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

(Juneau Empire file photo)
Aurora forecast for the week of Feb. 26

These forecasts are courtesy of the University of Alaska Fairbanks’ Geophysical Institute… Continue reading

(Michael Penn / Juneau Empire file photo)
Police calls for Saturday, Feb. 24, 2024

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

(Michael Penn / Juneau Empire file photo)
Police calls for Friday, Feb. 23, 2024

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

(Michael Penn / Juneau Empire file photo)
Police calls for Thursday, Feb. 22, 2024

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

(Michael Penn / Juneau Empire file photo)
Police calls for Wednesday, Feb. 21, 2024

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

Rep. Tom McKay, R-Anchorage, speaks in favor of House Bill 143 on Friday. (Photo by James Brooks/Alaska Beacon)
Alaska House approves relaxed environmental rules for ‘advanced recycling’

Applies to facilities using high heat or chemicals to turn plastic garbage into raw materials.

Juneau Mayor Beth Weldon (right) discusses the Juneau School District’s financial crisis with school board Vice President Emil Mackey (right) and City Attorney Robert Palmer during a meeting Thursday night at Juneau-Douglas High School: Yadaa.at Kalé. (Mark Sabbatini / Juneau Empire)
Meetings to comment on Assembly’s proposed $9.6M of help to school district scheduled next two Mondays

Plan includes $4.1 million no-interest loan, picking up “shared costs” this year and next.

A crowd overflows the library at Juneau-Douglas High School: Yadaa.at Kalé on Thursday night as school board members meet to select a consolidation option to help resolve the Juneau School District’s budget crisis. (Mark Sabbatini / Juneau Empire)
School district leaders approve putting grades 9-12 at JDHS, 7-8 and HomeBRIDGE at TMHS

Elementary schools will be K-6; Marie Drake, Floyd Dryden to close this fall if plan gets final OK.

Members of the Alaska House of Representatives celebrate the passage of a sweeping education bill on Thursday. (Ashlyn O’Hara/Peninsula Clarion)
House passes $680 BSA increase, with other education provisions

Bill now returns to Senate, which must pass it unchanged before it can head to the governor’s desk.

Most Read