The City and Borough of Juneau’s lobbyist for state issues says Alaska’s budget woes may lead to conversations during the upcoming legislative session about tapping the Alaska Permanent Fund.
Kevin Jardell also says it’s likely to mean fewer state-funded capital projects for communities, though he thinks Gov.-elect Bill Walker will be favorable to local governments.
About 90 percent of state revenue comes from oil taxes, and the price of Alaska’s oil is trending down.
“The reality of going into this next year, and the new administration: If oil averages $85, the deficit for the state is about $3 billion,” Jardell told the Juneau Assembly on Monday.
Alaska North Slope crude oil needs to be about $117 a barrel for the state to balance its budget, he said. It was about $77 a barrel at the end of last week.
During the campaign, outgoing Gov. Sean Parnell and Gov.-elect Bill Walker sparred over how much to cut spending to deal with the budget shortfall. In January, Jardell expects lawmakers and the Walker administration to shift the conversation to ways to increase revenue. He says that includes using the state’s $51 billion permanent fund.
“And I think communities are going to have to sit and think about where they stand on the issue, and whether they’re going to weigh in,” Jardell said.
As for cuts, Jardell says the state capital budget will be hit the hardest, with most of the funding going to projects that require a match to secure federal dollars for infrastructure like roads.
“I think the capital budget will be strictly what they call a bare bones capital budget,” he said.
On the bright side, Jardell says the incoming Walker administration is talking a lot about meeting the needs of municipalities.
“They’re really focused on hearing from local governments and ensuring that the state is aligned with the priorities of local governments,” he said. “That’s been one of Gov.-elect Walker’s priorities. It comes from his history, and his being in local government.”
Walker is a former mayor of Valdez. Incoming Lt. Gov. Byron Mallott is a former mayor of Yakutat and Juneau.
Jardell’s comments came at the Assembly’s annual retreat. Assembly member Kate Troll called his predictions “a new reality check.” City Manager Kim Kiefer said the Assembly Finance Committee will revisit the city’s state funding requests on Dec. 17.
Jardell’s contract with the city pays him nearly $4,600 a month, according to state’s 2014 lobbyist directory. He’s entering his second year as Juneau’s state lobbyist.