Alaskans will soon receive our annual dividend checks. This year's $1,022 check for every qualified resident will help Alaska families with things like winter fuel, food and clothes, holiday gifts and saving for college. These checks will boost local businesses and increase local tax revenues.

At the same time, I am keenly aware many Alaskans are disappointed – and some are angry – about the size of this year's dividend. While the average dividend since the inception of the program has been $1,150, many were counting on a larger amount this year. Indeed, this year's checks would have been $2,052 without my vetoes.

How did we get here? Why did I veto roughly half the dividend? The answer requires some context.

When I filed for office, state unrestricted general fund revenues were $7.5 billion. This year, they're $1.2 billion. That's an 83 percent drop.

Please consider that for a moment. Imagine your family's income fell more than 80 percent. Or your business lost 80 percent of its revenue.

You would probably start spending less. We have done that. Over the past four years, unrestricted general fund spending has dropped 44 percent – nearly in half. That's according to the Legislature's nonpartisan budget analyst David Teal.

The budget is now down to $4.4 billion. That's below the spending level called for by the Alaska State Chamber of Commerce and others calling for big spending cuts. And we still have a massive deficit. We could close every school and every prison, and we still wouldn't have enough money to pay for state services.

We simply can't cut our way down to a $1.2 billion budget.

I come from a family of home builders. I've never built anything without a plan. And we can't build Alaska back to prosperity without a plan.

In December, I proposed a plan to balance the budget in a sustainable way. The plan called for a combination of budget cuts – including cuts to oil-tax credits – along with modest tax increases and sustainable use of Permanent Fund earnings.

The idea was balance. We can't do it with cuts alone. We can't do it with taxes alone. For example, it would take a statewide sales tax of 19 percent to raise enough revenue to balance the budget. That's a nonstarter. And I am not willing to balance the budget using fund earnings alone. That would jeopardize our dividends and the fund itself.

Unfortunately, lawmakers failed to pass my plan or any other, leaving a nearly $4 billion budget gap. In the past four years we've drawn down our savings from $16.3 billion to an expected $3.6 billion at the end of this fiscal year. We're burning through our savings at an alarming rate.

I therefore took action to extend the life of our fast-shrinking savings. In June, I vetoed $1.3 billion, including $430 million in oil-tax credits. My vetoes also included roughly half of the money for this year's PFDs. The vetoed dividend money is not being spent. It remains in the Permanent Fund earnings reserve, prolonging the state's ability to pay dividends in the future.

I labored long and hard over the decision. It was by far the most difficult decision I have made to date as governor. However, it is clear we can't continue to use the current dividend formula.

In the past few years, revenues have plummeted while Permanent Fund investment earnings have grown. The current dividend formula would have us spending more on dividends than any other state service – including education. It's not a sustainable path.

If we do nothing, the fund's earnings reserve will likely be depleted within four years. Then dividends will be zero. I don't want that to happen.

My commitment to Alaska and Alaskans has never wavered. I believe we must find a balance between the wants of today and the needs of tomorrow. If we don't make changes, we're on a course to economic disaster. It's a 100 percent preventable disaster, and I will do everything I can to prevent it.

Bill Walker has served as governor of Alaska since 2014.