I was asked a question during a recent radio interview that I didn’t have time to answer fully, so I’m doing so now. The host asked, since I am a proponent of paying Alaskans a full statutory PFD, which services would I cut out of the state budget to do so? It is a good question, but it is framed incorrectly. The proper question should be: after paying the full statutory dividend, how do we fund essential services at a lower cost? Is this possible? The answer is a resounding YES!

We can fund essential services, but perhaps not in the way the legislature has in the past, which upsets special interest groups that rely on state funding for programs that benefit them. One way to deal with this budget shortfall is the privatization of certain state services. Private industry usually does things better and more efficiently than the state government does. The DMV is one example that is being done right now.

There was a time when all transactions relating to vehicles or driver’s licensing had to be conducted in person at a state-run DMV office. This usually meant long waiting times in the lobby until an overworked state DMV employee could help with your transaction. This is still the case if you visit a state-run DMV in person, but fortunately, you no longer have to in many cases. New technology has rendered the traditional DMV offices semi-obsolete. Alaskans can conduct much of their business using the DMV online portal and, more importantly, when in-person visits are needed, private companies now offer the same services. These privately run Tag and Title businesses offer quicker service and more convenience than the state-run DMV offices. They are available even in small towns like Homer.

The best part is that the state doesn’t fund these private businesses. They are funded by charging customers a small transaction fee, which customers willingly pay to avoid the long lines at the state DMV. These private businesses save the state money while making customers happy, which sounds like a win-win situation. This concept could be used for more aspects of state government.

It just takes fearless legislators willing to stand up to the special interest groups to find ways to manage our budget wisely.

That is where the challenge lies. Employees with the state are well paid, unionized, and costly. They have retirement benefits available to them that most workers in private businesses do not receive. Employee compensation is the single component of spending in the operating budget for most state departments, and when the idea of privatization of state functions is explored, the employee unions howl in protest.

One example is the annual school funding budget battle in Juneau. The Alaska Department of Education and Early Development is the single largest department funded in the state budget. Alaska spends ~$23,000 per student to educate kids in this state. Private schools can provide a better education for less than half the cost of state-run schools. If public education used a privatization model like the DMV, it would save a significant amount of money in our state budget, but the NEA Alaska teachers union would oppose this option, even though the DMV has already shown that it works, and the customers (voters) prefer going there.

Even if the public-school advocates won’t admit it, the move to a privatization model is already happening with schools. Over 20% of kids in Alaska don’t use the traditional brick-and-mortar public schools, and that number has increased every year since Covid. Standard state-run schools are facing funding problems because parents are choosing private schools or correspondence/homeschool options for their kids. When this happens, public schools lose funding. That process is irreversible, and the state would be better served if our Legislature focused on providing schools in rural communities without these choices, while facilitating the movement of urban kids to alternate education options. This will provide better education for our kids and save money for the state. This sounds like a win-win situation. Isn’t that what those on the left are advocating for?

Then there are fraud and waste in the state government. If you ask any legislator in Juneau, they will deny it exists and say the Division of Legislative Audit acts as a watchdog to prevent it from happening. However, it is difficult to have much confidence in a self-audit system run by the same legislative body that allocates and spends the money. It sounds like the fox guarding the hen house.

When you look at the gross amount of fraud and waste found in federal government programs, it is hard not to expect similar problems at the state level. There is currently a federal anti-fraud task force being led by Vice President Vance. It has found so much fraudulent spending in the federal government that White House Deputy Chief of Staff Stephen Miller says it could eliminate the federal deficit. Treasury Secretary Scott Bessent said in January that he estimates that 10% of the federal budget is lost to fraud and waste every year.

Applying that same logic to the Alaska State budget, if 10% of the FY2027 budget is lost to fraud and waste, that means the state will waste about 1.39 billion dollars in the next year. Incidentally, that is close to what the state will withhold from the statutory PFD for every Alaskan this year. ($2,650 withheld per person = $1.54 billion). If fraud exists in state government, eliminating it would almost pay for a full PFD. Yet, you don’t hear any legislator requesting a DOGE-style independent audit of its spending. They confidently believe that fraud does not exist and want to push the easy button by confiscating a portion of your PFD to make up for their inability to manage our money wisely.

So, in answer to the radio host who asked me that question, yes, it is possible to pay a full statutory PFD and fund the state government. It just takes fearless legislators willing to stand up to the special interest groups to find ways to manage our budget wisely. Unfortunately, wise and brave legislators are in short supply down in Juneau, so they are resorting to the theft of our PFD to fund state government spending once again.

The views expressed here are those of Greg Sarber. Read more Sarber posts at his Seward’s Folly substack.

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