The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (4.27.2026)
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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 April 27, 2026.
This week, our top 3 issues are these: 1) we explain why we believe the Governor should veto, and the Legislature should uphold his veto of the defined benefits bill, assuming it passes the Legislature in the first go round (2:24), 2) we discuss both the signals the feds are sending on the LNG project and what federal involvement in that project would mean for the state (19:22), and 3) we discuss the role we believe fiscal policy should be playing in this year’s Governor’s race, and our disappointment over why it isn’t (38:55).
And finally, a scheduling note. We will be off for the next two weeks, traveling. We will return with the next edition of The Weekly Top 3 on Tuesday, May 19th.
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.
Welcome And Top Three Preview
SPEAKER_01This is Brad Keith, 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 April 27th, 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 show from 6.10 to 7 a.m. for a discussion between the two of us about our three issues. We post the podcast of our discussion following the show on the Alaskans for Sustainable Budgets Facebook, YouTube, SoundCloud, Spotify, and Substack pages, also on the Alaskans for Sustainable Budgets website, as well as the projects page on national blog site, 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 why we believe the governor should veto and the legislature should uphold his veto of the defined benefits bill, assuming the bill passes the legislature in the first go round. Second, we discussed both the signals the feds are sending on the LNG project and what federal involvement would mean for the state if they get involved in the LNG project. And third, we discussed the role we believe fiscal policy should be playing in this year's governor's race and our disappointment over why it isn't. And finally, a scheduling note, we will be off for the next two weeks traveling. We will return with the next edition of the weekly top three on Tuesday, May 19th. And now, let's join Michael.
SPEAKER_02Get started here into the deep dive.
Defined Benefits Bill And Veto Stakes
SPEAKER_02Uh and we start off with number one, which is surely without a fiscal plan, the governor will veto the defined benefits bill, won't he? First of all, don't call me Shirley. Second of all, will the governor will he veto the defined benefits plan? I don't I don't know. They keep trying to make it easier, better, whatever. What's uh what say you, my friend?
SPEAKER_01Well, the defined benefits plan has been a goal of both uh House Majority Leader Chuck Kopp and uh and various people in the Senate for the past couple of years. Um and they've kept trying and kept trying and kept trying. They got it through the House last year, uh, got it over to the Senate, and the Senate's been uh working with it uh this session. Um I think Burt tried to lay down as many uh uh uncommonly for him, tried to lay down as many uh stumbling blocks as he could, but it's uh it's cleared Senate finance and it's headed and it's on the Senate floor. Uh was in its second reading yesterday, will be up for its third reading today and vote today. And given where the Senate's been on, the Senate as a whole has been on defined benefits, at least in terms of the statements from the leadership, uh, one has to assume that it will pass the Senate today. Now that's not the final Senate finance made a lot of changes to it, which actually brings into question whether there's a valid fiscal note and a valid uh uh uh actuarial study supporting the uh the bill. But Senate made a lot of changes, Senate finance made a lot of changes to it. And so it will have to go back over to the House for concurrence. If it's not concurred, it'll have to go to conference. So it's not it's not out of the legislature yet. Um and you know, possibly may not get out of the legislature. But here's the if it does get out of the legislature, here's the question that that I've been struggling with all along with all of these bills, the education bill that passed last year, the permanent bump in the in the K through 12 um uh BSA, and now this legislation that would be a permanent change in the uh in benefits, defined benefits going forward. My question basically is how can you be doing this? How can you be making these long-term term changes in the state's fiscal costs, in the state's fiscal structure without a fiscal plan? I mean, if you look ahead, you look at the governor's, the OMB's 10-year plan, you look at anything that Ludge Finance uh uh publishes. If you count the permanent fund uh dividend at the statutory levels, we've got huge deficits, huge deficits, $1.5 to $2 billion deficits, depending upon where spending levels are and depending upon where uh oil prices are, but huge deficits staring us in the face over the next 10 years and beyond. I mean, some people say, oh, just wait till the the new oil production starts in. Well, given what given what oil taxes do, new production actually actually drives revenues uh from oil production down over the long term. So um we're facing these huge deficits, and yet we keep layering on. We did this with with the increase in the BSA, we keep layering on these structural cost increases going forward. Now, you know, we get into these debates about year-to-year increases, like, you know, increase throwing a one-time increase on the BSA or throwing a one-time increase on correction spending or whatever, whatever spending level we're doing. I mean, those are those have problems in and of themselves because we're in deficit years. But intentionally, intentionally increasing the cost structure of the state with a with a bill that not only applies for the next year, uh, but applies for, you know, in in perpetuity going forward because you're changing the fundamental structure of the statutes. Intentionally doing that without having a fiscal plan in place is just, I mean, it's suicide. You're just you're just putting yourself deeper and deeper and deeper into the long-term hole. Before early this year, the response of some before early this year was, well, the governor, the governor can't veto it theoretically, logically, can't veto these increas this increased spending because the governor hasn't proposed a long-term fiscal plan. And indeed he hadn't since the 2019 debacle, when he when he tried to, you know, you know, achieve a fiscal plan through spending cuts that didn't that didn't succeed. Since that debacle, he really hadn't put forward a long-term fiscal plan uh uh in the subsequent years, but he did earlier this year. So when the governor, when not that the legislature bought off on it, but at least the governor put one out there. So when the legislature says, hey, we want to increase costs permanently going forward, we want to increase this problem permanently going forward, not a year-to-year thing, but we we just want to make it worse going forward. I think the governor has a legitimate basis on which to push back and say, I'm not gonna approve that without a fiscal plan. I mean, you guys, you guys pass a fiscal plan, and now he can say, I've put one out there, you didn't like it, come up with your own. But you guys pass a fiscal plan and we'll start putting these things in the context of what we've done overall. But just layering on this additional spending on top of additional spending on top of additional spending permanently going forward, making it what's already a horrible situation worse, layering that on top going forward, uh, I think is just uh is just insane. And I think it gives the governor the perfect ability to say, to push back and say, look, I'm gonna, you know, I'm not even gonna get to the merits of this, although the governor might. I'm not even gonna get to the merits of this. You can't pass another spending bill without having a permanent spending bill without having a fiscal plan in place. I'm not gonna sign off on it and and you know, and push it back on the legislature. And I doubt that there's the votes to override a veto on that basis. So surely he will do that, right? I mean, surely the governor, surely this is all I keep I could say John or Michael, Michael, surely. Um the governor is gonna do this. Um, and surely he's gonna push back and say, look, without a long-term fiscal plan in place, we're not, we're not doing these permanent long-term spending uh increases.
SPEAKER_02Well, you would you would hope so. Uh again, because we are still feeling the pain of the last defined benefits program. And although the authors of the bill have assured us that of course we won't uh it won't it won't accumulate anymore, it won't do any of this. But all you have to do is look at the appropriate costs for the local communities and see that in some of the some of the roadblocks that Steadman tried to throw up there, uh, it includes increases uh from 22 to 24 percent for the municipalities to have to pay into the kitty on this. And for some of them, that's a significant I think it was which whatever it was, the sitka or ketchupan. Uh it was it would have been a $500,000 increase per year. And they said that may not sound like much, but in a community of 8,500 people, it's a lot of money. And there's just no way that they could they could justify that. Um, and and I think that's the biggest thing. The the Jeremy Bindum's in the chat room and he he talks about the problem with it becoming bound by the constitution. And that's the problem with any of these defined benefits programs, is that once they're in law and they're locked in, then it's it's over. I mean, that's why we still have people who are on tier one, two, and three of the defined benefits program because they're protected by a constitutional guarantee of the contract being honored. You just they just stopped adding new people to it. Uh and so we could be on the hook for, I mean, the reason foundation said it would be almost a billion dollars a year by the time uh or within 10 years, it would be a billion dollars additional within 10 years. That's a that's a significant amount of money when we're already facing a billion dollar a year deficit.
SPEAKER_01Yeah, I just I just don't see I mean, separate apart from the merits, people can argue about the merits about whether to find an increase in defined benefits will improve various personnel problems that we've got uh in the state. And and we could have arguments over that. But I just I just don't see a basis for continually increasing spending, um, layering on additional permanent spending. And you know, Jeremy's point is yes, it is permanent because it because it's constitutionally protected once it's adopted, but layering on additional permanent spending, I just don't see a basis for that until we have a until we have a fiscal plan in place. And frankly, you know, we're at the end of a two-year, of a two-year legislature, and so this won't have any effect on this legislature. But frankly, pushing back on things like that and saying, look, we can't adopt additional spending. We can't keep layering on additional spending until we have a fiscal plan, it brings some additional pressure on the legislature to come to grips uh with a fiscal plan, because you have a governor who says that I'm not going to layer on additional spending until we have a fiscal plan in place. Um, and the legislature's part of the legislature's response should be, well, I guess we need to have a fiscal plan. So I I there's a lot of, I mean, there's a lot of reasons, the additional costs, the constitutional, the, the, the, you know, the effect on the municipalities, all that sort of stuff. There's a lot of reasons to to push back on it. But I think to me, the ultimate reason is we can't keep layering on long-term increases in spending until we've come to grips with a fiscal plan. Now, if we've come to grips with a fiscal plan and we have a way of paying for it and it's all within a spending cap, and we and we're going to force ourselves to have priorities uh coming out of this, uh, then yeah, I mean, it's you can start considering proposals to to layer on additional spending in the context of you know something that we've got that we've got defined. But until we have that defined, I just think it, I just don't think it makes sense. I just don't, I hope, uh surely the governor vetoes it, but I hope we don't get into a situation where he says, oh well, you know, we got all these problems in the state uh in terms of in terms of employee retainage, and we're just gonna, we're just this is the solution to it. We're gonna adopt this, we're gonna adopt this solution. Um and and and we just keep doing that. We just keep like we did last year with the BSA, we just keep layering on these additional costs without a long-term fiscal plan in place.
SPEAKER_02Yeah, not to mention the new BSA increase discussion and everything else and all that. Uh Rob Meyer says the majorities are behaving like he'll veto it. They're trying to rush it so they can get it to him soon enough that they'll be able to have a veto override before the end of session. And if I was the governor and I was going to stand tall and veto it, I think I'd hold on to it for that 30-day window that he has to sign it and wait for it to run out and then veto it and uh let them have to come back to him. But I I would definitely, if I was the governor, well, you know what I would do, I would definitely veto the hell out of it. Um, you know, but we'll we'll see where that goes. We're coming up on the break. Uh go ahead, final thoughts, Brad.
SPEAKER_01Yeah, I was gonna say, and then that puts if he does veto it with the wind within the window, um, and the legislature has a chance to uh consider it on override, then you then you put the pressure on the legislatures. How do you do that without having a fiscal plan in place? Um, uh, particularly since the governor offered you a fiscal plan, you trash that. So if you don't have one, how how do you as individual legislatures, legislators, justify your vote in favor of it?
SPEAKER_02The money will just appear, Brad. That's their plan. The money will just appear. I mean, that's the thing. If they're trying to uh if they're trying to get it in to rush it so that they can get to the again, if I was the governor, I would just sit on it. I mean, he's got again, he's got like a 30-day window to sign it. I'd just sit on it till the end of the session and then veto it and then see what goes on from there. If they're really serious about coming back with it, um, because again, uh, you know, why set it up and play into their hands at that point? I would let them uh 15 days while they're in session, excluding Sunday. So 20 days in the interim, says Jeremy. Well, I'd wait the 15 days. Uh we're 28. What are we here? We are 28, so that's two plus 20. We're 22 days away from the end of the session.
SPEAKER_01Well, that that was Rob's point, though, wasn't it? Rob's point was they're trying to get it through so so that it they get it to the governor so that he has to act on it within by while they're still in session. Um, and and they and they get a chance to override. And I, you know, I I'm horrible at headcounts, uh, but I would doubt that there's a majority uh or that there's the necessary vote uh veto override uh in the legislature to to override. Maybe there is, but I and maybe maybe all of this is just positioning for the election cycle, people you know, trying to get people on the record about whether or not they support the divine benefits so that that can then trigger you know public employee unions to support or not support um uh certain people. Maybe that's what this is all about. But it's it's just I mean, from a from a policy standpoint, it's just horrible policy to keep laying layering on additional spending without having an overall plan in in place. Right.
SPEAKER_02Uh the deadline to transmit it to him is by Friday. That's the that's the deadline to get it done before the end of session. Rob says takes 40 votes to override. We're counting about 33 votes in favor right now. Uh so maybe again, maybe this is more kabuki, you know, political theater, uh, where they want to be able to get everybody on the record and then they can try and beat it the hell out of them during the election cycle. Did you see how they did not take care of you as an employee? Um, which again is another friend. If they get it through, great. If not, they've got a great weapon to beat people with in the election season. Uh I don't know. I mean, we're playing games here with a, you know, we got a multi-billion dollars worth of deficits over the next 10 years, and these people are continuing to just kind of play games with this kind of stuff, which I guess it shouldn't surprise me uh at this point, shouldn't surprise me at all, but uh uh it is what it is. Um we uh we just we can't seem to we can't seem to come to grips with the fact that we just don't have an infinite amount of money in the state, uh, which seems to, I mean it just seems like this is what these people think. Oh, well, if it's important, we'll pay for it. You know, another hundred and fifty-three million dollars in BSA increases, and if we can't get it permanently, we'll take it as a one-time benefit. And uh, you know, the BSA and the and the everything else. It's I mean, we may have a little extra money on this Iranian thing, but when the when the when that slows down, but we don't we don't have extra money, Michael.
SPEAKER_01I mean, what what what the Iranian what the Iranian thing is doing is pushing the deficit from $1.5 billion to $1.4 billion. I mean, that's that's the deal. That we there is no amount of additional money from oil realistically that's gonna eliminate the deficit. And so when you think, oh, we got we got additional money from from Iran, we don't. I mean, all it does is is reduce the the amount of the deficits that we're that we're running. Um and and and you know, for people to think that that's you know a surplus or that's spare, or you know, as the Senate Finance Committee is doing, that that justifies funding a bunch of capital spending that at the beginning of the session we said we can't do, but now all of a sudden at the end of the session we can do because we've got all this additional oil money. I it's just I mean, until we have a fiscal plan, it's just we're we're just we're just digging the hole deeper and deeper and deeper and deeper.
SPEAKER_02Yeah, that's the thing. I mean, and and eventually, eventually the music has to stop, right? I mean, eventually the music will stop and there won't be any chairs left at all. And we'll all be standing around wondering where we're gonna try and take a seat, and the legislators will have slowly. I mean, we saw Stevens and Hoffman there retiring, and then you know a lot of these big they'll retire and wander off in the pucker brush and they'd be like, see a Lou, here you have to deal with it now. What
AKLNG Signals From Washington
SPEAKER_02are you gonna do? Welcome back, Brad Keithley, Alaskan's four sustainable budgets in the weekly top three continues. We're on to number two. We just can't get away from this stuff, can we? Um, what signals are the feds sending to us on the AKLNG project, Brad?
SPEAKER_01What are they what are they looking at here? The most conversations I've had in the last week have been around what are the feds up to? What what what are the what's happening with the LNG project? We've got we've got sort of these two worlds running in parallel or not running in parallel, just running in different different levels. One is this the state parallel, where we're debating property taxes, and we have the bill out of Senate resources, and we now we have a bill that's uh a substitute bill that's being considered by House Resources, both of which take the governor's proposal of a volumetric tax, adopt that, but then come up with different tax levels uh for the volumetric tax. So we have we have this debate going on at the state level about whether the uh uh whether we're gonna make changes in the property tax and whether you know the governor's gonna uh how the governor's gonna deal with that if the legislature comes to agreement before the end of the session on those changes. And then at a different plane, on a different level, we have the federal uh discussion going on. We had Trump uh a week ago, excuse me, uh Trump a week ago issue an executive order invoking the Defense Production Act uh with respect to LNG projects and other energy projects in general. Uh that invocation of the Defense Production Act sets up authorities in the federal government to uh the substantial authorities in the federal government to provide either financial support uh to uh to given projects or uh at the extreme, uh, as was done in World War II under the War Powers Act, which was a predecessor to the Defense Production Act, uh, at the extreme, potentially you know, have the federal government uh taking over the project and building the project as a national security, as a national security project. So and and and then we had Chris Wright, Secretary of Energy, Chris Wright, uh talk about that a week ago in a hearing before Senate Energy, uh, in which he said his highest priority uh was the Alaska uh gas line uh uh project, and that he was, you know, there wasn't a day that went by that he wasn't focusing on it. Um and getting fairly specific. I mean, he said the LNG, the the gas, the gasification facility on Kenai sort of paid. Itself, it wasn't tough to finance. What was really tough to finance was the pipeline, creating the impression when coupled with Trump's uh Defense Production Act uh uh executive order, creating the impression that maybe the feds were thinking about getting involved in the pipeline, separate from the LNG facility, the export facility, and separate from the upstream facility uh uh to deal with CO2, the stripping facility up in the North Slope. So we have we have sort of these parallel universes going on. And I I take I take the federal discussion uh seriously. I mean, you just Trump issues a lot of executive orders, so that's not altogether bizarre in and of itself. But talking about invoking the Defense Production Act and then Chris Wright's testimony coming right behind it uh before Senate Energy talking specifically about the Alaska LNG project, uh I take that as the Feds, you know, seriously considering doing something. So, you know, the conversations I've had this past week is how does all that play out? Um, and you know, one scenario that potentially you can see coming together is letting the state sort of have its shot at trying to bring the project together uh with the with the uh uh Dunleaby's proposal to go the alternative uh volumetric tax on property tax, um, and and seeing if that can get through the legislature and seeing if that then is enough of a financial uh uh reduction in in the cost of the project to bring forward investors and get the project put together uh uh privately. That's sort of the Fed's sort of sitting there waiting and seeing whether the state gets its act together. And then if it doesn't, or if it does, if it passes the the the legislature ends up passing the law, but with a uh volumetric tax that's too high in the in in the judgment of somebody that it that doesn't make the project economic, then the Fed's coming in behind that and saying, okay, we'll just take the project over. One of the one piece of this uh that I've spent a lot of time digging into as I've had these conversations over the past week, is what what exactly uh does the Defense Production Act do for the project? Well, it allows, it creates a lot of authorities in the feds to do things such as invest in the project. I mean, that's the the DPA is what Trump's used for the government to invest in a lot of different mining and other projects uh so far in the country. It's what he's using uh as the basis for his consideration of buying spirit airlines uh currently. Uh it gives the the federal government a lot of authority to do things, but it doesn't give them money. The money has to come from congressional appropriations. Um and the DPA is an it has an account uh that is managed by the Department of Defense, Defense Production Act managed by the Department of Defense, uh, because it's supposed to be a national security account, uh, has has an account into which in which there's about $1.9 billion that's been deposited currently, has has been appropriated currently. Now, under the law, the you aren't the the federal government isn't uh the administration can't carry over more than $750 million in in unauthorized or or spare DPA funds, can't carry over $750 million from year to year, is not supposed to carry over more than $750 million from year to year. The law provides that if it does, if it if it has more than $750 million in the account at the end of a given year, that it has to redeposit the excess amount back into the back into the general fund, back into the general treasury. Like the sweep and the reverse sweep in the state, right? Nobody's supposed to sweep it out, right? But but do they well, although there are, I mean, Congress can authorize, can can suspend that law, and in the DPA, there's authority to suspend to by executive order to suspend the law. So it you can sort of guess that maybe the $1.9 billion isn't going back, the excess isn't going back, that Trump will hang on to it. But it's only $1.9 billion, and it's $1.9 billion for all of the projects he's talked about in not yet committed funds, DPA funds. So if, for example, he wanted to spend $500 million on Spirit Airlines and buy Spirit Airlines, that's $500 million out of the $1.9 billion that's currently setting in the account, but all of a sudden becomes encumbered and no longer is available for other projects. $1.9 billion in the context of the Alaska project, $1.9 billion is not a lot. Now, you could, if if it were used to support a loan, uh then you risk adjust the amount. Let's say you wanted to commit, you know, $40 billion to the or $400, let's say you wanted to commit $20 billion, half of the cost of the project in in the form of a loan. Well, you to the the accounting for what how that affects the DPA account is you risk adjust the loan, how much you're really putting at risk. So if you say there's only a 10% risk of default, then it's only $2 billion, or if you say there's only a 5% risk of risk of default, then it's only a billion dollars. So you can sort of play with play with those numbers and get and get somewhat significant commitments, even off the off the back of a $1.9 billion DPA account. But but the DPA account is a limitation. Trump would have to go to Congress. You can't you can't create any more um uh out of it. So Trump would have to go to Congress to get additional funding uh into the DPA account if you were going to make a bigger commitment to the Alaska pipeline. So I can sort of see what Wright was talking about. I mean, yeah if Trump if the administration had $50 billion in the DPA account and they'd already taken care of everything else they wanted to do, and it was just sort of sitting there, then yeah, okay, we'll just go build a pipeline. Uh but but with the limitation of the funding on the DPA side, uh that that creates a real limitation on what they can do with respect to exercising the DPA Act. One other thing that that I think is interesting here, they can condition under the DPA, you can condition the loans. So if, for example, the legislature passed a volumetric tax, uh volumetric tax, let's assume Dunley either signed it or Dunley vetoed it, and the legislature overrode, and so that volumetric tax is now on the books from the state standpoint. The the federal government can come in and say, well, we're gonna we're gonna loan or we're gonna invest. Well, if they invested, then it's federal property non-taxable uh by the state. So that takes care of that problem, or we're gonna loan or we're we're gonna provide uh uh purchase credits uh to help the loan to help private loans on the on the uh on the project. But the federal government can say, and we're gonna condition those loans on the state collecting no more than X in terms of property tax. Right, right. And so, and so you've got, as I say, you've got these parallel tracks out there right now on the project uh that are you don't know where they're you don't know where they're gonna land. I mean, to some degree, at the end of all these conversations I had during the week, to some degree I came to the conclusion that what the legislature is doing right now is engaging in kabuki theater. They're they're acting as if they have some authority to step in here and say, oh, we're gonna impose these volumetric taxes on uh on the pipeline, knowing full well that the that the federal government is gonna come in and wipe those out uh uh if the federal government decides to get involved. And so, yeah, I mean, let's just pile the taxes on because at the end of the day, we could blame it on the federal government for wiping for wiping them out. So I I the the pipeline is the project is sort of progressing uh through all this, but it's progressing oddly. And and we're just sort of, I think we're just sort of waiting around to wait for the waiting for the federal shoe to drop uh uh out there at some point, and whether and whether, you know, and and then waiting on whether the 1.9 billion or the 1.5 billion or whatever the heck they've got in the DPA account at any given point in time, whether that's gonna be sufficient to allow them to have a big enough shoe uh to bring uh to bring the project uh together. But it's it it's it's it's interesting to watch these parallel tracks sort of sort of wander along and see if they're gonna ultimately re result in the project or we're just we're just running in circles here and and entertaining ourselves.
SPEAKER_02Yeah, the the the Rob Myers again in the chat room uh kind of uh uh kind of certifying and and and confirming what you're talking about. Certain people here are freaking out that if Trump nationalizes the project, leaving us with no tax on it at all. And and again, that's the thing. They could put whatever tax they want on it, but the limitations from the feds, if they come in under DPA, uh could change the whole scenario. Uh they may not have the money immediately at hand to do the whole project and do whatever, but they could definitely put some hooks into it and change the whole dynamic of it at any moment.
SPEAKER_01Yeah, somebody said somebody said during the week, well, you know, Trump will just go to the Congress and get additional authorization. Well, I don't I don't think that's as easy as as you think it is. I mean, you I doubt if that I doubt if the Democrats would give you the vote in the Senate for the additional appropriation. And and if they don't, uh then what happened to overcome the filibuster. And then if they don't, the only way to ram it through is through a reconciliation bill. And they're already they're already running one reconciliation bill right now that if you were going to do that, you would think you would put the money in that reconciliation bill uh to go do it. So it's uh there's a lot of moving parts out there uh that are from an observer's standpoint are fun to watch, probably from the perspective of those inside the project, horrifying.
SPEAKER_02Yeah, and we're still working on 10-year-old numbers, 12-year-old numbers. I mean, you said 40 billion for the project, and we still don't know what the modern day cost equivalent is. We have no idea, right? It was 40, 44 billion back in 20, 2015, 2016, whatever it was. And we still that we're taking that we're working on 10-year-old numbers and we're pretending like we know what it's actually going to cost at this point because Glen Farm won't cough up the goods.
SPEAKER_01Well, and whatever we think it's going to cost, it's going to cost more. I mean, right. One of the conversations was well, let's assume it's $60 billion. Well, you can't because Glenfarn has no execution experience, right? I mean, they've hired a general contractor that does have some execution experience, but no one has execution experience on this at this size of a project in this type of environment. So whatever you think the costs are going, just like taps, whatever you think the costs are going to be, they're going to be more. And then the question about the DPA is well, do you have enough to cover the more? Right. Are you you may be able to force it, but are you going to have enough to cover the cost overruns when the coverage?
SPEAKER_02Right. They don't even have the now or the old number coverage, let alone the new coverage. They don't have enough money laying around there. That was kind of eye-opening to find out uh in what you're what you're talking about there. That's what gets me. Um, is that I just I don't know. I just don't know what we're gonna do until we actually have a hard number. I mean, how can how can we really make any decisions, taxation or otherwise, until we have some kind of hard number? And even if it was under an NDA or whatever, but Glenn Farn won't even step up to give any of that info, it's um it's kind of difficult to make the decision. Like I said, I really want this thing to go through. I really want this to happen, but until we have some solid numbers or at least a wild ass guess to work with, we just don't even know where we're gonna end up at.
SPEAKER_01Well, you sort of in this in this parallel, in this parallel universe, you sort of assume, or I sort of assume, that the federal government knows what the what the the at least the cost that came out of uh the work that's been done thus far by Glenn Farn, at least what the what those costs are. And so when Chris Wright talks about the the difficult piece of it being the pipeline, the difficult piece to finance being the pipeline, um, you know, that's sort of that's sort of where the that's sort of where the bulk of the unknown costs are. That, and if you include the upstream uh uh uh cleaning plant, uh stripping plant as part of as part of the pipeline, that's really where the bulk of the costs are. LNG plants, you know, plus or minus are sort of uh are sort of defined in terms of costs. Doing it in the cook inlet's gonna be a little bit different. You got ice and you got things, issues around that. But you know, we build enough LNG plants, the industry's now building enough LNG plants in the lower 48 to sort of have those costs within within within mind. And so it, you know, when when Chris Wright talks about the fact that the pipeline is the difficult part, it may be that the federal government does know the does know the costs, and those costs are difficult to finance. Cost plus the uncertainty of the cost overruns um is is difficult to finance. It's one of those things. I mean, we start people started out in the week saying DPA, well, that means Trump can just build it, don't worry about it. Well, the funding, the funding behind the DPA is the b is a big issue. I mean, Trump doesn't have unlimited funds. Invoking the the DPA doesn't give him unlimited funds. And so that's a that's a big issue and a limiting factor uh in what the in what the federal government can do. Uh and so I think there's just a lot of moving pieces out there. One more moving piece is the commitments that Japan and Korea have made in connection with the tariffs. Um early on in the Trump administration, they made these investment commitments. And and at least the Korea portion, I think it's the Korea portion, has been used to some degree with respect to specific projects um in the U.S. And so they've sort of, you know, worked out the roadmap of how of how you do that, uh, at least in part. But then the tariffs got blown up by the Supreme Court, and so we really haven't heard about these trade-offs um in the past several months since the Supreme Court blew up the tariffs. And and so there's an uncertainty, even with respect to whether those monies, uh, to the extent there was any certainty that they were ever going to be available, there's an uncertainty with respect to those monies. So you've got you've got all sorts of conflicting motivations. People want to do this project with Hormuz, with the with the the Iran war, there's an increased desire to do the project for supply security reasons. Alaskans want to do the project, but then the money is is sort of floating around out there in terms of how it gets financed. A lot of moving pieces. You can sort of piece through a track of how it could get done, but but every time you start going down one track, you you hit the stumbling block. On the DPA, you hit the finance, the amount of funds, appropriated funds, uh right as you go down that.
SPEAKER_02So yeah, it's gonna be uh we're gonna be living in interesting times. Rob says this morning's resources committee meeting will be a deep dive into the economics and how the Senate version of the bill makes it worse. So, I mean, that'll be interesting. And then what did what did Rick just say? UAE just quit OPEC. That's a big deal because they want to produce more. OPEC was holding them back. That'll be an interesting thing to see what happens there, too. But again, this gas line thing, I know everybody's like, oh, Trump's gonna come in and save it, but there's gotta be the money. And I don't, it's not just like he goes down to an ATM and withdraws it. You know, he's gotta get Congress on board, and I just don't think he's winning any friends and make, you know, winning friends and influencing people right now.
SPEAKER_01And the wreck and reconciliation gives gives the Republicans the ability to blow stuff through, but they've not got it in the current reconciliation bill. So I it and they're running out of time. I mean, you if you look at the polls, they're gonna lose the the Republicans lose the House, potentially lose the Senate. So they're running out of time to get to get stuff to to jam stuff through.
SPEAKER_02Well, we'll see what we'll see what happens here. Brad Keithley continues with us the weekly top three.
Governor Race Without A Fiscal Plan
SPEAKER_02Uh number three of the weekly top three is what role will fiscal policy play in this year's governor's race? And we're seeing some discussions, and I'm seeing some of the same old recycled stuff. This is what Shelley Hughes had to say uh in a poll that she did among her constituency uh late last week.
SPEAKER_00Shelly Hughes here. I asked you recently a simple question. What's the biggest issue facing our state right now? And thank you to everyone who responded. Two things came up again and again the cost of living and the permanent fund dividend. And many of you said they're connected. When groceries, housing, everyday expenses go up, families feel it immediately. For many households, the PFD helps. And I hear you, the pressure is real for a lot of Alaskans right now. We're going through your responses and seeing what people are saying the most. So I want to keep the conversation going. What's been the biggest thing driving up your costs this past year? Please leave your thoughts in the comments. Thank you.
SPEAKER_02The biggest thing driving up my cost, Brad, is government. I mean, I'm just saying, but I mean, this is part of the question, right?
SPEAKER_01I mean, what is driving the governor's race? What do you say? Well, it's it's interesting. I mean, Shelly's tried to downplay the the PFD issue in her campaign thus far. And it's it was interesting to see the results of her own poll putting the PFD as one of the as one of the top two issues. Now it's just Shelley's constituency and the people who took the time to respond. And so it's a fairly narrow self-selecting um uh poll. Uh, and I and I wouldn't I wouldn't put it up as a as a state as a set as a measure of statewide sentiment broadly. Uh, but it's interesting that even though Shelly has tried to downplay it, the PFD issue uh pops up to the uh pops up to the top uh top of of her poll. Here's the thing that really bothers me with with Shelly and with and with all of the candidates, all of the candidates that are out there right now. They're all taking sort of single shot uh uh on fiscal issues, they're sort of taking single shot positions. So Bernadette's out there strong on behalf of the PFD, sort of wavers sometimes, but it comes back strong. It's currently in in one of its strong streaks. Um, and and so you've got candidates who are who are focusing on single issues. Nat Hertz, for those who read the Northern Journal, Nat Hertz is a Northern Journal. He's done some polls with the candidates on how much, you know, how much education spending should we be making, how much should the PFD be? Um what should we be doing with respect to oil taxes? All single shot issues uh that the candidates have sort of have sort of taken positions on. And they've been they've been inconsistent positions. I mean, some of the candidates said in response to the poll on the PFD, oh, we need statutory PFDs. And then on the poll on oil taxes, which is one of the lowest hanging fruits out there, to get you the alternative revenues you need to get back to full PFDs, statutory PFDs on oil taxes. Some of those same candidates who were strong on the PFD opposed changes in oil taxes. The lowest hanging fruit that's sitting out there to get to get alternative revenues to pay for pay for whatever spending levels we want to use out there. So you you really don't have any candidate out there that has a consistent position, well thought out position on fiscal policy. And and I'm starting to be concerned that that during the course of the of the campaign, we're not gonna have that. We're gonna have candidates who take positions, strong positions on single issues like burn a dead on the PFD, um, and strong positions with respect to you know various aspects of fiscal policy. Right. But we're not gonna have a candidate who who thinks through the whole thing and and and and puts forward a solution so that when they are elected, or if they are elected, they have a mandate on which uh on which to govern. It's it it's I mean one more time to go back to the first segment, we're facing huge deficits, huge deficits. 30% of the budget is in deficit over the uh currently and going forward over the next over the next 10 years, more than 30% of the budget's in deficit, huge deficits. And the and and we and to resolve those or to and to resolve any of the issues that people talk about, more education funding, defined benefits, to resolve those, we've got to resolve that that fiscal issue. And and but we have none of that, and everybody's saying, well, Dunley's been a failure, Dunley never put out a plan, uh, and we're gonna we're gonna get it all, get our act together finally with the next guy. Well, none of the gubernatorial candidates are out there with a full fiscal policy issue or with a full full fiscal policy proposal. They're all out there with these single-shot, you know, PFD, pro-PFD, or pro whatever uh policies that don't add up to an over fiscal overall fiscal policy solution. So I don't I it it's it's it's depressing when you start thinking about where we're going. I mean, I mean we're we've all been depressed by the last the last several years when we haven't gotten to a resolution on the issue. People have said, well, Dunleavy's going to be termed out at some point. We'll get a governor in there that will finally address it. We don't have any candidates that are even proposing on how to on how to address the the issue holistically. They're just running in circles.
SPEAKER_02How serious do you think candidates are that press for the full PFD yet are not willing to put forward a true fiscal plan? I mean, how serious are they at this point? I mean, that's that's that's kind of what I get the feeling of is that you you talk for a full PFD, yet you have no plan for cuts, no plan for new revenues, no plan for, you know, again, it it's a it's a lot of chatter, but not a lot of actual substance in how you're gonna get there from here.
SPEAKER_01Yeah, and and you know, people say, well, we'll just cut. I mean, Bernadette from time to time says, well, we'll cut government down. 35%. 30 five, we're in 35% deficit. More than a billion. The size of the deficit is plus or minus the size of the PFD cut. So the size of the PFD cut is plus or minus $1.5 billion, trending up to $2 billion over the next 10 years. That's the size of the deficit. It's more than a third of the size of government spending. So when you say we're gonna cut, but you don't have any idea on where you're gonna where you're gonna cut, you know, we've been there. We didn't been there, did that in 2019 with Dunley, it failed. Um, we couldn't even get 16 uh legislators behind him to to uphold the cuts that he wanted to make. So that's not gonna work. And if and and you don't have any alternative plan. I mean, you you're against oil taxes. Okay, well, that's the low-hanging fruit on the revenue side. What is your plan? We don't we don't have we don't have any candidate. Shelley was on the was on the fiscal policy working group. JKT was co-chair of the fiscal policy working group. Even they don't have full full-scale plans for how they resolve the uh the fiscal gap.
SPEAKER_02Nope. It's uh it's a challenge and it's problematic, but this is where we sit. And uh in a field of 19, you think somebody would have a full fiscal plan, but um it's it's just not it's not happening right now. This whole thing is uh is it's just astonishing to watch how we've got all these candidates who uh who talk about, oh, I want the full PFD, but their answer is well, we'll create a sunset commission, or we'll we'll uh we'll sell Alaska land, or we'll um, or we'll uh create new resources, we'll develop our resources, or we'll and these are all I mean, some of these are great things, don't get me wrong, but again, in the long you're talking about long-term revenue development versus we have a problem next year, and we have a problem for every year for the next five years. So if you've got a five-year tail on what you've got going on, how do we survive from here to there?
SPEAKER_01Well, and it's not, I mean, Michael, uh Shelly is I'll I'll pick on Shelly today because she's the one that did the video. But Shelly's plan is oh, we need to develop our resources, we need to develop all these resources that we have, uh, and and we need to develop low-cost energy, and that will bring in additional additional uh investment, and everything will be okay. Well, Shelly, additional investment doesn't add to the state's revenue base. We don't have any tax structure that that from all these additional industrial development that you visualize coming on board doesn't develop any revenues for the state. And additional oil development, which some people talk about, oh, that's going to save us, additional oil development. I mean, look at the numbers, people. I've I've published these several times in the Friday column in the landmine. Look at the numbers. What happens to oil taxes as you make additional, as you as the industry makes additional development? Oil taxes go down because of the way the credits are working. They drive oil taxes down, not just down as a percentage, but down in absolute terms. They widen the deficit. So, you know, people who talk about we're gonna work our way out of this through additional investment, we're gonna work our way out of this through additional oil production, they're not paying attention to how this stuff works. And and it really is frustrating from the standpoint of you know, considering do I support this candidate or that candidate? Do I is there even a basis on talking to this candidate right uh because they but because they don't have a plan? It's just there's no one out there that's really bringing it all together. And and you know, I'm not sure we have any legislative candidates who are bringing it all together either. But the but the the great push has been, oh, we'll get a governor in here who's gonna do all this. Just it's it's not all by themselves without the help of the legislature, they're gonna do all this.
SPEAKER_02They're gonna they're gonna force, they're gonna bend the legislature to their will and get it.
SPEAKER_01But but bend their bend them to what will? I mean, Bernadette says we'll cut we'll cut spending by 35%. No, you're not. I mean, we've been there. We we we went we've been down this road. Not even conservative, ultra-conservative Republican legislators were willing to back up the administration on the level of cuts. And those weren't 35% cuts, those were about 15% cuts. Right. Or Rob says, or alternatively, just get the permanent fund to earn more. Well, the permanent fund should be earning more, but it can't earn enough to close a billion dollar, uh a billion and a half dollar deficit every year.
SPEAKER_02Unless we stop paying the billion dollars to manage it and we just start taking the, you know, I mean, there, you know, we might be able to find some. But again, you're right. Roll your eyes. That's exactly where we're at. I mean, we we we don't have we just don't have the candidate with the serious plan. I mean, I like some of the candidates, um, but in the end, there is no real true fiscal plan, you know, to put together. And yeah, Brob's right. We saw Ben tried to bring it together, and we saw how that worked out for him, right? Ben tried to bring together a fiscal plan and immediately got stabbed full, you know, in the front and the back uh on the way out of the door. So yeah, it's a it's a tough situation. Uh, we're down to just under two minutes here, Brad. Uh, give you time to lay final thoughts out
Final Thoughts And Two-Week Break
SPEAKER_02there. Well, I'm gonna be gone for two weeks.
SPEAKER_01So I I I'm gonna miss the end game, uh, a lot, uh a big segment of the end game on uh the legislature. Uh, and and it'll be fun to watch. I I I don't know how it all comes together at the end. And I'm gonna miss, you know, everybody sort of getting their gubernatorial candidates, their, their, their, their plans uh more defined. So I'll come back in two weeks refresh and ready and and and be prepared to talk about how everybody screwed up in the meantime uh uh when I'm back. But yeah, um, there's a lot, a lot that's gonna go on in the in the next uh in the next period, none of which is very well defined.
SPEAKER_02Yeah, I mean, we don't even have most of the candidates don't even have a running mate at this point. I mean, I don't even know what's gonna happen uh when this is all said and done. I guess Shelly's supposed to announce hers this week, but I mean we've got 19 candidates out there. We've got three candidates that have got running mates uh at this point, and I'm just wondering, you know, how serious are we if we don't have a running mate now, if we don't have a fiscal plan now, if we don't have I mean, that this it's it's a mess. It's an absolute gargantuan just poo-parade from start to finish. And nobody, nobody is being serious about this um at this point. But Brad doesn't care because Brad's gonna go out and enjoy some great music and and and history and everything else. So Brad, we appreciate you uh coming out, my friend. Thank you so much for what you do and for bringing this to us. Uh, I think most of us will miss you here uh over the last yeah over the next week.
SPEAKER_01Well, Michael, it's fun to be here. Thanks for having me, and I'll see you in two weeks all refreshed and ready to go again. Yeah, you'll be ready. You'll be like, yeah, let's dive into it, and we'll just be beat down.
SPEAKER_02We'll just be like, oh my God. You you stepped away at the perfect moment to not watch the train wreck. As you know, exactly. You could see the train wreck was coming, and Brad's just like, nope, peace, I'm out. Sorry. I'll be back after it's happened and we'll see. That's right. Here. All right. Well, thank you, Brad. Appreciate it, my friend. Thanks for being part of it today. Thanks as always, Michael.
SPEAKER_01Well, 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. And again, please note that we will be off for the next two weeks traveling. We will return with the next edition of the weekly top three on Tuesday, May 19th. This has been Brad Keithley, Managing Director of Alaskans for Sustainable Budgets. We look forward to you joining us again on the next edition of the Weekly Top Three.
