Every December, the governor of Alaska is required to release a budget proposal for the upcoming fiscal year. In this upcoming legislative session (in 2023), policymakers will be enacting the FY 2024 state budget.
Released on December 15, 2022, the Governor’s FY 2024 budget proposal comes in at a total of $11.36 billion, with $6.52 billion of that coming from state funds (not included here is the ERA draw for the Permanent Fund Dividend payment to citizens). In comparison, the FY 2023 enacted budget plus supplemental spending is currently sitting at $13.45 billion, with $7.41 billion coming from state funds.
Alaska Policy Forum is encouraged by the almost $1 billion decrease in state funds appropriations between FY 2023 and FY 2024. However, the proposed budget draws from both the Constitutional Budget Reserve ($245 million) and the Statutory Budget Reserve ($20 million), which are Alaska’s savings accounts, often referred to as “rainy day funds.” Drawing down those accounts should only occur during truly “rainy days,” and while Alaska’s economy is not strong right now, the state has certainly seen “rainier days.” To have a lasting and consequential impact on the size and scope of state government so that it does not compete with the private sector, hinder free enterprise, or burden residents, reductions must be made to areas of the government that have grown too large.
We encourage policymakers heading to Juneau next month to approach the budget process with a mindset of needs versus wants. Due to the low revenue forecast for the upcoming year, it will be absolutely essential for policymakers to demonstrate fiscal responsibility by cutting the budget. The Governor’s FY 2024 budget is headed in the right direction.