Safe Landing: A Fiscal Strategy for the 1990s

Abstract

Alaska is poised for either a safe landing or a nose dive. Whether we land safely or crash depends on how Alaskans deal with declining oil revenue. Since oil began flowing from the Prudhoe Bay field 15 years ago, Alaska’s government and economy have come to depend on state taxes and royalties from oil production. Oil revenue makes up 85 percent of the state’s general revenue, and it creates 30 percent of Alaskans’ personal income. But North Slope production is now declining as the giant Prudhoe Bay field ages. Luckily, Alaska has the resources it needs to make the difficult transition. This paper outlines a comprehensive but flexible strategy for moving Alaska through the 1990s with a minimum of economic damage and into the next century with a government that is smaller but still able to provide essential services and support a healthy economy.