Alaskans just got some good news and some bad news. First, the good news: The state’s budget deficit — estimated at $2.4 billion just a few months ago — has been cut by more than two-thirds, to $700 million. It is still large by state standards, but enough to convince Standard and Poor’s to revise its outlook, to stable from negative, on the state’s debt.
Now the bad news. Reducing the deficit required Gov. Bill Walker and the state legislature to do something Alaska has never done before. It is dipping into the Alaska Permanent Fund — the state’s oil wealth — which is supposed to belong to its citizens. As a result, the annual dividend that every man, woman and child receives from the fund will drop this year to $1,600 from the original estimate of $2,700. Many families depend on those annual checks to help offset Alaska’s exorbitant cost of living. A loaf of bread in Juneau costs more than $5; energy bills in Fairbanks can run $500 per month.