Daily Archives: July 20, 2012

“Understanding Alaska’s Budget” May Explain Much More Than It Intends …

As some readers may have noticed, I publish shorter, less formal “thoughts” occasionally on another page, which I then link to this page in a box located in the upper right corner of this page entitled “Observations & Updates.”  The reason for using the separate page for those shorter pieces is because I don’t want them to displace the longer thought pieces that appear in this section of the blog.   A recent piece appearing on the other page, however, which started out short but turned into a longer piece, has attracted substantial attention and, as I have thought about it, should be included also on this, main page.  It follows below:

ImageThe Alaska “House Special Committee on Fiscal Policy” yesterday released a new website focused on “Understanding Alaska’s Budget.”  The website may explain much more than the authors intend about how Alaska has worked itself into its coming fiscal crisis — and why recent legislatures have made the problem worse.

The press release announcing the website provides the first clue.  The release quotes the Chair of the House Special Committee as follows:

“We’re in the cat-bird seat, financially, now, but with throughput this week under 400,000 barrels, and with a volatile oil price, we need to prepare people for the likelihood of lower revenue. That means also preparing to handle the challenges before we reach a crisis – that’s what this is meant for.”

Alaska is not in “the cat-bird seat, financially, now.”  Alaska has a temporary cash surplus, the same way that you or I would if we treated as current disposable income the money that we otherwise need to put away for our children’s college tuition or our retirement.  Spending it now means that our children — and us — will be worse off in the future as our income winds down but our spending needs continue. Continue reading