Wednesday, October 30, 2013

A Personal Note| The "Keithley Collection of Native American Art Works"

One of the things which brought a great deal of joy in a previous phase of my life was buying and collecting various pieces of contemporary Southwest (US) and Pacific Northwest  art.  For those of you that know me now, developing that collection, although minor, was as much a passion at one time as music -- and catching up with and supporting various musical artists -- is to me now.

Thinking through what to do with the collection when I sold my house in Oklahoma (within the historic boundaries of the Chickasaw Nation) was difficult. The collection included some larger pieces that would have been difficult to ship and, frankly, place here.  After thinking through the options I ultimately decided to gift the collection to the local university that I had supported in other ways -- and enjoyed participating in -- during my time there.  They were very appreciative and supportive.

Today, I learned that the collection has been named the "Keithley Collection of Native American Art Works" and that some of the pieces are being displayed for the first time over the next three weeks as part of "Native Traditions:  Then and Now," a show at the Centre Gallery on the campus of Southeastern Oklahoma State University.  There are some beautiful pieces in the collection -- the one on the right in the flyer above is one of them.  I can't think of a better use for the collection than for it to be available to be shown and studied at the regional university serving portions of the historic Choctaw and Chickasaw Nations.

Wow, that's all he's got ...

Yesterday I published a piece on the main blog in response to what essentially was an attack earlier in the week on Alaska fiscal conservatives by, adapting a phrase from the Wall St. Journal, the Grand Old Pork wing of the Alaska Republican Party.  See "Alaska’s “Tom DeLay Republicans” and why Sean Parnell will lose the 2014 Governor’s race …."

Later in the day, the emerging spokesman for the Pork wing, Frank McQueary, appears to have taken to Facebook in an attempt to respond.  Most of it is personally directed to me, which I will deal with in a moment.  But before going there, its useful to focus on what is really going on in this exchange.

There is an old adage among lawyers that came to mind as I read the response.
"When the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on your side, pound the table.”
The political equivalent of the last tenet is "when neither is on your side, pound on the other side in an attempt to create a diversion."  That is what McQueary's response appears to be an attempt to do.

The real facts are this:  In his little over four short years as Governor, Sean Parnell has increased the Alaska budget by more than 50% and put the fiscal future of Alaska at risk.

Don't take my word for it.  Here is what the University of Alaska-Anchorage's decidedly non-partisan Institute of Social and Economic Research (ISER) has to say about the subject:
Right now, the state is on a path it can’t sustain. Growing spending and falling revenues are creating a widening fiscal gap. …Reasonable assumptions about potential new revenue sources suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash.
There is a solution to the problem:  spend less, save more.  Again to quote ISER,
What can the state do to avoid a major fiscal and economic crisis? The answer is to save more and restrict the rate of spending growth. All revenues above the sustainable spending level of $5.5 billion—including Permanent Fund income, except the share that funds the dividend—would be channeled into savings.
I believe that adopting that solution can result in, to paraphrase former President Ronald Reagan, a "Morning in Alaska."   Last week I put forward a three point plan -- what I call the "Alaska Business Plan" -- which I believe achieves that very result.

But not everyone supports moving in that direction, including it appears McQueary, an official of the Alaska Republican Party.  He appears to want to stay the current course -- the one that ISER says will lead to a "fiscal crisis" and "economic crash."

Why?  Alaska political columnist Amanda Coyne sees it this way:
The people who benefit from all the state government largess — people like the developer Mark Pfeffer, the master of sole source government contracts, and a prolific campaign contributor — aren’t likely happy about what Keithley is preaching. Those people are arguing that the state’s spending keeps Alaskans working. Which, as Keithley points out, sounds suspiciously like Obama’s stimulus plan.
 Indeed, Parnell's current policies are exactly like Obama's stimulus plan, and are leading Alaska to the same disastrous end result (see "Alaska Fiscal Policy| Robbing Peter to pay Paul and why Alaska government is wrong to do it ….")  Just like the Obama plan, Alaska's current fiscal policy is corporate welfare at the government's -- and thus, the citizen's -- expense.  The state will crash and burn, but some will be comfortably positioned -- probably in Hawaii -- as it does.

Those are the facts.  They are on my side and admittedly, I pound them day in and day out on this and the main blog, as well as in speeches, columns in other publications and anywhere else I happen to be.

And interestingly, McQueary doesn't appear to argue with them. Indeed, not once in his 250-word response does he actually seek to defend the Governor's record, or argue with the conclusion that it is leading the state to a "fiscal crisis" and "economic crash."

Instead, his entire response focuses on me, my contribution record and my residence ("it is not the soundbite that I question: It is the motive of the soundbiter.")  So, that appears to be all he's got.  Not a problem; let's do my contributions first.

McQueary asserts "if Bradford [only my mother calls me that] was really a conservative of any stripe, why did he donate more than $4000 to the Alaska Democratic Party in the 2012 while the rest of us were busy trying to break up the "bipartisan coalition" in the Senate. See the website Open Secrets or go to the FEC website to see where his money went."

McQueary's reference to "Open Secrets or .. the FEC" is odd and appears largely designed to mislead the reader.  Both only report contributions to federal races.  Contributions to Alaska state races, where I have concentrated my giving for the last several years, are only available through the Alaska Public Offices Commission (APOC) website.

In my original piece yesterday, I published a print out of all of the state contributions I have made that are readily available from the APOC website. (There appear to be several missing from the list because of quirks related to the APOC website.  For example, I contributed to Mike Hawker in his 2010 race, but it doesn't appear on any of the APOC summaries produced by searching on my name.  Those contributions that do, however, are sufficient to provide the general direction of my efforts.)  McQueary had that available at the time he wrote his response, but ignored it.  Evidently, that is because it says far more than McQueary wants people to know.

The fact is that I was heavily involved in supporting Republican candidates in both 2010 and 2012, and already am again in the run up to 2014.  What, in fact, may bug Frank is that sometimes that support is for fiscally conservative candidates who are challenging those he supports, such as Senate Bipartisan Majority member Lesil McGuire (see "The most important slide in this election … and why I have contributed to Mike Dunleavy and Jeff Landfield ...").  I am proud of my record and would do it again.

McQueary also is incorrect about both the timing and the purpose of my contributions to Democrats.  As the APOC reports make clear, my significant contribution to the Alaska Democrat Party was made in 2010, not 2012, and was made directly to the Governor's Fund, not to support the party in general.  As I explained at the time -- Alaska’s economic future: Berkowitz gets it, Parnell doesn’t -- after earlier supporting Ralph Samuels in the primary, I supported Berkowitz in the general because I believed he offered both better oil and fiscal policies.  Turns out -- especially looking back on a 50% increase in state spending under Parnell -- I was right.

McQueary is similarly off-base in attacking my residency.  He asserts, "[m]y second question was why an educated, erudite and articulate former attorney who is quite capable of reading the state constitution persist in suggesting that 'he might have to run for Governor if someone sufficiently conservative did not file to run against Sean Parnell'. According to the Division of Elections and the voter registration document that Mr. Keithley signed on 2 February of 2010 he was up until that time registered to vote in Dallas, TX."

As McQueary knows, those that move to Alaska are not required to register to vote upon their arrival, or somehow, deregister in their former home (as long as they don't continue to vote there) once they have moved.  Like his earlier suggestion that readers look at Open Secrets or the FEC to examine my contribution history, his suggestion is simply a red herring, intended to misdirect the reader.

Here is my response to the same set of questions when raised in the right way earlier this year by Amanda Coyne:
  • September 23
  • Amanda Coyne
    Amanda Coyne

    U didn't register in ak into 2010. And prior registration was on Dallas. Care to comment?
  • Brad Keithley
    Brad Keithley

    I didn't register in Alaska when I first moved here. I don't recall voting in Texas after the 2000 redistricting. I have never applied for a PFD in Alaska because I don't take one.

I read, and re-read the Alaska Constitution often (in fact, I carry around a copy in my briefcase).  Despite McQueary's concerns, I am quite confident I know what I am doing.

McQueary's final question -- Who is Mr. Keithley supporting for the office of Governor? -- is one I should dodge, but won't.  There are two individuals in this state who, if they called this morning and asked me to go to work for their campaigns, I would say "yes" in a heartbeat:  Mike Dunleavy and Pete Kelly.  Neither currently is a candidate.  One or the other should be.  The economic future of the state is at stake; its time to get real, something McQueary and the Pork wing of the ARP are not.

Tuesday, October 29, 2013

Carrying the message ...

After my appearance last week before the Alaska Libertarian Party, Russ Millette asked if I would follow up by appearing on his talk radio show, Alaska Talks Liberty.  I happily agreed and will join Russ for a discussion on his show scheduled for later today.

Today's topic is "SB 21 v. ACES:  Can Alaska Be Saved from Financial Disaster?"  Hard -- well, impossible -- to talk about that topic without also talking about state budget issues.  

The show airs at 3:00p Alaska; I am scheduled to join Russ in the first segment. Tune in at; call in with questions at 1-855-855-2482.  If you are unable to catch the show live, Russ retains a podcast of each show for later hearing at  We'll see how this goes.

Thursday, October 24, 2013

The Alaska Democrats get it wrong ... again

Earlier this week the Anchorage Daily News ran an article headlined "Funding boom over, UAA moves to rank, and potentially cull, programs."  The gist of the story is summed up by the following:
Faced with declining funding from the state, UAA is doing an unprecedented, institution-wide examination of its sprawling offerings.  The soul-searching is called "prioritization." ... During the course of this school year, every program at UAA will be analyzed by a faculty-led group and then sorted into five competitive, equally-sized ranking groups. The top ranked will be first in line for funding. The lowest ranked could face elimination.
The funding drop is significant.
Right now, the state provides $1.30 for every dollar UAA gets from another source, he said. The state wants to go to a dollar-to-dollar ratio.  "We have already received guidance from the State that operations funding for the university will likely decline in the next fiscal year," the university wrote in a letter about prioritization posted on its website. The University of Alaska system's budget projection for the 2015 fiscal year is $30 million less than this year, the Juneau Empire reported in September.
Frankly, however, next year's drop is only the tip of the iceberg.  UAA needs to look no further than its own Institute of Social and Economic Research (ISER) to see what lies ahead.  According to ISER, "[r]ight now, the state is on a path it can’t sustain. Growing spending and falling revenues are creating a widening fiscal gap. ... Reasonable assumptions about potential new revenue sources suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash."

Looking for news to support their issue du jour, the Alaska Democrats immediately jumped in with both feet, blaming the situation on the recent passage of SB 21 and immediately breaking out in a buzz of activity on Twitter.

Casualties of the Oil Giveaway: @uaanchorage "faced with declining funding from the state" 
The problem with that approach, of course, is that in their effort to fire quickly the Democrats picked the wrong target.

Let's concentrate again for a moment on the ISER report:  "[r]ight now, the state is on a path it can’t sustain. Growing spending and falling revenues are creating a widening fiscal gap. ... Reasonable assumptions about potential new revenue sources suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash."

Guess what?  That analysis was written before the passage of SB 21, based on revenue projections assuming the continuation of ACES.  Alaska's budget is not crashing because of SB 21 (which, incidentally, according to testimony before the legislature last session produces a higher net present value than ACES), but according to the ISER report Alaska's budget is crashing because past state spending has gotten out of control ("[w]hat can the state do to avoid a major fiscal and economic crisis? The answer is to save more and restrict the rate of spending growth").

Want a poster child for that?  The Democrats can find one on UAA's own campus, the new UAA Sports Arena (pictured above), rising like the temple of doom that it is at the southwest corner of Providence Drive and Elmore.  Coming in at a list price of $109 million, the Arena is being funded entirely by state appropriations, at a time when similar facilities on every other campus in the United States requires at least 50% of the cost to be covered from private sources before one shovelful of earth is turned.

During his few, brief years as Governor, Sean Parnell has permitted state budgets to get out of control, to the point that they now threaten the very economic future of Alaska.  (Let's rewind the ISER report one more time:  "Reasonable assumptions about potential new revenue sources suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash.")

That is your story, Alaska Democrats, not some boogeyman of oil tax policy.
Read more here:

Tuesday, October 22, 2013

What is your plan ...

A recent piece by Amanda Coyne reports on the Anchorage fundraiser last week for Byron Mallott and her follow-up interview with him.  One thing from the interview stands out to me:
"... when asked directly if he [Mallott] would personally vote to repeal SB 21, the controversial oil tax bill passed last legislative session, he said he would."
While I appreciate that these are early days in his campaign -- and the campaign in general -- the answer nevertheless is disappointing and not a good sign of things to come.

My disappointment isn't necessarily in Mallott's position -- although I personally believe SB 21 is a step in the right direction, I understand how others can think differently about that. Instead, what is disappointing is that he didn't, at the same time, articulate at least the outline of a plan for how he would handle things differently.

Virtually everyone agreed in the last legislative session that ACES is failing, to one degree or another.  Production and revenues are down, and headed lower quickly.  As the University of Alaska-Anchorage's Institute of Social and Economic Research (ISER) put it earlier this year, using revenue forecasts based on ACES:
"Right now, the state is on a path it can’t sustain. Growing spending and falling revenues are creating a widening fiscal gap. In its 10-year fiscal plan, the state Office of Management and Budget (OMB) projects that spending the cash reserves might fill this gap until 2023, as the adjacent figure shows. But what happens after 2023? 
Reasonable assumptions about potential new revenue sources suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash."
Unless Mallott disagrees with that assessment, which I doubt and would require its own explanation in any event, I believe he has an obligation to outline -- sooner than later -- how he intends to address the issue.

To me -- and I believe as they come to understand it, to a large segment of Alaskans -- this is the most important issue facing the state in the years ahead and as a consequence, the most important in this campaign.  Merely being against one approach for addressing it is not good enough.  The candidates this election cycle need to offer hard, concrete solutions so that voters are able to judge which is better able to prepare Alaska for the coming challenge.

To be sure, the same obligation falls on Sean Parnell, and as I have commented often on these pages and elsewhere, he hasn't stepped up to the plate yet, either.  SB 21 is a step toward a solution, but even the Administration's own numbers demonstrate that SB 21 doesn't come close to producing the long-term revenue levels necessary to support to the Governor's proposed spending plans.

But because Parnell has not yet stepped up to the plate doesn't excuse the other candidates.  Mallott has said he will be a new kind of candidate, and Governor.  If true, he needs to start by telling Alaskans what solutions a Mallott Administration will pursue.

The fundamental question is "you don't like SB 21.  Fine, then what is your plan?"  Hopefully, he will address that soon.

Saturday, October 19, 2013

Understanding LNG: The Global and Alaska Context

Full slide deck available here.
At the invitation of the Alaska Support Industry Alliance I was asked to provide an introduction at the group's annual, and very well attended, Fairbanks Industry Update Forum yesterday on current LNG issues.

Other speakers focused on the specifics of two of the projects currently on the table:  the Alaska Gasline Development Corporation (AGDC) ASAP project, and the producers' Alaska South Central LNG (SCLNG) Project.  My assignment was to provide an introduction outlining the global context for the projects and the issues, including the fiscal impacts, that I think Alaskans should focus on as we begin to hear more about the projects and the state is asked to take supportive steps.

My slide deck is available here.  I anticipate that the slide decks used for the other presentations will be available the middle of next week on the Alliance website.  The Forum provided an outstanding update on a wide range of important industry issues.  My suggestion would be to check out all of the presentations when they become available.

Thursday, October 17, 2013

The parallels between the Administrations of Sean Parnell and George H.W. Bush

It’s been a hectic, but relaxing past few days.  As in most Octobers in recent years I have spent a few days on Cape Breton, an island at the eastern end of Nova Scotia, Canada, attending the annual Celtic Colours International Festival, a world-renowned music gathering.

I was not the only Alaskan doing so.  Monday afternoon I was sitting in a small community hall in the town of Christmas Island, Nova Scotia (described as having “a post office, a firehall and a very small population”), listening to songs largely being sung in Scottish Gaelic.  At a break the couple sitting in the next seats over and I struck up a conversation.  When I responded “Alaska” to their question of where I am from, they laughed and introduced me in turn to their friends, sitting on the other side of them, who live in Wasilla.  

Two years ago I came down to breakfast at the small bed and breakfast where I always stay and the owner, who over the years has become a very good friend, introduced me to Jack Goodsell and his wife, who of all the places to stay on the island had checked in to the room next to mine.  Jack, as some of you will recognize immediately but who I had never met before that morning, is the owner of the Turnagain Arm Pit BBQ, located near Indian on the road to Girdwood, and in the process of opening a new location in town across Old Seward from the Midtown New Sagaya.

I wasn’t far from home in other ways as well.  During my time there a friend here catching me up on the latest said that various, unnamed Alaska Republicans recently have taken to referring to me as political “gadfly” because of my pieces on state fiscal policy.  I suppose that is the latest in what appears to be an ongoing effort to use “names” – and other such tactics – to make me back down.  Good luck with that.

During the discussion we talked about others that had been called the same at various times, and in the course of that, started talking about Ross Perot.  Perot, as some may remember, was the Texas businessman who, in 1992, launched an unorthodox (to say the least) campaign for President as an Independent, focusing almost exclusively on fiscal and budget policy issues.  As a refresher, the other candidates in the race were George H.W. Bush, the Republican incumbent, and Bill Clinton. 

I remember that campaign well.  What Bush never understood – but Clinton did – was that Perot’s campaign wasn’t about himself; it was about the issues he advocated.  He wasn’t a politician who went searching for issues on which to run.  Instead he came at it in the reverse.  He was a private citizen who was seriously concerned about the country’s then-current economic path and when the existing candidates didn’t take them seriously, he ran to force the debate.

While Bush attempted to dismiss Perot as a gadfly and, at times, attacked him personally, Clinton largely did not.  Instead, in various ways, Clinton incorporated Perot’s issues into his own campaign.

The result.  While Perot did not win, his issue did by shining intense light on the economic future being created by the massive budget deficits being run up in the first Bush Administration.  Bush never was able to come up with a good response to those economic issues -- and lost the election.  Clinton did, and won.

As I thought about it, various other parallels between the Parnell and first Bush Administration also have occurred to me. 

Parnell is setting much the same stage for himself as Bush did during his single, elected term as President.   Compared with sustainable budget levels, the Parnell Administration currently is running up massive budget deficits.  According to an analysis done earlier this year by the University of Alaska-Anchorage’s highly respected Institute of Social and Economic Research (ISER), Alaska currently can afford state spending levels in the range of $5.5 billion.  Against that, the Parnell Administration spent roughly $7.8 billion (or $2.4 billion over sustainable levels) in the recently completed FY 2013, and proposes to spend another $7.1 billion (or $1.6 billion over sustainable levels) in FY 2014.

More disturbingly, in April Parnell said he intends to continue spending at the same levels for the next five years.  If given the opportunity to carry through, that means by the time he ultimately leaves office at the end of 2018 he cumulatively will have overspent sustainable spending levels by more than $10 billion.  Or to put it another way, by the end of his term Parnell will have spent away, rather than saved as a sustainable budget requires, the equivalent of roughly 25% of the current value of the Alaska Permanent Fund.

And there is another parallel.  Many will recall that while accepting the party’s Presidential nomination during the 1988 Republican National Convention, George Bush famously said, “Read my lips, no new taxes.”  Repeatedly referring to himself as a “fiscal conservative,” Sean Parnell effectively has said the same thing.
George Bush later had to eat those words.  At current spending levels, Parnell is on track to do the same thing, although the burden of the tax increases he is creating will fall conveniently (for him) mostly on future Alaskans, after he leaves the Governor’s office (as current rumor has it, to “primary” Senator Murkowski). 

The ISER report makes clear where the state is headed on its current track:
“Reasonable assumptions about potential new revenue sources suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash.”
And two separate reports written in 2009 and 2011 make clear what options that will leave the state:
“… projection of future state population and public sector demands compared to revenues suggests that a number of adjustments to the state’s fiscal structure will be necessary … to maintain adequate public services.  Two options available to the state, in addition to reducing expenditures, are institution of a broad-based tax, and use of a portion of the earnings of the Permanent Fund. … It is anticipated that both options will be required ….”
Rather than focus on changing policy directions while they still had the chance in the runup to the 1992 election, Republicans instead spent their time and effort thinking up different ways to call Ross Perot a “gadfly.”  The result:  George Bush lost.

Maybe the parallels between the first Bush and Parnell Administrations will end before it reaches that point … or maybe not.   

Saturday, October 5, 2013

Mayor Dan Sullivan is using up his nine political lives and may be on the last (at least with me) ...

Monday and Tuesday of this week I traveled as a member of the House Task Force on Sustainable Education to Kotzebue, Noatak and Kivalina to become more familiar with the Northwest Alaska Borough School District (NWABSD) and through that, rural Alaska schools.

It was eye opening.  With limited resources and in a challenging environment (to say the least) the NWABSD, in partnership with other regional entities -- the Borough, NANA, Maniiliq, Teck Resources and others -- is doing a remarkable job of delivering education to students throughout a geographic, and largely roadless, area a little larger than the state of Indiana.

Indeed, in some ways the NWABSD is breaking new and important ground.  As part of the visit, the Task Force received a tour and briefing about the District's Star of the Northwest Magnet School, a developing effort that combines on an integrated basis with the District's Alaska Technical Center (the only technical center in the state that operates as part of a local school district) and UAF's Chukchi Campus to train the Borough's youth in ways that fit closely with the workforce needs of both the area and the state at large.

To some degree Star of the Northwest is the old regional boarding school program in new clothing.  But rather than forcing kids away from their homes for general education and assimilation, the goal of that school and other, similar efforts elsewhere in the state (e.g., Nenana and Galena) is to offer students the opportunity to focus on various career "pathways."  From the briefing it appears that such efforts have the potential to provide a breakthrough in offering rural students with new opportunities, not only locally but statewide.  In much the same way as a private school would, the Star of the Northwest and other, similar schools are opening their doors as well to students from outside their districts.

But such efforts take money which to some degree is the responsibility of the state (Alaska Constitution, Art. 7, Sec. 1:  "The legislature shall by general law establish and maintain a system of public schools ....")  And, as we approach an era where overall state spending is going to be reduced one way or another within the very near future, it is important that we make certain we are focusing state funding on priority efforts.

Which explains the frame of mind I was in earlier this week when I started reading stories again about Mayor Dan Sullivan's proposal to spend state money on building new, to be municipally owned tennis courts in Anchorage.  This rekindled a line of irritation I had expressed earlier this year over the same subject, but this time my mind put it in real terms -- spending money on indoor tennis courts in Anchorage compared with minimizing funding to important programs like Star of the Northwest and other, promising initiatives in rural Alaska school districts.

This morning the news reports are that while some Anchorage Assembly members are proposing alternative uses of the money, Mayor Sullivan continues to support the use of the funds to build the tennis courts, the cost of which now, it appears, may be approaching $12 million.  One alternative appears to be to use all or a portion of the state money to buy some existing indoor courts from the Alaska Club, a private corporation, in order to make them municipally owned courts.

Given what I know of the state's fiscal situation and studied, learned and seen of state education funding since starting my service on the Task Force, I think there are many better, statewide uses of the funds.  To facilitate those uses, these funds should be turned back to the state general fund for reappropriation.  

That would demonstrate that Anchorage municipal officials, at least, understand there are more important uses of what are increasingly limited state financial resources than building -- or good lord, buying?? -- indoor tennis courts to benefit a very few at the expense of the many.

This is a very bad situation that is becoming worse and worse as time passes.  According to today's news report, for example, even Mayor Sullivan now admits that the cost of the courts has risen from the $7 million discussed earlier this year at least to $10 million.  To put that in perspective, that $3 million difference alone could fund a very much needed 5% increase in the revenues available to the Northwest Alaska Borough School District.

Mayor Dan Sullivan called me the first time I wrote on this issue in an attempt to defend the tennis courts and, at a minimum, redirect the criticism elsewhere.  He may call me again (or more likely after reading this, not).

But his continued push for the courts at yesterday's Assembly work session makes clear his involvement, as well as the ill conceived nature of this proposal.  Alaska is confronting an increasingly difficult fiscal future.  Facing that, it is clear that there are many, many, many, many more important priorities for the use of state funds than these tennis courts.

There is only one good choice remaining if the Mayor -- and Anchorage -- want to demonstrate they are good stewards of public funds.  The municipality should give the funds back to the state and allow them to be reappropriated to one or more of those higher priorities.

Mayor Sullivan is quickly using up his nine political lives.  Taking the right step here would restore a few.  If not, this may be his last, at least with me.  

Friday, October 4, 2013

Building a state budget: an update and a coming debate ...

Last weekend I wrote a column on the direction in which the Governor's budgets are currently taking the state ("Sean Parnell's budgets .. and mine").  In that column I committed to laying out an alternative budget which avoids that outcome and provides Alaskans instead "a safe and secure fiscal future."

Today I have published the first step in laying out my budget, by posting my column that appears this month in Alaska Business Monthly.  The title of that column is "Why Alaska Needs to Reduce State Spending (and how to do it) ...."  That column provides an overview of the reasons why Alaska needs to reduce state spending and an outline of how I propose to go about it.

Earlier this week I published an outline and timetable for explaining the details of my approach.  As I thought through it, however, I concluded a better way is to start with the overview provided by this month's Alaska Business Monthly column and then work through the details.  The revised schedule for the coming details is as follows:
  • Friday, October 11: "Reality bites" (The coming fiscal crisis is real)
  • Friday, October 18: "We can't afford it" (Correcting the flaws in Alaska's budget process)
  • Friday, October 25: "We can do this" (The next Alaska budget)
Separately, while there will be a more formal announcement upcoming, yesterday we finalized arrangements for a debate on November 11, 2013 before the Anchorage Chamber of Commerce's Make it Monday forum on state budget issues.  Scott Goldsmith and I will argue in favor of the following proposition:  "Limiting state spending to Maximum Sustainable Yield is the best way to ensure a sustainable fiscal future for the State of Alaska."  Others will argue against it.  It promises to be an interesting exchange. 

Wednesday, October 2, 2013

The Annual Top 49ers Luncheon: My Keynote

I was honored to be the Keynote Speaker at today's luncheon honoring Alaska Business Monthly 2013 Top 49ers:  Blockbusters of Business.  My remarks follows:

Remarks for Top 49ers Luncheon

Thank you very much Jim for that kind introduction and the opportunity to speak here today. 

The companies being recognized here today – the Top 49ers – are the best of the best. As suppliers to Alaska businesses and consumers, employers of Alaska residents and income and wealth generators for Alaska shareholders, those of you being recognized and honored today are critical to Alaska’s existing economy.

The state would be much less well supplied, significantly fewer Alaskans would have jobs, Alaska and Alaskans would have less wealth and less income – and critically, Alaska would be much more dependent on Outsiders – without you.

We thank you for all that you do to make our state and economy a better place.

But as important as you are to the current economy, you are even more critical to Alaska’s future.

In a study earlier this year the University of Alaska-Anchorage’s Institute of Social and Economic Research – the state’s best economic think tank -- had this to say after analyzing current and projected state government revenue and spending levels:
Reasonable assumptions about potential new revenue sources suggest [state government does] not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash.
Let me be very clear about that conclusion. ISER said that, on the state government’s current spending trajectory, the state will run through all of its current financial reserves by 2023. And for those of you that follow these things, that result occurs regardless of our approach to oil taxes. With slight differences in timing, it will occur under either ACES or SB 21.

It doesn’t have to be that way. In the same report ISER also outlines a solution that involves reducing state spending now, putting the excess revenues into the equivalent of a state 401(k) and using those earnings to support a sustainable budget as oil revenues decline. If that approach is implemented now, while Alaska still has a relatively strong state revenue stream, that sustainable approach can support a moderate level of state spending long into the future.

That will avoid a future which ISER says otherwise will leave the state with two options just to fund minimal state operations: institution of a broad-based tax such as a sales or income tax, or maybe both, and use of a portion of the earnings of the Permanent Fund for regular government operations.

But either way, the era of Alaska’s economy being significantly supported by state government spending, not to mention federal government spending, is coming to an end.

Which is why, as important as you are to Alaska’s economy now, those of you being recognized in this room today are even more critical to Alaska’s future.

This is the core group that will need to step up to the plate, supply the economy and spend money instate that will continue to drive the Alaska economy, hire the Alaskans that will need to be employed, and generate the wealth and revenues on which your Alaska shareholders depend.

As you receive your well-deserved awards today please think not only of what you have accomplished today, but what you will do as you take on an even more important role in the future.

One way or another Alaska is in the process of making the transition from a significantly government supported economy to a largely private economy.

You will need to be among the leaders in that effort. Work with our schools to ensure they are producing graduates that will fit into your workforce, work with your communities to make certain they transition from looking to state government for many things to working with you to look after themselves and work with your investors and shareholders to help them understand what is happening and the role they, and you, need to play in shaping Alaska’s future.

For the regional corporations, work hard to build an economy and find jobs for Alaskans within your regions.

For those of you that aren’t, work hard to find additional opportunities to provide jobs for Alaskans and continue to build the private side of the Alaska economy.

More than at any other time in its history, you are Alaska’s future. Step up to that responsibility for your customers, your employees and your shareholders.