Alaska's $3.5 billion deficit — roughly two-thirds of its budget — reads like a classic boom-bust tale. With the collapse in crude prices, lower oil revenues are hitting Alaska hard. Roughly 90 percent of the state government and one-third of all state jobs comes from oil money.
But weaning Alaska off oil revenues won't be a straight shot. And the pain won't be uniform.
The effects of budget solutions will vary among Alaska's diverse population. In many ways, the Last Frontier State is a collection of regions and micro economies — each with its own constellation of employers and local price swings for everything, from a gallon a milk to a gallon of fuel.
With most of the money used to pay for state government gone in just fours years, according to regional economists, the state is considering a personal income tax proposal for the first time in 35 years. There's talk of reducing annual dividend checks from a state savings fund, when oil money was flush.
"Dividend cuts would take more from poor people than rich people because rich people would pay less taxes if their dividend was cut," said Gunnar Knapp, a top economist on the region at the Institute of Social and Economic Research at the University of Alaska Anchorage. On the other hand, "an income tax would put the burden of paying for new revenue on the highest income Alaskans."