Tuesday, September 23, 2014

Four basic Alaska budget facts and one reminder ...

See "#AKbudget| Unfortunately, deficits matter … (addendum dated 4.25.2014)" for how this chart was constructed.
I was working on a longer piece today for publication elsewhere and kept coming back to four basic facts about Alaska budgets and one reminder.  I thought I would share them here:
  1. Current Governor Sean Parnell has been responsible for five budgets during his years as Governor.  Four of the five are the four largest in state history and the fifth is the sixth largest in state history (number 5 was signed by Governor Sarah Palin).
  2. Since 2000 the annual budget has finished in the red six times.  The last three of those (three of Parnell's five) have been signed by current Governor Sean Parnell and the last two of those, back-to-back have reflected the two largest budget deficits in state history.
  3. Contrary to what some have claimed (that these deficits arose under the Bipartisan Coalition), the last two budget deficits -- the highest in state history -- were passed by the legislature elected in 2012, which produced supermajorities (75%) for the Republicans/Majority Caucus in both legislative bodies.
  4. The current budget -- which already is projected to be $1.6 billion in the red -- is based on an assumed ANS oil price of $105/barrel (footnote 2).  The actual price of ANS oil has been below that level since July 31 (barely 30 days into the current fiscal year), has remained in decline since and most recently closed at $94.22/barrel.  Increasingly, most analysts are predicting that the price will either stay in the neighborhood of that reduced level or continue to drift downward over the next several months.  At the spending levels enacted by the legislature and signed by the Governor earlier this year, the actual current year deficit will exceed $2.5 billion if the current price level persists throughout the remainder of the fiscal year, exceeding the previous record state deficit by 30% and in one year alone draining nearly 25% of the state's remaining unrestricted general savings.
  5. In 2010, current Governor Sean Parnell campaigned on the theme that the candidates should be judged by their "Actions, Not Words."  Parnell's actions -- and those also of the legislature elected in 2012 -- speak for themselves.