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

Alaska’s Fiscal Situation

Alaska House Majority Coalition

FY17 UGF Budget Drivers

(In Millions)

200 400 600 800 1,000 1,200 1,400

(In Millions)

200 400 600 800 1000 1200 1400

UGF FY17 Cuts FY15‐FY17

2015 to 2017 Agency Cuts

State Budget Reductions 2013‐2017

(In Millions)

$7.9 $7.4 $6.0 $5.3 $4.2

1000 2000 3000 4000 5000 6000 7000 8000 9000

2013 2014 2015 2016 2017

Capital Budget Statewide Operating Agency Operations

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

$4.43 $3.75 $3.39 $2.99 $2.31 $1.62 $0.87 $0.08 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24

Billions

Department of Revenue SB 26 Model, 3/28/17 *Figures based on SB26 as it was transmitted to the House

Comparing Plans

Education Health and Social Services University Corrections Transportation^ Debt Service

Public Safety Retirement Alaska Court System Departments under $100 million

Existing Petroleum Existing Petroleum Existing Non‐Petroleum Existing Non‐Petroleum

Motor Fuel Tax Motor Fuel Tax

HB 111 Education Tax* Permanent Fund Earnings** Permanent Fund Earnings**

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

UGF Budget Senate Plan House Plan

*Income Tax would take a year to implement, FY20 projection used **Senate Operating Budget uses $141 million more from PF than House via steeper PFD reductions ^Transportation includes motor fuel tax funds, consistent with passage of Governor’s motor fuels tax

In millions

Balanced Budget by 2020

2020 Budget $4.58

Existing Revenue $1.95 School Tax $0.69

Oil Tax Reform $0.09 Motor Fuels Tax $0.07

Permanent Fund Draw $1.85 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0

Budget Revenue

Billions

Percent of Income Impact ‐ 2019

Income Percentile Percent Annual Income 0‐20% 60‐80% 40‐60% 20‐40% 80‐95% 95‐99% 99‐100% 10.7 4.3 3.3 2.1 1.3 0.6 0.2 8.6 4.1 3.5 3.2 2.9 2.9 2.9

2 4 6 8 10 12 Senate House

Percent of Income Impact ‐ 2023

Percent Annual Income 6.1 2.6 1.9 1.2 0.7 0.3 0.1 2.8 1.8 1.8 2.1 2.2 2.6 2.8

2 4 6 8 10 12 Senate House

Income Percentile 0‐20% 60‐80% 40‐60% 20‐40% 80‐95% 95‐99% 99‐100%

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

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

1 2 3 4 5 6 7 8 9 10

2009 2010 2011 2012 2013 2014 2015 2016 2017

Capital Budget Statewide Agency Operations Total UGF Revenue

Billions

*Budget and revenue adjusted for inflation

Historic Budget and Revenue

In millions*

2000 4000 6000 8000 10000 12000 14000

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Capital Budget Statewide Agency Operations Total UGF Revenue

Real Per Capita (RPC) Budget and Revenue

RPC Capital RPC Statewide Ops RPC Agency Ops RPC UGF

Capital Budget

500 1000 1500 2000 2500 3000

Inflation adjusted In millions*