Alaska government spent too much, saved too little - Must Read Alaska
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Alaska government spent too much, saved too little

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By CLEM TILLION

Growing up in the period between the first and second World Wars, the language we used included some old-fashioned terms. Expressions like “cash on the barrelhead” and having “too many dead horses” were common in the commercial trades.

Cash on the barrelhead referred to sales made in a tent or store where the top of a barrel was the point of sale. One can easily imagine sales made like this during the Klondike Gold Rush.

The dead horse designation wasn’t specific to Alaska. Back in the day, such was the need for transportation, folks would often buy a horse on credit. Because horses were essential, it was common enough to go deep into debt to procure a horse. If the horse died from cholic, the seller still expected payment. The poor soul who now needed a new horse still had to pay off the dead horse.

Alaska has a lot of dead horses. Not like the literal ones found along the old White Pass route where hundreds died and remain in Dead Horse Gulch outside Skagway. No, the ones I’m thinking of are the dozens of “dead horses” that our state government signed up for in the last four decades. Alaska’s government spent too much and saved too little of the oil revenue bonanza we obtained from Prudhoe Bay and other public oil patches.

Like sailors hitting port after a long sea voyage, our politicians went wild with spending starting the 1970s. We increased spending on new programs, juiced up salaries for employees and built projects willy-nilly as though the oil revenue would never end.

We did some things right. We set up a Permanent Fund so every dime of revenue derived from oil lifted from public lands wasn’t spent.

Here is the key thing to remember — we only saved 25% of our massive oil wealth in the Permanent Fund. All the rest of our oil wealth was spent by the politicians and a lot of it was blown.

The Permanent Fund dividend, which is Alaskans’ little slice of earnings from their savings account, is paid from the earnings generated by the trustees of the Permanent Fund. The PFD payments have historically not been paid with oil revenue — the dividend is derived from earnings achieved on savings investments.

At this point, the politicians are hooked on spending even though oil revenues have fallen. With revenue down, the politicians are hell-bent on spending all the available funds, including earnings from the Permanent Fund investments. This means they’re content to short the PFD in their quest to spend, spend, spend. The ugly truth here is that even the Permanent Fund earnings are not sufficient to pay for a sensible PFD and for all the dead horses we bought over the years.

I believe in paying a decent wage and proper benefits for public employees, but we have way too many judges, administrators and bureaucrats who were given a platinum-plated retirement package. Our current retirement obligation for public employees and teachers exceeds $6 billion. That’s billions, not millions, and represents a lot of “dead horses.”

We expanded programs that were deemed desirable but not obviously essential or sustainable. More “dead horses.”

And all the while, we continue to elect too many politicians who promise the moon if elected, as if there were no need for change.

The situation we face as a people is tough but not beyond repair. Our fiscal house in Alaska is in shambles. Too many of our elected and appointed officials are content to carry on as if no change is needed.

We need to first make targeted cuts and consolidation of government. Anyone who claims we have “cut to the bone,” as is frequently said, isn’t paying attention and probably never field-dressed a moose. Trimming state government is not only possible, it is essential.

We also need to settle the annual brawl that takes place with regard to the Permanent Fund dividend. The dividend is not welfare or just another appropriation. The PFD is a modest portion of earnings that comes from the wealth generated by people’s Permanent Fund. The Legislature must adopt a resolution putting a constitutional PFD formula before the voters.

After making targeted consolidation and cuts and after protecting the rights of Alaskans to receive a PFD, then and only then should we consider just how to pay any additional costs necessary to support a right-sized state government. If that includes taxes, so be it. I lived in Alaska when we paid our way for the services we needed. I did it before and will gladly do it again.

This is the greatest state in our union, by far. We need to stop fooling around and get on with the task of governing this state in a mature manner. We need to do the best we can, even as we clear off the dead horses we are carrying on the ledger book. Working together and sacrificing together, we can get the job done.

Clem Tillion, former President of the Alaska Senate, lives in Halibut Cove.

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  • “Our current retirement obligation for public employees and teachers exceeds $6 billion.” I am astonished at this “fact.” The last time I looked at the Retirement Fund, managed by the Dept. of Revenue, it had about $38 Billion in it. Currently we are taking about 3 Billion out of the Permanent Fund annually with the POMV. I don’t know if this is an obligation to pay 6 Billion in the future or if it’s meant to reflect the current annual retirement payment usually referred to as Pers and Ters. If the annual retirement payment was closer to 2 Billion I would feel a lot better.

  • Thanks for your opinion. I share your point of view. Unfortunately, in my point of view, our politicians are worse than just promising the moon just to get elected but continuing the same spend-spend-spend mentality. It’s the voters. They actually WANT THIS. The people who live within their means are a very slim minority of Alaskan citizens. No one sees any problem with being leveraged to the hilt. Most Alaskans (most Americans for that matter) don’t see any problem with being buried in debt. Why not run a state the same way? It’s a very ugly situation. I can’t change it. I’m cynical. I can’t feel sorry for people who drive new cars, own a fishing boat, live in $650,000 houses on Hillside, get their nails done, drink Starbucks Macchiatos, and haven’t got two nickels available when their dryer takes a poop. I almost want them to fall on their faces. I almost want them to fall into bankruptcy and become totally insolvent. I would love to find out their credit score. My cynical feeling extends straight over to those politicians who don’t simply balance the budget and support economy and business. The hatchets are out. They hate America. They especially hate Alaska because our citizens have reaped the benefit of a free market economy and a blue collar industrial state. We produce raw materials, resources, fish, and oil. We have processing facilities and pipelines. Blow it all up. Light it all on fire. Destroy it all. And pillage those of us few minorities who choose to spend less than they earn. It’s simple–and it’s the #1 thing our politicians hate the most. And the citizens LOVE IT.

  • Exactly. And that is why I expect the Proposition raising taxes on the oil industry will fail. Most Alaskans realize that they will never see a penny of any increase in taxes. Instead it would all be gobbled up by the insatiable appetites of education funding, Medicaid, government salaries & pension obligations.

  • “The Legislature must adopt a resolution putting a constitutional PFD formula before the voters.”

    I have always believed that the original formula was constitutional, and worked very well. In some sidewinding fashion the politicians, in their unchecked greed to satisfy special interests, have managed to steal the peoples share of the resource wealth!

  • “If that includes taxes, so be it.”
    .
    Who’s “we”, Clem? What’s this “sacrifice” suddenly needed to save our self-destructive government while “we” non-government employees go broke because government killed our economy? And what the hell is “… so be it”, kind of an oh shucks acceptance of new and improved taxes because “we” certainly don’t want to kill cash cows made of cute and cuddly folks who look like us?
    .
    No, Clem, no taxes.
    .
    Not while the Denali Commission remains in existence, the beneficiary of a money pipeline directly from the U.S. Treasury, run by the Alaska Department of Labor and Workforce Development Associated General Contractors of Alaska, Alaska Federation of Natives, Alaska Municipal League, University of Alaska, and the Alaska AFL-CIO. (denali.gov/about/meet-the-commissioners/)
    .
    Not while major Alaska cities and boroughs have multi-million or multi-billion dollar “rainy day” slush funds safely stashed out of taxpayers reach, while the Alaska Mental Health Trust controls nearly $700M in cash and investments, while the University of Alaska Foundation controls nearly $250M. (anchoragedailyplanet.com/159021/crawford-a-billion-here-a-billion-there-alaska-mental-health-trust-and-the-university-of-alaska-endowment/ -link since removed)

    adn.com/opinions/2019/05/18/alaska-agencies-and-municipalities-are-hoarding-cash/
    .
    Not while Alaska’s education racket is nationally recognized as being among America’s worst-performing, most expensive. (usnews.com/news/best-states/alaska)
    .
    Not while investors spend upwards of $20M a year on the lobbyist half of Alaska’s lobbyist-legislator team to buy or rent politicians. (Alaska Lobbyist Directory)
    .
    First things first, Clem. Who in his right mind wants to reward the very people who deliberately spent the state into oblivion?
    .
    Why not instead commission a forensic audit of state finances and management practices, use the factual results to stop the hemorrhage, see what parts of the mismanagement might be eligible for RICO prosecution.
    .
    Or should “we” simply stiff productive Alaskans already battered by government-caused China-flu recession with brand-new taxes and kinda hope the ones who stay behind after another 1980’s-style exodus can be taxed enough to support their government in the style to which ther leaders have become accustomed?
    .
    There’s your “so be it”, Clem.

    • Well said Morrigan.

    • ” Who in his right mind wants to reward the very people who deliberately spent the state into oblivion?”
      Exactly right. Get rid of all the GOP pols, especially here in the valley, who got us to the edge of this financial cliff.

  • The oil wealth goes to the oil corporations. Alaskans own the oil as per the Alaska Constitution, but they never see the wealth.

    • I must respectively disagree with you Earl….we have all, in many ways experienced some of the oil harvest wealth but the administration of that wealth evenly to Alaska’s citizen has certainly not always seemed fair. its use to fatten an oppressive Government is just one great example of that unfairness….

  • Talk about a déjà vu.
    I lived in the area of Flint Mi. In the seventies. Flint too absolutely needed their “ fair share “
    All the while gm had other cities begging them to come and the could keep their fair share. Just please give jobs to the community.
    A rising tide…….. or at least until government get involved.

  • For an excellent read and legal interpretation of the Alaska Permanent Fund and how the AK State Supreme Court ruled on the diminished dividend payout by Bill Walker, read: Alaska Law Review article by Attorney Jack McGee, 2020, published by Duke University Law School. “Did AK Supreme Court Get It Right?”

  • It’s around you everywhere, dumbbell Earl. Roads, schools, airports, colleges, ferries, buses, infrastructure, PFD dividends, state worker salaries, matching funds to munies, student loans, state run agencies, ARRC, etc…etc. Time for your nap, Earl.

  • About 25 years ago I was fishing near Seldovia and I noticed all the power lines for an area where nobody lived. After asking about it a local guy said, “Those were installed for Clem. He got the state to do it when he was a senator.” So the state spent millions of dollars to provide electricity to Halibut Cove, where maybe a dozen people lived year round, because one of those people was our conservative columnist— Clem Tillion. Clem is a red headed welfare queen.

  • Tillion, with Hammond and others, ushered in the limited entry fisheries permit system. I believe he may even hold one of those exclusive franchises on public resources. Permits sell for up to hundreds of thousands of dollars; many are owned by Washington and Oregon residents. These permits should have been issued like any other occupational license. That is, doctors, plumbers, and realtors cannot sell their occupational licenses. The billions of dollars of value of fishing permits should be held by our state–not a privileged few like Clem Tillion…. who enriched himself through legislation.

    • Wayne, If I recall that a repeal of Limited Entry was on the ballot back in 1976. The measure went down in defeat. So, in the words of Pogo, “we have met the enemy and… he is us”. Perhaps you were out of State at this time, no doubt attending university and enjoying the carefree experience. During this same time others of us were here, steadfastly building Alaska with sleeves rolled up or “grinding the grist” so to speak. Did you vote in the 1976 election? Those of us that stayed on the home front sure could have used your help. Wayne, there will always be Clem Tillion’s angling , (pun intended) to limit your liberties while enriching themselves, the real question is, where were you Sir, when your logical free market constitutional voice was so badly needed?

      • Robert, just so you know, I was grinding the grist for a technical degree; nothing “carefree” about the experience. Yes, I voted in 1976; I admit I was foolish enough to vote for Carter. However, I returned to Alaska and repaid every dime of my student loan with interest. Used my education to help build the state. No protective privileges or marketable franchises on government resources for me. Just hard work. Can’t say the same for Tillion and the privileged fishermen class he created.

        • Well, Wayne, it is a hard thing to admit that you once cast a vote for the peanut farmer. Perhaps Tillion would think the same today about Limited Entry?
          I wonder. What troubles me more than Clem’s “dead horses” is that we didn’t spend money building infrastructure. You know, roads to mineral rich areas. Not developing this critical infrastructure will impoverish Alaska for generations to come.

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