February 17, 2022
ALASKA’S FISCAL SITUATION
I had the pleasure of presenting at the 2022 Southeast Conference in Juneau and was happy to report that Alaska’s fiscal situation has improved significantly since last session. Alaska now has an anticipated surplus of about $1 billion (thanks to an increase in the price of oil and a temporary influx of federal COVID money).
To promote a future oriented discussion, the Senate Finance Committee heard a presentation by the non-partisan Legislative Finance Division on February 10th to discuss what Alaska’s budget, revenues and savings might look like in the future, using a wide variety of spending and revenue assumptions. The takeaway was that, despite the surplus this year, the state is expected to run deficits unless we change the way we do business.
As Co-Chair of the Senate Finance Committee and a fiscal conservative, I am committed to spending this temporary windfall wisely, with a savings component, so that it benefits both current and future generations of Alaskans. We will look at future revenues and budgets to ensure that we are able to meet the needs of the state (such as funding reasonable and affordable dividends, our education system, deferred maintenance, the Alaska Marine Highway System and other necessary services) without being forced to pay taxes. More information on deferred maintenance is below.
On February 9th, the Senate Finance Committee heard a presentation on Deferred Maintenance. Alaska has 2,400+ facilities with a replacement value of more than $7.6 billion. Standard rule of thumb is that 2-4% of the replacement cost be spent each year for upkeep in order to avoid costly repairs down the road. This means that $145.6 million (2%) to $307 million (4%) should be spent each year. The Governor’s FY23 budget request includes only $106 million—not enough to maintain our infrastructure for future generations
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