Wishful fiscal thinking

Posted: Friday, October 25, 2002

Hardship highlights reality and helps people make better choices. The Legislature's failure to close the budget gap brings Alaskans to the brink of the same economic depression that characterized the late 1980s. Then, when the drop in oil revenues created a budget gap, the Legislature cut a billion dollars from the state budget. This drastic reduction threw the state's economy into a widespread depression. People lost jobs and income. Property values collapsed People could not sell their homes and defaulted on mortgages. Bankruptcies soared, and the FDIC attached the assets of those who could not pay their federally insured loans. Rich and poor, rural and urban, all Alaskans suffered. Thousands left the state.

Now we are poised on the brink of a similar economic disaster. Our new governor must focus on real solutions to the budget gap. Timing is critical. Depending on the price of oil, the state will exhaust its reserves in two to five years. There is no time to spare for a leader who avoids realities and panders to our human tendency to hope.

Sen. Murkowski's "plan" to fill the gap is wishful thinking. With the size of the gap, oil and gas are the only resources with a return to the state big enough to make a difference. We know that congressional action on major new energy development in Alaska is unpredictable at best. Without new revenues, we are back to Sen. Murkowski's other solution, budget cuts. Given the amount of deficit, those cuts would be of a size that caused the economic hardships of the 1980s.

On the other hand, Lt. Gov. Fran Ulmer has shown that she is willing to face fiscal reality. With her experience as an Alaska mayor, legislator and lieutenant governor she could hit the ground running. Fran Ulmer's personal skills as a problem-solver and leader are even more important. She focuses on what's important for Alaskans, not on who gets the credit. She can bring people together to solve our fiscal crisis and avoid a repeat of the 1980s.

Janet McCabe


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