Alaska has $59.8 billion in its permanent fund and yet the state is in a financial predicament.
It also has a $2.5 billion operating budget deficit.
In other words, it’s spending more than is budgeted.
That’s like an Alaskan with $59,000 in a savings account spending $2,000 more than comes in paychecks during the year.
This is a very simplified view, and the state has rules on the disbursement of the Alaska Permanent Fund and its other revenue that complicate the situation.
But most Alaskans in such a financial situation would reduce other spending by $2,000, increase income or draw down on savings if they wanted to continue to afford the goods and services paid for by that two grand.
Gov. Bill Walker’s administration announced late this week it had begun preparing for a state government shutdown because, despite almost six months in sessions, the Legislature hasn’t passed a 2018 budget.
About a dozen state departments this week sent out information regarding what services would continue under an emergency situation prompted by a shutdown and which would cease.
Services related to public safety would continue, but Alaskans can look at the list of services in jeopardy during a shutdown. While most of the services are necessary for one Alaskan or another, or the well-being of Alaska, possible cutting opportunities might become apparent under review.
If further cuts are to be made, the Legislature should cut quickly out of respect for the state workforce, allowing the remaining employees to provide the services most valued by Alaskans. Departing employees should be given as much notice as possible in order to take advantage of other employment opportunities.
The Legislature, at this juncture, also might pass at least a pared-down budget in order to allow the least disruption to state operations. The Legislature set a precedent for this in 2015 when another shutdown loomed.
Walker hopes the Democrat-controlled House and Republican-dominated Senate will come up with a budget before a shutdown at the start of the next fiscal year July 1.
Legislative leadership contends it continues to work toward a budget.
This is lawmakers’ best chance to agree on a path going forward in regard to the deficit. Next year will be an election year; typically those aren’t the most productive when it comes to financial decisions affecting constituents’ pocketbooks, for example, implementing a state income tax as proposed by the House, or even reducing the permanent fund payouts as both bodies have suggested.
Three weeks is plenty of time to prevent a full-blown shutdown.
— Ketchikan Daily News, June 10, 2017
