Rags or riches?

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By DICK RANDOLPH

Let’s take a look at the magnitude of the amount of oil wealth we have spent–not invested–since the advent of oil production.

As I stated in an op-ed of April 9, 2020, Gov. Hammond frequently said, “it was easy to be governor at that time because there was enough money to give everybody everything they wanted!”

Unfortunately, that attitude was held by a majority of Alaskans and their representatives. It was “Katie-bar-the-door,” but there just were not enough Katies in office. Over the next 40 years we received and spent approximately $160 billion, with very little sustainability to show for it.

Just how much cash is that?  

One billion dollars equals $1,000 – thousand – million; $160 billion is 160 times that amount. Keep in mind that the population of Alaska in the 1970s was around 500,000 and is now only about 730,000. What’s the per capita amount? Go ahead and do the math.

What have we done with this vast, almost unfathomable amount of wealth, which was collectively owned by Alaskans and appropriated by their representatives? The often-stated premise, “easy come easy go” applies to Alaska’s budgetary history in spades.

A few examples I have used over the years illustrate just the tip of the iceberg of this irresponsible spending and the minimizing of the negative effects on future generations.

First, and probably most significant, has been the buildup of a huge, wasteful and unsustainable bureaucracy at all levels of government: State, Borough, City, and Village.

Second is a massive and unsustainable per-capita subsidization of many small villages with housing, make-work jobs, transportation, communication, education, infrastructure and more.

Other examples include the ill-advised and hugely expensive, now mostly defunct agricultural projects at Delta Junction and Point McKenzie; the empty grain elevators in Valdez and Seward; and mega projects like the electric plant built decades ago at Healy.

State government has also provided billions of dollars to build infrastructure in our cities, some of which was appropriate such as roads and other necessary utilities.

However, much of it was more like unnecessary superstructure, which now has to be used and maintained; adding significantly to our current budgetary problems.

In spite of this ”kid in the candy store” spending mentality, Alaska is still the richest state in the nation. No other state has a $50-$70 billion savings account, and neither will we for long if we don’t make some very wise and critical choices very soon.

Our choices are few and painful.  We can impose taxes on Alaskans. We can cut the state budget to a sustainable level.

We can keep on doing what we have been doing and in the course of a few years deplete the corpus of the Permanent Fund. Or, of course, there’s a combination thereof. 

Thank God and previous generations for enshrining the Permanent Fund in the Constitution. The current legislators cannot spend a dime of it without an affirmative vote, which requires a 2\3 vote of each the House and Senate and then a majority vote of the people. It’s a pretty substantial firewall but don’t count that possibility out. The Permanent Fund earnings plus other income can provide billions of dollars a year to adequately fund a rational level of government. 

Thankfully, we did not spend all of the $160 billion, but collectively much of our decision-making was based not on current needs, but mostly on current wants.

Again, as my friends Rick Halford and Clem Tillion stated in their recent article promoting the Permanent Fund dividend,” we clearly spent too much and saved too little.”

We could have grown a nest egg of possibly $100 billion instead of the current $50 – 70 billion. Just the earnings on $100 billion could have provided him a more buoyant life preserver in times like these.

We have had a couple of pretty remarkable achievements that have served the individual Alaskan citizen very well. The dividend, over the last 40 years, has provided $23,973,499,973.43 directly to the citizens of Alaska, which has greatly enhanced our lives and communities.

In addition, we repealed the state income tax in 1980, which left another roughly $25 billion in all of our bank accounts to spend or invest as we saw fit.

Clearly and for variety of reasons we Alaskans are at a critical juncture and the decisions we make going forward will dictate ours and our children’s future.

Dick Randolph is a longtime insurance agency owner in Fairbanks, who was the first person to ever be elected to a partisan office under the Libertarian Party banner when he won in 1978 and joined the Alaska House of Representatives. He was re-elected in 1980. Randolph successfully advocated for the repeal of the state income tax and since 1982 Alaska has remained the only state where residents pay neither an income nor a state sales tax. 

15 COMMENTS

  1. Dick Randolph, Thank you very much for your email to this site. We also very much need the Petition “None of the Above” that I helped to carry for signatures many years ago. It would have taken place except for it was not carried in enough areas of the State because of a lack of money at that time. It is still on the internet but no one answers my emails to the address given. I am sure you remember this Petition and I would very much like to hear from you concerning this matter. It is way overdue. [email protected] Seymour Marvin Mills Jr. sui juris

  2. An accurate assessment of the manifest fiscal tragedy that is our legislative legacy for 40 years. The list of supremely idiotic expenditures is barely touched on in the article but should move every Alaskan that works for a living to be concerned about they are going to be required to support this lunacy if the welfare state that has been created is allowed to continue unabated. The unfortunate truth is that it will go on until some truths are represented and elected officials voice those truths and take appropriate action to put the state finances on an achievable trajectory. I have been in Alaska 63 years and work with my hands, so financial independence has not been achieved so that I might attempt to gain public office. I have watched this complete disregard for positive results for the state with this discharge of cash, to no avail. It may require personal sacrifice by some to save the state from ruin.

  3. As usual, a wonderful analysis by Mr. Randolph. Was it the captain (government) who encouraged the drunken sailors? Or did the drunken sailors demand the captain join them? Anyway, its morning and time to sober up. Nothing but chore duties and long hours until the next shore leave.

  4. Mr. Dick Randolph is point on although I’d advocate for state sales tax long before a income tax this state is hard enough on living costs for seniors and now small business and middle class to lower class. A fixed sales tax gets everyone drug dealers, to tourists no one escapes paying into the economy use a fixed rate only changeable by the people’s vote not the legislation. The real problem here is the out right theft of the money on pet projects, special interest groups, legislators. Take for example the $300 mil. on a total failure on the Anchorage port job now expected to run over $400 mil to fix and the power plant replacement that has surpassed all budgetary calculations on a plant that only run at half capacity, oh and lets not forget the Knonos/sap project that has surpassed $140mil and still counting and the overtime that is spent in each department to fix on a weekly basis not even in the calculations. then we get to the back door deal ARCA just signed off on with the MLP/ Chugach electric company another monopoly was made just like Enstar’s deal long ago. Oh and by the way Anchorage the top 5 users got a deal with that sale from .07 cents per kw to less than .04 cents per kw bet you can’t guess who’s going to make up the difference. So the point is Alaskans before you vote remember do your homework to see who your voting for. And even with that wolves come disguised as sheepdogs to lead you astray.

    • Don’t buy (or sell) the lie that perpetrators of epic waste, fraud, and mismanagement should be rewarded with a sales tax, or any other tax.
      .
      Voting in Alaska may become irrelevant unless productive Alaskans figure out how to prosecute the Great Alaska LeDoux Vote Experiment and ditch Anchorage’s easily corruptible mail-in vote system.
      .
      Until then, rags for productive Alaskans, riches for the ruling class, yes?

  5. I think spending on infrastructure was short changed in the era that Mr Randolph writes about. Sure we blew $ on silly stuff but we failed to spend on building roads into areas that have great mineral potential. In fact, I think the last new highway was the road from Skagway to the border , which was funded prior to oil money, (1976). My point is that while saving $ might be good, investing in something that will provide for future economic growth is good also.

  6. Representative Randolph, to my knowledge, is being modest. It is my understanding that NO person is more responsible for eliminating the state income tax than Dick Randolph. Thank you, my friend.

  7. Thank you, Dick. Great message. Alaska’s funds were mismanaged because we made spending dependent on revenues. That mentality still exists. It’s human nature. The more we have the more we spend. Even today’s cut-hungry governor thinks that.

    Bluntly, we didn’t save fast enough for today’s rainy day. You’re right, we could have and should have a PF worth $100+B by this time, kicking out enough for an entirely manageable state budget, plus giving everyone a substantially bigger PFD.

    You mention two courses from here on out: either tax ourselves or reduce our budget. Neither is doable. Taxing ourselves will never provide enough but a fraction. And reducing the budget will not suffice PFD-dependent Alaskans.

    Instead, let’s make it a goal to get the PF to $100B as fast as possible, in the next 5-7 years. Find ways to do that. Say, increase royalties going into the PF from 25% to 50%. Have incentives for agencies to spend under budget. Roll out zero-based budgeting.

    Oh! 5h1+! We have 9-Dollar oil@#! Scratch all that, just hold on to your trousers.

    Alaskans were gritty once. Now, we’ve become nitpicky. Dick, you represent the grit. We need to hear more from you. And from others like you. Especially during this gritty time.

  8. Anyone who knows Dick Randolph also knows that he has had the same message about government since 1976.
    He has stated over and over that government is the problem, which forces too many regulations on it’s citizens. But what about insurance? Automobile insurance in Alaska is mandatory. Dick Randolph has made millions of dollars as a State Farm agent selling mandatory auto insurance. (State Farm is one of the worst for paying out on legitimate claims). Ask Dick Randolph who is the father of the PFD? He will tell you that he is. I once asked Jay Hammond the same question and he answered this way, “Dick Randolph. At least that’s what he told me.” Dick Randolph ran for governor as a Libertarian in 1982. He had close to 30,000 votes. He ran again in 1986 as a Republican but collected only half as many the second time around. He was viewed as an opportunistic party-switcher. Mr. Randolph’s political flame flickered out in a late 1980’s state Senate race in which he was handidly defeated in the primary by a candidate half his age. It has been a bumpy political road for Dick during the past 45 years. He has made a bit of a comeback since 2018 when he helped forge the large PFD payout platform for Dunleavy’s candidacy. But at what price for the governor? One might say that Dick is an old warhorse who never won a war. A dragon slayer who tangles with geckos. Dick has been fighting the demons of government for most of his life. And he’s earned millions in the private sector while doing it. Dick’s political work over the decades is largely a product of his dedicated army of volunteers. The folks who worked tirelessly for Dick. Funny thing. Dick never mentions them. And that includes his writers, some who even authored the books that Dick signs his name to.

      • Snuffy must have served in the Legislature the same time as Dick. Though Dick’s message is broadly consistent, he is also all over the map in particularities. Case in point: Years ago, he stated that the Permanent Fund should be divided up by the number of qualified resident Alaskans and a check sent to each. That would mean ……..no Permanent Fund after the last check was mailed out. No money to invest for Alaska’s future. No money to pay for roads. No money for the Troopers. So how would state government then be funded? TAXES. The very thing that Randolph despises. Libertarianism is great if you have a large personal bank account, several homes paid for, a business in which customers are forced to buy your product, and disciples who will blindly follow and do your work for you. Libertarian theory works productively for selfish individuals. Those who live meagerly and have little to spare, will not receive support or compassion from a Libertarian. Randolph has done very well for himself financially and had set-up his family in the insurance trade. But Alaskans rejected Randolph as their political leader decades ago. For good reason. Personality played a part in that rejection. The rejection of ego-driven selfishness played the other part.

        • Very, very well-stated, Snuffy and Donna. You both have an esoteric view into the inner-workings of Dick Randolph’s brain.

  9. Everyone seems to have a host of ideas for fixing the budget problem (negative cash flow). It keeps coming back to various taxes, stealing even more of the PFD, hiring more “experts” and forming new commissions to tell Alaskans what we already know. We’re running out of money. There, is that so hard? The solution is slapping all of you in the face but no one says anything. Cut spending. Pare the workforce to essentials. For any population the size of Alaska’s, having 10,000 public employees with accompanying benefits and retirements, amounts to more than a little insanity. The problem has been and still is—spending. Quit spending on everything that catches the imagination. Let the “public” institutions feel the same pain the citizens feel. Let the politicians feel it. They sit on their little ‘thrones’ and tell everyone else how we must pay for their incompetence. $48 million of the ‘disaster’ funding on “education”? Wonder where that’s destined to go. There is currently very little real education. Just a lot of leftist dogma and propaganda that’s being called education. Address the real problem with the only real, sustainable solution. Quit spending and get rid of all the ‘fluff’ in the public workforce. There really is no other option.

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