Alaska’s Budget Deficit: Have we really cut enough?

Fiscal Policy, Policy, tax changes, Taxes — By on January 7, 2018 at 10:50 AM

In a large statewide poll conducted by Hellenthal and Associates in the spring of 2017, Alaskan voters agreed with the following statement by a two-to-one margin: “The state budget needs to be drastically reduced.”  A December 2017 analysis from Key Policy Data (KPD) would seem to confirm that the beliefs of those voters are correct.

Despite assurances from many policymakers that our state budget has been “cut to the bone” and every possible efficiency has already been adopted, research from KPD has concluded that Alaska’s government workforce (the single largest budget expense) was the second “least productive” state and local government workforce in the US in 2016.

The two key elements of the low productivity of Alaska’s government workers are the very high number of government employees, and the very high level of taxpayer cost of government employees when compared to their fellow Alaskan workers in the private sector.

According to KPD, Alaska had 56% more state and government workers per capita than the US average in 2016. In fact, Alaska actually saw the ratio of government workers to private sector workers slightly increase between 2015 and 2016 while we were being told that the state was making dramatic cuts in the government workforce.

Contrary to the budget-slashing narrative from Juneau, KPD concluded that the taxpayer cost for Alaska government workers compared to private sector workers dramatically increased between 2015 and 2016. In 2015, government worker compensation was 32% higher than average private sector Alaskan workers. By 2016 public sector compensation had increased to a new all-time record of nearly 40% higher than the private sector. During that same timeframe, the US average for state and local workers held fairly steady at around 12-13% higher than private sector workers.  Back in the pre-pipeline days of 1969, the taxpayer cost of Alaska’s government workers was actually 6% less than their private sector counterparts.

While the conversation in Juneau has turned almost exclusively to “new revenues” (i.e., taxes) to support state government at its current levels, Alaskans need to ask ourselves if we are truly content to see PFDs reduced and to pay new taxes–all in support of the second least productive government workforce in the US?

See the full KPD analysis here:  http://www.keypolicydata.com/blog-archives/2017/12/alaskas-state-and-local-government-workforce-second-least-productive-2016

 

 

 

 

 

 

 

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