Unless legislators act, the state of Alaska will run out of money sometime in late 2018 or early 2019.<\/p>\n
In a pair of presentations Tuesday and Wednesday, members of the Alaska House Finance Committee were told that the state’s Constitutional Budget Reserve does not have enough money to cover the state deficit in the next fiscal year.<\/p>\n
That leaves lawmakers with a politically impossible choice when they convene for their regular session in January 2018: Pass steep new taxes, spend from the unprotected portion of the Alaska Permanent Fund, or embark on staggering cuts to the state budget.<\/p>\n
“You either have to make two and a half billion-dollar budget cuts, or you have to use the (Permanent Fund) earnings reserve,” said Legislative Finance Division Director David Teal, outlining legislators’ options once the budget reserve is empty.<\/p>\n
That grim news comes despite an improved forecast for oil production from the North Slope.<\/p>\n
On Wednesday, Revenue Commissioner Sheldon Fisher told lawmakers<\/a> that oil production in fiscal year 2017 rose from the previous year. It’s the second consecutive year of increase after years of declines.<\/p>\n Those increases follow the passage of a revised oil tax system known as Senate Bill 21<\/a>, but it isn’t clear whether the increase can be linked to the bill. The increase also comes after oil companies slashed capital expenses by 44 percent between 2015 and 2016. <\/p>\n “They actually outperformed their own expectations,” said Ed King, special assistant to the Alaska Department of Natural Resources.<\/p>\n