Download

Download Full Text (223 KB)

Description

Low oil prices always capture headlines in Alaska, because the state government has run mostly on oil revenues for 20 years. So the slide in oil prices this year has once again made us think Alaska is becoming poor, and we worry about more budget cuts and an economic downturn. But two big changes in recent years make Alaska’s current fiscal condition better than it might seem. Sustainable revenues (and spending) are higher than we estimated a few years ago. And with a growing share of revenues from asset earnings, the state has the chance to make its year-to-year revenue flow more stable. Still, despite this good news, problems remain. The state’s fiscal policy has been to divide general purpose revenues into two categories: oil revenues have mostly paid General Fund expenses, and Permanent Fund earnings have been used to pay dividends to Alaskans (as well as to inflation-proof and build the fund balance). Low oil prices gouged a hole in the General Fund budget in 1998, while a strong stock market boosted Permanent Fund earnings. In the following pages we discuss in more detail the good financial news for Alaska and how we estimate “sustainable” spending. We also look at the choices Alaska has for keeping its finances healthy in the long run.

Publication Date

4-17-1998

Keywords

oil prices, state government, revenues, fiscal policy, General Fund, Permanent Fund Dividend

Handle

http://hdl.handle.net/11122/12484

From Oil to Assets: Managing Alaska's New Wealth

Share

COinS