“I wanted to transform oil wells pumping oil for a finite period into money wells pumping money for infinity.” Governor Jay Hammond, father of the Alaska Permanent Fund.
We find ourselves scrambling to piece together an overdrawn budget because oil revenues are drastically low, yet we can sustain ourselves with what we have, according to Scott Goldsmith, a leading economist in Alaska. In a recent report published by ISER, he detailed an 8-Step plan for financial stability in Alaska, where he says we can continue to pay the PFD and safely draw from the earnings of the Permanent Fund to pay for State government.
Thanks to a combination of good decisions and a little luck, today Governor Hammond’s vision has become a reality. More than $60 billion in financial accounts now generates more income for the state government than petroleum production.
Yet we continue to rely mostly on current petroleum revenues to pay for public services—and as oil production declines, “sliding down the falling Prudhoe Bay revenue curve” is proving to be a formula for fiscal and economic disaster.
In fiscal year 2016, General Fund revenues are expected to be only about $2.2 billion. That will leave an apparent “deficit” of about $3.3 billion, based on spending of $5.5 billion. But the state doesn’t have to face such a huge shortfall. There is a straightforward solution that Jay Hammond foresaw: using both current revenues and earnings from the state’s portfolio of assets (financial accounts and future petroleum revenues) to pay for public services.
See Full Report Here
