Alaska has operated with a budget deficit for almost a decade.
That, to say the least, is a shame. Little wonder that the state Legislature will be meeting again, starting next week, and finances will be the topic of the special session.
Much of the legislative debate will involve the Alaska Permanent Fund, given that it is the state’s main source of revenue.
The fund totals about $81 billion. Of that, $60 billion is the principal and about $21 billion is in the Earnings Reserve Account, and $7 billion of that already committed. The Legislature can spend only from the ERA, and, at that, only 5% of the remaining $14 billion.
Oh, and by the way, this oil rich state is no longer an oil state. Oil revenue is at its lowest in 50 years or since oil started to flow through the Trans-Alaska Pipeline.
So, what’s to be done?
That’s what the Legislature has to decide.
Do we as Alaskans want the permanent fund dividend guaranteed by the Alaska Constitution? And do we want it inflation proofed?
Do Alaskans believe the time has come for a statewide sales tax? And/or an income tax?
Cuts? To what? Currently, the permanent fund dividend is the largest budget item at more than $2 billion. It is followed by education and health and social services at between $1 billion and $1.5 billion each. After that, all of the other departments together cost less than $1.9 billion.
Frankly, Alaska is in a vice even with $81 billion in the permanent fund.
There is no one easy answer. The answer will have to be a combination of permanent fund earnings and sales and/or income tax to maintain government at its current level.
A lower level will mean fewer services, such as Southeast is witnessing with the Alaska Marine Highway System.
Something has to give. Legislators have to determine, along with the governor, what it will be.
But you have input by talking with the lawmakers you elected. Tell them what you think.