Now is the time for tough conversations about the budget

  • Thursday, December 11, 2014 3:50pm
  • Opinion

The Kenai Peninsula Borough School District administration and school board recently discussed the costs and benefits of maintaining pools.

Faced with a budget deficit, it’s an important conversation for the district to have. On one hand it’s hard to argue for keeping pools open if it means cutting classroom staff. On the other, it’s hard to argue against the value of teaching students about swimming and water safety in a region with so many bodies of water and water-based activities.

A discussion on pool usage is just one of many difficult conversations that the school district — as well as every other government body and agency that receives funding from the state — should be having. Those conversations need to start happening now, while there’s still time to plan and budget for contingencies, because if those conversations are put off, considering the state’s fiscal outlook, there won’t be many good options available down the road.

The state on Wednesday released its latest revenue forecast. The Associated Press reports the price of oil, which was predicted to average $105 a barrel when the state budget was approved last spring, is now expected to average $76 a barrel for the fiscal year that ends June 30, 2015. For 2016, that average is expected to dip even lower, to $66 per barrel, before rebounding.

While the drop in the price of oil might be good for consumers, the state derives more than 90 percent of its revenue from oil. The state is facing a potential budget deficit of $3.5 billion this year. The forecast expects unrestricted general fund revenue of $2.6 billion this year, down from $5.4 billion in 2014. That number is expected to be $2.2 billion in 2016.

While the numbers look grim, Alaska doesn’t need to panic. In recent years, when the price of oil was high, lawmakers were able to replenish the state’s savings accounts, and Alaska is in the fortunate position of having the resources to weather the storm.

That said, things are going to be tight for a few years, and the state can’t pay for everything out of budget reserves indefinitely. It’s important to have conversations now about funding priorities. It’s also just as important to have conversations about what we can afford, what we can do without — and what we can’t afford to do without. Having those conversations now gives us options when it comes to making decisions. We have time to make reasonable decisions.

However, if those conversations are put off, circumstances will dictate those decisions for us.

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