Until now, with a few exceptions, most of this fall’s state legislative races have seemed pretty predictable. The Democrats might pick up a few seats, but the House will stay in Republican hands, and though there might be one or two new faces in the Senate, it’s been assumed that there wouldn’t be huge upsets or surprises.
Brad Keithley spending up to $200,000 on some races could shake things up.
Keithley a lawyer until recently with Perkins Coie and now a consultant, has tried, and to some extent succeeded, in elbowing his way into Alaska’s political class by preaching fiscal responsibility. Last winter, he was toying with a self-financed run for governor. His model was Ross Perot’s self-financed independent presidential run. Keithley opted out of the governors race, however. Now, he’s found his “Ross Perot moment” in another way. “It’s time to put my money where my mouth is,” he said.
On Wednesday, Keithley announced that he plans to put up to $200,000 of his own money into general election races as an independent expenditure, targeting 3-5 seats this fall.
He’ll focus on candidates who, while campaigning, talk “fiscal conservatism” but who vote very differently while down in Juneau. Indeed, despite all the Republican rhetoric about such fiscal conservatism, budgets have been sky high and the state is going into deficit spending. Most of the legislators who voted for the ballooning budgets also voted for a resolution that would call for the federal government to balance the budget.
To Keithley and to others, including this reporter, such hypocrisy is maddening at best, particularly when economists are warning that the state can’t sustain its own level of spending.
“Instead of heeding these warnings, the legislature has gone backwards in the last two years by running up the two largest budget deficits in Alaska’s history and draining over a third of the state’s cash reserves,” Keithley said.
He says that the seats that he’ll target are ones that are winnable. ”We’re going to be professional and serious about this,” Keithley said. “I want to move the needle.”
When pressed on what races he intends to target, he said that he was still undecided. He’s getting help from former Anchorage talk show host Casey Reynolds, who lives in Kansas but was in Alaska recently.
Contact Amanda Coyne at amandamcoyne@yahoo.com
The old parties are incapable of implementing the changes required. It will take new blood to pull it off. It is good the people of Alaska have a choice and a chance to change history for their own good.
I actually find lynn to always have annoying and naggy comments but hey, maybe that’s just me.
You are on the right track – keep it up. I never heard of your suggestion to demand hearings on a sustained budget.
I listen to you; however, once you become dismissive of those who you want to influence and might support your efforts you are going to fail. You might reflect on how much other individuals and groups (with a hell of a lot more money) are spending attempting to do what you are attempting. Most of them have a simple objective related to to personal profit and access to power, not some relatively esoteric sense of public good that people simply cannot see at this time (e.g. the PFD will double this year over last). Remember Ross Perot’s Reform Party and the current Tea Party? How long until your effort looses focus on fiscal constraint just as theirs did and you become mired in the political swamp?
Jon K aka “not willing to stand behind your statements” (since you don’t use your full name): The breakdown of the FY2015 budget is here. Even assuming the most expansive definition of “non-discretionary spending,” it only totals $2.44 Billion (lns. 14, 15 & 20). While the number is shrinking the more the Administration and legislature delay in dealing with the issue, as of last year (FY 2015) the sustainable number was still $5 billion leaving around $2.5 billion in room for discretionary spending. If you are about to say, “that’s not enough,” then you may want to add your advice to the coming generations of Alaskans that ISER has warned face “institution of a broad based tax, and use of a portion of the earnings of the Permanent Fund” just to sustain minimal government services because of the failure of this generation to curb their spending to sustainable levels.
I’ve been doing the “public education” piece for awhile now, spending my own money to do it. The result the last two years? The two highest budget deficits in the state’s history, a reduction of one third in the state’s savings and, despite promises last year, not even one hearing on sustainable budgets. I’ve had enough of that fun, it’s time to take it in a different direction. But it sounds like you’ve outlined a plan for your $200,000, good luck.
My point is that you and many of us are attempting to influence a paradigm that has been formed over the decades since oil revenue came to Alaska. As soon as you politicize your efforts you will be marginalized by the hired image makers now so busy attempting to make dogs or heroes out of various candidates or issues based on who hired them.
If I was going to spend $200,000 on a campaign with a lasting legacy, I would focus on public education not on media based vilification or blatant partisanship. I might explore litigation to force the legislative and executive branches to openly justify their behaviors and practices in the context of Constitutional authority.
Regarding education of the public; I wonder how many Alaskans understand that the solution to control spending is absolutely within the power of the Governor of Alaska as stated in Article 2 of the Alaska Constitution. I wonder how many Alaskans understand that the same Constitution creates a huge demand for state spending by charging the legislature in Article 7 to “establish and maintain a system of public schools” and in Article 10 to “provide for the performance of services in the unorganized boroughs”. I wonder how many Alaskans appreciate that while the Constitution established the Permanent Fund in Article 9 there is no mention of a PFD to the people being guaranteed.
I do wish you all the best in your efforts and thank you for doing this.
That report actually doesn’t show higher revenue’s under SB21. But I suppose linking to it and saying it does probably plays well with low information voters.
What it does say is that they expect taxable value to increase. What it doesn’t say is that the tax rates on taxable value have been slashed in half with SB21. So half as much of a little bit more is a lot less.
Alaska Department of Revenue’s OFFICIAL forecast says the state will only get $1.1 billion in net production tax revenue under SB21 for Fiscal Year 2014 (after deductions and credits).
Their previous OFFICIAL forecast said the state was going to earn $3.2 billion in net production tax revenue under ACES for Fiscal Year 2014 (after deductions and credits).
Brad Keithley is an epic grifter and a deeply disingenuous individual. Anyone who advocates for reducing income to solve a deficit spending problem is misguided at best and a con artist at worst. And until he reveals his source of income and consulting clients he shouldn’t be taken seriously.
Amanda, does he have a fan club? Because you appear to be the president of it.
ACES/ SB21….how can we determine what has done what if we have no audits to base our opinions on?
How can we know which taxation plan is better if the real reason Alaska lost so much money is that oil company’s production cost increased with no oversight.
Production costs almost doubed to $50 per barrel based largely on transportation expenses which were artificially inflated.
Google—Judge: Oil companies ‘cavalierly’ wasted hundreds of millions on pipeline work
Why hasn’t the state of Alaska audited the oil companies after being caught by FERC judge inflating their costs?
How has this affected Alaska’s oil revenue?
And how can we consider building a $65 Billion pipeline with these untrustworthy companies?
They can artificially inflate their expenses again, and write it all off against their taxes.
The state of Alaska will get no oil revenue if the $65 Billion pipeline deal actually happens.
ACES/ SB21….how can we determine what has done what if we have no audits to base our opinions on?
How can we know which taxation plan is better if the real reason Alaska lost so much money is that oil company’s production cost increased with no oversight.
Production costs almost doubed to $50 per barrel based largely on transportation expenses which were artificially inflated.
Judge: Oil companies ‘cavalierly’ wasted hundreds of millions on pipeline work
http://www.adn.com/article/20140228/judge-oil-companies-cavalierly-wasted-hundreds-millions-pipeline-work
Why hasn’t the state of Alaska audited the oil companies after being caught by FERC judge inflating their costs?
How has this affected Alaska’s oil revenue?
And how can we consider building a $65 Billion pipeline with these untrustworthy companies?
They can artificially inflate their expenses again, and write it all off against their taxes.
The state of Alaska will get no oil revenue if the $65 Billion pipeline deal actually happens.
and all the boondoggle projects, UMed road no one wants, Knik Bridge, a road out of Juneau..why of all times does this Governor and legislature think we need to build a road out of Juneau? …And the new $250 million coal plant for Fairbanks who already can’t breathe in the winter….this Gov and legislature is either criminal or incredibly incompetent neither of which looks good for our state.
Brad, I completely agree that ALL legislators need to be held accountable. We need to hold their feet to the fire for wasteful spending. The operating budget needs to be cut by at least 5% each year-that means cutting people. This state has nearly 24,000 employees! What are they all doing? There is not enough paper in the U.S. for them to all be shuffling. The governor needs to lead by example and cut his staff and tell his commissioners they will do the same. How about an effective fraud, waste and abuse statute that actually rewards those employees who cut waste? How about a much more effective whistle blower statute? Those on the inside know where the waste is-they can help in this effort. What would you think of getting a group of folks together from all sides of the aisle to come up with a plan with accompanying legislation to cut the government? Thanks for your work in getting the message out. We need that.
It’s hard to get worse than legislators who in the last two years have passed back-to-back the two largest budget deficits in the state’s history and drained over one-third of the state’s current savings. Indeed, if the legislature was no longer R dominated, perhaps Parnell would find a political advantage to go find his veto pen again to keep them in line. One thing I do know, continuing down the current path is leading the state at breakneck speed toward the fiscal cliff ISER has so clearly identified. I refuse to sit back and just watch that continue to play out. It’s time to hold legislators accountable for their actions.
Just now catching up with this comment. So, Lynn, are you suggesting I am wasting the money, should be spending it in a different way, or should be spending more. I don’t quite understand your point. One thing is clear; I refuse to give in to frustration and just continue sputtering about it. To me, it’s time to take the next step and start putting my money where my mouth is.
Thank you….
How about we demand every state department reduce spending every year by the rate of inflation. Freeze state hiring and reassign employees as necessary to provide essential services. Standardize school designs in the bush and merge urban schools that are not being utilized to their maximum capacity. Stop allowing the sandbagging of funds for projects- decide this year to either fund them to completion or not. Understand that the Port of Anchorage has spent itself to a point where we will not spend another dime on that rathole. Cancel all legislative office leases within 50 miles of the new LIO. Create a comprehensive state energy plan so we know where we are going with energy projects. Cut the travel budget this year by 50%. Cancel one or the other of the two pipeline projects we are currently funding since the AGIA restrictions are no longer applicable.
Or do nothing and continue to claim that Parnell and his ilk have done all they can do to control spending. Then introduce legislation to reinstate the income tax, increase local taxes, cancel the PFD, and beg for more federal assistance.
Lynn – what percentage of state spending is allocated to non-discretionary funding? What are the biggest drivers to the growth in government spending? What would YOU cut from the operation and capital budgets and how will these specific cuts improve things?
Enough of the rock throwing. It is nice to sit back and opine on structural flaws in the process, but unless you have real solutions to these problems drop the indignation.
As well it should be over. I worked for over 20 years in state leasing and have never seen such gross incompetence. It is outrageous that a single source contract was awarded in the first place but the problem was aggravated by the complete lack of anyone acting in the state’s best interest. I have said it before and will say it again that this deal was either an example of complete incompetence or corruption.
Lynn, as always, you bring a clear and thoughtful comment. I am in complete agreement.
Why do we expect to see a Taj MaHawker campaign? Is it common sensical, predictable, warranted or hopeful? Or all of the above?
While I applaud Mr. Keithley’s efforts, I fear that without serious changes within the institution of the legislature picking off a few fiscal offenders will accomplish very little.
Governor Parnell, despite having the constitutional authority to do so, will do nothing. At best he will spin the numbers (as he did with the pension buy down) to create the best mirage of fiscal management he can.
Here is what will happen regardless of who is in Juneau. The majority caucus will first meet in secret (because they have exempted themselves from state open meeting law) where they will remind the members that any caucus member who fails to support the next budget will be kicked out of the caucus and banished to political irrelevancy. Next they will meet with constituents to complain about how they are running out of money but “formula spending” ties their hands and it is the fault of Alaskans that they have to spend so much. Then it’s off to remote Juneau where these committee chairs will, without explanation and against their own legislative rules, hold bills to death often in a trade for even more spending. Next, the Governor will sign yet another record breaking budget into law while the opiate of the PFD calms the masses and the march to the fiscal cliff will continue.
Derp, do your own research on two points. First, check out the Yes / Repeal website. They say that under ACES we covered 2/3 of the costs of a project. We don’t anymore. That’s a lot of money that we are no longer pushing across the table.
Second, both SB 21 and ACES are net profit systems. We did very well under ACES when costs were low and spending was down because the companies had less profit to tax. But when costs are going up, price of oil is at 105, and spending increases, the ACES tax rate dropped – progressivety lost its impact because their was less profit to tax. In the price and cost environment that we are currently inhabiting – $105 oil plus high costs plus high spending – SB 21 brings in more revenue. This is a verifiable. Go check out DOR’s most recent analysis.
I’d also note that this isn’t new – DOR had many presentations during the legislative session in 2013 where they made this same point.
This is also why people like Stedman do NOT want to go back to ACES. It just isn’t sustainable.
But if the cost drivers are non-discretionary spending and education is this realistic?
I think Mike Hawker just got a notice that his tenure in public office is about to end.
Brad is correct on one thing-we spend too much of the “free” money. Until the public is connected to the cost of government, pretty much no one cares how much the Legislator spends as long as they get theirs. Remember: Nobody Spends Someone Else’s Money as Carefully as He Spends His Own. Just look at the signs around Anchorage touting road construction with the legislative district(s) posted on the sign. How strange is that? Kinda like free incumbent advertising. Eventually, the money will dry up, people will trade their freedoms, slowly at first, to receive more “benefits” from the government. Once the PFD goes away, taxes of all types kick in, many people will leave this state.
Brad’s good intentions could have some unintended consequences. If he targets a “fiscal conservative” in name only and that person loses in the general, then we may get a free wheeling liberal spender who would be much worse. Oh well, they can always blame George W.
@Jon. I asked that. Keithley basically said that that’s up to the lawmakers. They get a fixed amount–about 1.2 billion less than they’re getting now– and then they get to decide what should be cut. That kind of makes sense to me, but I’ll be asking candidates what they would cut when I begin covering those races post primary.
If i Was a jealous democrat with 200k to throw around too…. I’d attack everyone who’s jobs I wanted too….somebody is trying to buy their way to the top
Though it’s pretty easy more me to throw around other people’s 100k chips.. ha
ACES won’t save us if leg keeps spending so high; but ACES does return more revenue than SB21 at fixed production. If it didn’t, oil companies would be asking to go back to ACES instead of flooding the airwaves to keep SB21. That whole line of reasoning undercuts the main argument for tax reform in the first place. Get a job Jon K.
But re: keithley– Good!! we need to cut the budget. He should spend 100k attacking Parnell too, who had complete power to trim the budget on his own.
We’ll get his target list today at 4.
And here’s a link to the DOR report showing higher revenues under SB 21 vs. ACES:
http://dor.alaska.gov/Portals/5/Docs/SB21/Creating%20Opportunities%20for%20Alaskans%20July%2024.pdf
To preempt what some will undoubtedly say in response, returning to ACES will not save us from the fiscal cliff. ACES was unsustainable. Unfortunately, there has been virtually no press coverage of this point. How many people realize that we lost $2.5 billion in revenue between FY 2009 and FY 2013 despite prices being $12 higher — progressivity didn’t save us.
Going forward, things were only getting worse because of 6 percent production declines, which meant that we did not have the cash flow to cover the generous incentivizes provided by ACES to the legacy producers. Many know that ACES was designed to incentivize spending by driving up a project’s IRR. But few seem to realize that according to Econ One (the Administration’s tax consultants) ACES covered over 75 percent of a project’s capital costs for BP, Exxon, and Conoco. These guys got the 20 percent capital credits AND were able to make additional deductions based on their production tax rate. Thus for a $20 million well, the state was effectively covering $15 million of Conoco’s costs.
At $105 oil, costs going through the roof, North Slope investment increasing with the arrival of new rigs, new players, CD-5, Point Thomson, etc. etc., and production at 550,000 or below, our revenue picture was bleak under ACES. In fact, DOR just issued a report showing that ACES would bring in $141 million LESS revenue than SB 21. For some reason the press hasn’t covered this. Bottom line: if we return to ACES we are not going to see additional revenue next year unless oil prices go through the roof.
What will Bill W, Les, Gregg Erickson say to Alaskans if SB 21 is repealed and we don’t see any more revenue over the next 12 months?
Anyway, two questions for Brad or Amanda: (1) what is driving the deficits? and (2) what exactly gets cut?