The fluctuating world oil price situation is wreaking havoc down South on pump prices, yet at the same time boosting Alaska's revenue to unprecedented levels.
Just how long these high prices will hold is anyone's guess.
Less than two years ago oil was at one of its lowest levels in years, which in turn put the state's budget deficit at record highs.
As an example of just how volatile the state's oil-based economy is, department economists predict Alaska's budget deficit could be somewhere around $150 million, provided prices remain where they are. In contrast, predictions in late 1998 were that the fiscal gap -- the difference between state revenues and expenditures -- could be nearly $840 million for fiscal 2001.
That is a huge change -- roughly $690 million. It's the kind of dramatic fluctuation that reinforces the need for the state to get its fiscal house in order. It's impossible to try and accurately budget the state's needs when anticipated versus actual revenues can rise and fall by hundreds of millions of dollars.
In recent years the Legislature and governor have attempted various revenue plans in an effort to help balance the budget and reduce the impacts fluctuating oil prices have on the budget. None of those plans -- which have ranged from income taxes, taking money from the Alaska Permanent Fund and a host of others -- have passed.
Our fear is that if oil prices remain where they are, lawmakers won't see the financial crisis as dire as earlier predicted and will, therefore, ease off on plans to help balance our fiscal picture.
That can't happen. It's paramount we push even harder, especially with more money to work with, now while we still can. Oil prices will drop, the budget deficit will grow and we will be right back where we were two years ago.
It's great that we have some breathing room. But let's not use it to sit back and let someone else down the road worry about our fiscal picture. The time to act is now. Let's get the state on a safer financial picture while we still can. -
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