pull between the project saying we need to be profitable so that we can attract financing and and show the financing folks that we're always going to have enough cash to be able to pay off the debt that uh that we want them to issue. And the legislature saying, yeah, well, you're gonna be super profitable sometimes, in our term, super profitable sometimes. And we want to pull we want to pull revenues from you uh during those periods. So you can see you can you can sort of see the debate on this chart as is as is the push-pull between the the Senate pushing for more and more, or the Senate Resources Committee pushing for more and more coming over to the state side in terms of the economics, the rent uh of the of prices in the blue area, and the project saying you could you're you're gonna overdo it, you're gonna take too much out. Right. The project would say, look, yes, there are periods where there's excess rent where there's revenues deep into the blue area, not excess revenues, but revenues deep into the blue area. Those help offset the periods where the the prices are below the blue area and indeed below the horizontal area. And so don't take those periods of high prices, high revenues from us, because we need those to offset the periods of low revenues. We need to be able to tell the bank that yes, we're going to get it covered on average over time. Uh, we'll build up surpluses during certain periods and we'll use those to pay off when prices, when prices are down. The legislature, the Senate resources tends to be focusing just on the blue area and saying, well, look, you're in that blue area a long, a long period of time. So we ought to be extracting some of that rent for ourselves.

SPEAKER_00 28:11

Yeah, and it's more and more and more all the time. It's as much, in fact, uh, Rob Myers says, I don't think it's I don't think some care if it's profitable. Some have the attitude that it's not worth it if we can't take as much as we want. That's kind of that's kind of the attitude right now. And how does the we're down to the last minute and a half here, so how does the president's new executive order play into all

Defense Production Act Changes Everything

SPEAKER_00 28:32

this? Wrap it up in.

SPEAKER_01 28:33

So that's gonna be an interesting play out. Um essentially, what the president has said is the Defense Production Act uh will now cover LNG projects, not specifically just Alaska, but LNG projects in general. The Defense Production Act is the successor to the War Powers Act that existed in the 1940s and was the authority under which the federal government built the big inch and the little inch oil lines that we've talked about on the program before. Um, and so the successor is the Defense Production Act and essentially allows the the executive branch to build pipelines if it if that's what it comes to, but but to provide financial guarantees, much bigger financial guarantees than what's on the books right now, bigger financial guarantees, or indeed purchase the output from the LNG uh uh projects at a certain at a price that makes them economic, and then the federal government owns the output and and and can resell it. So it invokes a whole new layer of federal authority uh that hasn't been invoked to this point. Uh, again, not specifically directed at Alaska, talks generally about LNG projects in general, but uh as applied to Alaska, it could be a game changer in terms of the role that the federal government is playing to uh to bring this line forward.

SPEAKER_00 29:58

Do you think it makes uh uh I mean, uh is it too little, too late, or is this just the shot in the arm that you think it needs to get it done?

SPEAKER_01 30:06

It it it changes the dynamics. I mean, it so the federal government could say, look, you're not gonna build these lines, we're gonna build the lines. The federal government's gonna just like the big inch and little inch during World War II. Or it could say, look, we're gonna buy the output at $10.50. We will have a price guarantee of $10.50 for the for the output from this line. I'm not saying they're going to do that, but they could, by invoking the Defense Production Act, they could do that. And by providing that federal guarantee that federal guarantee, that price support, they could make the project economic because it's always going to have that price support as a way of as a way of uh covering the economics on the on the pipeline. So it's a game, it's a potential game changer in a way that I think people are going to be thinking through over the next month or so, but it it it it shifts the sand significantly underneath uh the federal sand, at least underneath this project.

SPEAKER_00 31:05

Rick's got the comment of the day. Got a 74-year-old nurse running the show on a major project to move our state forward. Shake my damn head. She just she's just, you know, uh, she's just guaranteed to do it. Brian says, oh yeah, the feds have entered the market. Be still my faint heart. You know, I mean, that's the thing. I mean, what do you what what does this do for the likelihood, Brad? Give me a give me an over-under now. I mean, we're gonna crescent it if we're gonna if we're gonna talk about it. Um, I mean, I as I've always said, I'm hopeful but not optimistic. Does this give me reason to raise my optimism a fraction or two? Or what do you think in the long run here?

SPEAKER_01 31:43

I I would I would raise the optimism a fraction or two uh with the invocation of the Defense Production Act or using the Defense Production Act to deal with this. The problem is it it will just it'll it'll confuse things for a while. So if the state says, okay, the federal government can have a $10.50 price guarantee, great. Then it doesn't matter what our property taxes are because they'll be economic. Our existing property tax base will be economic at $10.50 if that's what the price guarantee is. So it creates this dynamic, but potential dynamic between the federal government and the state government about trying to make the the federal government trying to make the project economic and the state government trying to grab more economic rent from our project that's that's now economic at a at a higher price. Ultimately, I think the federal government wins that competition. Um there are, I mean, the Defense Production Act is an amazing thing. It's very seldom invoked, um, uh, or it has been historically very seldom invoked because it creates all these additional powers on the part of the federal government, sort of, sort of without regard to economics. And so, but it creates, it has all these all these provisions in it, and and ultimately it allows the state government, the federal government essentially to override the state government. So when big inch and little inch were built, there was opposition to big inch and little inch, uh, local opposition to big inch and little inch because of the location and what it and the construction and what it was going to take. And the Defense Production Act essentially allowed the federal government to say, we don't care. Forget eminent domain, forget state procedures, we're just gonna build this thing. Um, and did. Um, and so it the the the it it uh increases the powers of the federal government to help positive positively affect the economics. It's gonna be interesting to see how the state responds to that. If the state says, well, if it's gonna be economic at these higher prices, then great, we'll just have our full property tax. We won't we won't need to have a concession on the property tax.

unknown 33:53

Right.

SPEAKER_00 33:53

They'll go back to Glen Farn and say, Well, see, you don't really need this because the federal government's guaranteeing all this stuff, so you really don't need this to move forward. So go ahead. Um and uh I was wondering if this was what was going to happen. We've been since ever since we talked about the big inch, little inch line and and the dynamics of that, and I did a little reading on it and I was like, wow, uh, because they built those lines and then after the war, they sold them out to different companies and different private companies. And so if they get behind this, that that takes the economic argument and throws a lot of it out the window because it's there, it's guaranteed. If the federal government is gonna is gonna pick up a component either of the of the construction cost or of the purchasing of the uh gas on the other end, one way or the other, it guarantees the whole thing. Um, I'm a little more optimistic than I was yesterday.

SPEAKER_01 34:42

Yeah, I mean, but you gotta you gotta look at the other side of the equation, right? I mean, it will increase the the federal government's debt. It'll increase the federal government's uh the amount the federal government is is putting into this is putting into this project. And so, and so there's a downside from the from the from the federal budget, federal fiscal policy. Uh, and Congress also has to appropriate the money. Uh Congress, I I've read a little bit about the provisions of the one big beautiful act that put a bunch of money in the Department of Energy, that the Department of Energy could use for something like this. So the funding may not be as big an issue as as sometimes people talk about with invoking the defense production.

SPEAKER_00 35:22

Because it's already been appropriated and it's just sitting there and he could spend it out uh on his own, essentially, as the chief executive. Um and then, of course, we got something we've got, I was going to talk about this later in the show, but there's the whole de-dollarization going on right now um of different things on the on the national or on the uh global stage, uh, which could, I mean, there's we're teetering on the edge here of some really juicy bad stuff at some point. So we need to uh we need to be paying attention to this. I mean, I'm more hopeful, but at the same time, does it accelerate the potential crash in the future? That's the biggest question.

SPEAKER_01 35:59

Well, it it it it will make you, I mean, we've talked about since the beginning, since we talked about big insulated federal government, you know, the question is, is this project ever going to be economic? Well, the federal government could come in and do it. And and invoking creating the ability to use the Defense Production Act um sort of is a precursor to the federal government coming in and doing it. Right. Exactly. Um, all right, 30 seconds. Final thoughts on this, Brad, before we go. It's um um it's hard to watch the LNG debate because it keeps shifting, but but I think this chart is a very useful tool to keep in mind what the economics are that people are debating uh as they go through it. It's not perfect because it's a backward-looking chart. It's not a forward-looking price chart, uh, but it's a good tool to see really the economics that people are debating.

SPEAKER_00 36:49

All right, Brad Keith, the Alaska's for sustainable budgets, the weekly top

Anchorage Bond Defeat And K-12 Reality

SPEAKER_00 36:53

three. We're on to number three for today, Brad. Is the K-12 community understanding the wake-up call, or will they just shift to more funding?

SPEAKER_01 37:05

Yeah, so the so the Anchorage vote that defeated the two school bonds is an interesting, interesting dynamic, is creating an interesting dynamic uh about about where we're going on K-12 funding in the state. And and that's picked up, it was picked up particularly in an editorial this weekend in the uh in the ADN, the Binkley Family blog, where which you wouldn't expect to say what this editorial says. The headline is Anchorage schools are shrinking. It's time to face it. And basically, it's a discussion that says uh that says we've sort of reached the outer limits of of what uh at least in Anchorage, voters are willing to do with respect to schools. We've sort of reached the the end uh of the uh of their willingness to uh to continually increase funding, continually increase property taxes, uh, pass bonds to uh to support schools. Um and so what does that mean? The editorial sort of addresses what that means or or thinks about what that means and basically says, look, schools are shrinking, the school age population is shrinking. We need to we need to recognize that and we need to start redoing things or thinking about things in in an environment where you know we've sort of hit the edge of what people are willing to fund. We've sort of hit the edge in terms of in terms of school population as it starts uh as it starts falling back. Um and we need to think about K through 12 in a in a different way uh than we've thought about it, uh thought about it before, and talk specifically uh about Mississippi, about the Mississippi approach and how Mississippi has has elevated itself from being worst, if not worst, near worst in terms of school output um to one of the best in terms of terms of educational output in the nation, significantly increase itself. So it talks about Mississippi as a as a way of looking at uh at an alternative way. Right. And so I think I think it's it's a useful, I mean, the the election results and the way that the ADN is reflecting on it is sort of a useful tool to say, okay, we we we've sort of hit the outer boundary of what voters are going to be willing to do in terms of funding K-12. And we need to start shrinking back, we need to start thinking about what that means and the environment and the different environment that we need to develop going forward uh as uh as as as we go forward uh in this new environment of sort of having having hit the outer limits. At the same time that the ADN has that editorial, there's another op-ed uh written by a parent, Kara Sobel Sorbel, uh, that uh talks about the school bond failure. Uh and the head the headline of it is a school bond failure in more ways than one. And it sort of bemoans the fact that that voters voted down the school bonds, um, attributes the reason for it to some degree to the the less than perfect press that the schools are getting uh right now in terms of their output, um, in terms of in in in in a lot of different ways. And and then rather than says, okay, rather than like the ADN editorial, uh, which says, okay, we've sort of hit the outer limits, now we need to start thinking about what that means and start thinking about redeploying assets. The the parent editorial, uh, Kara Sorbel's editorial says, well, we just need to go get more money from the state. If local vote, if local voters aren't going to vote any more money for K-12, we still need more money for K through 12. Uh, and so we just need to we need to increase the pressure on the state, which after all is where the money ought to come from. Alaska, I mean, notwithstanding the fact that Alaska is a true outlier in terms of how much of funding for schools comes from the state versus local. Right. Uh, that uh the editorial says we need to we need to push the state for more funding.

SPEAKER_00 41:34

Right, and how much we spend per pupil already uh on top of it. Um I I read both of these articles, and quite honestly, the one uh from the parent is very much pie in the sky, very much entitlement based. This is what we need, and the state should pay for it. Whereas I was shocked that the uh editorial from the ADN was basically like acknowledging that look, the shrink is here. They call it the big shrink. That's a national thing, it's not just an Alaska thing. The big shrink is here. We've had a decreasing population, lower birth rate, fewer students, more choice, people are leaving brick and mortar. And so we've got to acknowledge the the reality that there are less students. 7,500 less students in 10 years. I mean, that's a that's a significant number. You just don't, you know, 7,500 empty seats in these schools, you don't just leave all the schools open. And that's what they're finally acknowledging.

SPEAKER_01 42:26

Yeah, and and so I think it's I I think I think the Anchorage election, you know, in a lot of in a lot of different industries in a lot of different ways, you can pinpoint when the point at which we went too far. Uh, we spent too much, we taxed too much. We built too much. I remember when Dallas sort of hit in the mid-70s, sort of hit peak building. Uh, and you could see these half-completed buildings where the money ran out. Um, and I and and so you see these industries uh where you you hit the edge and you start you start coming back and you start reenvisioning uh what you ought to be doing going forward because you're not gonna be able to continue going that direction anymore. And I think I think the Anchorage Election, the defeat of the bond issues is sort of that point. And I think the ADN is correct in pointing that out. Uh that that's the point at which we need to start, we need to now start rethinking about what we're doing going forward. But that's not gonna be universal. I mean, parents are gonna continue to say, oh, it's the state after all. State ought to pay for all this. Um and so and so we need to keep pushing, pushing on the state. I think the test is going to be whether the legislature and the state as a whole sees the Anchorage vote as a lesson that ought to be applied at the state level as well as well, and say, look, if parents in Anchorage aren't going to vote for you know more, then we need to rethink what we're doing down here as well.

SPEAKER_00 43:55

Yeah, and I don't know if that lesson is being heard or not, but I think, you know, again, between this The 10 billion the 10 billion, the $10 million vote in Fairbanks two years ago, 18 months ago, whatever it was, May, I guess it'd be two years ago now, um, where they wanted to vote $10 million over the tax cap to fix schools, the same thing uh in Fairbanks, which is pretty blue at this point, and they voted no on it. I think you're starting to see that max uh that max uh headroom area where people are like, yeah, we're we can't go any further than this. Even though they support education, they can't see any more taxes going to it. And uh, I think maybe it it calls a low back. We got 45 seconds here, Brent.

SPEAKER_01 44:37

Yeah, I think I think I think even though they support education, I think that mindset, I think what the ADN is saying is we ought to apply that mindset. We support education, but we need to reenvision it. Um, I think it I think that's the mindset that that as a state we need as as anchor that Anchorage is going to, and I think is a state we need to be working toward now uh as well.

SPEAKER_00 44:58

In reading these two editorials, I mean you're you're it's very much the entitled uh I mean her name is not Karen, it's Kara, but it's very much that idea of it's I mean, really, I mean, I don't mean to be mean, but uh seriously, isn't that really what's going on? It just seems like this is what we deserve and this is what we need, and the state is our daddy, and the state should give us everything. Um, I mean, not acknowledging at all the fact that they've lost 7,000 students, 7,500 students since 2010. Um, and you just again, if each average school only holds 300, 400 students, I mean, that's a lot of schools that you got have got empty seats in them, right? If you're looking at it like that. Nobody's been, we've been talking about that on this program for months now, that you can't just lose all those students and expect to do business exactly the same way, not just on a not just on a on an attendance level, but also on the fact that you're getting funding on a per pupil level. You just can't continue that.

SPEAKER_01 46:03

Yeah, and I think what I think all those arguments we've been having on the show, all those discussions that that we've been having on the show and and elsewhere, I think what the Anchorage vote is, is is a validation of that in the sense that, yeah, there are all these problems, and we can't keep throwing money at it. It's not, we're we are not supporting, we Anchorage, the Anchorage voters are do not support continuing to throw money at that. Um the the parent editorial, uh, Kara's editorial editorial was a lot more well, that's that's because of the peculiarities of Anchorage and the failures of the Anchorage School Board and the failure of of Anchorage in general. That doesn't mean education doesn't need less money. It just means that that Anchorage that nobody likes Anchorage any, or nobody trusts Anchorage anymore. So we just need to get the money a different way. And I and I and I I don't think that I don't think that works. I don't think that argument works. So all the pushback that we that that you and others have been having on, you know, we we can't keep throwing money at the problem. Throwing money at the problem is not is not the solution. All that pushback, I think, has now been validated by the voters that voters inch anchorage saying we don't support more money. Um, and I think that should be taken by not only by Anchorage, but also by the legislature, because after all, Anchorage is 50% of the state, by the legislature and saying, you know, maybe throwing more money at this stuff isn't the right solution. Maybe we need to be re-envisioning, like the like the uh the ADN editorial says, maybe we need to be reenvisioning where we go with this. And uh, and I think I think I think that's sort of the next step to have people at the state level start picking up on that and saying that's the Anchorage voters push back on it. We need to start pushing back on it as well at the state level.

SPEAKER_00 47:57

Well, I would hope so, but it that you know, there's you can never count on uh the the stupidity of of that going on. Um and then we have this is a throwback to our earlier discussions in the hour.

Income Tax Versus PFD Cuts Debate

SPEAKER_00 48:11

Teresa said our outgoing senator, she's talking about Senator Stevens and our rep, Louise Stutz, at a recent trade show forum scolded us for wanting a full PFD. And then they prophesied an income tax if we got one. If we got a full PFD, we'd have an income. We already got the PFD, they're already taking it. I mean, I don't understand the the whole thing here.

SPEAKER_01 48:33

You know, you know, it what's really fascinating to me is the either a sales tax or an income tax, a flat income tax, even not a progressive income tax, but a flat income tax, would take less from 80% of Alaska families than PFD cuts are. I mean, I've done I've done that chart over and over and over and over again in the Friday column and and run those numbers over and over and over again. You middle and lower income Alaska families, 80% of Alaska families end up with more in their pockets, even after taking into account the federal income tax effect. End up with more in their pockets uh with uh with a sales tax, broad-based sales tax, or a broad-based income tax. In large part, because you're pushing a big share of the burden off on non-residents. Um and and so you're reducing the share that has to come from the state residents, and you're and you're and you're flattening it out in a way that that that improves the distributional effects on middle and lower income Alaska families. So when somebody says, when Stutz says or or Steven says, or somebody says, oh, you'd have to pay an income tax, 80% of Alaska families ought to say, great, because I would pay less in that situation than with PFD cuts.

SPEAKER_00 49:55

But they're counting on the uh on the uh tax aversion. That's what they're counting on. They're counting on all those people who are so tax adverse that they don't see that the PFD is a tax and they don't they don't factor it that way. They're the Randys of the world. They don't, oh, it can't possibly be a tax. And so any other tax is bad. Not that any other option would be less money out of your pocket in the long run. Um, yeah, give me a full PFD and give me a tax. I'd take that because I know that I'd have 30% more money at the end of the year. That's where we're at right now. But again, they're counting on the tax aversion uh to scare people into not doing it. And that's that's where we're at right now. 40 seconds, Brad. Final thoughts.

SPEAKER_01 50:36

Well, and they're also concerned, they're also not only can they're also counting on that, but they're also counting on the fact that people would say, Oh my gosh, you know, if we had to pay taxes, people would be pushing back on spending more. And so we wouldn't have all these programs that we can have out there, and they're counting on all the special interests who are dependent on these programs to keep pushing them.

SPEAKER_00 50:55

That's true. That's true too, as well. So um the growing comment is I'm just grateful for whatever we get, says Rob. That's the growing comment on the PFD. I'm just grateful for whatever it's your money. It's four thousand dollars a year per person in your household of your money that's being taken. Oh, man. Brad, um, hey, thanks, man. I appreciate it. It was it was good. We look forward to next week. All right, we'll we'll catch you, we'll catch you next time. Thank you very much, Michael.

SPEAKER_01 51:25

See

Wrap Up And Where To Follow

SPEAKER_01 51:26

you next week. 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 next edition of the weekly top three.