The trans-Alaksa pipeline north of Fairbanks. (Associated Press)

I was born in Fairbanks, and as the owner of a commercial general contractor operating across this great state, I’ve witnessed the grit and ingenuity of Alaskans. But we face an uncomfortable truth: Alaska stands at a fiscal crossroads. Our budget crisis is no longer a temporary challenge — it’s a structural imbalance. Ignoring it puts essential services and the Permanent Fund Dividend (PFD) at risk. We need honest conversations and decisive leadership.

The looming fiscal cliff

Alaska’s financial foundation has long been built on oil. But oil, once our golden goose, has become a vulnerability. Around 40% of the state’s budget is tied to oil revenue, which is notoriously volatile. A $1 drop in price can cut $35-40 million from state revenue. Depending on this income is like betting our budget on the stock market.

While Alaska must pass a balanced budget annually, that doesn’t mean our finances are stable. For FY 2025, the state faces a projected $200 million deficit, growing to $1.5 billion by FY 2026. The decline in projected oil prices compounds the issue.

To mask these deficits, the state draws from the Constitutional Budget Reserve Fund. But the budget reserve is not a bottomless ATM. The state has borrowed nearly $4 billion from it, creating an illusion of stability. These recurring withdrawals are not sustainable.

Statutory limits exist on spending growth, but they exclude capital projects and the Permanent Fund. This allows unchecked growth in infrastructure spending, further inflating the budget. Alaska’s credit rating has already been downgraded, signaling a lack of long-term fiscal discipline. The consequences are real: larger class sizes, cuts to rural healthcare and reduced public safety support.

The unavoidable choice: PFD or solvency

Alaska must choose: continue unsustainable spending, slash the PFD, raid savings — or build new revenue. Each year, the PFD becomes the battleground.

The statutory PFD formula is based on half the earnings of the Permanent Fund over five years. But the Alaska Supreme Court ruled the Legislature controls final appropriations, meaning the payout is a political decision . For 2025, the Legislature approved a $1,000 PFD, despite the governor’s proposal of $3,892.

Cuts to the PFD hurt low-income and rural Alaskans the most. Yet each year, that’s the lever leaders pull. Meanwhile, permanent draws from the fund’s earnings — and possibly its principal — risk the long-term health of one of the world’s premier sovereign wealth funds. For every $1 billion drawn beyond sustainable levels, we lose $50 million in annual earnings.

A long-term solution: The Alaska gas line project

While the PFD fight dominates headlines, our real focus should be on diversifying Alaska’s revenue. The Alaska LNG project offers a generational opportunity.

This $38-44 billion project would transport natural gas from the North Slope 800 miles to Nikiski, supplying Asian markets and Alaskans alike. It could generate billions in royalties, taxes, and jobs — up to 5,000 during construction and 1,000 permanent roles. It’s also critical for energy security, as Cook Inlet gas supplies decline.

Beyond revenue, the gas line can improve air quality and lower energy costs across Alaska. Interior residents, including Fairbanks families, face high heating costs and poor air quality from diesel and wood. Natural gas is cleaner and more stable. This is about energy justice, not just economics.

The project’s phased approach — prioritizing in-state delivery before full export — is smart. It buys us time and flexibility in a competitive global LNG market. Construction is expected in 2027, with deliveries by 2029 or 2030. This is a long-term solution — but one worth pursuing.

However, AGDC’s claims of “billions in new revenue” need clearer public data. The state must provide transparent, annualized fiscal impact reports so Alaskans can understand what’s at stake and hold leaders accountable.

Action must replace rhetoric

This is not just about numbers. It’s about whether we preserve the services and opportunities that define our quality of life.

We must balance smart spending with responsible savings and long-term investments. The gas line will not solve our short-term crisis, but it can be a cornerstone of long-term prosperity. Meanwhile, we need courage from elected officials to adopt a comprehensive fiscal plan and end the cycle of temporary fixes.

Alaskans have always been resilient. But resilience without strategy won’t secure our future. It’s time to act — before these decisions are made for us.

Seth Church is a real estate entrepreneur, commercial general contractor and managing member of multiple Alaska-based companies, including Jewel Isaac, LLC. He has led development projects across the state, building businesses and revitalizing infrastructure. He serves on the University of Alaska Board of Regents and is the founder of the “Fairbanks, Alaska” Facebook group, the largest online community in the Fairbanks area. His work bridges business, civic leadership and community impact.

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