Edward King, Chief Economist for the Office of Management and Budget, speaks about the state’s revenue forecast to the Juneau Chamber of Commerce during its weekly luncheon at the Hangar Ballroom on Thursday, Feb. 7, 2019. (Michael Penn | Juneau Empire)

Edward King, Chief Economist for the Office of Management and Budget, speaks about the state’s revenue forecast to the Juneau Chamber of Commerce during its weekly luncheon at the Hangar Ballroom on Thursday, Feb. 7, 2019. (Michael Penn | Juneau Empire)

Economy to take a hit, no matter the budget outcome

Oil revenue not expected to increase

Chief Economist Edward King from the Office of Management and Budget presented a data-driven outlook on the situation the state — and what the governor drafting his budget — faces today.

During his presentation at the Hangar Ballroom to the Juneau Chamber of Commerce at lunch on Thursday, he outlined the revenue forecast for Alaska for the next few years based on the expected price of oil, and said no matter which way you look at it, the economy is going to take a hit.

[Volatile oil market prompts conservative forecasts]

If the governor cuts state funding, it will affect jobs, which in turn will affect different aspects of the economy. But if legislators look at making new taxes to make up for the difference instead of cutting spending, those also will affect the economy negatively in their own ways.

“Every lever you pull is going to impact different people and different regions differently,” he said. “There are trade-offs we have to make between the public and private sector, and between current and future generations.”

But he said a change needs to be made structurally, because the decline in revenue from oil is not going to go away. He said in general, based on trends, the price of oil is not going to return to $100 per barrel anytime soon. While certain unforeseen events might change it for a time, the supply and demand predictions remain constant over the next few years.

“It’s not just a change, a cut to a budget for this year, then we’ll get it back next year, it has to be structurally,” King said. “We don’t know how it’s going to play out (at the Capitol). They have a real big problem to solve and they’ve known that it was coming for the past four years.”

A recent jobs forecast presented by the Alaska Department of Labor and Workforce Development stated that there will be modest growth in jobs this year after a downward streak of jobs for the past 39 months. But King said cuts to the state budget will most likely change that positive job prediction.

“If you look at the assumptions that go into those job forecasts, a lot of them include holding things constant. If you go and make a change to the way that things are — to be clear we have to (make a change) — there aren’t enough revenues. As soon as we know what those changes are those forecasts are going to change.”

• Contact reporter Mollie Barnes at mbarnes@juneauempire.com or 523-2228.

More in News

Jasmine Chavez, a crew member aboard the Quantum of the Seas cruise ship, waves to her family during a cell phone conversation after disembarking from the ship at Marine Park on May 10. (Mark Sabbatini / Juneau Empire file photo)
Ships in port for the week of July 13

Here’s what to expect this week.

(Michael Penn / Juneau Empire file photo)
Police calls for Wedesday, July 17, 2024

This report contains public information from law enforcement and public safety agencies.

Cars arrive at Juneau International Airport on Thursday, July 11, 2024. (Mark Sabbatini / Juneau Empire file photo)
Juneau seems to have avoided major disruptions following global technology-related outage

911 centers, hospitals, airport, and public safety and emergency management agencies are operating.

People take photos of local dignitaries during the ribbon-cutting ceremony at the Teal Street Center on Thursday afternoon. (Mark Sabbatini / Juneau Empire)
Teal Street Center celebrates with ribbon-cutting a year after social agencies begin providing services

Nine organizations providing legal, disability, counseling and other help open under one roof.

Alaska Permanent Fund Corp. board chairman Ethan Schutt is seen during a special board meeting on Monday, Oct. 3, 2022, in Juneau. (James Brooks/Alaska Beacon)
Dunleavy reappoints Permanent Fund Corp. board chair Schutt after weeks of uncertainty

Gov. Mike Dunleavy has reappointed Ethan Schutt to a public seat on… Continue reading

Employees gather in front the historic Red Onion Saloon in Skagway, which will be taken over by Juneau restaurant owner Tracy LaBarge at the end of the summer tourism season. (Photo courtesy of the Red Onion Saloon)
Owner of Tracy’s King Crab Shack buys historic Red Onion Saloon in Skagway

Tracy LaBarge will take over the establishment after the 2024 summer tourism season

A memorial started on Front Street in downtown Juneau for 35-year-old Juneau resident Steven Kissack, who was experiencing homelessness, grows on Thursday with food donations and suicide hotline information. (Jasz Garrett / Juneau Empire)
As the death investigation of Steven Kissack begins, special prosecution office explains its process

Reviews can be lengthy, information limited to ensure due process, Department of Law leaders say

In this screenshot from a streamed court hearing, Attorney Thekla Hansen-Young (bottom right) speaks in front of a three-judge panel of the 9th U.S. Circuit Court of Appeals on July 18, 2024, in San Francisco. (Screenshot)
Federal appeals court appears unlikely to halt Southeast Alaska king trolling for now

A lower-court order that could stop fishing has been placed on hold since last year.

Bulk food in Food Bank of Alaska’s Anchorage warehouse on April 21, 2023. (Claire Stremple/Alaska Beacon)

Most Read