For Immediate Release: May 19, 2014
His Plan to Avert a Fiscal Meltdown in Alaska
Sen. Wielechowski Asks Governor to Provide Specific Details about When Additional Oil Production and State Revenue Will Come Under Senate Bill 21
ANCHORAGE – Alaska’s massive savings accounts have plummeted in the last two years and could be completely drained within eight years, according to a new analysis by the non-partisan Legislative Finance Division. Oil production is also expected to drop 40% over the next decade and state revenues to decline by 26%, according to the Alaska Department of Revenue’s Spring Revenue Forecast.
Given these troubling projections, Senator Wielechowski today called on the Governor to provide specific details about how and when his oil tax rollback will avert the dire financial crisis Alaska faces.
“We were told that by passing SB 21, we would see more oil production and more revenue,” said Senator Wielechowski. “Instead, we’re tumbling off a fiscal cliff at an alarming rate. The Governor needs to explain to Alaskans when we can expect our production and revenue numbers to turn around and the free fall to end.”
Analysts from Legislative Finance recently depicted what will happen to Alaska’s two largest savings accounts (excluding the Permanent Fund) if spending continues at today’s rate. In 2013, under the ACES oil tax system, the accounts peaked at $16 billion. By the end of next fiscal year, these accounts will have dropped to less than $12 billion. That’s a 25 percent drop in just two years.
“We are depleting our savings at a disturbing rate,” said Senator Bill Wielechowski. “No family would be comfortable watching its savings evaporate like water, and no Alaskan should be comfortable watching Alaska’s savings dry up almost overnight.”
He asked the Governor to provide hard facts about how Senate Bill 21 will do anything but make this situation worse.
“We built these savings during a time of high oil prices because we had an oil tax that was fair to Alaskans as well as the oil industry,” he added. “It enabled us to save when oil prices rose. The new system lacks this feature and will cause real harm to our schools, economy and public infrastructure over the next decade.”
The second chart produced by legislative analysts forecasts state deficits as far as the eye can see. By 2024, the annual deficit will approach $4 billion annually, assuming today’s rate of spending.
“Alaskans don’t want to pay an income tax or have our Permanent Fund raided because of poor policy decisions,” Wielechowski said. “We deserve to know specifically what the Governor’s plan is to deal with these massive deficits.”
For more information, please call Senator Wielechowski at (907) 242-1558.