Senate Finance hears OMB, Legislative Finance warn Alaska's 10-year fiscal outlook is unsustainable

At a January meeting of the Alaska Senate Finance Committee, Office of Management and Budget Director Lacey Sanders and Legislative Finance Director Alexi Painter told senators the state faces a structural budget shortfall that will deplete savings over the coming decade unless the Legislature and governor take action.

"The status quo is clearly unsustainable," Lacey Sanders, director for the Office of Management and Budget, said, adding that "some combination of revenue measures and reductions in spending will have to occur before the state savings accounts are depleted." Sanders also said the governor is willing to participate in those conversations but is not proposing new revenue measures this year.

The warning landed in the nut graf: Legislative Finance's model and the governor's 10-year outlook both project growing deficits under current policy choices, and both offices said the state will need either new revenue or spending reductions to avoid drawing down the Constitutional Budget Reserve (CBR) and the Permanent Fund's earnings reserve (ERA).

Alexi Painter, director of the Legislative Finance Division, told the committee the fall revenue forecast showed lower oil prices and production and higher lease expenditures, which together reduced expected revenue. "Even if we hit the original $78 that was forecast last year, based on the higher cost, lease expenditure forecast, we'd have about $90 million less in revenue," Painter said. He added that the…