Opinion: Alaska’s economy desperately needs a clear, stable state budget

When government fails in its role to provide clear and stable signals, the economy suffers…

  • Friday, February 26, 2021 2:30am
  • Opinion

The members of the Alaska Bankers Association commend Alaska’s legislators and governor for their willingness to serve Alaskans during these challenging times and to make the difficult choices ahead to resolve the state’s ongoing fiscal imbalance. Like each of them, we value our state and offer our perspective on achieving a stable financial future for Alaska.

Alaska’s banks are integral to Alaska’s economy through investment in our local communities, businesses and families. Through extending credit, banks function as the creators and allocators of most of the money supply. When bank credit is extended for productive purposes, the economy grows. However, as reported by the Federal Bureau of Economic Analysis, our pre-pandemic GDP was lower than reported in 2008.

An essential feature of a healthy economic system is a healthy government. When government fails in its role to provide clear and stable signals, the economy suffers: 10 consecutive years of fiscal deficit; over $18 billion in state savings gone; and 10 rating agency downgrades over half as many years. This performance has bred confusion and undermined entrepreneurial activity and long-term investment of capital in our state.

Alaska’s economy desperately needs a clear, stable state budget to attract and sustain private capital investment. The Alaska Bankers Association supports a comprehensive approach to include continued but measured fiscal reforms over time, predictable tax laws, and utilization of Alaska Permanent Fund earnings built on a rules-based framework. We also support funding for a meaningful capital budget to improve critical infrastructure and create jobs. This must be done without overdrawing the Alaska Permanent Fund and depleting the Earnings Reserve to preserve these assets for future use. As bankers, we have a unique perspective as we finance customers and projects that require planning for the long term. The state must do the same. Like us, the decisions our Legislature and Governor make affect the present and future of Alaska.

We understand reaching consensus on a solution is not easy and will not emerge spontaneously. Rather, it will be the result of our elected officials’ sacrifice, wisdom, foresight and courage to make decisions for the future of our state. The members of the Alaska Bankers Association support them in this endeavor and welcome the opportunity to work with them in building a prosperous future for Alaska.

• Michael Martin is the chief operating officer, general counsel and corporate secretary of Northrim Bank, and president of the Alaska Bankers Association.Columns, My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire. Have something to say? Here’s how to submit a My Turn or letter.

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