Alaska’s budget is the most popular topic on any legislator’s list as we approach the 29th legislative session which will convene on January 20.
Vice Chair of Finance Senator Peter Micciche said right now the state deficit could be as much as $3.5 billion.
Micciche: “And that’s due to a lot of things, one of them is that at some point we have to stop budgeting at the likely top of the oil price spectrum. If you think about oil companies when they budgeted last year, they were in the mid 80’s. If you do a 90-110 you’d be somewhere around the high 70’s to 90 bucks, we budgeted at 107.”
He said that even budgeting at 107 there was a small shortfall.
Micciche then used an analogy to illustrate what the budget work will look like.
Micciche: “Say you work at the hardware store ok, you’re selling nails and boss calls you into the office and says hey first thing I want you to know is that your job is secure but I also want to explain that you’ve just had a 50% pay cut over the last 4 months, we think we can get you back up to the prior wages over the next couple of years but we’re going to have to manage this shortfall when you go home. So you go home and luckily you put away 4-5 years of reserves at your current lifestyle and it gives you a little bit of leeway, you’re kids aren’t going to starve today but you’re going to start cutting out things. That’s where we are, we’re going to be cutting back on the luxuries we’ve become accustomed to and getting back to sort of constitutionally required essential services.”