Before discussing a sustainable budget, it is important to know the difference between a Balanced Budget and a Sustainable Budget.

A Balanced Budget refers to a budget where expenses equal income based on actual numbers, predictions, and estimates. All the government needs to do if they want to increase spending is to increase taxes.  This is the balanced budget approach, and you do not want this.  Therefore, do not allow a politician to impress you with promises of a balanced budget.

A Sustainable Budget is the ability of a government to sustain its current spending, tax and other policies in the long run – without threatening government solvency or defaulting on some of its liabilities or promised expenditures. For Alaska specifically, this also means not dipping into the pockets of Alaskans, and avoiding the institution of a broad-based [sales or income] tax or use of a portion of the earnings of the Permanent Fund.

You want a Sustainable Budget! This is vital in protecting the liberty we enjoy.

Currently, Alaska’s spending is unsustainable. I do not want a state income or sales tax, and neither do you! Alaskans’ earnings should never be the back-up plan for legislators that don’t have the spine to make necessary adjustments or cuts in order to operate within a sustainable budget.

Below is the Institution of Social and Economic Research (ISER) Report on the Maximum Sustainable Yield (Budget). This report clearly explains where we need to be, where we are not, and why.  I would like to highlight the following:

The governor’s proposed budget for fiscal year 2015 is $5.6 billion, down from $7.2 billion last year. But assuming the final budget will be about $6 billion, after legislative add-ons, it is still not sustainable. If this year’s spending is $6 billion (“business as usual” in the graph), and it grows at an annual rate just 1% faster than population and inflation, the cash reserves (not including the Permanent Fund) would be exhausted by 2024 and the fiscal gap could reach $3.5 billion.

But if the fiscal year 2015 budget were $5 billion, and it grew only as fast as population and inflation (“maximum sustainable yield” in the graph), the cash reserves would last much longer and a growing petroleum nest egg could produce enough earnings to sustain the state budget long into the future.

Please take the time to read this entire report. This is the direction we need to go – now!

ISER Report on the Maximum Sustainable Yield (Budget)

ISER Report on the Maximum Sustainable Yield (Budget)