Thursday, June 14, 2018

Fact check: Governor Walker is wrong, the FY 2019 isn't sustainable

In a series of recent tweets, Governor Walker claims that Alaska now has a "sustainable budget." But that's not true.

The FY 2019 budget isn't sustainable even in the most basic sense. It continues to rely on draws from the Constitutional Budget Reserve in order to balance. Revenues don't equal spending in this or any other projected year.

But as we have long explained, whether or not a government budget is "sustainable" in the full sense of the term is about more than simply whether long term revenues equal long term spending. In the words of Section 1.2 of the Constitution, to be considered sustainable a budget must also be designed for "the good of the people as a whole."

In short, a government budget can't be considered fully "sustainable" if it undercuts the overall economy or benefits some Alaskans at the expense of others. While such an approach may benefit -- sustain -- some segments, to be fully "sustainable" fiscal policy needs to both adequately fund government and also serve to sustain the overall economy and individual citizens "as a whole."

It is that second role where the FY 2019 budget fails the most. As ISER consistently has advised, cutting the PFD -- the foundation of the FY 2019 budget -- has the "largest adverse impact" on the overall economy and is "by far the costliest measure for Alaska families" of any of the various new revenue options.

While that approach may help some segments of the economy -- particularly those portions tied to government spending and those in the Top 20% income bracket, who avoid paying a proportionate share of the cost of government by using PFD cuts as the primary public funding mechanism -- it fails miserably in meeting the test of sustaining the overall economy and individual citizens "as a whole."

As Jay Hammond made clear, "...under Alaska’s Constitution, [Alaska's resource income] and the resources it comes from, belong to all Alaskans; not to government nor to a few ‘J.R. Ewings’ .... Alaska’s founding fathers wanted every citizen to have a piece of the action.”

Diverting to government a portion of the income set aside to provide "every citizen with a piece of the action" so that those tied to the government economy and the Top 20% -- Alaska's version of the 'J.R. Ewings' -- are better off, but at the expense of the overall economy and the Other 80%, does not meet the Constitutional objective of acting for "the good of the people as a whole."

There are ways that do so. By applying to all Alaskans the same, proportionate assessment to cover the cost of government, a broad based flat tax would treat all Alaskans the same -- "as a whole."

By raising a portion of the revenue from non-residents receiving Alaska income and spreading the remainder out across a broad base, a broad based flat tax also would minimize the burden on individual Alaskans, and thus the effect on the overall economy.

The FY 2019 budget does neither of those, however, and in doing so fails the test of sustainability.

Governor Walker's -- and others -- claims that it does is simply a shameless attempt to co-opt a phrase made popular by others for his own political purposes. It fails the fact check, however.

Wednesday, May 9, 2018

Let's be real about the potential costs of HB 331

Some legislators who we have criticized for voting yes on HB 331 posted a link yesterday to a response to an earlier piece we did on the subject, presumably because they think the response rebuts our criticism of their vote. 

It doesn't.

We can sort of understand the initial inclination to interpret it in that way. The title is Follow-up: HB 331 is Still a Good Deal. But those reading the article quickly understand that the title really is "HB 331 is a good deal ... if you do certain things." 

As it was constructed when those legislators voted for it -- and remains to this day -- HB 331 doesn't do those things. Without them, even the response effectively admits HB 331 results in "a net negative to the state."

After working through some initial Latin, here is what the response says:
What if, rather than budgeting based on what the state needs, the legislature budgets to a target amount of spending? 
That would lead to a real problem. Now, rather than reducing the budget and keeping the extra money in the bank to earn interest, the legislature instead views the reduced budget as an excuse to spend that money in another way. 
If that’s the way this whole thing plays out, throw my previous analysis out the window.
Some argue that this is basically what happens with the POMV draw created by SB 26. The legislature will view that calculation as the amount they should spend, rather than the amount they can spend.

If we are going to take on debt under the pretense that the debt service will be paid with the interest on the savings, we need to protect those savings. Otherwise we may end up with an empty savings account and a debt service payment on top of it.
 
Even if the discount on the face of the certificates warrants the bill on its own, the financial implications are a net negative to the State if those savings are wasted. Which means that, at least in my mind, the passage of this bill relies upon the fact that it reduces the budget and those savings are saved.
The problem? HB 331 doesn't provide in any way protections "that it reduces the budget and those savings are saved."  And as the response admits elsewhere, the history of the legislature with respect to issues related to fiscal responsibility "isn’t great." In short, this isn’t an issue on which a legislative “trust me” deserves much weight.

As did our initial piece, the response goes on to list certain ways that HB 331 might be amended, or otherwise parallelled by other actions, potentially to provide the needed protections. Those are the certain things that, "if" done, potentially could help make HB 331"a good deal." (In our view, there are other risks beyond those that still could make it a bad deal, but at least the number of risks would be reduced).

But, again, none of those were contained, proposed or even discussed at the time the House voted on HB 331, and at least to this point still haven't. Without them, there is a high risk, and given the legislature's history, some (including us) might even say a virtual certainty that this or future legislatures will use the reduction in current spending levels created by the approach as an opportunity to increase spending in other areas. 

Indeed, some might suggest that this Legislature already is doing so with its proposed increase in K-12 spending.

If this or future legislatures do?  In the words of the response,"the financial implications are a net negative to the State."

Moreover, even if the additional things outlined in the response are done this session in an effort to salvage HB 331, they easily can be undone. Under the Supreme Court's recent decision in Wielechowski v. State, 403 P.3d 1141 (2017)
each year during the appropriation process the legislature can revise and reshuffle the manner in which funds are appropriated, even if contrary to statute.

As a result, even if the legislature were to reduce the POMV draw as we suggested in our initial piece and is repeated in the response, or set aside the requisite amount of funds in the Alaska Capital Income Fund or a separate subaccount of the Permanent Fund corpus with a firm commitment to direct the proceeds (and the appropriate part of the accumulated earnings) from that subaccount only to repayment of the debt (both of which are suggested in the response), nothing prevents either the very next or a subsequent Legislature as a part of the appropriation process from redirecting — directly or through various accounting tricks — all or a portion of those funds right back into the general fund to help pay for other things.

While some attempting to defend HB 331 may seek to dismiss or minimize the potential for such actions, the current Legislature's own use of so-called designated funds for other purposes and current reappropriation of past capital appropriations to other projects provides more than ample evidence of behavior along these precise lines.

The consequence if this or a subsequent legislature did so? Any such steps -- whether direct or indirect -- would immediately increase the cost of HB 331 to future Alaskans to the levels we discussed in our initial piece (depending on when they occurred, potentially up to a net negative of $940 million).

To be clear, we recognize that the state has an obligation to pay off the oil credits which qualify for cash purchase. But the state already has a statutory mechanism in place for dealing with those. While that mechanism comes with a cost, it is both one to which those seeking such payments agreed at the time they entered into the oil credit program and one which, based on current projections, has an end date with largely known costs in the relatively near future.

Even under the best case scenario outlined in the response, the alternative proposed by HB 331 bears a substantial risk of increasing those costs significantly more over the lifetime of the bonds if the required safeguards necessary to its success either are not put in place from the outset by the current Legislature or ignored by future ones.

Those safeguards aren't contained in the current bill and, in passing SB 26 (the POMV bill) without a deduction mechanism, one opportunity for doing so has already passed. As we outlined in our initial piece -- and as the response effectively concludes as well -- without them the so-called "good deal" quickly can -- and given the past behavior of the legislature, likely will -- become a very bad deal for Alaskans.

Sunday, May 6, 2018

HB 331: How a "Good Deal" Quickly Becomes a Bad Deal for Alaskans

Last week on the eve of the House Finance Committee meeting and subsequent House floor debates on HB 331 -- the bill authorizing the issuance of state bonds to pay for oil tax credits -- a new analysis emerged asserting that the bonds might be a "good deal" for Alaska.  Bonding for Tax Credit Purchases may be a Good Deal for Alaska (May 2018).

The analysis claimed that, by issuing bonds and using them to pay the oil credits currently, the state might "make" as much as $600 million on the "spread" between earnings on the amounts that the state would have paid out currently in credits but was able to defer because of the bonds, and the amount of interest owed in paying the bonds back.

The analysis was immediately adopted and hailed by proponents of the bill during both the Committee and House floor debates, and picked up and repeated by some blogs.

But the analysis is built on a number of assumptions and in the din of the week, one particularly important assumption went missing.

That assumption is that, in the current and subsequent years, the "savings" produced by using the bonding approach -- that is, the difference between the amount that would have been spent to pay off the credits under the current statute and the amounts due on the bonds -- will be retained in the Permanent Fund earnings reserve and not spent on other things.

In other words, if during the period the bonds are projected to produce a savings (roughly FY 2019 - FY 2023) the budget otherwise would be $4.5 billion with $0.2 billion paying the credits, then the budget needs to be reduced to $4.3 billion (the difference in the spending between the statutory and bonding approaches), with the difference not spent on other things.

Anyone who has been around the legislature for any period of time knows it is highly unlikely that the legislature can exercise that level of constraint. If there is current money available, the legislature will find someplace to spend it.


Certainly, a commitment to exercise such constraint is not contained in the statute, and went unmentioned in the Committee and floor debate.

What happens if the legislature does not exercise the constraint?  Bad things. Instead of the bonding approach "making money" for Alaskans (compared to the current, statutory approach), it will lose even more of it. 

To measure the potential effects we extended the calculations done in the original analysis.

Here are the results from the original analysis. Under the assumptions made in the analysis, the results show that the bonding approach potentially could result in retaining ("making") an additional $623 million ($1.301 billion, minus $678 million) over the life of the program.


But here are the results if, instead of saving the differences between the amounts "Appropriated for Next Year Credit Purchases" (the payments due under the current statutory program) and "Debt Service Payments Required for Next Year" (the payments due under the bonding approach), the legislature spends all or a portion of them.

If the legislature spends all of the savings on other things, the state loses $940 million over what it is obligated to pay under the current, statutory program (the difference between the $678 million FY 2031 balance under the statutory formula, and the -$262 million FY 2031 balance if all of savings are spent on other things).

Even if the legislature only spends 50% of the savings on other things, the state still loses $96 million over what it is obligated to pay under the current, statutory program (the difference between the $678 million FY 2031 balance under the statutory formula, and the $582 million FY 2031 balance if 50% of the savings are spent on other things).


In short, if the legislature is unable to restrain itself from spending the "savings" on other things, from a fiscal perspective the state will end up even worse off than complying with the current statutory repayment approach.

When approached about these results one legislator who voted for HB 331 this past week said that he "hoped" future legislators would be able to exercise the necessary constraint.

But such past "hopes" are how the state has found itself in the fiscal shape it is now. And relying on the same "hope" going forward will quickly result in turning what some claim is a "good deal" for Alaskans into an even worse one than we have now.

In the past some in the Senate have claimed that in order ultimately to instill fiscal discipline the state needs to reduce the revenue it has to spend.  That hasn't seemed to work too well in the past; when it hasn't had current revenue, the legislature has simply drawn down savings more.

But giving some weight to that view here is one way the legislature could demonstrate it is somewhat committed to saving the amounts assumed in the earlier analysis.

Under SB 26, the legislature proposes to limit the annual draw on the Permanent Fund to approximately 5% of the fund's value. Assuming an average value of roughly $50 billion, that results in an annual draw of roughly $2.5 billion.

If the legislature is committed at least to attempting to turn the bonding approach into a "good deal" for Alaskans it could agree to limit the draw to 5% of the fund's value, minus the annual savings projected to be achieved by the bonding program.

At least in the first instance, doing so would leave in the earnings reserve the amounts necessary under the analysis to achieve the potentially "good deal." Of course, nothing would prevent the legislature from end running the limitation by making a separate, additional draw on the earnings reserve in future years or by achieving the same objective through making an additional draw on the amounts remaining in the CBR.

But at least that step would demonstrate some recognition of the issue and some commitment to taking it seriously.

On the other hand, following in the footsteps of the House and failing to make even that minimum commitment will demonstrate that HB 331 is really about something else (i.e., providing an additional state subsidy to certain oil companies) and the legislature is fine with it ending up costing Alaskans even more than the current statute provides.

Sunday, April 22, 2018

Alaska's legislators adopt fiscal measures that are better for themselves than other Alaskans ...

Consistent with the way in which we have watched the Washington Post and others cover proposed tax and other fiscal legislation at the national level, over the course of the last week we have put together an analysis of the economic impact of PFD cuts -- Alaska's equivalent -- on Alaska's legislators compared with their constituents.

The results are startling. The level of PFD cuts passed by both the House and Senate this session ($1100 per Alaskan) will reduce the income of a middle income Alaska family of 4 by nearly 8%. No legislator, on the other hand, will experience anywhere near the same impact.

The largest impact on a Senator, for example, is only 2.74%, more than 3 times less. The average on all Senators is only 1.34%, nearly 6 times less.

The cut reduces the income of one Senator who has been a leading advocate for the measure by only 0.27%, nearly 30 times less than the impact on a middle income Alaska family of 4. The cut reduces the income of the Senate Majority Leader, who last year suggested that he was a Profile in Courage because of his support for such a measure, by only 1.13%, or nearly 7 times less than the impact on a middle income Alaska family of 4. What he really was proposing, it seems, is that someone else take the economic bullet, not him.
The results in the House are roughly the same. The largest impact on a House member is slightly higher, at 5.88%, but that is still 25% lower than the impact on a middle income family of 4. The average impact on all House members is only 1.38%, almost exactly the same as the average impact on Senators.

The cut reduces the income of the Co-Chair of the House Finance Committee, the leading advocate of the measure on the House side, by only .39%, or roughly 25 times less than the impact on a middle income Alaska family of 4.

In short, in responding to Alaska's current fiscal situation, whether intentional or not a majority of the members of both bodies in the Alaska legislature are looking out for themselves first, and pushing the costs off on those lower down the earnings ladder.

In our view, Alaska's legislators should be required to contribute the same toward the costs of government as every other Alaskan. After all, legislators are the ones that create those costs. They should have to deal with the consequences to the same extent as everyone else.

As Governor Hammond said in Diapering the Devil
... the best therapy for containing malignant government growth is a diet forcing politicians to spend no more than that for which they are willing to tax.
That doesn't work, however, if legislators are able to adopt an approach which lets themselves largely off the hook while they pass the costs on to others.

What Governor Hammond meant was "a diet forcing politicians to spend no more than that for which they are willing to tax themselves."

As we have discussed previously on these pages, a broad based flat tax designed to treat all Alaskans the same would do exactly that. To raise the same amount of revenue as the legislature proposes to raise through PFD cuts all Alaskans would contribute roughly 2.75%.

The legislature's approach, on the other hand, let's them get away with paying only around 1.35%, while an Alaska family of 4 in the Upper Middle income bracket pays 4.68%, an Alaska family of 4 in the Middle income bracket pays 7.79%, an Alaska family of 4 in the Lower Middle income bracket pays 13.54% and an Alaska family of 4 in the Low income bracket pays a staggering 27.5% of income.

Heck, on average under their approach legislators are contributing less toward the costs of government than even an Alaska family of 4 earning the average income in the Top 20% income bracket (1.76%).

Voting for that approach wasn't a Profile in Courage; it is a vote in clear self-interest.

A chart summarizing the results of the analysis, by legislator, follows below:

Wednesday, April 11, 2018

Our morning twitter storm ...

Our reaction this morning after reviewing DOR Commissioner Sheldon Fisher's testimony on HB 411 (Oil & Gas Production Tax; Payments; Credits) late yesterday afternoon. The overriding question: who is running this state and whose benefit are they running it for?










Sunday, April 8, 2018

Want to really control state spending? Use a flat tax.

Some argue that new revenues aren't required in order to resolve the state's current fiscal situation, or if they are the revenues resulting from the implementation of Governor Hammond's 50/50 plan are sufficient.

They argue that spending cuts will resolve the remainder of the problem.

That view is theoretically correct. Numerous groups, ours included, have repeatedly offered detailed proposals on how to curb spending to long term sustainable levels (i.e., without the need for various forms of "new revenues").

However, given the level of spending that the Governor, House -- and Senate -- have continually agreed to the last ten years, including the years even since the current fiscal situation has become apparent, relying on cuts alone to address the state's fiscal situation is no longer realistic. 

While various proposals to cut spending often have received lip service from legislators, in the end they all have been ignored. 

Indeed, this year the Alaska Senate itself is proposing a spending increase in at least one of the very categories -- the University system -- that would have to be cut back significantly further in order to achieve such an objective.

In short, while technically accomplishable, and while some from some parts of the state (MatSu comes immediately to mind) appear willing to cast the votes necessary to achieve at least some of it, the statewide political will just doesn't exist to take the steps necessary to achieve the required level of overall cuts, not even in the currently R-led Alaska Senate. 

As a result, a different question increasingly has taken precedence over the last two years -- if we aren't going to reduce spending to long term sustainable levels, what should we do instead.

Some, particularly those who are driven by concerns about a progressive income tax which would put the largest share of the burden on the Top 20% of Alaskans (but also some just looking for any easily accessible source of "new revenues" to fund government), argue in favor of PFD cuts. 

But that approach is just as biased as a progressive income tax, pushing a disproportionate share of the costs off on the Remaining 80% and leaving the Top 20% almost completely unscathed.

Moreover, PFD cuts have the "largest adverse impact" on the overall Alaska economy, are "by far the costliest to Alaska families" and, because they draw funds only from Alaskans, take the largest share of dollars out of the Alaska private sector than any other option.

As we have explained previously on these pages, we believe there is a better way, which uses Governor Hammond's 50/50 plan to help fill some of the gap, and then uses a broad based flat tax to fill the remainder. 
"Notes from the Alaska Fiscal Cliff: Our Proposed Fiscal Solution" (Nov. 2017).

A broad based flat tax results in ALL Alaskans contributing a proportionate share to pay for the costs of government instead of merely shifting the costs -- as do both a progressive income tax and a PFD cut -- from one bracket to another.

Moreover, because it is broad based the individual impact of a flat tax is much lower than other options, minimizing the adverse impact on the overall economy and all Alaska families. Because a broad based flat tax applies to income received by non-residents from Alaska sources, it additionally reduces the share of dollars taken out of the Alaska private sector.

Some have complained that, even if that approach has merit, it still involves a tax and that spending cuts would be better.

Our response is the same as above; that's just no longer realistic. But we also suggest that if some level of spending cuts remains a goal -- as it should -- that our approach is the best out there for accomplishing that as well.

As he did with other issues, Governor Hammond saw this one coming. As he said in Diapering the Devil, "the best therapy for containing malignant government growth is a diet forcing politicians to spend no more than that for which they are willing to tax." 

Put another way, want to motivate Alaskans to focus on actually reducing spending -- rather than just paying lip service to the objective -- tell them they will be taxed to pay for it if they don't.

To be effective, however, that consequence has to apply equally to ALL Alaskans. Threatening to raise revenues (i.e., tax) through PFD cuts motivates middle and lower income Alaskans, but as we have seen in the Alaska Senate, not the Top 20%. 

Instead, taxing the Top 20% at less than the cost of a Starbucks a day ($1100/365 = $3.01) results largely in a shrug.

On the other hand, using a progressive income tax, which would raise the largest share of revenues from the Top 20%, would have the same effect on those at the lower end of the scale. Using national figures as a proxy, if the Top 20% are going to pay nearly 90% of the resulting costs then why should others care about restraining continued government spending growth.

A broad based flat tax addresses that problem, by distributing the costs of government proportionally among all Alaskans. Under that approach, all Alaskans make an equal, proportionate contribution toward the costs of government; as a consequence, all have an equal, proportionate incentive to keep them as low as possible. 

So, in an era where it isn't occurring otherwise, want to really control state spending? Use a flat tax. Create an incentive for ALL Alaskans to engage in the effort, not just those on the receiving end of a biased approach that merely shifts the costs from one group to another.

Friday, April 6, 2018

The fallacy of Alaska State Rep. Dan Ortiz (and others) ...

A recent Facebook post by Rep. Dan Ortiz attempting to explain his vote for cutting the PFD from the $2,700 provided by statute to a relatively arbitrary $1,600 provides a good opportunity to analyze the claim made by him and others (Sen. Mia Costello comes immediately to mind) that "you have to cut the PFD to save it."

Rep. Ortiz's full post is hereThe crux of his argument is this:
The size of draw required to pay a full $2,700 dividend would require an additional [over the $1,600 passed by the House] $1 billion draw on the Earnings Reserve. The Commissioner of Revenue, the Director of the Permanent Fund Corp., and the Legislative Finance Director all ... have recommended a sustainable draw on the earnings reserve of 4.75% to 5.25%. The added draw from the Earnings Reserve to pay out the $2,700 would require a 6.7% draw on the market value of the fund.
Let's start with his last claim -- that "[t]he added draw from the Earnings Reserve to pay out the $2,700 would require a 6.7% draw on the market value of the fund."

Assuming -- as from his numbers seems to be the case -- that he is using the Permanent Fund's current $65 billion market value as the basis for his calculations, the draw required to pay out a PFD of $2,700 would only require a roughly 2.5% draw from the Permanent Fund, not the "6.7%" claimed by Rep. Ortiz. 

So where is Rep. Ortiz getting his numbers from, then? 

His numbers take as a given that the draw made from the Permanent Fund earnings goes first to fund state government at a specified level, and then treats the PFD as an incremental draw on top of that.

The House budget appropriates roughly $3.1 billion from the Permanent Fund earnings reserve.  That represents a 5.25% draw based on an average market value of roughly $59 billion (or a 4.75% draw on the current $65 billion market value Rep. Ortiz appears to be using). 

Of that, the House budget then rakes off the top two-thirds of that, or roughly $2.1 billion, for government. Rep. Ortiz treats that as a given.

His numbers then analyze the draws to fund the PFD as incremental to that. Adding the draw required to fund a $1600 PFD results in an overall draw of 5.25% (using an average Permanent Fund market value of roughly $59 billion). Adding the "additional $1 billion" which Rep. Ortiz claims would be required to fund a $2,700 PFD results in his claimed overall "6.7% draw on the market value of the fund."

There are several glaring problems, however, with Rep. Ortiz's analysis.

The most fundamental is that it not only ignores, but subverts, the current state statutes by treating the PFD as an incremental, rather than the base, draw.

The statutes could not be any more clear on this point. AS 37.13.145, the statute that governs "Disposition of Income" from the Permanent Fund, provides in relevant part as follows:
(b) At the end of each fiscal year, the corporation shall transfer from the earnings reserve account to the dividend fund established under AS 43.23.045, 50 percent of the income available for distribution under AS 37.13.140. 
(c) After the transfer under (b) of this section, the corporation shall transfer from the earnings reserve account to the principal of the fund an amount sufficient to offset the effect of inflation on principal of the fund during that fiscal year. 
Only once those two transfers occur is there any scope under the current statutes for a draw for government.

Rep. Ortiz not only entirely ignores that prioritization, his approach in fact reverses (i.e., subverts) it, taking the draw for government first and treating the draw for the PFD as what comes last.

If Rep. Ortiz followed the statutes in his analysis the blame for the excessive draw would fall directly on the government overdrawing its share of the Permanent Fund earnings, not on the PFD. But in order to justify his conclusion, he applies the statute exactly backwards.

Rep. Ortiz's failure to follow the statutes is at best disingenuous and, more fairly put, results in an outright false conclusion.

But that's not the only fallacy in his piece.  

Rep. Ortiz also attempts to justify his position by claiming that "[t]he size of draw required to pay a full $2,700 dividend would require an additional [over the $1,600 passed by the House] $1 billion draw on the Earnings Reserve."

It wouldn't. The House's calculation of a $1600 draw appears to be based on the assumption of roughly 615,000 recipients, the same number as last year. Adding an additional $1100 to bring the total to the statutory $2700 would only require an additional $675 million, not the "additional $1 billion" claimed by Rep. Ortiz.

Overstating the amount by nearly 50% is more than a mathematical mistake, it's an intentional scare tactic designed to prop up his already fallacious percentages.

Given the elevated spending levels that both the House and Senate appear to be on their way to adopting, we agree that some new revenues are required to make the budget sustainable over the long term. But subverting state statutes and using fake numbers to justify one approach over another is not the way to decide which approach is best for doing so.

According to ISER's undisputed economic analyses over the last two years, cutting the PFD has the "largest adverse impact" on the overall Alaska economy, is "by far the costliest to Alaska families," and because it takes money only from Alaska residents rather than other alternatives which would draw also on non-residents, costs the Alaska private sector the most of all of the various "new revenue" options.

In short, if you are concerned about the overall Alaska economy, Alaska families and the Alaska private sector -- which we would hope legislators are -- cutting the PFD should be the last option taken, not the first.

There are better ways. 

As we have discussed elsewhere, implementing Governor Hammond's original 50/50 plan for drawing funds from the Permanent Fund earnings, then using a flat tax to fill the remaining gap, not only has a smaller impact on the overall Alaska economy than other options, it also is less costly to Alaska families and, because it raises a proportionate share from non-residents receiving income in the state, also costs the Alaska private sector less. See Notes from the Alaska Fiscal Cliff: Our Proposed Fiscal Solution (Nov. 2017).

Rep. Ortiz doesn't even analyze that or other, similar approaches. He simply adopts the worst approach, first, and then seeks to cover his tracks using fallacious percentages and fake numbers.

Let's be crystal clear about one thing. Under the current state statutes it's not the level of the current PFD that is threatening future PFD levels; it's the government's overtake of its share of earnings.

We are deeply disappointed in Rep. Dan Ortiz (just as we have been previously with others that arguing similarly -- again, Sen. Mia Costello comes immediately to mind) for subverting the statutes and making up fake numbers to claim otherwise.

It's bad enough to make the wrong decision. It's worse to then try to cover it up by using fallacious reasoning and fake numbers.