The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (6.29.2026)
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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 June 29, 2026.
This week, our top 3 issues are these: 1) we outline the state's deeply unsettling fiscal outlook, even if spending growth is held to inflation from FY26 onward (2:05), 2) we discuss why we continue to believe that the #akleg should pass the S-corp amendment and override the Governor's veto of the resulting bill if necessary (16:39), and 3) we explain why there are no Jay Hammond-like candidates in the race for Governor, and why that is troubling for Alaska (34:29).
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 Where To Listen
SPEAKER_01This is Brad Keithley, Managing Director of Alaskans for Sustainable Budgets. Welcome to the Weekly Top Three, the Top Three Things on Our Mind here at Alaskans for Sustainable Budgets for the week of June 29th, 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 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 the state's fiscal trajectory, even if spending growth is held to inflation from FY26 forward. Second, we discuss why we continue to believe that the Alaska legislature should pass the S-Corp amendment and override the governor's veto of the resulting bill if necessary. And third, we discussed the fact there are no Jay Hammonds in the race for governor and why that is troubling for Alaska. And now, let's join Michael.
SPEAKER_00Brad,
Alaska’s Deficit Baseline Explained
SPEAKER_00uh, we got a lot of things to talk about here, and let's get started uh with the the weekly top three. We're gonna start off with the fiscal trajectory. I almost read that as tragedy. The fiscal trajectory that the state is on. I mean, I'm not I'm not wrong, right? I mean, it's kind of where we're at, the fiscal tragedy that the state is on. Uh give us your thoughts on this. Let's get started.
SPEAKER_01Well, first of all, uh, welcome or happy uh uh end of the fiscal year day. This is the last day. The end of uh fiscal year 26. Uh and and you know, we were gonna celebrate that with high oil prices, but now we're not. So uh it's uh uh it's a good time to sort of delve into what's going on with the with the fiscal issues. Uh we did the show last week, and I started off every segment by saying we're $1.9 billion in debt. That is that's sort of the driving force to things that I uh things that I think about. Uh and I and I got some pushback on that. Oh, we can't be that big in debt, it can't be that bad. Revenues are gonna come, you know, oil production is gonna come save us. Don't worry about it. We're all we're all gonna be okay. So I thought, okay, so let's do, let's do the numbers. Let's uh let me show you how how the the the numbers work and and how we're deep into debt. So I've done a couple of charts, as I always do. Um, I've done a couple of charts today that uh try to uh look at the uh at where we are. This is the latest, this is the latest chart. This uses the most recent oil prices. So oil prices are down from the previous projections that I got $1.9 billion out of, and I'll explain where we are now. Uh but this is the latest chart with the latest oil prices, the latest forecast from the Permanent Fund Corporation of what the permanent fund earnings are going to look like. Uh, and the POMB draw is gonna look like the the latest spending numbers from FY20, FY26, the final FY26 numbers, including the supplementals, and then adjusting those going forward uh for only only for inflation, not increasing them any more than inflation, but increasing them for inflation. And and here's the results. The top half are the are the gross results, the bottom half are the uh are the focus in on the uh on the PFD. And the focus is for those who who are who are watching this online, the focus is the the yellow line, which is the current law deficit uh using the statutory PFD uh to set the revenues, that is the the portion of the POMB draw that goes to government, goes for government services, is the portion set by statute, the amount remaining from the POMB draw after the uh the PFD is uh is taken out. And then the numbers are uh when if you look at this, you see all red uh in that yellow line. And those are deficit numbers across the entire yellow line, only increasing current spending levels. The spending level approved by Governor Dunleavy in his in his in when he signed the budget after the vetoes, uh, only increasing the spending levels uh by inflation, uh year on year uh by inflation. And you can see they go from uh 1.66 billion in FY26, 1.83 billion in FY27, and they continue growing over the period until you get to FY35. And this is this is a year in which production is growing rapidly, and everybody says, oh, we're gonna be saved by uh resource development, by growing production. When you get to FY35, the budget deficit is $2.24 billion, bigger than it is now. And the reason for that is two things. One, spending the rate of spending growth is outstripping the rate of revenue growth for sure. Um, and the rate of revenue growth is actually, when you look at production taxes at least, are going down. So it's widening the gap between growing spending and and decreasing, uh decreasing revenues over the period. The average over that period at uh the currently projected production levels, currently projected uh uh the futures market for for LN for uh uh oil pricing, the uh currently projected spending levels increased by inflation, and the current uh projections by the permanent fund corporation of POMV levels uh and PFD levels, the the average deficit over the 10-year period is 2.1 billion, $2.09 billion uh over the over that entire period. Um, and so it's it's not, I mean, there's not anything that's coming to save us. There's not anything riding over the hill production increase in production, which is factored in here. We have a 40% increase of production over this period, and yet we end up at the end of the period with a higher deficit than we begin at the than we have at the beginning of the period, even with increased production. So some people say, okay, well, you're assuming you're assuming inflation. Let's assume half inflation. Okay. Okay, we've done that. The next chart is half inflation. And when you look at that, nope, that's still the first chart. There we go. When you when you when you assume half inflation, the the deficit doesn't get to $2.09 billion. And by half inflation, I mean this spending only grows at the rate of half of inflation. So essentially you're having real reductions, reductions in real levels of spending, real in the economic terms, reductions in real levels of spending because you're only keeping up with half half the rate of inflation over the period. And when you look at those numbers, again, we start at 1.66 billion. Now at the end of the period, we're only at 1.45 billion. We've caught up some uh by by limiting growth to half inflation, if we could actually do that. Uh, but still the average over the entire 10-year period is $1.71 billion. And still at the end of the of the period, when we have this, when we had this 40% growth in production, still at the end of the period, we are over a billion dollars, nearly, nearly a billion and a half dollars in deficits. So when when I start out every segment and say, look, the starting point here is we are running huge deficits. This is what I mean. I mean, if you if you look at it inflation, we're running over $2 billion in average deficits over the over the over the next 10 years. When you look at it at half
Why Cuts And Production Fall Short
SPEAKER_01inflation, we're running at $1.7 billion. All right, some people say, okay, well, we'll just cut our way. We'll just cut our way out of this. We'll we'll we'll we'll handle all this deficit spending by cutting it. I did the calculation. We have to cut spending on average over the 10 years, each year on average annually, by something like 25% in order in order to in order to to balance this out through through spending cuts. And when you look back at 2019, what was the reduction there that Governor Lun Dunley was proposing?
SPEAKER_0010%, 7%, 8%, something like that.
SPEAKER_01Yeah, wasn't even 10%. And he couldn't get 16. I mean, he he needed 16 to be able to uphold the vetoes to get that to get to the spending levels that he that he had proposed. He couldn't even get 16 to back him up on that level of cuts. And we're talking more than double that level of cuts every year going forward in order to balance this through through spending cuts. So we need to be realistic about this. We we are in a state that that given the current law projections, by current law, I mean I mean the spending at the statutory levels. Given current law projections, we are in a state, uh, assuming uh inflation spending grows in inflation, we're in a state where we are over $2 billion in the red uh on average over the year, and we are 2.2.45 or something in debt, 2.24 in debt by the end of the period, even with 40% uh increase in production. So that's that's my starting point. When somebody says, oh, you're over-dramatizing this, or or oh, you're you know, when you talk about taxes, you're just not taking into account that we can that we've got you know future production growth and we got future revenues out there, and you're just you're you're you're you know, you're you're getting overwrought about all this stuff. This is the starting point. These are real numbers.
SPEAKER_00Um but I could I can already hear the people going, oh, but you're assuming a statutory PFD and that's never gonna happen anymore. I could see the already see the argument.
PFD Cuts As A Costly Tax
SPEAKER_00That's never gonna happen anymore because that's just that's just fiction, that's just fairy tales. But but that's what the law says. Well, I mean, what do you what do you say to them?
SPEAKER_01Well, the response is okay, then we're gonna have taxes. What you're saying is the way we're gonna solve this is through personal taxes, through PFD cuts. Now, okay, since you're gonna since you're saying we're gonna solve this through taxes, let's talk about what the best tax is. The PFD cuts, using PFD cuts as the as the tax approach, has the largest adverse impact on the overall Alaska economy. It is by far the most regressive, it is by far the most, the the most difficult or the most uh takes the most from middle and lower income Alaska families. So let's talk about better tax approaches. If you're saying, okay, we're gonna solve this through taxes uh by by cutting the PFD, let's talk about, let's talk about tax approaches and let's get the best tax approach as opposed to the most regressive tax ever proposed uh approach out there that takes the most from middle and lower income Alaska families. I'm I'm ready to have that conversation. I'm ready to have a conversation about how we approach taxes. But that's the conversation you're triggering. When you say we're gonna do this through PFD cuts, that's the conversation you're triggering. You say we're gonna solve this through through personal taxes. Fine. Then let's talk about which type of personal tax is the best for the Alaska economy and the best for Alaska families.
SPEAKER_00Brad Keithley, Alaskans for Sustainable Budgets, the weekly top three. That's number one. Final thoughts on number one, Brad. 1.9 billion is not a pipe dream. That's where we're at. It's one point $1.9 billion upside down, according to the statutory numbers, every year moving forward, and getting up to, as we pointed out in the uh uh in the in the first one, uh, getting up to um the two point two point four one by 2031, 2.41 billion dollars at statutory levels by 2031. Final thoughts on this.
SPEAKER_01Well, 2.24 billion, but but you know, what's $200 million between friends, right? Uh my point is this everybody, everybody, every legislator, every person who wants to talk about the state's fiscal situation needs to start with that number in mind. And we need to stop this this fiction of we're gonna dig our way out of this through production increases, uh, or we're gonna dig our way out of this through the the through the gas line. We're gonna dig our way through. We're not, we're not. These numbers are too big. We've got ourselves into a situation. It's a combination of spending growth and a combination of revenue decline, but we've got ourselves into a situation that is hugely problematic going forward. And we should not be solving it if you want to, if we want to talk about taxes now, if you want to talk about PFD cuts, we should not be solving it in a way that has the largest adverse impact on the overall Alaska economy and has the largest adverse impact on middle and lower income Alaska, 80% of Alaska families, especially the time that we have out migration. We should be talking about better approaches to solve it.
SPEAKER_00Brad, here's my question, uh, based on the number, the number one of the weekly top three. Here's my question. Does anybody really get it in the in the government? I mean, there's a few legislators who seem to understand this, but $1.9 billion in deficit moving forward. And and everybody's ignoring those numbers. I mean, I've hit every candidate with those numbers and they just seem to they just seem to brush them off, you know? And I didn't even go to 1.9. It was like over a billion dollars in deficits every year moving forward for the night. And they just kind of brush it. Even Adam Crom, who was on the program as the commissioner of revenue, and and they just kind of brush it off. What what do you say to that?
SPEAKER_01I it it's it's denial uh in the extreme. I mean, these aren't fake numbers, and these numbers account for the the dramatic increase in uh uh in production levels that uh that we've got going on at the end of the 10-year period. They aren't fake numbers. And and I think people it I think they're just too staggering for for people to deal with. Plus, when you deal with them, when you actually confront them and you and you actually talk about them and you actually think about them, you tell yourself you realize you need revenues. And and and I'm gonna talk about this in the third segment a little bit, but but none of these candidates are willing to talk about revenues. They're willing to talk about a little bit of revenues at the margin, or they're willing to talk about some PFD cuts, uh, but they're not willing to talk about the type of revenues it takes to to balance out the budget under current law. And and you know, they want to they know that there will be pushback when people talk about taxes, just like I get pushback when I talk about taxes on the program or when I write about them in the on the landmine column. I get a lot of pushback about that. But these are the numbers you're dealing with, and and and you and you know, when you go to somebody and say, these are the numbers, show me different numbers. Well, they can't show me different numbers because those are what the numbers are.
SPEAKER_00But well, but what about the genius of the walrus? I know where I'm going to do, I know what's talking about. I mean, he's been on the conference committee since Christ was a corporal. I mean, or the the finance committee. Doesn't he know? I mean, how do how do we look at this and go, oh, this is fine? I mean, I just I mean this is fine. The house is burning around me, but this is fine. Um, I just I'm shaking my head, wondering how we how we got to this point and how do we get out of it. Um, it's nearly impossible. Brad Keithley continues with us. We call it the weekly top three, the big three issues that Brad thinks uh is important for us to uh acknowledge and talk about. And uh, you know, avoidance apparently is a strategy. Uh that is the that is the the key for what we're seeing here in the state of Alaska. Avoidance is a strategy. Um,
The Case For The S-Corp Fix
SPEAKER_00and now we're gonna jump right over to number two, which is why he continues to think that the Alaska legislature should pass the S-Corp amendment. He and I had a little bit of an argument about this last week, where I was saying this is a full, this is a whole separate issue that I would like to look at it, but I don't know if it needs to be tied to the gas line. Brad still thinks it does. All right, Brad, hit me with it. This is your second go-around on it. Give me the give me your thoughts on why the S-Corp Tax Amendment should be included uh in the uh in the gas line debate and everything else.
SPEAKER_01All right. So we've just we've just gone through the baseline, right? We've just looked at the baseline numbers, the $1.9, $2 billion in deficit, depending upon what the what the oil prices are on the day. We've looked at that at you know restrict restraining spending going forward to half of inflation. I guess it's all the way down to $1.7 billion. Not a huge, not a huge improvement on where we're otherwise headed. We've looked at what it would take to close the gap uh through spending cuts. Uh and it's double, uh, more than double the level that uh that Dunleavy tried in 2019. And we all remember the firestorm that that sent off. And he's never tried it again. The legislature's never tried it again. So we we know the ridiculousness of arguing, oh, we're gonna solve this through spending cuts. We are gonna have taxes. We are gonna have some form of taxes. We're either gonna tax royalties uh uh that are distributed to Alaskans in the form of PFDs, we're either gonna tax those specially, which is the has the largest adverse impact on the overall Alaska economy and is the most has the largest adverse impact of all of the all of the tax approaches, personal tax approaches on middle and lower income Alaska families. We're either gonna do that or we're gonna find better tax approaches. And the question is, is the S-Corp fix one of the better tax approaches? To go back to a couple of things that we talked about last week, the S-Corp fix is not is not novel. Texas, they do it in different ways than than what we're proposing to do in Alaska, what some are proposing to do in Alaska. But but Texas taxes S-Corps through their uh business franchise tax. And in Louisiana, again, two the two big LNG states that we've got right now. In Louisiana, they have a personal income tax so that when the S-corp provision kicks in and drops the income down through the corporation, it's not taxed at the corporation level, it's taxed at the personal level in Louisiana. And and outside owners, owners outside of Louisiana who have who have income coming through the S-corps, take that income and pay and pay tax on it through the Louisiana personal income tax. So the two big states that people want to say, oh, we we're in competition with them, we need to be like them. Well, they they are taxing uh S-corps, pass-through, pass-through entities. So the question, the question is, as we set up this gas pipeline, as we talk about the economics of the gas pipeline, as we talk about economics of gas, uh uh, how are we gonna what what should we be doing about it? And I think in that context, and in the context that we're facing a $1.9 billion deficit, in that context, we ought to be talking about the S-Corp, the S-Corp tax. Uh Department of Revenue has done some really good economic stuff, one exception to that, uh, on the phase one economics, but Department of Revenue has done some really good economic analysis uh with respect to various pieces of the gas pipeline. And and in the hearings last week before the conference committee about the S-Corp provision, they did a chart that showed what the impact of the S-Corp uh provisions uh would be. And it's a great chart. It shows it it takes the takes the revenue in three pieces. One is what would be the impact uh on the on existing oil producers of having the S of closing the S-Corp uh loophole loophole. And that's in blue, and it's primarily directed uh at Hill Corp. Hill Corp would be the the primary uh taxpayer who would now start paying in the same way that that that the the Hill Corps production in Texas pays and Hill Corp's production in Louisiana pays. Um so that in blue is the Hill Corp tranche. The next tranche in orange is the incremental impact on producers, the incremental revenue they would get, the incremental tax they would pay on the incremental revenue they would get uh from uh initiating gas sales. Um and so that's this is the upstream producers, it's the upstream revenue that they're getting, the upstream profits they're making off of selling gas, and that is captured in the uh in the orange. And again, a lot of that is Hill Corp. It's a few others, but a lot of that uh is Hill Corp. And again, it's the same sort of structure that. Hillcorp has in New Mexico, where they have uh a corporate income tax in or a personal income tax in Texas, in Louisiana, in in all of the play in the places in which uh uh the primary production areas that that uh that we view as our as our sort of standard that we compare ourselves to. So that's that's in orange. And that tax would begin when the producers start realizing profits from sales uh into the LNG line, which is 2032. So up until that point, up until 2032, we see mostly blue, which is which is extending the the the tax to uh uh uh those who are currently using the S-Corp loophole, the blue on on oil, the orange starts kicking in
When S-Corp Revenue Actually Arrives
SPEAKER_01in 2032 when we start making first gas sales. And then the gray is the impact of the S-Corp provision on Alaska on AKLNG. And that doesn't kick in. I mean, it kicks in slightly in 2036, uh, when uh when they start making some profit off the line. And what's really driving this is depreciation. They're taking depreciation against heavy depreciation against their tax obligation, their income tax obligation, for the first several years uh of the operation of the line. So the gray starts in 2036, but it starts very slightly, a very slight amount. It doesn't really start uh in in significant effect until 2046, which is 15 years after the start uh after the start of operation of the line. And then it increases from from then on because they pretty well depreciated out the line for tax purposes. And so the and so the income uh for corporate for for income tax purposes is is growing. But that's only that's only the tax share of the income. Their profits are growing dramatically during that period. Accounting profits are growing dramatically because they're off depreciation. Accounting profits are growing dramatically, and that's and this is this reflects the tax share. So when people say, oh my God, this was, you know, this would just undo the property tax uh exemption that we've been fighting about, that they've asked for, that we've been fighting about. No, it wouldn't. The property tax exemption, that as they described it, was to avoid front loading, putting a front loading tax, front-loaded tax burden uh on the pipeline. It was to change it into essentially a volumetric tax that they would be taxed once they started moving gas and at the rate they started moving gas. This is a similar, this has a similar effect. It's not volumetric. It's profit, it's it's calculated on profits, but it follows, it follows the same sort of trajectory of not front loading, of not front loading the tax bur on Alaska LNG. So I think I think this chart does a lot, frankly, to undercut those who say, oh, this is just this is just horrible. It's going to undo the AKLNG line. They can't operate with this sort of tax burden layered on. It's not a significant tax burden for the first for the first 15 years, and it only becomes a significant, a significant amount of revenue to the state when Hillcr, when uh uh Glen Farn and when the AKLNG project is generating huge amounts of revenues, huge amounts of profits uh for uh for the pipeline. So so let's go back to the beginning. The beginning is we're facing a 2 billion, 1.9 billion, $2 billion deficit uh uh into the as far as you can see into the future. And we know, even with given a given the current oil tax code, we know that even when you have substantial increases in production, you don't have substantial increases in state revenue because because of the way that SB21 is driven and because a lot of that increased production is coming off federal lands, so we didn't don't get a royalty share from there, right? So we don't we're knowing we know we're facing this huge fiscal uh uh imbalance going forward. The question is, the question is, I'm not I'm not advocating tax for tax sake. The question is, how do you deal with that huge deficit we've got? And I think the escort tax is one way of dealing with it in a fair, not discriminatory, because again, they have the same sort of result tax effect uh in Texas and Louisiana, not discriminatory. We're we're we're still you know dealing with them on a par. Um, and and I think it's a one way of dealing with the the huge financial situation we're facing.
SPEAKER_00So, I mean, I don't disagree with your analysis here. I don't disagree with any. I guess my question is this could they pass a clean, uh clean, quote unquote, gas line tax bill and then come back and revisit the S tax, the S-Corp tax next session, and still capture all of this stuff moving forward. That's my that's my question.
SPEAKER_01And the answer, I think, is I think the answer to that, I think, is no in two respects. It the first is no, because we're not we're not not having a huge amount of success in this state passing revenue measures on their own. We we finally get these minimal revenue measures out of the legislature, the the e-cigarette tax, the the the corporate uh uh the the corporate tax, basically, um states that are taxed on people who do business in the state through the internet. Uh, we we finally get those out of the legislature, then they get vetoed because we don't have a comprehensive fiscal plan, even though we let spending keep growing. Then they get vetoed. So we're we're not having a huge amount of success with these standalone revenue measures. And I doubt very much we would have a huge amount of success with a standalone revenue measure uh on on gas if we let the line go through. Because people are then going to say, oh, well, we didn't have that tax when they built the line. Sort of like Hillcork, we didn't have that tax when they built the line. Don't don't do this after the fact. Don't impose this after the fact after they've done the economics for the line and and gone forward with the line. The second thing is that I think that it's it's it's important that that the that the pipeline know the economics, know the know what we're gonna do in this state before they while they're running the economics, while we have all of this before us. Stedman, or Bert Sedman made the uh made this point over the weekend. He said, you know, we could we could tax you later, but but then we're gonna then you're gonna say, oh, you're coming in after the facts to tax us after we made the investment and all that sort of stuff. And then we'd have all this sort of all this sort of argument. It's it's better to have all of this for you to know what your economics are up front uh and to have that full debate up front rather than come back and try to grab uh revenue later on.
SPEAKER_00I want to just go to this real quick. Terry
Gas Line Benefits And Import Backups
SPEAKER_00says, This is a there's a there's a chain here. Let me get to it. How about a gas line to keep the state from freezing to death? To me, that's a big benefit. I agree. Frank comes out again, as he's been wont to do over the last few days and says, I don't have gas and I haven't frozen yet. Frank keeps going on and on about how Fairbanks, you know, oh, we don't care about gas because we don't have gas and it doesn't benefit us. But I don't know how many times I got to tell you this, Frank. The reason why you are now paying a 61% fuel surcharge increase is because we don't have enough gas to ship that 30% of GVA's production up the interty. You're gonna be paying 27% on your overall bill more over at least the next 90 days, potentially the next 120 days, because they don't have enough gas to ship 30% of GVA's needs up the interty. So while you may not have gas at a spigot at your house heating your home, if you have a if you have any kind of electricity, you're paying 27% more right now because we don't have enough gas to generate. This is this whole argument about well, I'm not on the road, I'm not in South, I'm not in Anchorage, I'm not in Wasilla, I'm not in the South Central. So I don't really care one way. You should care. Every dollar, every, every M, you know, M MCF of gas that we don't have means higher energy cost for everyone on the intertide, the rail system, the road system, all of those things are connected, Brian.
SPEAKER_01Yeah, no, I I absolutely agree, Michael. The state would hugely benefit from a gas line done the right way. And the right way is when we have the export volumes to lower the economies of scale of building the facilities down to down to lower costs, that then we should proceed with the gas line. We ought to be focusing on on doing what it takes within reason to uh to to make that work and to get the benefits of the gas line. That would that benefits the entire state, not only South Central, uh, where the gas shows up, but also Fairbanks, which gets a part of the gas. And also on the electric side, we'd lower the costs of of the fuel that the electric companies are paying. When we are with the export volumes at full volumes going through that line. What we don't want to do, what we don't want to do is build this line just for phase one and then get stuck in phase one, because then the costs to both South Central and Fairbanks and everybody else who otherwise would benefit go up higher than they would from importing LNG. Right. So we've got to do this line the right way. We shouldn't just be running, you know, oh, we've got to build the line, got to build the line, got to build a line. Wait until you have those export contracts in hand and you have you have the economics underlying achieving lower costs for Alaska in hand. Don't get yourself stuck out there in phase one and then end up being stuck in phase one for the next 50 years.
SPEAKER_00This raises an interesting question. And we were talking about this uh yesterday, I think in the end of last week, which is I mean, first of all, it's getting it, it's the the the the chances of a gas line actually going through seem to be getting smaller and smaller, diminishing by the minute, it seems like, as we watch these committees work on it. That's just my feeling on it, that there's a lot of foot dragging. Um, and my question is, where does the import scheme fall on this? Have we have we gone too far? Are we, you know, is the import steam uh still waiting in the wings? Because that's our only other choice, right? That's our only other option. What do you think about that? Two minutes here.
SPEAKER_01Well, we've got two proposals. We've got the the Hill Corp proposal to to repurpose the the old Kenye LNG export plant to import gas. And then we've got the the Glen Farm NSTAR uh proposal to build a grassroots uh LNG import facility. We've got proposals out there on how to do this. There's a third that uses the old Osprey platform as well. We've got proposals out there on how to do this. We we need to be getting ready to do it. Um uh but at the same we we need to be getting ready to do that at the same time as we pursue, as as Glen Farm pursues the export contracts to tie down the volumes that justify the construction of the L and of the gas line.
SPEAKER_00You looked a little skeptical when I said that I'm feeling like the that the window is closing on the gas line here. What do you think the over and under is? I got a minute. What do you think the over and under is here that they actually get something in that actually moves forward and is actually usable for the phase two?
SPEAKER_01I want to see I there's a missing component here, uh, which is what it will take to get the export volumes tied down. I mean, we we've we've had virtually zero discussion uh about that issue. And that's the critical issue for making this gas line work, not only for Alaskans, but also for the producers and also for the economics for the state. We need to we need to find out where that is. And I I think it's doable. I think the gas line is doable in that competitive environment, but we need to get that right resolved.
SPEAKER_00Brad Keithly, Alaskans for Sustainable Budgets, the weekly top three. We're on to the third of the big three for today.
Where Are Alaska’s Jay Hammonds
SPEAKER_00And this is the question that uh a lot of people uh I think have been asking uh over the course of the last uh uh, well, I mean, not just this cycle, but many cycles. Why are there no Jay Hammond candidates? Not even in the in the Republican. When we're talking about the governor's race, why are there no Jay Hammond style candidates? Brad?
SPEAKER_01Yeah, you know, Michael, this I've I've I've been sitting, we we've talked about this on the show some, and I've been sitting trying to figure out why I don't like any of the candidates in the gubernatorial race. That that they all all of them seem to be denying reality in terms of in terms of where the state's heading from a fiscal standpoint. All of them are denying reality in terms of what's the best approach for dealing with where the state's going from a fiscal standpoint. And I and I and I and I it's and and I've sort of realized that what I'm looking for is a Jay Hammond, somebody who who who dealt with those those factors, talked about taxes, was willing to talk about taxes um uh at a personal level, was willing to talk about taxing oil companies uh to achieve the maximum benefit uh standard in the Constitution. Somebody who's willing to talk about the revenue side uh as well as the as the cost side. And and we we've just we don't have any candidates anymore uh who talk about those things in the way Hammond did. There's there's a piece of another piece of that that has really struck me the more the more I've thought about it. Hammond, at least in his writings and at least going back and you know trying to reconstruct what he said during his during his time in office and during the during the campaigns that he ran, Hammond sort of sort of had a starting point of the individual, the uh individual Alaskan and trying to identify and focus on what benefits the individual Alaskan. I think that's where the PFD came from. The PFD came from look, let's get a share of the state's commonly owned wealth to those, to the owners, to those who own that the commonly owned wealth. Let's get a share of that in their hands and enable them as individuals to have the economic benefits just the same way that royalty owners have the economic benefits, minimal interest owners have the economic benefits in Texas and Louisiana and Arkansas and New Mexico and Colorado, West Virginia, all the producing states. Every other state has a system that gets money to the individual owners. Let's have a system in Alaska that gets that money, just like in those other states, gets that money in the hands of individuals, and let individuals, you know, benefit from that and let them determine for themselves the economics out of that. Let that help them with their with their with their economics. And I think Hammond focused on let's focus on the individual and what makes the individual better. What makes the end of what makes the individual Alaskan stronger, what makes it more economically self-sufficient, what gives it revenue to be able to do things uh in the state, to be able to live in the state and and build things in the state because it gives them some capital formation. All the other, all the candidates today, as I think about it, none of the candidates today start with the individual. Um, you know, some of the candidates are going to disagree with that and say, oh, I start with the individual. But they really don't. In my view, what all the candidates today are doing is starting with the state and saying, either, A, how do I make the state, how do I make the state bigger, stronger, a bigger force in the state, uh better prepared to, you know, dole out money to this group and that group and the other group. Or they say, how do I make the state weaker by you know taking money away or or redistributing money or or doing things that that reduce the power of the state? They would say in reducing the power of the state, they're increasing the the increasing the strength of the individual, but none of them start with the individual and say, I'm gonna make the individual stronger. I'm gonna make the individual, I'm gonna make the individual Alaskan better positioned to deal with his life in the same way that you have in Texas and Oklahoma and Louisiana and Arkansas and the other states where you have oil production. I'm gonna make the common resource, one of the members of the common resource ownership in the state stronger by sharing a piece of of their commonly owned wealth with them. I'm gonna start there and then Hammond did. I'm gonna start there and then to fund the state, the state things the state needs to do. I'm gonna talk about income taxes and I'm gonna talk about I'm gonna talk about oil taxes uh to pay for the program. What Hammond did in doing that was enable the individual, energize the individual, and and and really uh talked about how do you pay for a how do you pay for state government after you've first taken care of of the individual. And and when when you talk about you know spreading the burden of funding state government through taxes, then he's frankly automatically engaging uh uh uh uh controlling costs, controlling state spending by creating this this huge number of people who push back uh on spending increases because they're not gonna they know they're gonna have to pay for it through taxes. And I and I think I think there is a I think there was a genius in the way Hammond thought about this. I've always thought there was a genius in the way Hammond thought about it. You take the Alaska construct where all of the minerals are given to the state in the beginning. How do you create the individual wealth uh in in in individuals in Alaska, residents in Alaska, that you have in the other states uh when you when you when you've had all this, all the all the mineral state given to the state. And I think Hammond was a genius in creating the PFD and in and in finding a way to in Alaska do the same thing that's done uh in the other in the other states. None of the candidates are doing that, in my opinion.
SPEAKER_00Part of the problem is is that the whole thing's been suborned by the legislature because that was Hammond's vision. Uh, I mean, it's in the intent language in the in the state in the statute for the PFD. Alaskans have first call. I mean, that is in there. And it's just been suborn by the legislature to mean, well, we'll take the money and give you what's left over. I mean, that's part of the problem. And I don't know how to fix that or address that when you've got that mindset in the legislature. It's the Willakowski mindset, the Giesel mindset, maximum revenue to the state, Matt Klaiman, a billion dollars isn't enough. Uh, we need more. I mean, that I how do you it's it's not even in the DNA anymore, it seems like.
SPEAKER_01I and I think I think I I think part of that is the lack of a governor who is expressing that. I mean, Hammond Hammond expressed that. Hammond expressed the the the goal of the individual uh sharing in the in the wealth. Not not the share determined by 21 and 11, 21 in the house, 11 in the in the in the senate, and one in in the in the governor's mansion, not not centralizing that wealth and then deciding then the 21, 11, and 1 deciding out who gets it, getting that wealth in the hands of the individual from the from the from the get-go. I we don't have a governor that's articulating that. And so it's not frankly not surprising to me that we don't have legislators who are following that. I mean, because they're not gonna they're not gonna get what Hammond did was sort of set the bounds of how we're gonna think about this and then drive the legislature through various means, drive the legislature toward that goal. We don't have a governor who's setting those bounds anymore. Right. So the leg legislature doesn't have the leadership that's driving it toward that goal. And I and I and and and so they've just fallen into give give us all the wealth and we'll dole out the 21, 11, and one will decide who gets the who gets the wealth that we get from the from the from the commonly owned resources. They've just sort of fallen fallen back into that. If we had if Jay was still around, if Jay was still the governor, if Jay was still, you know, Jay, even after he was governor, uh uh had a huge influence on things. If he was still around to, I think, provide that guidance and had a governor who was who was following that guidance uh or following that approach, I think we'd be in a much different place. And as I think about it, that's why that's why I can't get behind any of these gubernatorial candidates. They don't start with the individual, they start with the state. We're either gonna make the state bigger, we're gonna make the state smaller, but they start with the state.
SPEAKER_00Is there any is there any of them out there that even have an inkling of this? Or or you know, is there anybody who could change their platform slightly to match what you're talking about here? One minute. I don't know.
SPEAKER_01I mean, I don't know. There none of them, I mean, I could go through all the candidates and why they're all failing in this. And I and I don't know if any of them have the have. Have the ability to turn it around and to rethink uh what they're doing. But I can I I can't support any of them. I don't know what I'm gonna do. I can't support any of them because they're all just focused on how they manipulate the state uh uh and how the state uh controls Alaskans. They're not talking about empowering individual Alaskans in the first place.
SPEAKER_00I don't know, Brad. I mean I I see what you're saying. I see what you're saying there with the uh, you know, with the kind of this Hammond thing where um we've just lost it, and you know, and again, it's a it's a politician thing. I mean, we got politicians who have been in the legislature for two decades, and they are, I mean, they're antithetical to Hammond's whole vision of the individual Alaskan. They've looked to it, as you said, as either how do we make the government bigger, bad, or stronger, how do we get more revenue for the government so that we can nanny state people. It's like the individual Alaskan, it doesn't even matter anymore.
SPEAKER_01Yeah, and we don't we don't have anybody who's even aspired. Dunley B when he ran in 2018, said he was the Hammond candidate in various ways. He said he was the Hammond candidate. Um, and he was gonna you know put the protect the PFD, put Alaskans first, uh, and then and then deal with the consequences, what that did with government. After 2019, he just sort of let that go off the board and and really hasn't tried, uh hasn't been vocal in articulating a vision, uh, a vision since. And as I say, none of the candidates have picked it up. What we've we if you were around then, I've I've done it through reading and and through listening and talking to people who were there and all that sort of stuff. There was a huge divide between, a big divide between Hammond and Hickel in the old days, right? Hammond Hammond was the individualist. Hammond was we're gonna empower individual Alaskans to make their lives better. Hickel was the state's gonna control everything. We're gonna build big things, we're gonna do big things. The state is the is the is the owner state. We're gonna control all this stuff, and we're gonna use the revenue from the state. Hickel wasn't a big fan of the PFD at the beginning. We're gonna use the revenue from this stuff uh to uh to build a big state. That's what we've really got now is just all Hickle candidates. Hickel, interestingly enough, Hickel in his later life uh uh became a PFD advocate. There's uh there's an op-ed he wrote before he before he passed away, um uh extolling the PFD and talking about the good the PFD did and why we should preserve the PFD and protect the PFD. Uh, but but in his heyday, he was not, he was a big state guy. And so, you know, we got people who are running to be another Hickel. We got Walker or even Bernadette uh who are you know are talking about the Hickel legacy uh and and the things they can do with the state or the thing or how they can limit the state. We don't have anybody who, like Jay, started the starting point of which was the individual, how we're gonna how we're gonna benefit the individual Alaskan and then go from there and how we're gonna deal with the state.
SPEAKER_00Well, I can see how this puts you in a conundrum with none of the candidates really matching up for your vision of what governor is, but who do you think is the best candidate? Sybil's asking who is the best candidate. So who do you think out of all those, even though they don't match your vision, is there any of them in there that's worth a damn? I mean, is there any candidate in there that you think is, I mean, that you're gonna hold your nose for and pull the lever? I mean, what where are you at?
SPEAKER_01No. I'm I mean, that's what I've that's what I'm trying to say. I there isn't any one of them, any one of them that motivates me. I mean, there are a couple, as I said, as I said on the show previously, there were a couple that I held out some hope for uh that were members of the legislative uh fiscal policy working group 2021. Is that how far back that was? Anyway, who were members who were members of the legislative fiscal policy working group? JKT was uh was a co-chair of that, and Shelly Hughes uh was was on that. And I held out hope for them that they would that they would take the work of the fiscal policy working group, which was really good, comprehensive fiscal plan, take the work of the fiscal policy working group and make it the centerpiece of their campaign. And part of that is to restore the PFD. Part of that is to protect the PF the PFD. But both of them have run away from it. I mean, Shelley talks about the PFD, but then she also talks about not taxing the oil companies and not taxing individual Alaskans. Well, you can't do that. You can't make the economics, you can't make the fiscals of the work of the state work doing that. You can't, you're not gonna get a 25% spending cut, uh, which is what which is what that would take. So Shelley's run away from it. AKT never even ran close to it from from the from the time he started running. I mean, JKT has talked about more things that the state can do, which are good, which is gonna take more revenue, which makes the problem worse. Um, and he really hasn't talked about how he's gonna how he's gonna develop the revenue to to pay for all that. So the two I had hope for at the beginning of run away from from the very thing that gave me hope about them. And none of the rest of them, I think, get it. I mean, Bernadette talks about we're gonna restore the Bernadette's like Dunley 2018, we're gonna restore the PFT. How the hell are you gonna do that?
SPEAKER_00Yeah, how do you pay for it? Um, Frank makes a good point. What happened to the last person from the fiscal planning group that wanted to fix the revenue? That would have been Ben Carpenter. I mean, you know, but what what happened? Alaskans, you don't you can't handle the truth, is is what I'm hearing. You can't handle the truth in that the fact is we can't keep doing what we're doing. And uh yeah, it's uh it's very frustrating to watch these candidates. I'm with you. I mean, I'm at this point where I like some for certain things, I like others for other things, but there's I mean, nobody in there is inspiring me to go out there and campaign for them or do anything else. There's nobody out there that has all the answers that uh that you know that we're looking for, or even is close at this point to that.
SPEAKER_01I think I think that's it. Nobody, nobody even has a core, uh, a starting point where they're where they're max or for their focusing on the individual. I think it's just everybody starts at the state. Maybe that's a reflection of where we've gotten come to as a state. Maybe that's a reflection of where voters are, but everybody starts with the state. I'm gonna make it bigger, I'm gonna make it smaller, but it's all focused on the state. It's not focused with, as Hammond did, starting with the individual. I'm gonna make your life better. Then I'm gonna deal with how I how the hell I pay for that. But I'm gonna make your life better.
SPEAKER_00Yeah. Well, and I could see Miguel says at the end of the day, we all have to make a decision, correct? Well, yeah, we do. But it's a question of do we do it grudgingly or do we do we just not vote? I mean, I I don't know. It's uh it's a challenge. Uh final thoughts, let you go here.
SPEAKER_01Final
Final Fiscal Warning And Wrap
SPEAKER_01thoughts is $1.9 billion. I mean, I mean that that we are in a fiscal crisis in the state, and we need to we need to recognize that and deal with it.
SPEAKER_00Alaskans for sustainable budgets. Enjoy your time, my friend, in your paradise. I appreciate you.
SPEAKER_01Michael, as always, thanks for having me. Well, that's a wrap for another week's edition of the weekly top three from Alaskans for Sustainable Budgets. Thank you again for joining us. Remember that you can find past episodes on our YouTube, SoundCloud, Spotify, and Substack pages, and keep track of us during the week on Facebook and Twitter. This has been Brad Keithley, Managing Director of Alaskans for Sustainable Budgets. We look forward to you joining us again next week for the next edition of the weekly top three.
