Muddling Through: Alaska’s Budget Process in 2021

Abstract

In 2021, the State of Alaska faced substantial challenges due to the public health and economic impacts of COVID-19. COVID damaged Alaska's state revenues by driving down global oil prices. COVID also harmed the state's economy more broadly, with substantial impacts on some extractive industries and tourism. However, Alaska's budgetary problems-high expenditures and low revenues-long predate COVID and are related to Alaska's historical dependence on fossil fuel extraction for state revenue. Alaska's budget situation has improved somewhat through 2021 as oil prices have risen globally, though this may also complicate budgetary debates in Spring 2022.