With election over, time to realize Alaska faces huge fiscal challenge …

Fiscal CliffMy appreciation to the Alaska Dispatch News for running the following op-ed piece in both its online and print editions (Tuesday, November 18, p. B4).  The piece ran in the online edition under the headline “Governor-elect will have to cut deep to keep Alaska budget sustainable,” and “Walker must cut deep to make budget sustainable” in the print edition.

Sometimes the buzz created by election campaigns tends to mask what is going on in the “real world.” The most recent Alaska election cycle is a good example. While the Walker and Parnell campaigns debated through the fall about whether the state budget should be cut in the next year by 5 percent, 16 percent or something in between, in the real world state revenues have been plummeting to levels that make those numbers seem like artifacts of ancient history. Continue reading

The elephant in the room …

Last evening, at the first session of the Walker Mallott Transition Team, what some have called the “elephant in the room” — the state’s fiscal situation — took center stage.  To Governor-elect Walker’s credit the session was designed specifically to do that.  As he had told KTUU’s Austin Baird earlier in the day, Continue reading

Alaska Fiscal Policy: Dealing with $80 oil …

At the request of the (Anchorage Municipal) Budget Advisory Commission, yesterday (November 5) I made a presentation on Alaska Fiscal Policy.  When I was first asked to give the presentation the working title was “The need for implementing sustainable budgets.”  Due to dramatic changes since then in the oil markets, however, by the time I gave it yesterday the title was “Alaska Fiscal Policy:  Dealing with $90 $80 oil.” Continue reading

My closing statement …

DebateYesterday a friend asked me to sum up in a sentence my “closing statement” on this year’s state-level (Governor and  legislative) races.

The following — from a 2010 Wall Street Journal editorial looking back on the loss by the Republicans of the federal House of Representatives in 2006 — is what popped into my head: Continue reading

The most important question of this election ….

Dollar signANS oil prices, which as most will recall drive 90% of the Alaska state government revenue, fell again Wednesday to $82.16 per barrel.

The current state budget, which already was $1.6 billion in the red when it passed, is predicated on oil prices averaging $105 per barrel.  (The breakeven price for the budget is roughly $117 per barrel.)

Each dollar change in the price of oil is equal to roughly $90 million in state oil revenues.  That means if oil prices for the year settle at $95/barrel, the budget deficit will grow to $2.5 billion, at $90/barrel to something approaching $3 billion, and at $85/barrel to something on the order of $3.4 billion. Continue reading

Alaskans can handle the truth, even if some are in denial …

Screenshot 2014-10-12 16.48.51Earlier this week, as part of the “It’s Our Future” campaign, we started running web ads that asserted simply, and correctly, that if those legislators who have voted for state budgets since 2012 are “allowed to continue spending Alaska’s money at the rate we are on, you can kiss the #PFD goodbye.”

We made equally clear that, in casting votes to continue spending far in excess of sustainable levels, those same legislators necessarily are “eyeing” the Permanent Fund earnings because, as the state’s best economic analysts have made clear there will be nowhere else for the state to turn to for revenues at a point in the not too distant future .

The reaction by some has been humorous, in a Greek tragedy sort of way.  Rather than deal with the statement on the merits, a few have resorted instead with variations of “you lie.”  I suppose when you don’t have the facts on your side that’s about the best you can do. Continue reading

Bill Walker: “I will … put in place a sustainable budget.”

Web Note 14 Fiscal Burden_Page_01

Click above to read ISER Web Note 14.

Two years ago the University of Alaska – Anchorage Institute of Social and Economic Research (ISER), the state’s best economic think tank, said this:  “Right now, the state is on a path it can’t sustain. … Reasonable assumptions … suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash.”

ISER also offered a solution.  “What can the state do to avoid a major fiscal and economic crisis? The answer is to save more and restrict the rate of spending growth. All revenues above the sustainable spending level of $5.5 … would be channeled into savings.” Continue reading

Guest Column: Care Clift, the Alaska Libertarian Party Candidate for Governor

Publisher’s Note:  This is the second in a continuing series of guest columns by various state-level candidates who are focusing in this election cycle on the issues relevant to this blog — Alaska oil, gas and fiscal policy.  The first was by Alaska Constitution Party candidate for Governor J.R. Myers, and is available here.  The following is from the Alaska Libertarian Party candidate for Governor, Care Clift (website, Facebook).  The reason for publishing these pieces is explained in greater detail in the preamble to the previous piece from J.R. Myers. Continue reading

A Pretty Big Deal (… and an important event)

Alaska’s fiscal dilemma in a nutshell (and an opportunity to learn a lot more about it) ….  To learn more about the event, click here.

Guest column from Daniel Hamm, President, Alaska Republican Assemly

Publisher’s Note:  In a 2010 editorial the Wall St. Journal had this to say looking back at the 2006 loss by Republicans of the U.S. House of Representatives:  “It isn’t easy to spend so much money so egregiously that even Nancy Pelosi could campaign as a relative fiscal conservative, but the Tom DeLay Republicans managed the feat in 2006.”  Daniel Hamm writes below about seeing the same in this year’s Alaska legislative races. Continue reading