That Blanking, Bloated, Big Alaska Budget!

Fiscal Policy, Recent News — By on June 17, 2016 at 7:25 AM

By now most of us are totally confused when it comes to the Alaska state budget discussions going on in the legislature.  Undesignated General Funds, Designated General Funds, Operating Budget, Statewide Costs, ad infinitum.  And maybe that is the objective: confusion.  And the governor, the legislators, and state bureaucrats have done an excellent job of confusing most Alaskans so one has virtually no clue of what the proposed budget is.

So, the real question is, “How do we measure the budget and the costs of state government so we are consistent year over year ?“.   We must use the same standards throughout the years to maintain consistency and compare “apples to apples”.  Well, here is our take and comparison, adjusted for inflation:

Budget UFG fm FY61 to FY17 per capita

 

So what does this picture show?  From 1961 to just before the $900 million Prudhoe Bay lease sale in 1969, the per capita UGF budget in Alaska averaged $1,600 per person, updated to 2014 dollars.  Then after the lease sale largess, it jumped up towards the 1975 starting point that Legislative Finance uses to convince legislators is the beginning of history, $5,000 per capita.  Gov. Walker’s FY17 UGF proposed budget at $4,854 per capita has returned to near the $4,881 of FY06 but that is THREE TIMES the pre‐oil UGF per capita budget before 1969.

Note that also the revenue stream (green) is nearly the same in FY17 as it was in FY69.  BUT the per capita spending is nearly THREE times the spending in FY69. 

In this fiscal environment if we’re going to be considering “historic levels” of budgeting then begin with what government services were provided before North Slope oil and building on those step-by‐step while rigidly adhering to what we can really afford and what Alaskans are truly willing to pay for out of reduced Permanent Fund Dividends and increased taxation.  Willing to pay, because they think they’re really getting value for the services paid for by their reduced family income.

Of course, we will hear shouts from the opponents of this comparison:  “Comparing back to the 1960s, are you kidding?”.  We can hear it now… “That was before 1% For Art, you couldn’t drive from Fairbanks to McKinley Park, no PFD!  (Before the Delta barley project, the fish plant etc, etc.)”  So how bad was Alaska back in those days of light-handed government and very small state budgets?  Was blood running in the streets…crime out of control…folks starving, dying like flies? How bad was it, REALLY?

Finally, all these budget graphics and discussion of the Unrestricted General Fund Agency Operating budget are just diverting attention from the truly gigantic complete Alaska state budget that includes all the other rarely discussed (and thus effectively hidden) components: DGF (Designated General Fund), Statewide Operations (retirement costs, debt service, tax credits), Federal Funds). Here is the full budget:

 

budget real per capita expenditure history ALL FUNDING SOURCES

 

The governor’s FY17 proposed $4 billion Agency Operations UGF spending rockets up to over $13 billion when all spending (including federal match is included).   In per capita 2014 dollars that is $5,400/person for Agency UGF only and $17,600/person for all spending, including federal!  Everyone needs to stop giving all the attention to the UGF budget.  We are absolutely confident that Alaskan families losing their household income to Permanent Fund Dividend reductions and new and higher taxes aren’t going to care whether those dollars are going to the UGF budget or the DGF budget or to statewide operations to pay for debt service or state employee pension trust deficiencies.  To them, all those dollars are the same.

Bottom line: Alaskans cannot afford the size and cost of our state government.  Legislators and governor: Stop playing word games with the public.  Be transparent.

 

 

 

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