I am addressing the MatSu Business Alliance today as part of their regular lunch forum. The general topic for today’s forum is the “Amusement Park of Economics.” As described in the invitation to today’s program, my role is to discuss “the economic wheel of the state budget” and, given my recent focus on the area as part of the Alaska House Sustainable Education Task Force, “provide individual conversation around education funding.”
As I have thought through it, I have divided the topic into three pieces: where we are (on the state budget), where we are headed and what that means for Alaskans and the state’s economy. My conclusions two months in to the current legislative session:
- The state budget is in for some rough – potentially very rough – economic seas ahead. If oil goes to $90 (as some have projected), the situation will become seriously difficult.
- While the proposed spending levels currently being proposed for the FY2015 budget are lower than the last three years (and compared to three years ago, significantly lower) , they nevertheless remain at alarmingly high levels which are not sustainable and continue to spend the next generation’s money. At these levels, the state is continuing down the path that the University of Alaska’s Institute of Social and Economic Research (ISER) previously has identified is leading to a “fiscal crisis [and] economic crash,” which in turn will lead to the need for the “ … institution of a broad-based tax, and use of a portion of the earnings of the Permanent Fund.”
- If Alaskans want a different course, they need to tell Juneau that they will accept serious cuts. Right now, that isn’t the message Juneau is hearing.
The slide deck reflecting the analysis and conclusions is available here. I am looking forward to the opportunity — and more importantly, the questions following.
Thoughts on Alaska Oil & Gas 
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