In a web note published this month by the University of Alaska Anchorage Institute of Social and Economic Research (ISER), economist Scott Goldsmith examines the concept of "maximum sustainable yield" applied to Alaska's petroleum resources. With oil production dropping, and state General Fund spending growing 8% per year, the state's savings accounts - perhaps including the $40 billion Permanent Fund - will be the only funds available to make up the difference.
Given the "revenue generating capacity" of Alaska's economy, Goldsmith writes that state spending is too high and growing too fast. The General Fund budget must be adjusted downward, but the amount of the adjustment depends on many factors:
- How Alaska's citizens choose to share the state's petroleum wealth with future generations
- The amount of money yet to be collected from future oil and gas production
- What the state's financial investments will earn
- How the Permanent Fund principal and earnings will be used in a fiscal plan
The web note's analysis shows that Alaska's FY2013 budget (the budget approved by the legislature in April 2012 that runs from July 1, 2012 through June 30, 2013) is $1.2 billion too high for "maximum sustainable yield."
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