So when a legislator tells you that we are fine on our current course because we have retained our credit rating, here is the basis for doing so. [T]he state has prudently set aside much of its past revenue windfalls in the CBRF and SBRF. The state has intended to apply these funds to ease potential expenditure reductions until the new tax structure incentivized new production. However, the ability to tap these funds for operating expenditures was premised on sustained higher per barrel prices, and the current low crude oil price is expected to disrupt those articulated plans, in Fitchs opinion. The state maintains additional, large reserves beyond the CBRF and SBRF that provide multiple times coverage of its outstanding debt obligations. Over $1 billion has been set aside for pre-funding school formula payments that does not require a vote of the legislature to access. Also accessible by a majority legislative vote is the realized earnings reserve of the ... Alaska Permanent Fund (as of Dec. 9, 2014), measuring almost $4.4 billion (as of Oct. 31, 2014). [BK note: That account is used in the calculation of the PFD, so tapping it would result in a reduction in the PFD]. Fitch expects the state to prudently manage draws from its various reserves as warranted, in addition to realigning its discretionary expenditures to achieve budgetary balance. Ask them when they say we are fine how they intend to realign discretionary expenditures to achieve #budgetary #balance and whether part of their plan is to tap the PF realized earnings reserve (which will lower the PFD) to do so. ow.ly/FLsJH
Posted on: Fri, 12 Dec 2014 02:55:04 +0000
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