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.