ANCHORAGE (KTUU) - The state of Alaska could find itself in debt, if lawmakers don't find a way to replace the money that's slowly depleting from the budget reserve.
Ralph E. Townsend, a director at the University of Alaska Anchorage Institute of Social & Economic Research, sits down with KTUU to share his expertise on the issue.
"I'm an economists by training," said Townsend. "And I've spent a fair bit of time since I've been here understanding the state budget and explaining it."
The Office of the Governor projects a deficit of around $2.5 billion. That is the amount of money that the state needs to fill.
Townsend says that state lawmakers have four options:
• Get rid of the divided paid out to Alaskans to help cover the losses.
• Decide to implement an income or sales tax.
• Pull from the permanent fund.
• Or decide to make cuts to government programs and services.
Townsend adds that it was always anticipated that the state would use the $63 billion permanent fund earnings – not the principal – to offset the decline in oil revenues. He believes that Alaska is essentially at the point where lawmakers have to make the decision: Is now the time to start spending from the permanent fund, and how do we go about doing it?
"So the idea of using the earnings from the permanent fund, to balance the budget – it seems to me is not something that is a big issue for those people in Juneau," said Townsend. "What is an issue is how you sell it to the people of Alaska."