In 2008 the Alaska Legislature passed and the governor signed into law a bill requiring the
Office of Management and Budget (OMB) to prepare an annual state fiscal plan projecting state
spending for 10 years and identifying the revenue sources to pay for that spending. One
objective of the law was to get government and the general public thinking, discussing, and
planning for the long-term fiscal health of the state in light of declining oil production.
These plans have not attracted the attention they deserve. In this Web Note we review the most
recent fiscal year 2012 10-year plan and offer suggestions for improvement.Northrim Bank

Goldsmith, Oliver Scott

English

ScholarWorks@UA

Web Note No. 9

Alaska today is in the lucky position of having an estimated $126 billion in petroleum wealth—
$45 billion in savings accounts derived from oil revenues, and $81 billion in future state
revenues from oil and gas still in the ground--if current official state projections prove accurate.
Almost all state revenues come from oil, as they have for 30 years. But oil production is now
only a third of what it once was, and analysts think that even with new discoveries and enhanced
recovery, production from state lands will keep dropping. So Alaskans face a dilemma: how can
we preserve this petroleum wealth for future generations, while still benefitting from it
ourselves?
The answer is to limit how much we spend
today from our petroleum wealth, and invest
the savings in income generating assets. The
income from those assets would grow over
time and gradually replace declining
petroleum revenues. We’ve already taken a
major step, by depositing 24% of past oil
revenues into savings accounts. Is that
enough?Northrim Bank

Web Note No. 7

https://scholarworks.alaska.edu/bitstream/11122/4148/1/webnote7.pdf

Web Note No. 9

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