Alaska’s fiscal house is in shambles. But we can fix it.

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 is a former President of the Alaska Senate. He lives in Halibut Cove, where he keeps the bears from massacring the chickens in between operating the boat for rural mail delivery.

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