Alaska’s fiscal crisis: Apocalyptic or overblown?

Juneau residents packed a ballroom on Wednesday to hear a panel of experts talk about Alaska’s fiscal future. Fewer barrels and a growing budget deficit could turn the state into an economic wasteland.

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In the future, cities will become deserts, roads will become battlefields, and the hope of mankind will appear as a stranger…

Mad Max is a late ’70s apocalyptic thriller. Oil has been depleted which leads to financial chaos, famine and roving biker gangs. Here in Alaska, fewer barrels of oil are being produced and the price has dropped to under $50 a barrel. About half of what it used to be. The state is expecting  a deficit of $3 billion next year.

And with deeper cuts, [comes] a loss of jobs and school funding.

“It’s not going to take 10 or 15 years. I think two or three years, you’ll see a noticeable drop in Alaska’s population.”

That’s Larry Persily. He, along with a panel of three, spoke at Juneau’s Forum on Alaska’s Fiscal Future.

Persily worked for the Obama Administration on Alaska’s natural gas pipeline now works for the Kenai Peninsula Borough. He said the proposed LNG pipeline offered a glimmer of hope that could add $1.2 billion a year into the budget.

“But in and of itself, it is not going to solve our problem.”

A big topic of conversation at the forum was the possibility of a state income or sales tax. But some of the panelists agreed a sales tax could be regressive and hurt struggling people.

Brad Keithley, a consultant firm that focuses on oil, gas and policy matters, said that’s what adding state taxes would do.

“Think about this for a second. If we’re going into a recession, the last thing you want to do is reduce personal  incomes. The last thing you want to do is take money out of the private economy. Take money out of people’s hands. That’s what taxes do.”

Persily sees it differently.

“You look at taxes as taking money out of individuals hands. I look at taxes as a way of paying for community services. That’s how it works. That’s how communities work.”

Persily said some people could also afford a reduced PFD check or forgoing it altogether. I asked Josh Warren an attendant at the forum, what he thought of that.

“I love my PFD. I’ve gotten it every year since I was born here. But if that’s what the state needs to educate children, then I think that’s OK,” Warren says.

Juneau has a 5 percent city sales tax. Places like Anchorage and Fairbanks don’t.

To help with the fiscal crisis, panelists advised municipalities to come up with solutions on their own. Brad Keithley said that meant “thinking local.”

“‘Cause the state’s not going to be riding over the hill to build the  next school, to build the next astroturf football field, to build the next UAF athletic arena, to build the next crime lab. They’re not going to ride over the hill to do that.”

Nothing apocalyptic about that.

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