Alaskas Fiscal Situation Alaska House Majority Coalition FY17 UGF - PowerPoint PPT Presentation

Alaska’s Fiscal Situation Alaska House Majority Coalition

FY17 UGF Budget Drivers 1,400 1,200 1,000 800 600 400 (In Millions) 200 0

2015 to 2017 Agency Cuts 1400 1200 1000 800 600 400 200 (In Millions) 0 UGF FY17 Cuts FY15 ‐ FY17

State Budget Reductions 2013 ‐ 2017 9000 $7.9 8000 $7.4 7000 $6.0 6000 $5.3 5000 Capital Budget $4.2 Statewide Operating 4000 Agency Operations 3000 2000 (In Millions) 1000 0 2013 2014 2015 2016 2017

Window for Action • Legislative Year 2017 (FY 2018) • Income tax passed this year first fully implemented in FY2020 • Legislative Year 2018 (FY 2019) • Election year, action unlikely • Legislative Year 2019 (FY 2020) • Income tax passed in 2019 fully implemented in FY 2022 • We have less than 4 billion in CBR + SBR for FY18 forward • Drawing $800 million from CBR as Senate proposes this year uses 20 ‐ 25% of remaining savings.

CBR End of Year Balance ‐ SB26* Only 5 $4.43 4.5 4 $3.75 $3.39 3.5 $2.99 3 $2.31 2.5 2 $1.62 1.5 $0.87 1 Billions 0.5 $0.08 0 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Department of Revenue SB 26 Model, 3/28/17 *Figures based on SB26 as it was transmitted to the House

Comparing Plans 5,000 4,500 4,000 Departments under $100 million Alaska Court System Retirement 3,500 Permanent Fund Earnings** Public Safety Debt Service Transportation^ 3,000 Corrections Permanent Fund Earnings** 2,500 University Education Tax* 2,000 HB 111 Health and Social Services Motor Fuel Tax Motor Fuel Tax 1,500 Existing Non ‐ Petroleum Existing Non ‐ Petroleum 1,000 In millions Education Existing Petroleum Existing Petroleum 500 0 UGF Budget Senate Plan House Plan *Income Tax would take a year to implement, FY20 projection used ^Transportation includes motor fuel tax funds, consistent with passage of **Senate Operating Budget uses $141 million more from PF than House via steeper PFD reductions Governor’s motor fuels tax

Balanced Budget by 2020 $5.0 Permanent Fund $4.0 Draw $1.85 Motor Fuels Tax $3.0 $0.07 2020 Budget School Tax Oil Tax Reform $0.69 $4.58 $0.09 $2.0 Existing Revenue $1.0 $1.95 Billions $0.0 Budget Revenue

Percent of Income Impact ‐ 2019 12 10.7 10 8.6 8 Percent Annual Income Senate 6 House 4 4.3 4.1 3.5 3.3 3.2 2.9 2.9 2.9 2 2.1 0.6 1.3 0.2 0 80 ‐ 95% 95 ‐ 99% 99 ‐ 100% 0 ‐ 20% 20 ‐ 40% 40 ‐ 60% 60 ‐ 80% Income Percentile

Percent of Income Impact ‐ 2023 12 10 8 Percent Annual Income Senate 6 6.1 House 4 2.8 2.8 2.6 2.6 2 2.2 2.1 1.9 1.8 1.8 1.2 0.3 0.1 0.7 0 80 ‐ 95% 95 ‐ 99% 99 ‐ 100% 0 ‐ 20% 20 ‐ 40% 40 ‐ 60% 60 ‐ 80% Income Percentile

Job Losses per $100 Million of Deficit Reduction Option Public Private Total Spending Cuts 504 754 1258 Dividend Reduction 892 892 Income Tax 786 786 Spend Savings 0 2016 ISER Report

Growing Alaska • SB 26 leaves more than $800 million deficit this year • Legislative Finance projects about a half billion dollar budget gap remaining indefinitely • We are deferring maintenance and basic upkeep that will cost us more to fix later. If you never change the oil in your car, you may save a nickel in the short term, but you cost yourself a dollar later • Capital budget brings in federal match and spurs economic development and growth • Investments in Education and the University attract and retain the best and brightest, and spur innovation and economic development

Recent Budgets and Revenue 10 9 8 7 6 Capital Budget 5 Statewide Agency Operations 4 Total UGF Revenue 3 2 Billions 1 0 2009 2010 2011 2012 2013 2014 2015 2016 2017

Historic Budget and Revenue 14000 12000 10000 8000 Capital Budget Statewide 6000 Agency Operations Total UGF Revenue 4000 In millions* 2000 0 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 *Budget and revenue adjusted for inflation

Real Per Capita (RPC) Budget and Revenue RPC Capital RPC Statewide Ops RPC Agency Ops RPC UGF

Capital Budget 3000 2500 2000 1500 1000 In millions* 500 0 Inflation adjusted