The recent crash in oil prices casts a pall over this year's and next year's state budgets. A gap of $400 million looms this year, and things could get even worse next year if oil prices don't rebound to the $70 range. The hole in this year's budget is pretty easy to fix, though. The projected shortfall includes $1 billion of savings that is supposed to go into the Constitutional Budget Reserve Fund. Lawmakers can balance the budget by trimming that savings plan and taking a quick look for expenses that can be trimmed or deferred.
But Anchorage Rep. Mike Hawker has sounded the alarm about the budget for the coming year. Gov. Palin has based it on oil at $74.41 a barrel -- a number Hawker says is so "aggressive" that it "may also be imprudent."
When Hawker wrote the governor in mid-December with his concerns, futures markets indicated the price of oil would stay below $60 until June 2010, the end of the coming budget year. Other oil states are basing budgets on an oil price notably below Alaska's $74 estimate.
If they're right and Alaska is wrong, trouble looms.
With an average oil price of $50 a barrel in the coming year, Hawker says, there's a $2 billion hole in the governor's spending plan. He wants Gov. Palin to revise her revenue projections and prepare budget amendments before lawmakers start work next month.
A tough look at next year's state spending blueprint is appropriate, to make sure no excesses are left over from the brief but glorious days of $100-a-barrel oil. And it's good to have a contingency plan for significant cuts in case oil prices stay stuck in the basement.
But it's important not to overreact and go into full retrenchment mode.
Thanks to the huge surpluses Alaska had when oil spiked to $140 a barrel, the state has more than $6 billion in reserve funds. Unlike other states, Alaska does not immediately have to begin hacking away at essential services. Careful reconsideration of what the governor has in her budget, yes. Bloodletting, no.
Alaska is in a good position to ride out the biggest downward swing ever in the world oil market. We are still the only state with no statewide sales or income tax. We still have our $29 billion oil savings account that spins off share-the-wealth dividends to every bona fide resident.
As oil prices continue to show all the stability of Bootlegger Cove clay in an earthquake, the state definitely has financial challenges ahead. There's no need to panic, though, because with our multibillion-dollar savings, Alaska's leaders have prudently prepared ahead.
BOTTOM LINE: Alaska's budget situation is better than in most states, despite low oil prices.
Speak up
Subject: health care
Audience: President Obama
If you'd like to tell President-elect Obama what's wrong or right with health care, there's an opportunity today.
The state, city and other organizations are hosting a community discussion about health care issues from 5:30 to 7:30 p.m. in Assembly chambers at Loussac Library.
Communities across the country have been asked to do the same thing, say city officials. Results will be forwarded to incoming Health and Social Services Secretary Tom Daschle, who is charged with coming up with a plan to improve the U.S. health care system.
We know Alaska's got problems -- costs are higher than in most of the country, a bad situation in which senior citizens on Medicare can't find primary care doctors, and providing adequate care to residents in remote areas is difficult.
If you've got a story to tell or an idea, now's the time to speak out.
What cold?
Not too bad, I thought when I stepped out of the house Monday morning. Below zero, sure, but tolerable. Brisk walk to the bus stop. I was running late, so brisk turned to brrrr when I jogged it for 30 yards and felt the wind chill on my face.
The kindness of strangers intervened along the North Eagle River overpass.
"Want a ride?" a young man in a ski cap asked from the truck that stopped next to me.
"Sure, thanks."
I hopped in the back seat and the driver, a bespectacled gentleman who looked like he might be the young man's father, glanced back at me.
"Too cold to be walking this morning," he said.
So we talked about weather, natch, the difference in temperature from the airport to Eagle River (from 11 above to 3 below one morning this month), the warm inversion layers at Alyeska.
They took me to the Eagle River Transit Center, where the shelter was warm. I was glad for the ride and the shelter. And the 102 bus into town was nap cozy.
I remembered a vintage Alaska commentary by five-time Iditarod champ Rick Swenson, talking to old musher Joel Kottke at Finger Lake in 1981.
"Gettin' to where it gets down to 20 below and people think it's cold, Joel," Swenson said.
Swagger? Nah. Even Iditarod champions freeze just like other men and women. They're tougher, that's all, psychologically more than anything else, and dressed for it. The man who saunters at 20 below isn't superior. He's just wearing layers sufficient for slow walkin'.
Those of us more pedestrian Alaskans have to step lively, and hope that 5 o'clock bus isn't running late.
-- Frank Gerjevic