Craig Johnson in Senate District L (South Anchorage)

I am supporting Craig Johnson in the Republican Primary in Senate District L.   Here’s my radio spot — that goes up today and will run through the election — to prove it.

The script, if you would prefer to read the ad rather than listen, is here.  A digital campaign, which links to this piece, will go up Monday.

Why am I supporting Craig?  Here’s the longer piece I published last week at Alaskans for Sustainable Budgets to explain it:

This piece will surprise others some coming from me, and even surprises me some, but as things have evolved it has become an important thing to do.

As the Senate District L race has developed an important — and to me, critical — difference has emerged among the three candidates in the Republican primary. Two of them are supporting “restructuring” the Permanent Fund in a way that will permanently cut the PFD. One opposes that approach and supports maintaining the PFD as is. (For a summary of the race, see “With McGuire’s retirement, South and Midtown Republican voters pick from GOP buffet in state Senate race“).

As I have made clear on these and other pages over the past several months I believe maintaining the current structure of the PFD is a critically important component of resolving the state’s fiscal situation in a way that also protects Alaska’s overall economy. And, given the position that some in the Senate took on the subject during the last session, I believe it has become critically important also to take every opportunity to elect new Senators that have that same outlook.

For that reason, I will be supporting Craig Johnson for Senate in the coming Senate District L Republican primary.

I don’t come to this position easily. As those who follow these pages know I have been highly — highly — critical of the spending decisions made by the legislature over the last several years. That extends also to this session as the legislature voted to continue overall spending at unsustainable levels above $5 billion, replacing cuts elsewhere with votes that maintained oil tax credits at high levels.

As the House Rules Committee Chair these past two years Johnson has been right in the middle of those spending decisions and even played a key role this past session in working to keep oil credit levels — and with them, overall spending — much higher than supportable.

But the PFD issue overrides all of that. Spending is a year-to-year decision and I have hopes that as the state faces up to its fiscal crisis, the legislature going forward will do much, much better than it has in the past in capping spending at sustainable levels.

The PFD issue, however, is a permanent one. Those who favor “restructuring” aren’t proposing to do it on a year-to-year basis in a way that restores the current approach once other fiscal issues are dealt with. Instead, they propose making a structural change which permanently will reduce the cash in Alaska’s private economy in order to support continued elevated spending in Alaska’s government economy.

The consequences of that decision are hugely significant. In its analysis earlier this year of the effects of various fiscal policy options, ISER made clear that cutting the PFD is the “most regressive” and has the “largest adverse impact on the [state’s] economy” of any. http://goo.gl/ZxR1Hw

In short, looking at the Alaska economy as a whole cutting the PFD sends the state’s overall economy backwards to save only a portion of it — the portion tied to government spending. The two other candidates in the Senate L Republican primary want to pull that lever on a permanent basis. Only Craig Johnson advocates protecting against that.

There are other options for dealing with the state’s fiscal situation. Here is what former Governor Jay Hammond — who led the fight for both the Permanent Fund and the PFD — had to say about the structure of the program.

“I wanted to transform oil wells pumping oil for a finite period into money wells pumping money for infinity. … [Once the money wells were pumping,] [e]ach year one-half of the account’s earnings would be dispersed among Alaska residents …. The other half of the earnings could be used for essential government services.”

And if, as is the case under current spending levels, government costs more than that? Hammond again:

“Before slicing dividends to cure that skin lesion, let’s first treat that belly tumor with surgical budget cuts and, if necessary, the ‘radiation’ of user fees and less regressive taxes. Let’s leave dividends in the people’s pockets so they can both better afford and, to a degree, elect whether or not to pay coming user fees and taxes. … After all, the best therapy for containing malignant government growth is a diet forcing politicians to spend no more than that for which they are willing to tax.“

Hammond’s 50:50 plan — which is the basis behind the PFD — has been remarkably successful. Government already is positioned to receive 50% of the earnings from the Permanent Fund. Now, quite frankly, some want to take more simply because it’s a big pot of money, easily accessible by majority vote, with — on a percentage of income basis — those burdened the most by the change having the least voice in Juneau.

But the problem is cutting it also does the most damage of all the options to the overall Alaska economy. That, ultimately, is where I leave the ship.

Alone of the candidates in the Senate L Republican primary, Craig Johnson seems to get that. He has my support. — Brad Keithley

Subsequent to publishing that statement, another candidate in the race questioned my choice, leading to the following additional discussion and further explanation:

  Jeff Landfield  Brad, we have known each other for over 5 years. You were the person who really alerted me to our state’s fiscal problems. Back then, few people cared. I ran in 2012 and predicted our current mess if we did not get our fiscal house in order. After everything you have done, I just can’t understand how you could support Craig. He is one of the key players who got us in this mess. He has voted for every budget over the last 10 years. I understand we disagree on the PF thing, but you endorsing him is very confusing. He has supported all the things you have been against for years.

  Brad Keithley  Jeff … The “PF thing” isn’t just a thing. As I explain above, to me its a bedrock principle of building a sustainable Alaska economy overall. That isn’t something we discussed five, four, three, two or even eighteen months ago because I never imagined then that some seriously would propose cutting it. But I have written and talked about it extensively since some have started going down that road.

As I discuss above, I agree that Craig has been part of the problem on a number of issues. But the question now isn’t so much who got us here; its how best to go forward now that we are. As I indicate above — and as the ISER study supports — making permanent cuts to the PFD sends our overall economy backwards. Saving government at the expense of Alaska’s overall and private economies isn’t part of a solution, its just a way to fall into a different economic abyss. My goal is to avoid any abyss, not just avoid the first by falling instead into the second.

Given how close this issue was in the last legislature, and the efforts of some to bring it up again in the next, there isn’t much of a margin for error this election cycle. Each House and Senate seat counts; where there’s a clear choice, such as Senate L has become, its important to support the candidate that is right on the issue.

Yes Craig has been a continual problem on spending, but as I explain above that is a year-to-year problem that increasingly becomes resolvable (albeit at lower spending levels than could have been the case) as the legislature has less and less financial flexibility remaining.

On the other hand, the PFD “fix” that you and Natasha are backing is permanent. If either of you are elected and follow through with others to enact your proposals, the overall Alaska economy will take several steps back on a permanent basis. As others have put it so well, “”once we backfill with … revenue there will be no will structurally to make government smaller.” As opposed to spending cuts, which has annual forks in the road, this is a one time fork in the road on, as I said above, what I believe is a bedrock principle. In my view, its critical that Alaskans choose those who will take the right fork.