By MICHAEL TAVOLIERO
For several decades, Alaskans have been told that the state faces a fiscal crisis requiring a long-term solution. Time and again, we hear claims that Alaska has “kicked the can down the road” to a dead end, and that action is urgently needed. Despite this recurring narrative, voters continue to elect representatives who neither demonstrate an understanding of sound fiscal policy nor practice fiscal discipline.
It is time for an Alaskan Department of Governmental Efficiency (ADOGE)!
Since the oil boom—a blessing and a curse—we have seen countless examples of poor decisions in capital projects, many of which have resulted in billions of dollars in losses. Meanwhile, Alaska has witnessed one of the largest expansions of bureaucracy since the era of FDR, unsurprising given that majority members of our constitutional convention were FDR Democrats.
Alaskans have been inundated with warnings about collapsing oil revenues, budget cuts, and deficits. Yet, when state government crafts an action plan, the solution invariably involves expanding government’s role, perpetuating the notion that “bigger government” is the answer to every problem. Politicians insist that addressing Alaska’s fiscal challenges will require painful measures—but the “painful solutions” often translate to increasing revenues through new taxes, the easiest option available to government and not the even simpler action of cutting costs.
Consider Alaska’s history: In 1986, with oil priced under $10 per barrel, state government employed almost 19,900 people to serve a population of under 550,000, with an operating budget of $2.7 billion.
Fast forward to 2024, with oil priced at over $60 per barrel, state employment has risen to 23,800, the population exceeds 730,000, and the operating budget has ballooned to $12.2 billion. While the population grew by 33%, state employment increased by nearly 20% fueled by a 350% surge in operating budget.
Sixty-one politicians — a governor and 60 members of our state Legislature — are responsible for driving Alaska’s costs to this level. Their decisions, guided increasingly by progressive fiscal policies and special interests, will soon push the state’s financial burdens even higher. Proposed solutions aligned with a progressive playbook: higher taxes, expanded government spending, and never kept promises of fiscal reform. These plans include spending the Permanent Fund, reducing dividends, increasing oil taxes, introducing a broad-based income and/or sales tax, and ironically imposing budget discipline, yet Alaska’s government continues to grow.
The question Alaskans must ask is whether the state will follow the new federal path of deregulation and cost-cutting, as the Trump administration returns in 2025. This is a crucial issue for the future of Alaska, a state with the greatest untapped natural resources in the nation. (As a side note, Alaska has an abundance of rare earth elements which will be desperately needed by our nation very soon, yet no plans for processing or refining these resources.)
Unfortunately, the current political landscape suggests that Alaska’s fiscal challenges will persist. Republican lawmakers such as Reps. Chuck Kopp, Louise Stutes, and Sens. Kelly Merrick, Gary Stevens, Bert Stedman, and Jesse Bjorkman are aligned with Democrats. What will this cost the state and the voters who elected them?
Their continued support for Democratic priorities may perpetuate the cycle of higher taxes, greater spending, and diminished opportunities for Alaska’s private sector.
Alaskans must demand real answers and leadership to break free from this dead end of fiscal irresponsibility and chart the right path forward.
When fiscal policy prioritizes government spending over the private sector, this shift leads to a troubling scenario. If government spending is not restrained, it crowds out private sector activity. This creates the worst possible outcome, particularly for Alaska, where the development of underutilized natural resources is stifled by the illusion of prosperity driven by unchecked government growth.
The United States stands on the brink of a transformative era of prosperity and functionality, driven by unprecedented innovation. Five emerging technological platforms—robotics, energy storage, artificial intelligence, blockchain technology, and multi-omic sequencing—are advancing from early adoption to mainstream application. As these platforms mature and converge, they will unlock opportunities that today are unimaginable, consistently driving productivity growth into the 4% to 5% range.
Why should Alaskans—and our progressive state legislature—pay attention? The answer is straightforward: these innovations will fuel nationwide economic growth, creating a rising tide that could benefit all Americans, including Alaskans. However, there is a critical caveat tied to Alaska’s dependence on oil revenues.
Under President Trump’s first term, U.S. crude oil production surged from 8.5 million barrels per day to 13 million barrels per day, driving energy prices down and spurring deflationary economic growth. If this trend resumes and accelerates, production could reach 16 million barrels per day by 2028.
While this will lower energy costs and enhance U.S. competitiveness globally, it also spells challenges for Alaska. Oil prices, adjusted for inflation, could plummet to $30 per barrel—posing a significant fiscal risk for a state heavily reliant on oil revenue.
Meanwhile, global economic dynamics suggest further challenges for Europe and China, which are likely to face prolonged recessionary pressures. This imbalance could lead to increased capital investment in the United States, amplifying deflationary forces domestically through cheaper energy and technological advancements. For Alaska, these deflationary trends will compound the economic impact of falling oil prices yet offer the potential of tremendous natural resource development and support to the lower 48.
Alaska’s policymakers must recognize that a new era of economic transformation is unfolding. While the nation will benefit from reduced energy costs and technological breakthroughs, Alaska faces a unique challenge: adapting to a world where oil revenue is no longer a reliable pillar of the state’s economy.
Can Alaska seek to diversify its economy?
Alaska must recognize the regulatory and investment needs in industries tied to emerging technologies, including technology convergence, digital infrastructure, and precision medicine. The state should work proactively with the Trump Administration to leverage its natural resources effectively, prioritizing the development of untapped resources in ways that align with global market trends and technological advancements.
Fiscal reform is also essential. If the federal government, through initiatives like the Department of Governmental Efficiency, can justify trimming $2 to $3 trillion from the federal budget to bolster the national economy and our future, Alaska—where 56% of the operating budget comes from federal funds—should similarly address its own bureaucratic inefficiencies and shortcomings.
Reducing dependence on oil revenues requires fostering private sector growth and implementing reasoned budgetary practices. By embracing these changes and aligning with national and global innovation trends, Alaska can position itself for long-term prosperity, even amidst economic and technological shifts.
Michael Tavoliero is a senior contibutor at Must Read Alaska
Yes to all of what Mike says. It is time to self-reflect and decide exactly how much government we need and fix ourselves.
nice piece, not sure you’ve ever had signatory authority in private industry. u spot the disease, prescribe an antidote but cite no evidence of recovery. political smoke and mirror phrases. u lack agency
Great article and spot-on!
Good Job Mike.
“……..Since the oil boom—a blessing and a curse—we have seen countless examples of poor decisions in capital projects………”
It hasn’t solely been on the capital budget side. Indeed, today, I’d counter that the abuse is primarily on the operating side, and that the PFD has become untenable, which is why the Legislature and governor steadfastly refuse to increase it to the legendary “statutory” amount.
As the seasons lag in their timing, it seems Alaskan politics lag in the trending national groundswell. We have a very opposite trend happening in our Anchorage government with School board and Assembly left leaning momentum. It seems we have not reached the bottom of the barrel yet. I believe that Anchorage voted more blue than red in our presidential voting. I pray that we will turn this corner in my lifetime!
If only the local electorate would turn out to vote and speak their mind…if only…if only!
We need to privatize everything we can privatize. Government is not the solution it’s the problem. As usual our big potential projects get jammed by mostly outside left wing obstructionist groups who care little about the environment and a lot about milking their supporters check books. These groups have set our country back 100 years.
“I am concerned about fiscal sustainability and I am sorry that we haven’t made more progress,” she said adding that “I believe that the deficit needs to be brought down especially now that we’re in an environment of higher interest rates.” Janet Yellen
Maybe she can get a pardon.
I definitely agree with the statements above. I doubt STRONGLY that the voters in Alaska will allow it. Way, way WAY WAY WAY too much union control over everyone and everything. Unions never cut jobs, never reduce salaries, and never reduce costs. So if the bloated state employee rolls are unionized, and the state/municipalities have agreements with labor unions to produce jobs, or state capital funds are tagged to contractual obligations to hire union workers at union prices, guess where any cost saving initiatives are going to go? Nowhere. Why? Because those union employees (Teachers, tradesmen, state employees) vote. It takes exactly zero thought to understand the barrier. And the voters will never vote against their own pockets.
A very good article by Mr.Tavoliero. His idea about starting Alaska’s own ‘ADOGE’ is a good one. But it would take vision and courage to do it. However, there is no sign our governor has any inclination to take any bold action. Perhaps that is why he has been passed over for any part in the Trump administration.
But if we were to start up a ‘ADOGE’ we could start by first releasing the full and unredacted Kelly Tshibaka report. This is the report in which Governor Dunleavy requested Commissioner Kelly Tshibaka to review the operations of the Division of Elections. The report was completed and immediately cloaked in secrecy. When forced to release a copy for legislators drafting election reform bills, it was very heavily redacted. Not a good start for a ‘ADOGE’.
Sadly, Mr. Tavoliero is spot on about the dreadful political situation in the legislature. Republicans in Name Only joining very liberal democrats ‘in order to get things done’. It points toward likely unrestrained ‘progressive’ spending’ the state cannot afford. It would be very sad that when America experiences an extraordinary Trump economic renaissance, Alaska is left foundering with a dwindling population, no PFD payouts and financial malaise.
Outstanding effort, proactive and timely. Ideas require further guidance along the path. Full marks MT.
Now if there was a way to get the “Republicans” on board to actually do what they were elected to do, then we might see some actual change in our State budgetary process. I can’t understand why those RINOs keep getting elected in their perspective districts. There needs to be some type of accounting by the State Republican Party …
The accountability – and responsibility – resides in the power of the people to VOTE! In every meeting the Republicans discuss rinoism and what might be done about it Basically nothing can be done by the Party that isn’t being done, and nothing can be done over the will of the voters. But we can’t stop trying.
I have my doubts the writer of the article would truthfully articulate and expound to give credit where it is due if any significant amount of time were given to further investigation of why or how he has such rosy cheery news.
When it comes to government, less is more.The public sector has always been and will always be an inefficient allocator of resources.
I appreciate your optimism, it being the Holidays and all, but a soaring economy doesn’t seem to be in the cards anytime soon. I hope I am wrong, but the Biden administration has been feverishly sabotaging the economy that Trump will inherit on January 20th and those efforts will bear fruit for some time. Bet on soaring inflation, high interest rates and an economic downturn in the New Year.
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