Building a state budget ...

Note:  The following piece was updated on October 4, 2013:

Yesterday I wrote a column on the direction in which the Governor's budgets are currently taking the state ("Sean Parnell's budgets ... and mine"). As I said there:

The budgets which Sean Parnell has proposed, the legislature has passed and Sean Parnell has signed over the last three years, combined with what he has said on the record about the budgets he intends to propose over the next five years are leading inevitably to one thing: statewide income or sales taxes, if not both, and use for government spending of a portion of the earnings of the Permanent Fund. Period, end of sentence.

Although there is a time and a place for simply identifying problems, you can't realistically expect things to change unless you also offer solutions.  As a result, in yesterday's column I also committed to laying out an alternative budget which avoids that outcome and provides Alaskans instead "a safe and secure fiscal future."

As I have thought through it, I have decided to lay out the case in three pieces. 

• Friday, October 4:       "Reality bites" (The coming fiscal crisis is real)
• Friday, October 11:     "We can't afford it" (Correcting the flaws in Alaska's budget process)
• Friday, October 18:     "We can do this" (The next Alaska budget)

I am looking forward to the series, and the discussion.

Shooting (at) the messenger ...

There is nothing quite like waking up in the morning, checking messages and seeing the following tweet from one of Alaska's most widely read political columnists:

Ted Cruz and Sean Parnell -- off the top of my head I'm not sure those are the two I would pick for the author to be thinking about when she is finishing a piece on me.

So, rather than roll over and hit the snooze button as I normally do at 4am I clicked on the piece.  It seems Amanda has been receiving a few texts and messages of her own:

Brad Keithley, one of the potential independent candidates for governor, must have the Republican establishment scared. I know this because I get texts and emails from those political activists who appear to be scared. They are going through his voting record, trying to make the case that he’s a Democratic operative who moved to Alaska just to sabotage Gov. Sean Parnell, much like Vic Vickers, who moved to Alaska to run against Ted Stevens in 2008.

I started laughing.  "Democratic operative ...."  Good lord.  Whoever has been texting Amanda must not have been paying attention when, in response to some of my columns, Rep. Les Gara occasionally calls me an "oil shill," or when Shannyn Moore, as recently as a few weeks ago, told me I am "boring, really boring" (and thought worse, I am fairly confident).

For the record -- and for the umpteenth time -- I don't want to run for Governor (or anything else for that matter, just to make that point clear as well to my soon-to-be-new State Senator, who I strongly support, and my State Representative, who I would support if he stopped helping pass the Governor's recent, sustainable-busting budgets).

And Vic Vickers?  Hahahaha, Vickers moved to Alaska at most a nano-second before (and actually, maybe after) he announced his run against Ted Stevens.  He never held a job here.  Me?  Heck, Les Gara has been calling me names at least since the mid-2000's.

Seriously, "Republican establishment," you want me to stop writing about the Governor's (lack of) job performance?  Then spend your time instead urging him to submit real, sustainable budgets and use his line item veto pen to bring the budgets back down to that level if the Legislature doesn't take the hint.

Actually, all of us would be happy at that point.  I could stop being the messenger of inconvenient truths and go back to planning my bluegrass concert tours for the coming months, and you could stop wasting time tracking down my voting (and let's see, what's next, my contribution) records.

Just to help out on that front, I gave $250 each to Senator Kelly and Senator Dunleavy last night.  You want some more inconvenient truth?  They don't like the budgets either.

My morning email (the Republican version) ...

Those of you who follow these things will recall an instance a few weeks ago where I was first invited -- then disinvited after my named appeared in Amanda Coyne's blog -- to speak on current budget issues at an Anchorage Republican Women's Club event ("Short Takes| ... and then, I wasn't").

Hmmm ... I appear to be back in good graces (he said, tongue in cheek).  This morning I found a weekend email from Randy Ruedrich (the same guy, I am told, who had me taken off the speaker's list for the ARWC event) to "help get the word out" about a fundraiser tomorrow (Tuesday) evening for Governor Parnell.

Well, darn.  Unfortunately, I am already committed tomorrow evening to attend a fundraiser for two, real fiscal conservatives.  For those of you interested in doing the same, the details are here.

But, uh, here, let me "help get the word out" about the Governor's fundraiser.  Maybe he will give the same remarks there I was going to give at the ARWC forum -- you know, the ones about the budget being too high and threatening Alaska's future.  Or, maybe not.

The Ghost of Alaska's Fiscal Future ...

Most of you, if not all, reading this page are familiar with the Charles Dickens' classic, A Christmas Carol. For the one or two that could use a quick refresher, it is the story of Ebenezer Scrooge, a misguided soul otherwise headed toward an inglorious end, but whose outlook and attitude are transformed as a result of visits from the Ghosts of Christmas Past, Present, and Future.

I don't intend to play out the entire book on these pages, but a piece in the Fairbanks News-Miner this week brought to mind one of the characters -- the Ghost of Christmas Future.

The article was about the Mushers' Hall in Fairbanks, and the decision to close it for this coming winter ("Mushers Hall in Fairbanks to close for winter"). The story said that "[f]acing a financial shortfall and an organizational upheaval, the Alaska Dog Mushers Association [ADMA] has decided to close the iconic log structure for the winter."

According to the story:

[The Hall] was built in the late 1970s or early 1980s after the ADMA received a large chunk of money from the Alaska Legislature to construct it .... Back then, when the oil and money were flowing, nobody ever thought about the costs associated with heating, maintaining and insuring the building, [ADMA President Mike McCowan] said.

Obviously, that approach isn't confined to some by-gone era. The state continues to appropriate money to build things, from high school football stadiums, to soccer fields, to baseball stadiums ... and most recently, to indoor tennis courts.

The Ghost of Christmas Future came to mind, however, when I read the following:

“That building has never really paid for itself for at least 25 years,” McCowan said. “As time went on, it became a bigger, more costly albatross.”

And the "albatross" is now taking down more than just the ability to operate building.

"As it stands now, the club is trying to scrape up enough money to pay the second half of its property taxes, which are due Nov. 1, as well as an insurance payment at the end of October. The club also owes almost $12,000 to its trail grooming contractor from last winter, and there is no money for trail grooming this season, which means the club may be forced to rely on volunteers to groom trails this winter. ... If people don’t volunteer and the trail isn’t groomed, what kind of trail are we going to have? ... The club approved a race schedule for the 2013-14 season in March, but whether that schedule is a realistic one is up for debate, McCowan said."

This reminded me of the Ghost of Christmas Future because, quite frankly, if Alaska remains on its current financial course, this is a story we will see playing out more and more in the years ahead. Like the Ghost showing Scrooge his future if he stayed on his current course, the Mushers Hall is a glimpse into what the future increasingly holds for Alaska if we stay on ours.

But unlike Scrooge, the message does not seem to be sinking in to the state's leaders. Rather than enabling the state to avoid the future the Mushers Hall foretells -- for example, by saving the money that otherwise would be spent on constructing additional buildings -- the current Administration and Legislature instead appear to be going at warp speed toward it.

For example, shortly after reading the story about the Mushers Hall in the News-Miner, I caught up with several tweets about a recent groundbreaking at UAA of a new engineering building. The following is an example:

The irony of the state constructing new buildings while others it has built in the past fall into trouble is one thing. But this particular tweet has a double irony.

The state already has a well-established and long recognized School of Engineering at UAF. Yet, in the 1980's the state established a second, and in many respects, duplicative program at UAA, which it subsequently expanded significantly in the 2000's and, now, is in the process of doing so again.

So, not only are those at the groundbreaking ignoring Alaska's Ghost of Christmas Future, to some degree they are taunting it, by building a new building which duplicates one which the state otherwise already has. (This isn't the only instance of the state's current construction craze, of course. Indeed, UAA now has an entire blog devoted to "New Construction.")

As UAA's very own Institute of Social and Economic Research has made clear:

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.... 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.

The crash already has hit the Mushers. By continuing on down this path, those who voted for and had their pictures taken at the opening of this duplicative facility are ensuring that there will be more such closures -- likely including at some point in the relatively near future the very building they are standing before when their picture was snapped (or maybe it will be the one at UAF instead).

I wonder if they will show up again for pictures when, like the Mushers Hall, those facilities are shuttered or repurposed. The Ghost of Christmas Future foretold that Scrooge would be required to face his future if he didn't learn his lesson. Maybe those involved should be bussed to Fairbanks this winter for a similar "photo op" at the closed and cold Mushers Hall.

Headed to Kotzebue, reading the News Miner ...

I am headed to Kotzebue this morning to talk about state budget policy.  It will be my first visit to the village; it won't be the last.  In fact, I will be back at the end of the month as a member of the House Task Force on Sustainable Education, to continue listening to testimony and discussing education policy and funding issues as Alaska increasingly comes to grips with its fiscal future.

While preparing for the day I noticed that the Fairbanks News-Miner today is running my recent op-ed piece, titled "Morning in Alaska."  It captures the theme I want to talk about today:

"[Alaska's] spending crisis has developed only recently. In fiscal 2011, the state spent $5.48 billion, as with most years before that time a rate within sustainable levels. In the fiscal year just ended on June 30, however, the state spent a record $7.9 billion, almost 50 percent higher. This year, the state is spending $6.8 billion, the second-highest in the state’s history, and, in April, the governor proposed to continue spending at the same rate for the next five years. 

To be blunt, at these levels Alaska’s leaders are spending the state into the poorhouse.  Indeed, they are acting the same as a young family in their late 30s, deciding between putting a portion of their income into a 401(k) to build an asset that will sustain them through the remainder of their life or spending it all now on a new ATV, snowmachine, cabin, house and repeated vacations in Hawaii. Alaska state government is buying a lot of ATVs, albeit in the form of indoor tennis courts and new baseball and football stadiums. 

There is time remaining to sober up from the state’s binge spending spree and leave a significant legacy to our children and grandchildren, but we need to start now. If not, continued overspending will reduce future sustainable levels. The $5.5 billion will become $5.2, then $4.9 and less and less as we delay. 

There is an opportunity for a 'Morning in Alaska.' But we have to take it before it evaporates."

We will see how the day goes.

My favorite line ...

Amanda Coyne wrote a column yesterday on her blog that had my name in the title:  "Keithley: Sticks and stones may break his bones. But politics? We’ll see."  She spelled it right, which is a plus.

The piece talks about the potential that I may run for Governor.  For the record, my position on that hasn't changed since the last time this issue came up.

What I said then is: 

"If the Governor doesn't bring the budget down to sustainable levels some fiscal conservative is going to do it. Because I talk about the issue often, I suppose my name has become associated with the potential. I don't want to do it and remain hopeful the Governor will offer a sustainable budget in December ... but there is a tradition of Virginia Law School trained lawyers doing that sort of thing. Angus King in Maine, and Lowell Weicker in Connecticut, both UVa Law graduates, ran as independents for Governor and won."

King and Weicker were two of the last three governors elected as Independents (King recently also was elected to the U.S. Senate as an Independent).  The third of that group was Jesse Ventura -- hmmmm, he wasn't a Virginia law graduate (hahaha).

But my favorite line in the most recent piece is absolutely accurate:  "He knows as much about college basketball and more about music than anyone who is running or has talked about running to date."  Former Governor Gary Johnson of New Mexico (and most recently, the Libertarian Party nominee for President of the United States) once said the most fun thing he was able to do as Governor was select the music for his inauguration party.  I have already thought through that; it will -- oops, I mean would -- be Alaska bluegrass night.

My morning mail, continued ...

Friday I posted a small piece about something I had received in my morning email.  Today, I received another missive from the same person.

The story continues and as I pieced a couple of other things together, brought to mind also a segment from the West Wing.  For those readers that care, I repost the original piece below, followed by the continuation and the West Wing segment.

Friday, September 13, 2013  Sometimes my morning email brings humor.  This is one of those days.  A sample from this morning's:

Meant to tell you, I was recently at a meeting that included several Alaskan republican leaders. It was rumored that you were considering running for governor. When I heard their reactions, I was actually embarrassed for you. 

Of course democrat friends in JNU and on the hill hope you run, as there's not a chance in hell you can win, but you will help push the vote in their favor. Best part? Several of those I mention above are people you told me were good friends and who you respect immensely. You are the laughing stock of that town. So gratifying to watch. ... Heidi Bohi

The writer is someone who used to live in Alaska, but since has moved to Arizona (maybe she was meeting with Governor Palin there).  The last time I talked to her was about 3 years ago.  Some of those I respected then, maybe not so much now; that's the same period over which state spending has shot up about 50 percent.

The humor?  That "Alaskan republican leaders" are wasting their time talking about personalities.  (If you believe the writer, at least.)  My recommendation?  They spend their time instead talking about things that really matter, starting with ways to reduce the upcoming budget.  Otherwise ... they won't be leaders for much longer.

Monday, September 16, 2013  This was in this morning's email:

Not that anyone reads it ...but please do not mention my name in your blog or any of your other public communications. ... Heidi Bohi

Since no one "reads it," there shouldn't be a problem posting that email here as well.  After reflecting on it this morning I recalled that the same person also authored an earlier email that circulated shortly after I started my consulting company, and apparently also more recently has been involved in setting up a disparaging website and circulating some additional related emails, which friends subsequently have forwarded to me.

The problem with the latter two is that they are the results of searching on an email address that isn't mine, but apparently was used by others and was "close enough" in the minds of some to attribute the results to me.  The website has not bothered me because those that know me have made fun of it; those that have fallen for the hoax have my sympathy.

All of this reminds me this morning of a segment (below) from the West Wing television series, centering around "Josh Lyman," the mythical Deputy Chief of Staff and the target in that episode of an internet website.  My favorite part comes toward the end of the segment, when "C. J. Cregg" is speaking to Josh.  "The people on these sites," C.J. lectures at Josh,  "they're the cast of One Flew Over the Cuckoo's Nest.  The [leader], that's Nurse Ratched."

"Sustainable Spending & State of Alaska Fiscal Planning"

Click here for full presentation.

This weekend about 70 are gathered in Seward at the Windsong Lodge for the Institute of the North's Annual Alaska Dialogue.  The focus is on "Developing Criteria for Energy Decision-Making".

The Dialogue is being chaired by Sen. John Coghill, Co-Chair of the Senate Committee on In-state Energy, and Rep. Doug Isaacson, Co-Chair of the House Energy Committee.   The purpose is to develop concrete criteria to help guide the development of state energy policy. I previously described the effort here.

Last evening's session was focused on putting information in the room important to understanding current state energy issues, the opportunities and the constraints going forward.  One of the most significant constraints is the state's fiscal situation.  Those supporting state energy projects often think of the state as the ultimate funding source for such efforts.  The state, however, rapidly is running out of the capacity to support such efforts.

The slides for my presentation on Alaska's current fiscal situation and the options for going forward are available here.  It helped start the session with a dose of reality.

"You can't spend 105 percent of revenue," but that seems to be what we are on track to do ...

Yesterday and today the Senate Finance Subcommittee on Education & Early Development is holding hearings on the "cost drivers" in Alaska's education budget.

Late in the afternoon yesterday, the Subcommittee asked David Teal, the Director of the Legislative Finance Division, to return to discuss a "Preliminary Model for Calculating Future Costs."  As I take it from the testimony, the Subcommittee had asked Teal to develop an Excel based model that the Subcommittee and others could use to predict future costs based on various assumptions.

The full afternoon of testimony is available here.  Teal's testimony begins at 128:00 of the tape.  All of it is worth watching, but one piece stands out in particular.  Beginning around 150:00, Teal talks about the "Big 3" of state spending:  education, medicaid and retirement assistance.  Shortly after that he provides the quote of the day:

"You will notice that [currently] 55 percent of ... available revenue is spent on these three items.  By the time you get to 2022 its 105 percent of available revenue being spent on these three items.  Well ... you can't spend 105 percent of revenue ..."  

 He then goes on to state the obvious

"And ... [even if you reduce it to 100 percent] and spend all of your revenue on these three items, you've got nothing left for the rest of state government, at all. ... The fiscal future is not all that rosey."

As Teal makes clear earlier in his testimony, those predictions are made using ACES-based revenue forecasts.  Based on the evidence submitted by the Administration during the last legislative session, the future isn't any better over this period under SB 21.

To be blunt, this Governor and this Legislature, by approving -- and indeed, expanding -- this Governor's budgets, are spending Alaska off a fiscal cliff.  This Governor has had four years to make things better; instead, he has made things worse, much worse.  As Amanda Coyne reported starkly in a recent column, "[t]he budget has increased 55 percent since Gov. Sean Parnell took over."

There is still time, and a way, to provide Alaska with a bright future.  If this Governor doesn't step up to the plate in his December budget, someone else will.

 

Institute of the North| 2013 Alaska Dialogue ...

I am working this morning on my presentation(s) for this year's Institute of the North Alaska Dialogue.  The Dialogue is this coming weekend.

For those of you not familiar, the Dialogue is an annual event hosted by the Institute, which each year takes an in-depth look at -- and attempts to formulate responses to -- a critical issue facing Alaska.  This year the Dialogue is focused on Developing Criteria for Energy Decision-Making.

In a step beyond from past sessions, this year's dialogue will be Co-Chaired by leaders of the Senate In-State and House Energy Committees.  The intention is to feed the outcomes from the Dialogue into legislative action this coming session.

As most readers of these pages realize, although an energy rich state from some perspectives, large portions of the state, both urban and rural, nevertheless face significant challenges both in the availability and cost of local energy.  For a long time state government has attempted to help local communities deal with those issues through various forms of subsidies and grants.

But as Alaska increasingly comes to grips with the limits of its fiscal capacity -- my most recent effort to explain that is available here -- those that think about such issues are confronting how to prioritize remaining state spending among various projects.  Some -- including a number involved in the process -- view the current process as ad hoc, at best.  The purpose of this Dialogue is to focus on developing criteria which will help to guide the prioritization of those efforts.

My presentation the first evening will focus on "Sustainable Spending and State of Alaska Fiscal Planning."  It is intended as an overview of the state's fiscal situation and will largely focus on the conclusions reached by the University of Alaska - Anchorage's Institute of Social and Economic Research earlier this year.  Other presentations the first evening -- they are intended as "lightening round" (five minute) presentations -- will focus on Alaska’s Energy Portfolio, Alaska’s Energy Policy and Strategies for Implementation, Railbelt Utilities and Potential Options, Policy Recommendations that Affect Renewables, The Economics of Energy, Alternative Messages and Options, Community Challenges in the Bering Straits Region, Natural Gas – Limitations and Legacies, and Independent Power Producers.

The morning of the second day is focused on "Case studies of effective energy policies, projects and analysis."  Larry Persily and I will discuss the effectiveness of recent state policies directed toward the Cook Inlet.  Others will address other success cases, including some outside Alaska and indeed, outside the United States.

The opening part of the afternoon will be devoted to the "Structural, Fiscal and Procedural Realities of Implementing SOA’s Energy Policy."  The panel will be led by legislators.  The second part of the afternoon will be devoted to the goal of the Dialogue -- developing criteria going forward for state energy decision making.

There are a few spots remaining for this year's conference, which will be held at the Windsong Lodge in Seward.  If you are interested in joining in the process -- and I would encourage those of you interested in this area to do so -- the details, including registration materials, are available here.

Catching up on podcasts ...

Believe it or not, these pages originally started largely as a place where I could stick facts, thoughts, articles, podcasts and other such things that I thought a few friends might find interesting, and I would have in a place that I could go review them quickly when I wanted.  I also used it as a means for thinking through issues that I found interesting and important.  The discipline of exposing them to the public caused me to think about and test them thoroughly before hitting "publish."

Somewhat surprisingly, others started reading and listening to the pages, then more, then more.  I appreciate that, but occasionally forget the starting focus, as a placeholder for my various thoughts (and apparently, as an occasional one-stop shop for the Governor's opposition research team).

So, to catch up ...

Aug. 28, 2013 Guest on The Casey Reynolds Show (appeared on the 8:30a segment [which starts at 20:46 of the podcast] to discuss sustainable budgets and the House Task Force on Sustainable Education, which started hearings that afternoon).  Casey continued the discussion with his comment at the beginning of the next hour.)

Sept. 3, 2013 Guest hosted The Casey Reynolds Show.  What we covered:

• First hour:  Music in Alaska (first quarter hour), education in Alaska (8:15 - 8:45, Guest:  Andy Holleman, President of the Anchorage Education Association), more music in Alaska (final quarter hour, I was on a roll).
• Second hour:  My thoughts on spending in Alaska (first quarter hour), spending in Alaska (remainder of the hour, Guest:  Rep. Charisse Millett).
• Third hour:  View from the Alaska Chamber of Commerce (10:00 - 10:30, Guest:  Rachael Petro, President), the best college course I ever took and why I am taking it again (10:30 - 11:00, Guest:  Willie Hensley).

Sept. 8, 2013 Guest on "It's About Energy:  Alaska News and Views," a weekly blog radio show hosted by Sherry Whitstine (aka "AKSyrin") (appeared on the last half of the show, starting at 14:15 of the podcast).

On Blog Talk Radio this evening to discuss "Morning in Alaska" ...

I will be joining Wasilla's Sherry Whitstine (aka "AKSyrin") this (Sunday) evening on her Blog Talk Radio Show, "Alaska News and Views:  Its About Energy" to discuss my Compass piece today in the Anchorage Daily News.  That's the show's logo to the left; I wouldn't be so creative left to my own devices.

The show begins at 8p Alaska; I have told Sherry that I will call in when she is ready for me.  You can listen to the show (it is a half hour) by clicking here.  The call in number is (718) 508-9024.

I look forward to the discussion.

Music in Alaska ...

Recently I learned that Paul Krugman, the New York Times op-ed columnist and blogger who, in his day job, is professor of Economics and International Affairs at Princeton University and, in 2008, won the Nobel prize in Economics, also posts occasional pieces on music.  I wouldn't have guessed it, but he and I apparently share some tastes in that arena; his most recent post was on Sarah Jarosz, a young singer-songwriter from Wimberley, Texas, whose first two albums (the first mostly recorded while she was still in high school) are outstanding pieces and who is on the cusp of releasing her third to already building acclaim.

As some of the readers of my Facebook page realize, I occasionally -- ok, well frequently -- comment on music there, including on Sarah's upcoming album.  I also use my occasional stints as a guest host for KFQD talk radio show moguls Dave Stieren and Casey Reynolds to do the same.  For example, I subbed in for Casey early last week and the opening segment, up until Anchorage Education Association President Andy Holleman joined to talk about education stuff, was mostly about music.

I am intrigued by Krugman's use of his column also to hi-lite his musical interests, and frankly, will pay even closer attention to his blog as a result.  But I don't think I will start boring readers of these pages also with mine -- well, except now and maybe occasionally.

The reason I do so this morning is because I am still enjoying, by playing over in my head, last evening's closing concert of Fairbank's now, annual Far North Fiddle Festival.  The brainchild originally of Fairbanks oncologists Drs. Andrew and Jacqui Cox, in just three short years the Festival already has become more than a small blip on the world Celtic music map, even earning a shout out yesterday from WGBH (Boston public radio)'s Brian O'Donovan during his weekly Celtic music radio show, A Celtic Sojourn.

This year's Festival attracted some outstanding artists, including two pantheons of world Celtic music, John Doyle and Nuala Kennedy, who recently have joined with Eamon O'Leary to form a new group, ALT, which made its debut last night in Fairbanks, Alaska.  But last evening's show also was marked by the inclusion of a number of other up and coming artists.  The full list is here.

For me (and many, many others), the epitome of Celtic music festivals (at least on this side of the Atlantic) is Cape Breton, Nova Scotia's annual Celtic Colours International Festival, held over nine days each fall (as the leaves are turning) throughout the island. Last night's Far North closing concert was every bit the equivalent of a Celtic Colours session. I don't know how to give it any higher rating.

But music in Alaska isn't only one event.  Within the next two weeks, for example, family-owned (Mike McCormick and his wife Katie Spangler) Whistling Swan Productions is bringing four incredible performers to Alaska:  Leon Russell (a long time favorite from my Tulsa days), Dougie MacLean (a Scot Celt performer who I first saw live at Celtic Colours), Hot Club of Cowtown (a Western swing trio) and the Taj Mahal Trio (which, unbeknownst to them, played an interesting role in my college experience) all will be playing in Anchorage.

And the list could go on from there by simply going through the upcoming playlist at the Anchorage Concert Association, Fairbanks Concert Association, The Blue Loon in Fairbanks, The Tap Root in Anchorage and on, and on, and on.

Music in Alaska is an incredibly rich experience and the Far North Fiddle Festival was and is an outstanding event.  Maybe we can get Paul Krugman to blog about that sometime as well.

#AK2014| This is how I am spending part of my Friday evening ...

As I have suggested elsewhere, this coming election may become a referendum on Alaska's future. As readers of these pages will know, earlier this year the University of Alaska Anchorage's Institute of Social and Economic Research (ISER) had this to say about Alaska's current direction:

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.

Thusfar, the Governor and Legislature have taken some steps toward avoiding this future, but not nearly enough.

I am going to support candidates this coming year that are committed to helping turn the ship around.  I would urge those who have the same concerns to do the same.

Lynn Gattis is one of those candidates.  I am going to spend part of my Friday evening showing my support.  If you have the time, I hope some of you will join me.

The consequences of biased reporting ...

Yesterday I wrote a piece about biased reporting.  Later in the day I received a comment essentially asking for an example of the consequences of the bias.  Here is a perfect one.

A couple of days ago the Anchorage Daily News ran a letter to the editor with the title "Tax cuts are hurting education."  The writer began the letter with "Unless repealed, the tax breaks given to Big Oil by our governor and Legislature will create further direct hits to Alaska education."  Senator French, campaigning for Governor, subsequently tweeted the article with the comment "Oil Giveaway will lead to further damaging cuts to AK education:."

The problem?  "Tax cuts" aren't hurting education -- past and continued state overspending, the type that Senator French himself has voted for -- is.

How do I know that?  Because the ISER report I referred to in yesterday's piece says the following about the fiscal trajectory the state is on, using revenue projections based on the continuation of 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.

Doing the numbers substituting the revenue levels from SB 21 produces the same result.

It isn't the level of taxes that is causing the state harm, it is the level of spending that the state has -- and continues to -- engage in.  State-funded indoor tennis courts in Anchorage, state-funded paving of private parking lots, building a new sports arena at UAA entirely with state funds, rather than requiring that a significant portion be paid for by donors as occurs in every other state, new football fields at a number of Anchorage high schools, when Anchorage Football Stadium exists for just that purpose -- those and countless other state-funded activities are the problem.  Which tax structure the state uses to raise revenue is, at best, a second order problem.

Yet, the biased reporting in the Alaska Dispatch and others leads the ADN letter writer and vast numbers of other Alaska citizens to focus on tax structure as the problem, missing the point.

The Alaska public should be concerned about reduced funding.  They should really be concerned about the level of reduced funding the state is headed for in the next (now just seven short years away) and following decades.  If they were there is a good chance they would do something about it, by demanding of their leaders to address the subject.

But they aren't, because the Dispatch and other news outlets in the state are allowing those leaders -- including Senator French -- to escape consequences for their actions, by instead focusing attention on a less consequential subject.

The ADN letter writer should have begun her letter "Unless repealed, gross overspending by our governor and Legislature will create further direct hits to Alaska education."  The reason she didn't is because the Dispatch and others are failing in their mission to inform their readers of the true problems facing the state.  As a result, the state continues down the road it is on, which inevitably will lead to the "fiscal crisis" and "economic crisis" forecast in the ISER report.

That is the consequence of biased reporting.  The state's citizens are missing the most important economic issue facing the state today.

To paraphrase the letter's author, "unless reversed" I will remember who caused it as we start to hit the wall later this decade.  By then others will realize it as well.  The consequences won't be pretty.

An example of the Alaska Dispatch's bias ...

Over the weekend I wrote a piece that, among other things, criticized the Alaska Dispatch for its lack of reporting balance.

As if on cue, the Dispatch wrote a news story today that proves my point.  The story is about Byron Mallott's announcement in a conversation yesterday that he will be running for Governor as a Democrat.  I have no problem with that part of the story and believe that Byron will become an important candidate.

But in writing the story the Dispatch reporter also decided to editorialize about the state's oil tax policy.  Here is the quote:

But the fiscal picture is rapidly changing. And some opponents such as Walker and possibly French hope Parnell's flagship success -- pushing through a major tax cut in 2013 to spur oil production -- will be his undoing. 

State revenue officials say the cut will remove billions of dollars from the Alaska treasury in the coming years, throwing it into severe deficit spending.  The tax cut generated surprising opposition in the form of a repeal initiative signed by 51,000 Alaskans, about two-thirds more than the minimum amount needed.

The bias?  The story fails to report that ACES -- the tax approach favored by those signing the initiative -- also will throw the state into "severe deficit spending."

My source?  Easy, the University of Alaska-Anchorage's Institute for Social and Economic Research (ISER) January 2013 report, Maximum Sustainable Yield:  FY 2014 Update.  Their conclusion, after analyzing revenue and spending trends based entirely 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.

ACES:  "can't sustain," "fiscal crisis, "economic crash."  Three phrases you would think from reading the Dispatch story apply to SB 21, but not the tax approach to which the state will revert if the repeal -- supported by "surprising opposition" -- is adopted.  But three phrases ISER applies directly to the policies flowing from ACES.

Why is the bias important?  It misleads the public into thinking that what Alaska is facing is a revenue problem, solvable by changing tax structures.  That isn't the problem Alaska faces -- instead, Alaska faces a spending problem.  Under either tax structure -- ACES or SB 21 -- at current spending levels Alaska is headed for a crash.  Blaming it on one tax approach or the other misses the central point, and in doing so, diverts Alaskans from focusing on finding real solutions.

Previous Dispatch political and economic reporters never would have reported with that bias.  It is disappointing that their successors do.  The credibility of the entire organization suffers for it.

Guest hosting The Casey Reynolds Show tomorrow ... now, today (Tuesday)

My default answer when asked by a friend to do something is "yes."  Sometimes that works out great, sometimes not as well (a recent experience comes to mind), but its always my default answer.  I need to have a conflict or a clear reason before I say no.

So that was my answer over the weekend when Casey Reynolds asked if I would sub-in as host of his talk radio show tomorrow (well, maybe by the time some of you read this post, this) morning.

While it may not show on air, at least in my mind I am beginning to get the hang of how to deal with this.  I immediately turned to others to ask them to join me.

Continuing the discussion that began at the initial hearings of the House Task Force on Sustainable Education last week, Andy Holleman, the President of the Anchorage Education Association will join me in the first hour.  Continuing the discussion on that, but also broadening it to other issues, Rep. Charisse Millett will join me in the second hour.  And Rachael Petro, the President of the Alaska Chamber of Commerce and the voice behind the ads helping Alaskans understand that all of us are in the oil business will be joining me in the last hour.

I am working on a couple of additional segments now, but as usual when I sub in we also will have some updates on what is going on around town from a music perspective, and I want to talk a little bit about the best college course I ever took, why I am taking it again this semester and why some of you should consider doing the same thing. (9p update:  And I just learned that Willie Hensley, who teaches that course, will be able to join us at the 10:30a segment to talk about it.)

Join me from 8 - 11am, locally at KFQD 103.7 FM/750 AM, and on the web by clicking here.

A transition at the News-Miner, a loss to the state ...

Sometimes I don't get to the papers for a few days and miss something important.  This is one of those times. On Wednesday Dermot Cole wrote a piece announcing that he is leaving the News-Miner and moving over to the Alaska Dispatch.  Maybe when I get over to the Dispatch I will find a similar announcement there, but I don't go there as often anymore.

Personally I think this is a loss for the News-Miner, Fairbanks and the state as a whole.  In my opinion, the News-Miner probably is the best hard news source in the state right now from a number of perspectives -- oil, mining, fiscal policy, to name a few.

Following in the footsteps of some before him -- Rena Delbridge comes immediately to mind -- Matt Buxton certainly is one of the top three, and in fact may be the best, hard news state political reporter right now.  (The AP's Becky Bohrer and, somewhat surprisingly given her age and newness to the job, APRN's Alexandra Gutierrez are the other two.) To a certainty, Matt is the best twitterer.  And, week in and out, Rod Boyce writes the most practical and insightful editorials in the state.

But, as a reader, one of the things that makes the News-Miner work best is Dermot.  Certainly, Dermot is more to the left on some issues than me and, thinking back, it is possible that I disagree with him more than I agree with him.  But Dermot forces me to think, long and hard, about the issues on which I disagree with him and, always, without exception, I -- and the views I express on these pages and elsewhere -- are the better for having been made to do so.

More importantly, the total mix of the News-Miner is the better for it.  It gathers together in one place the hard reporting of Matt Buxton, the reasoned opinions of Rod Boyce and the important insights that Dermot brings to bear.  While I have no clue about the inner workings of the News-Miner, from a reader's perspective having all three in one place somehow makes the total product bigger -- and better -- than the mere sum of the individual components.

I know that the Dispatch brain trust will argue that those same talents will transfer seamlessly to Dermot's new, on-line home.  But, to me, they are wrong.

The Dispatch is not a balanced organization.  At one time, when Rena Delbridge and, following her, Patty Epler, were there, the Dispatch had a strong state economic and political news team to match its strong editorial bent.  Somewhat like the News-Miner has been to this point, it was a one stop shop where hard, insightful news was matched with hard, insightful commentary.

But now, what state economic and political news there is in the Dispatch is mostly fluff and even that comes with a palpable ideological bent.  The result is a sense that rather than hard news, readers are just being handed a "reporter's" own particular bias wrapped in a package that merely has the word "news" in front of it.

In short, there are no hard state political and economic reporters at the Dispatch, just a series of commentators.  I can get that a lot of places -- Fox "News" comes to mind for one.  The state isn't the better for it.

I will miss Dermot at the News-Miner.  I am sure I will still read him and be challenged by him, but it won't be the same.  The package will be different and in this case at least, that is important.