Alaska Fiscal Policy| Alaska’s Legislature Is Spending Away Alaska’s Future

An article in yesterday’s Anchorage Daily News caught my attention.  The article — “Parnell budget vetoes due in next 2 weeks” — reports on the status of the Parnell Administration’s consideration of the Alaska capital and operating budgets passed during the recent legislative session.

The truth?  The Alaska Legislature is spending away Alaska’s future.  In a recent report, UAA’s Institute for Social and Economic Research concluded that while oil production has built the Alaska economy, extending the current production and revenue numbers past 2020 reveals “a story of significant decline.”  See “Alaska’s Petroleum Industry, Transformative But Is It Sustainable,” University of Alaska Anchorage, Institute for Social and Economic Research (April 2011).

The decline, of course, will significantly impact state government revenues.  Analyzing this effect in another report, ISER concludes that, at current spending levels, Alaska will start eating into savings in 2018 and ALL SAVINGS WILL BE GONE by at least 2028, and possibly as early 2023.  See “Revising the State Fiscal Plan to Account for Petroleum Wealth,” University of Alaska Anchorage, Institute for Social and Economic Research, Web Note No. 9 (May 2011) at 5.

To put it into a sentence, by overspending now, the Alaska Legislature is undermining the future of anyone who remains in the State past the mid-2020’s.  Want to retire here?  Want your children to live here?  Then pay attention.

Another truth?  Given the increased spending he proposed in the Operating Budget — which the Legislature approved — Parnell isn’t vetoing nearly enough from the current Capital Budget to avoid the coming draw on savings.  Applying ISER’s numbers, by my calculation Parnell should be eliminating any general fund spending ($1.7B) from the Capital Budget, and vetoing an additional $1.3B in general fund spending from the Operating Budget.  Yep, that is how much the current Legislature is spending from Alaska’s future.  Plan on you (or your kids) being in Alaska after the mid-2020’s?  Be very, very — very — concerned about what the current Legislature — and Governor — are doing.