Alaska
Brad Keithley’s Chart of the Week: The Legislature to Alaska families – The less you make, the more we take
One of the things that disappoints most about the Alaska media is its ongoing failure to report on – or even reference – the hugely regressive impact of using cuts in the Permanent Fund Dividend (PFD) to fund state government. The regressive approach the Legislature has used since 2016 to fund state government can be summarized by the mantra some observers use to describe it, usually in hushed tones – “the less you make, the more we take.”
It’s not that there isn’t source material that the media can use. Both the 2016 study for the then-administration of former Governor Bill Walker by researchers at the University of Alaska-Anchorage’s (UAA) Institute of Social and Economic Research (ISER) and the 2017 study for the then-Legislature by the Institute on Taxation and Economic Policy (ITEP) provide detailed analyses of the highly disproportionate impact on middle and lower-income – which together are 80% of – Alaska families that results from using PFD cuts to fund Alaska government.
For those who claim that’s old news, just last year, ISER Professor Matthew Berman, one of the authors of the 2016 ISER study and still on the faculty at UAA, made clear that the impact remains as regressive as ever. In an opinion piece in the Anchorage Daily News, Berman reiterated the points made in the 2016 ISER and other subsequent studies:
A cut in the PFD is a tax — the most regressive tax ever proposed. A $1,000 cut will push thousands of Alaska families below the poverty line. It will increase homelessness and food insecurity.
The two most relevant times to remind Alaskans of the impact of using PFD cuts to fund state government compared to the alternatives are each Spring as the Legislature develops the state budget, when the cuts are being made, and each Fall when the reduced PFD is distributed to Alaskans, when the cuts hit home. For the past several years, however, the media has done neither, leaving Alaskans repeatedly in the dark about one of the most – if not for many families the single most – significant economic decision affecting Alaska household income made annually by the Legislature.
It’s not that the state’s politicians are much better. Unlike as in some past years, this year’s announcement of the per PFD amount by the Dunleavy administration – relegated to a press release by Revenue Commissioner Adam Crum, which doesn’t even appear on the Governor’s website – doesn’t even whisper a mention of the level of the reduction from the current law level. Instead, the press release leads the third paragraph with the misleading claim that “[t]his is the 43rd year Alaskans have received their share of the state’s natural resources and investment earnings;” it fails to mention that this is, instead, the ninth year that the amount set by the Legislature – and signed by Governor Mike Dunleavy (R – Alaska) – has been significantly below Alaskans’ “share” set by state statute, much less the size of the cut or its hugely regressive impact on Alaska families.
While there may be others, in glancing through various posts from the state’s elected officials, the only one we noticed that even mentioned the cut was a tweet from Senator Bill Wielechowski (D – Anchorage), but in an era where many claim to be concerned about the outmigration of middle and lower-income – working – Alaska families, even that post didn’t focus on the regressive nature of the cut. Others, like those from self-proclaimed PFD defenders Senator Shelly Hughes (R – Palmer) and Representative Sarah Vance (R – Homer), just regurgitate the Dunleavy administration’s press release without noting the deficiency or its impact.
So, as we have done before, we will use one of these columns to address the level of the cut and its impact on Alaskan families by income bracket.
Calculating the level of the PFD cut at the aggregate level is easy. Using data available from the Permanent Fund Corporation’s monthly “History and Projections” report, we (and others) can easily calculate, to use the words of the applicable statute (AS 37.13.140(a)), the gross amount of the “income available for distribution” from the fund. The annual level of the cut is the difference between that and the amount appropriated by the Legislature for distribution, which is easily calculable from the annual appropriations bill.
For dividend (calendar) year 2024, the “income available for distribution” calculated per the statute is $2.34 billion. On the other hand, the amount appropriated by the Legislature, including both the amount being distributed as the PFD and the amount euphemistically described as the “energy relief payment,” totals $1.10 billion. The difference – the amount of the PFD cut – is $1.24 billion, more than half the statutory amount.
As we explained in a previous column, to put that amount in context, PFD cuts alone (adjusted for the final budget numbers) represent about a quarter of overall projected state revenues. For those who like to claim that Alaska is “fiscally conservative,” the cuts – or, to use Professor Berman’s term, the “taxes” – are being used to plug a deficit in the state budget about the same size on a percentage basis, as the deficit in the federal budget.
Calculating the amount of the cut per individual PFD is more complex. As we explained in a previous column, the amount of the individual PFD is calculated first by making some statutory adjustments to the gross amount and then second by dividing the remainder by the number of approved recipients. The size of the adjustments and the number of recipients are published by the Department of Revenue’s (DOR) Permanent Fund Dividend Division (PFD Division) only in arrears, sometimes a couple of years after the fact.
However, pending the publication of the final numbers, we can make a reasonably close approximation for 2024 using a combination of data available from the Legislative Finance Division (LegFin) and the information included by DOR in its announcement. LegFin reported in its July 2024 Newsletter that the amount available for the so-called “Energy Relief” payment is $190.3 million, the full amount conditionally appropriated by the Legislature as part of the overall budget (HB 268, Section 27). For its part, DOR’s announcement reported that the individual energy relief payment is $298.17. Dividing the former by the latter results in a recipient base of roughly 638,225, a larger number than reported by the PFD Division for 2023 but not out of line historically.
Multiplying that recipient base by the individual amount reported by DOR for the PFD ($1,403.83) equals approximately $896.0 million, indicating a net deduction by the PFD Division of approximately $18.3 million in adjustments from the $914.3 million appropriated by the Legislature. Deducting the same amount of adjustments from the gross statutory PFD level and dividing the result by the same number of recipients results in an estimated 2024 statutory PFD of $3,640 and, compared to the $1,702 being distributed, a PFD cut of approximately $1,938.
As the following chart indicates, while lower than some, on a dollar basis, the amount of the 2024 cut ($1,938) is materially higher than the average size of the cuts made over the past nine years ($1,659). On the other hand, the percentage of the cut is about the same. Over the past nine years, PFD cuts have been about 52% of the statutory amount. The 2024 cut is a bit over 53% of the statutory amount. Put another way, the amount paid in 2024, including the so-called “energy relief” payment, totals about 47% of the statutory amount compared to an average of 48% over the full period.
However, that analysis is only the starting point for calculating the impact of the PFD cuts on Alaskan families. As both the 2016 ISER and 2017 ITEP studies emphasized, and as ISER Professor Matthew Berman reiterated in his column last year, at a household level, the impact of the PFD cut is felt through its effect on overall household income. The lower the income, the more the PFD – and therefore the more PFD cuts – matter.
Using the most recent measure of Alaska household income by income level available – the calendar year 2021 income statistics from the Internal Revenue Service (IRS) – we have calculated the impact of the 2024 PFD cuts (or, as Professor Berman calls them, the “tax”) by income bracket.
To do that, we start by taking the average Alaska household income reported by the IRS for each income bracket for which it provides data for 2021 and adjusting that to projected 2024 levels using a compound annual growth rate (CAGR) of 2.5%. Some might argue we should use different escalation factors by income bracket because, in past years, income growth in Alaska’s upper-income brackets has far exceeded that in the lower-income brackets. However, we have forgone that step because it wouldn’t have a material impact over the short time frame for which we use the escalation adjustment.
After that, we calculate the impact by income bracket by increasing the resulting household income by the level of the PFD cut – so that household income reflects what it would have been at a full PFD – then dividing the level of the PFD cut by the resulting household income, reflecting the impact of the cut as a share of household income. In calculating the adjustment, we use the average household size – the number of recipients – in each income bracket calculated from the IRS data. That recognizes that, in Alaska, households at higher income levels tend to be larger – have more recipients – than those at lower income levels.
Here is the result:
Each quartile contains one-quarter – about 81,000 – of Alaska’s 323,074 households. As the chart shows, within the Top 25% of Alaska households – the quarter of Alaska households with the highest income – the average income at a full PFD is $253,183. Using PFD cuts to fund state government reduces that income by $5,039, or 2.0%.
Using the same breakdown as the IRS, the left columns show the impacts among the Top 10%, Top 5%, and Top 1% of Alaska households. Understandably, as income rises, the impact of using PFD cuts falls. At the average income of the Alaska households with the highest 5% of incomes, for example, PFD cuts to fund state government only reduce income by 0.8%. At the average income of those in the Top 1%, using PFD cuts only reduces income by 0.3%.
The reverse is true, however, as the focus moves down the income scale. For example, within the quarter of Alaska households in the Upper Middle-Income bracket, the average income at a full PFD is $87,497. Because of the smaller household size, using PFD cuts to fund state government only reduces that income by $3,973. However, because of their lower overall income, that still represents 4.5% of total household income.
Again, because of smaller household sizes, using PFD cuts to fund state government only reduces the average income of the quarter of Alaska households falling in the Lower Middle-Income bracket by $3,295. However, because of their lower overall income, that still represents 7% of total household income.
And while the $2,713 reduction in the average income of the quarter of Alaska households falling in the Lowest 25% is lower than in any other bracket, because of their lower overall income, using PFD cuts to fund state government reduces overall income by 14.8%, far more significant than for any other bracket.
In short, as the mantra goes, by using PFD cuts to fund state government, the Legislature is using an approach that takes more as a share of income from Alaska households – indeed, much more – the less the household makes. Again, to reference Professor Berman, the approach is “the most regressive tax ever proposed.”
For context, we also have included on the chart the level of take that would result if all Alaska households contributed the same share of household income toward the costs of state government. That level – 3.6% of household income – is reflected on the chart as a gold dashed line. Using it would raise the same overall amount – $1.24 billion – as using PFD cuts, but in a much more distributionally neutral way. Government action wouldn’t decide winners and losers; all Alaska families would contribute the same.
While using that approach, those in the Top 25% would pay slightly more as a share of income than they do using PFD cuts, the remaining 75% of Alaska families – the 50% in the middle-income brackets and the 25% of those in the lowest bracket – would pay less. Most importantly, unlike as occurs using PFD cuts, no Alaska household would be required to contribute any more toward the cost of state government than any other.
Instead of a mantra of “the less you make, the more we take,” using an average rate approach would result in a mantra of “we take the same share of income to pay for Alaska government from all Alaska families, regardless of whether they are rich, poor, or in between. They all have the same skin in the game. Unlike in the past, we no longer favor the rich over working-class families.”
Alaskans should be aware of the impact of the current approach and options to change it. Alaska’s politicians and the Alaska media should play a significant role in informing them of both.
Brad Keithley is the Managing Director of Alaskans for Sustainable Budgets, a project focused on developing and advocating for economically robust and durable state fiscal policies. You can follow the work of the project on its website, at @AK4SB on Twitter, on its Facebook page or by subscribing to its weekly podcast on Substack.
HONOLULU (KHON2) — It’s the biggest milestone yet in the Hawaiian Airlines merger with Alaska Airlines.
Starting Wednesday, April 22, Hawaiian Airlines and Alaska will operate as one, powered by a single passenger reservation system, essentially the technology behind your entire travel experience.
“The system that connects all of the programs that our guests use, things like our websites, our app, our Atmos rewards program, our Huaka’i program, all of those systems, including employee tools, will be updated as of tomorrow to a more modern single passenger service system that will allow a more stream streamlined and seamless guest experience for all those that are traveling on either Alaska or Hawaiian that will allow a more stream streamlined and seamless guest experience for all those that are traveling on either Alaska or Hawaiian,” said Alisa Onishi, Hawaiian Airlines Marketing Manager.
By midnight tonight, the Hawaiian app goes dark, replaced by a new combined Alaska-Hawaiian platform, marking a major shift in how you book and manage your flights.
“If you download our new single Alaska-Hawaiian app, you’ll be able to manage your bookings all in one place, make changes, cancellations and a lot more self-service features that our guests have been asking us for for quite some time now that you couldn’t do on the old app,” said Onishi.
Behind the scenes, this moment has been three years in the making. Alaska announced its $1.9 billion acquisition back in 2023, with approvals and integration steps unfolding through 2024 and 2025.
At the airport, much will look the same, but the process is getting an upgrade. Travelers are encouraged to check in ahead of time, using the new app, then use updated bag tag stations to print tags and drop bags faster.
“You scan your boarding pass, prints out the bag tags. You can pay or prepay online or pay at the stations and then drop your bag, so you’ll get through the airport a lot quicker,” said Onishi.
Airline officials said the goal is a more seamless, self-service experience, something customers have been asking for.
Still, not everyone is convinced.
“Even today, when I was trying to get my boarding passes, there was a Hawaiian-Alaskan app that I went to, and then it referred me back to the Hawaiian app. So I didn’t know what application I was supposed to be using, but ultimately, it worked out to a point,” said Ethan Christensen, who was standing in line at customer service to confirm his flight for tomorrow. “But yeah, we’ll see. Hopefully, it gets better. I mean, I know these things take time, especially when you’re kind of merging two big things like this, but the outlook is positive for me because I know it’s a good airline. Hopefully it stays that way.”
The call centers are not going away, and customer service desks will remain at the airports for those who need one-on-one help.
Airline leaders acknowledge the transition so far hasn’t been perfect, but said this milestone is meant to fix many of those issues.
The state agency leading some of Alaska’s most polarizing development projects has approved a new communications budget, saying it needs to do a better job telling its own story amid attacks from critics.
The state-owned Alaska Industrial Development and Export Authority is run by a former chief of staff to Gov. Mike Dunleavy and is charged with promoting economic growth and expanding natural resource extraction and exports.
It is leading work to develop state-owned oil leases in the Arctic National Wildlife Refuge and also hopes to build two controversial new roads to access mining prospects in Northwest Alaska and outside of Anchorage.
Those projects have drawn sharp opposition from conservation organizations and other critics, including lawsuits, critical op-eds and campaigns that have labeled the agency “Bad AIDEA” and caricatured its leaders.
At a meeting in Ketchikan this month, board members, with no public discussion, authorized AIDEA’s staff to spend up to $700,000 a year on a new communications budget — formalizing a plan that the agency says was previously budgeted inconsistently through spending on individual projects.
The new communications plan, the agency said in its formal resolution authorizing the spending, will “ensure proper public engagement, transparency, and stewardship of the authority’s mission.” The money could go toward trade shows and conferences, responding to media inquiries and “other communications-related needs,” according to the resolution.
The agency’s executive director, Randy Ruaro, referred questions about the plan to Dave Stieren, an AIDEA employee who ran an advertising agency and hosted a conservative talk radio show before joining the Dunleavy administration.
Stieren said he could not provide exact figures on AIDEA’s past communications spending, but he acknowledged that the new plan should allow the agency to meaningfully boost its public profile.
The $700,000 a year, he added, is a limit, and the agency will set a final budget through a request for proposals process.
“Mothership AIDEA has done, frankly, little to nothing on a consistent basis to tell our story,” Stieren said in an email — particularly when it comes to its loan programs that have helped finance tourism and hospitality businesses, like the Alaska Club fitness chain and Anchorage’s Bear Tooth pizza restaurant and theater.
“We’re far more than roads,” Stieren said. “But since we’ve really not promoted or showcased our efforts in traditional finance areas, I understand the narrative or lack thereof that folks may have.”
Stieren has also personally defended AIDEA on social media, including over the weekend — when he posted a conservative news website’s positive story about an agency-owned shipyard and said that “when commie libs attack AIDEA, they attack projects like this.”
AIDEA’s board chair, Bill Kendig, declined to answer questions about approval of the new communications budget when reached by phone.
At the Ketchikan meeting, one AIDEA critic, Melis Coady, credited the agency with formalizing communications spending as a “step toward accountability.” But she said that the plan doesn’t “deliver the transparency it describes” because it gives Ruaro, the executive director, authority to approve communications spending, and only requires that he report it to the board if asked.
“The authorization is broad, the dollar amount is undefined, and expenditures are approved solely by the executive director,” said Coady, who leads a conservation group called the Susitna River Coalition.
Ruaro, in an email, said AIDEA will issue reports on communications to board members “whether requested or not.”
Nathaniel Herz is an Anchorage-based reporter. Subscribe to his newsletter, Northern Journal, at northernjournal.com.
In exchange for living in what is perhaps the country’s most beautiful state, Alaskans sometimes have to do without: professional sports teams, Trader Joe’s and, well, sunlight for half the year. But we make up for it with the Iditarod, reindeer sausages and chasing the aurora borealis. In other words, we often have to make our own fun. And by “fun” I mean “beer.” Those words are interchangeable, right?
Beer is a big part of life for Alaskans. We hike with it, camp with it, boat with it, cook with it and pair it with foods like the stuffiest of sommeliers. We throw it monthly birthday parties like the First Tap events at Broken Tooth Brewing Co. (otherwise known as Bear Tooth Theatrepub and Moose’s Tooth Pub & Pizzeria), complete with national musical acts like Modest Mouse, Clinton Fearon, and Norah Jones. We even occasionally do yoga with it (at downtown’s Williwaw Social). In other words, we take it everywhere and we take it seriously.
Beers from the state’s biggest brewery, Alaskan Brewing Co. based in Juneau, might already be in your refrigerator if you live in one of the 25 states where it’s available. Established in 1986 by Marcy and Geoff Larson, it was the 67th independent brewery to open in the country. With a steady line of signature brews, including their most recent “Wildness” beer, it’s the most well-established of all the state’s breweries. Expect seasonal specialties that incorporate ingredients like cranberries, raspberries, locally roasted coffee, locally grown white wheat from the Matanuska-Susitna area and even Alaska spruce tips. Ubiquitous around Alaska, this is our Papa Beer, if you will (I’ll show myself out).
But Alaskan Brewing is just one out of the more-than 50 breweries, distilleries, meaderies and cideries in the state (for an excellent list visit brewersguildofalaska.org). And while almost half of them are in Anchorage or within a short drive of our state’s largest city (including the relatively populous communities of Girdwood, Eagle River, Palmer and Wasilla), some of our most remote ports of call and tiniest towns are also in on the brewing action (I’m looking at you, Cooper Landing Brewing Company in Cooper Landing, population 231).
The ever-expanding Denali Brewing Co. in Talkeetna (population 997) may be a small-town hero, but it’s anything but small. Their four signature beers — Mother Ale, Chuli Stout, Single Engine Red and the ever-popular Twister Creek IPA, as well seasonal brews like Slow Down Brown and Flag Stop Milepost #3 — are year-round mainstays of summer barbecues and winter bonfires around the state.
This brewery is also home to the more recently established Alaska Cider Works, Alaska Meadery (featuring “Razzery,” a mead made with raspberries, sour cherries and apples) and Denali Spirits (featuring vodka, gin, whiskey, and “smoke” whiskey), because when you’ve fermented one, why not ferment them all?
(Denali Spirits’ canned cocktails, especially their blueberry mojito, have been so popular in Anchorage that at one time there was a Facebook page largely dedicated to tracking them down. Luckily, supply has since caught up with demand.)
Some breweries are even more remote. Ports of call and island hopping here can be one way to get your fill of hops. Breweries can be found in Ketchikan (Bawden Street Brewing Co.), Kodiak (Kodiak Island Brewing & Still, Double Shovel Kodiak Cidery, and Olds River Inn), Homer (Homer Brewing Co. and Grace Ridge Brewing Co. for beer, and you can also check out Sweetgale Meadworks & Cider House for hard cider and locally sourced meads featuring ingredients like nagoonberry), Sitka (Harbor Mountain Brewing), Seward (Seward Brewing Co. and Stoney Creek Brewhouse), Valdez (Valdez Brewing and Growler Bay Brewing), and Skagway (Klondike Brewing Co. and Skagway Brewing Co.).
Of course, many trips to Alaska begin and end in Anchorage. And if, during your travels, you’ve foolishly left some beers untasted, you can make up for lost time in our state’s biggest city which boasts — let’s face it — a ridiculous number of exceptional craft breweries.
Downtown’s Glacier Brewhouse specializes in oak-aged English and American West Coast-style beers, 13 of them, from blondes to stouts. Beneath the floor of the Brewhouse is a “Wall of Wood” comprised of casks of special release beers that are conditioned in oak barrels once used to age wine and bourbon. The history of the oak imparts “mother tongue” flavor characteristics, like vanilla and coconut, into these limited edition brews. Opt for one of these unique beers or choose from their flagship choices like raspberry wheat, oatmeal stout, imperial blonde, Bavarian hefeweizen or a flight that includes them all.
Down the street is 49th State Brewing Co., which expanded into Anchorage from its original location in Healy, at the edge of Denali National Park and Preserve. If you are unable to visit their flagship location, where you can sip beer while playing bocce or horseshoes on the lawn, you can catch up with them here. There’s a unique selection that includes beers like Smok, a smoked lager, as well as seasonal offerings like the Tiger’s Blood Sour, an homage to shave ice described as ”ferociously fruity.” Or there’s “Apple Fritter Ale,” with hints of cinnamon, icing, caramel, and vanilla. This location also boasts some of the best views in Anchorage and an expansive outdoor rooftop patio.
Just about all of the full-service restaurants in downtown Anchorage proudly feature some variety of Alaskan beers. In the heart of downtown, Humpy’s Great Alaskan Alehouse prides itself on a huge selection of beers, both international and local. Tent City Taphouse offers a diverse and carefully curated list of 24 rotating local brews, including their house beer, Tent City Tangerine IPA brewed by Glacier Brewhouse. Tent City regularly hosts “Taste of the North” beer dinners featuring Alaskan brewers. One, in collaboration with Grace Ridge Brewing Company, featured smoked salmon canapes with Black Pepper IPA, classic beef Wellington with an Oystercatcher stout and roasted honey lamb chops with a Winter Cranberry Ale.
If you have transportation around the city, treat yourself to a brewery tasting-room tour. Found in unassuming little side streets in the more industrial areas of Anchorage, some of our best beers can be sipped and savored at the source. Finding these funky little spots can feel like being invited to a secret party. And it’s a glimpse into Anchorage’s most authentic beer culture.
In midtown, Onsite Brewing Co. has unique, small-batch brews in a funky relaxed environment. Further south, King Street Brewing Co., Turnagain Brewing, Cynosure Brewing, Magnetic North Brewing Company, Brewerks, and one of our newest, Ship Creek Brewing Company are all within a stone’s throw of one another. If you’re lucky, you might run into one of Anchorage’s popular food trucks parked outside, so you’ll have something to wash down with your flights. Depending on the day, you might find reindeer sausages, pad Thai, cheesesteaks or pupusas. On the weekends, Anchorage Brewing Company features a top-notch in-house pop-up restaurant, called Familia, with a rotating menu featuring local Alaskan ingredients.
One of the newest and furthest south breweries, while still in the Anchorage bowl, is Raven’s Ring Brewing Company, which is a brewery/winery and meadery. From a traditional IPA to a Concorde grape wine called Grape Juice to a rotating Vintner’s pour like Sweet Peach Jalapeno mead, this ambitious operation is challenging the notion that you can’t please everyone.
Other Anchorage points of interest for non-hoppy but still home-grown adult beverages include Anchorage Distillery, Zip Kombucha, Double Shovel Cidery and Hive Mind Meadery.
If your travels are over and you still haven’t had your fill, check out the Silver Gulch Brewing & Bottling Co. inside Terminal C at the Ted Stevens Anchorage International Airport on your way out of town. An offshoot of the flagship Silver Gulch brewery in Fox, Alaska (about 10 miles north of Fairbanks), this location has a bar and restaurant, and a retail shop carrying growlers of their own brews as well as those of other Alaskan brewers and distillers. Last-minute souvenir shopping never tasted so good.
Before you start your great Northern beer safari, bear in mind that tasting rooms often have limited and varying hours, so always double-check before planning a visit.
Whether your travels take you to fine-dining restaurants, low-key alehouses or even rustic cabins in the woods, make like an Alaskan and fuel your adventures with one of our beloved, home-grown brews. When in Alaska, drink as the Alaskans do.
Mara Severin is a food writer who writes about restaurants in Southcentral Alaska for the Anchorage Daily News.
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