Alaska’s State Budget Collapses by 50%
wolfstreet.com / By Andy Tully, Oilprice.com / January 28, 2015
Alaska, once oil-rich, now faces tough decisions on what parts of the state’s budget can be cut, and where it can find other sources of revenue to confront deficits it has never faced before.
The part-time state legislature, whose 2014 session ended in April, had passed a $6.1-billion budget for 2015, but since then a barrel of oil has lost more than half its value. Add to that, Alaska gets 90% of its budget from oil taxes. So when the 2015 legislative session began Jan. 27, the state’s budget was $3.5 billion short.
With an 80 percent drop in oil revenues since June, Alaska is over a barrel. It has no state sales or income taxes, but it does have a kind of savings account from previous oil revenues, the oil wealth fund, but that may not be enough to make up for the shortfall.
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“Even if you lay off every state employee, that only saves us a billion (dollars),” Representative Chris Tuck, a Democrat and the minority leader in the Alaska House of Representatives, told The New York Times. “We’d still have $2.5 billion to go.”
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