Governor Walker’s Fiscal Plan - akml.orgA Few of State’s Services • DOT Plowed & Maintained 5,612 miles of roadway • DOT Operated 242 airports • Troopers responded to 114,933

Office of Management and Budget

www.omb.alaska.gov

Governor Walker’s Fiscal Plan

Overview

February 23, 2017


Pat Pitney, Director

1


www.omb.alaska.gov

Alaska’s Budget in Household Terms

Income has dropped more than 80%

• Your annual income dropped from $80,000 to $16,000

Spending has been reduced 44%

• You have been able to reduce your rent or mortgage, heat, food, every day travel,

and vacations. You stopped building your cabin, stopped remodeling, and you’ll keep

your old car.

• Expenses have been cut from $80,000 to $45,000

Savings has one year remaining

• You had $130,000 in the bank, but now only $25,000

Investment accounts have been growing steadily

• You have $500,000 in an IRA and you need to decide whether to use it and how

much you can prudently use

An income/spending gap remains

2


www.omb.alaska.gov

Governor Walker’s FY2018 Fiscal Plan

The Governor’s FY2018 fiscal plan is comprised of three

necessary elements this year to assure sustainable and

balanced budgets long term.

1. Continue to reduce state spending

2. Draw from Permanent Fund earnings to support vital

state services and protect the dividend

3. Generate more revenue

3


www.omb.alaska.gov

The Budget Has Already Been Greatly Reduced

There has been $1.7 billion in unrestricted general fund cuts

since FY2015.

The FY2018 unrestricted general fund agency operating budget

is lower than the FY2011 budget.

Last year’s and this year’s capital budgets, $96 million and $115

respectively, were the first time the capital budget was below

$120 million since FY2000, aside from FY2005 when there were

general obligation bonds to cover capital projects.

There are fewer state employees now than there were 14 years

ago in 2002, even though there are 15 percent more Alaska

residents using state services.

4

A Few of State’s Services

• DOT Plowed & Maintained 5,612 miles of roadway

• DOT Operated 242 airports

• Troopers responded to 114,933 calls and 467 search & rescue efforts

• Public Defenders served 23,529 Alaskans

• Reinsurance program: Keeps health insurance rates low for 24,064 Alaskans

• Education funding for 138,000 K-12 students in 570 schools

• Collect and Distribute child support payments for 121,600 Alaskans

• Military & Veterans Affairs responded to 36 emergencies

• Domestic Violence grants provided 108,975 nights of safe shelter

• 4,794 degrees conferred at the University

• 1,800 homeless were served by shelters

• Firefighters responded to 552 fires

• Provide Medicaid insurance to 178,000 Alaskans

• 562 Seniors living in Pioneer Homes

• Children’s services helped 33,302 children

5


www.omb.alaska.gov5555


www.omb.alaska.gov

FY2018 Budget by All Fund Sources

Total Federal Funds

$3,442.3 33%

Total Unrestricted

GF 49%

$5,026.5

6

DOT Federal $1,078.0 11%

Medicaid Federal $1,165.1 11%

All Other Federal $1,199.2 12%

Other $680.6 7%

DGF$1,036.2 10%

UGF PFD $695.7 7%

Unrestricted GF $4,330.8 42%

Dollars in millionsTOTAL w/o PFD: $9.5 billion

TOTAL w/ PFD: $10.2 billion

Unrestricted GF (without PFD)

42%$4,330.8

Federal Funds33% $3,442.3

Other State Funds7% $680.6

Designated GF10% $1,036.2


www.omb.alaska.gov

FY2018 Unrestricted General Fund Spending With

Dividends: $5.0 Billion

7

Dollars in billions

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

2013 2014 2015 2016 2017 2018

Savings

PFPA

Existing UGF


www.omb.alaska.gov

FY2018 Unrestricted General Fund

Agency Operating Budget

Dollars in millions

8

Education, UA, AVTEC$1,627.2, 43%

(-9% from FY2015)

Health, Life, Safety, Justice$1,655.5, 44%

(-13% from FY2015)

All Other Executive Agencies

$472.6, 11%(-41% from FY2015)


www.omb.alaska.gov

Spending on Major Items FY2013 Compared to FY2018

Dollars in millions

9

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

Agencies Without K-12 K-12 Retirement, Debt, Etc. Capital Oil and Gas Tax Credits Permanent FundDividends

FY2013 FY2015 FY2018Dollars in millions

Agency Reductions

Percentage ReductionDollar Reduction ($millions)

Commerce*

Labor & Workforce Develop

Fish & Game

Military & Veterans' Affairs

Natural Resources

Environmental Conservation

Governor

Revenue

Transportation*

Administration

Law

Legislature

Health & Social Services

Corrections

University of Alaska

Public Safety

Education & Early Develop

Judiciary

Dollars in millions

Unrestricted General Fund Reduction by Agency

FY15 Management Plan to FY18 Governor



FY15-16 Reduction

FY16-17 Reduction

FY17-18 Reduction

$(7.1)

$(111.8)

$(17.0)

$(45.6)

$(39.4)

$(12.4)

$(12.4)

$(19.1)

$(63.6)

$(8.4)

$(8.6)

$(7.2)

$(28.9)

$(8.3)

$(28.9)

$(12.5)

$(13.7)

$(200.0) $(150.0) $(100.0) $(50.0) $-

(190.6)

6.3%

7.9%

9.9%

12.3%

13.2%

15.2%

16.0%

20.2%

21.7%

22.8%

24.9%

25.7%

31.9%

32.8%

33.3%

36.4%

37.3%

54.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Closures Throughout the State



Fairbanks: Examples of Direct State Funding

• School Formula: $119.5 million

• School Pupil Transportation: $12.3 million

• School Debt: $13.1 million

• PERS/TRS: $14.8 million

– Fairbanks North Star Borough: $1.1 million

– Fairbanks NSB School District: $13.3 million

– City of Fairbanks: $0.4 million

• Community Revenue Sharing: $3.2 million

– City of Fairbanks: $1.0 million

– Fairbanks North Star Borough: $2.2 million

12



Fairbanks: Examples of Other State ImpactsPayments to recipients in Fairbanks

• AHFC Housing Programs: $5.4 million

• AK Temporary Assistance: $1.9 million

• Child Care Benefits: $2.5 million

• Community Developmental Disability Grants: $2.1 million

• Behavioral Health Prevention/Intervention/Treatment/Recovery Grants: $8.3 million

• Adult Public Assistance: $6.1 million

• General Relief Assistance: $1.9 million

• Food Stamps: $12.8 million

• PFD: $85.0 million

• Senior Benefits: $2.2 million

• WIC: $5.8 million

• Foster Care: $3.4 million

• Subsidized Adoptions: $3.0 million

Other State Operations

• Pioneer Home: $9.9 million

• Division of Juvenile Justice: $7.4 million

• University of Alaska Fairbanks: $426.8 million all funds, $144 million state funds

13



Revenue Measures

FY2018 Governors Proposal

• Permanent Fund Protection Act

• Motor Fuels Tax Increase

Additional measure needed to bridge the gap – work with

the legislature for acceptable solution

• Income tax or sales tax

• Corporate tax increase

• Oil tax credits reform and/or tax change



Future Reserve Balances

15



• CBR/SBR savings peaked at $16.3B in FY2013, after the last five years of deficits, an

estimated $2.1B will exist at the end June 2018.

• Governor’s plan restores CBR and begins sustainable draw on the ERA effective in

FY2017.

• Governor’s Plan maintains the real value of the Permanent Fund and preserves an

adequate balance in the CBR.

• Under Status Quo the CBR is empty in November of FY2019 and the ERA is empty in

late FY2023. Permanent fund looses value and corpus would be at risk.

Governor's Plan ($B) Status Quo

FY2019 FY2022 FY2027 FY2019 FY2022 FY2027

CBR Balance $ 6.6 $ 7.8 $ 10.3 0 0 0

ERA Balance $ 8.0 $ 8.0 $ 8.2 $ 9.3 $ 2.3 0

Permanent Fund $ 57.0 $ 61.5 $ 69.9 $ 56.5 $ 53.2 $ 43.8

Active Discussions in Juneau?

16



• Four Different Earning Reserve Plans

• Governor’s, Seaton, Stedman, Dunleavy

• Considerations

• Rule Based

• Preserve Permanent Fund Value

• Minimize Volatility

• Dividend Size

• Spending Level

• Oil and Gas Taxes and Credits

• Motor Fuels Tax

• Sales Tax

• Session length

Examples of Direct State Funding

By Selected Communities

17



Juneau: Examples of Direct State Funding





– Juneau Borough School District: $4.8 million

– City & Borough of Juneau: $1.7 million

• Community Assistance: $1.3 million

18



Juneau: Examples of Other State Impacts

Payments to recipients in the City and Borough of Juneau• AHFC Housing Programs: $3.8 million















• Lemon Creek Correctional Center: $9.7 million

• University of Alaska Juneau Campus: $19.5 million

19



Bristol Bay: Examples of Direct State Funding




• Bristol Bay Borough School District: $0.1 million

• Dillingham City School District: $0.6 million

• City of Dillingham: $0.1 million

• Bristol Bay Borough: $0.1 million


• Dillingham: $0.1 million

• Bristol Bay Borough: $0.3 million

20



Dillingham: Examples of Other State Impacts

Payments to recipients in Dillingham• Power cost Equalization: $1.3 million

• OCS Family Preservation Grants: $0.4 million

• Community Initiative Grant: $0.1 million

• Behavioral Health Grants: $1.3 million










• University of Alaska Bristol Bay Campus: $1.2 million

21



Bethel: Examples of Other State Impacts

Payments to recipients in Bethel• Power cost Equalization: $2.6 million











Other State Operations• Division of Juvenile Justice: $5.4 million

• University Kuskokwim Campus: $2.6 million

• Yukon-Kuskokwim Correctional Center: $7.5 million

22



Bethel: Examples of Direct State Funding

• School Formula (Lower Kuskokwim SD): $59.6 million

• Pupil Transportation (Lower Kuskokwim SD): $1.3 million



• Lower Kuskokwim SD: $4.5 million

• City of Bethel: $0.2 million


• Bethel: $0.2 million

23



Fairbanks: Examples of Direct State Funding





• Fairbanks North Star Borough: $1.1 million

• Fairbanks NSB School District: $13.3 million

• City of Fairbanks: $0.4 million

• Community Assistance : $3.2 million

• City of Fairbanks: $1.0 million

• Fairbanks North Star Borough: $2.2 million

24



Fairbanks: Examples of Other State Impacts

Payments to recipients in Fairbanks• AHFC Housing Programs: $5.4 million












Other State Operations• Pioneer Home: $9.9 million


• University of Alaska Fairbanks: $144.0 million

25



Anchorage: Examples of Direct State Funding





• Municipality of Anchorage: $8.6 million

• Anchorage School District: $44.5 million

• Community Assistance : $9.3 million

26



Anchorage: Examples of Direct State Funding

Payments to recipients in Anchorage• AHFC Housing Programs: $23.8 million


• Child Care Benefits : $12.9 million













• University of Alaska Anchorage: $100.2 million

27



Nome: Examples of Direct State Funding




• PERS/TRS: $0.9 million • City of Nome: $0.1 million

• Nome City School District: $0.7 million


28



Nome: Examples of Other State Impacts

Payments to recipients in Nome• AHFC Housing Programs: $0.4 million









• OCS Family Preservation Grant : $0.8 million



Other State Operations• Division of Juvenile Justice: $3.5 million

• University of Alaska Northwest Campus: $1.3 million

29



Mat-Su: Examples of Direct State Funding





• Mat-Su Borough: $0.9 million

• Mat-Su Borough School District: $15.6 million

• City of Wasilla: $0.3 million

• City of Palmer: $0.2 million


• Mat-Su Borough: $2.8 million

• City of Wasilla: $0.3 million

• City of Palmer: $0.2 million

30



Mat-Su: Examples of Other State Impacts

Payments to recipients in the Mat-Su













Other State Operations:



• Mat-Su Correctional Center: $5.3 million

• Mat-Su College: $4.9 million

31



Wasilla: Examples of Other State Impacts

Payments to recipients in Wasilla












32


www.omb.alaska.gov

Palmer: Examples of Other State Impacts

Payments to Recipients in Palmer















• Palmer Correctional Center: $5.0 million

33


www.omb.alaska.gov


www.omb.alaska.gov

Kenai: Examples of Direct State Funding

School Formula: $81.0 million

School Pupil Transportation: $8.1 million

School Debt: $3.1 million

PERS/TRS On Behalf: $9.7 million

City of Kenai: $0.3 million

Kenai Peninsula Borough School District: $8.5 million

City of Soldotna: $0.2 million

Kenai Peninsula Borough: $0.9 million

Community Assistance: $1.8 million

City of Kenai: $0.3 million

Kenai Peninsula Borough: $1.4 million

City of Soldotna: $0.2 million

34


www.omb.alaska.gov

Kenai: Examples of Other State Impacts

Payments to recipients in Kenai Peninsula Borough

• Public Health Services: $1.2 million

• Behavioral Health Treatment/Prevention Grants $2.5 million

• Foster Care and Adoption: $2.2 million


• Public Assistance: $7.2 million

• Food Stamp Payments: $7.9 million)

• Senior Benefit Payments: ($2.3 million)

• AHFC Housing Programs: ($2.2 million)


• Juvenile Justice ($3.1 million)

• Wildwood Correctional Center: $13.9 million

• UA – Kenai Peninsula College: $6.6 million

35

Haines: Examples of Direct State Funding





• Haines Borough School District: $0.2 million

• Haines Borough: $0.1 million


36



Haines: Examples of Other State Impacts

Payments to recipients in Haines Borough• AHFC Housing Programs: $0.1 million









37



Delta/Greely: Examples of Direct State Funding





• Delta/Greely School District: $0.6 million

• Delta Junction: $0.1 million


38



Delta/Greely: Examples of Other State Impacts

Payments to recipients in Delta Junction: • AHFC Housing Programs: $0.1 million









39



Nenana: Examples of Direct State Funding





– Nenana School District: $0.3 million


40



Nenana: Examples of Other State Impacts

Payments to recipients in Nenana• AHFC Housing Programs: $0.1 million









41



Sitka: Examples of Direct State Funding





• Sitka Borough School District: $1.3 million

• City & Borough of Sitka: $0.4 million


42



Sitka: Examples of Other State Impacts

Payments to recipients in Sitka• AHFC Housing Programs: $0.7 million













• Mt. Edgecumbe Boarding School: $10.8 million

43



Aleutians East Borough: Examples of Direct State Funding





• Aleutians East Borough School District: $0.3 million

• Aleutians East Borough : $0.1 million


44



Aleutians East Borough: Examples of Other

State Impacts

Payments to recipients in the Aleutians East Borough






45



Tok: Examples of Direct State Funding

• School Formula (Alaska Gateway): $7.7 million

• School Pupil Transportation(Alaska Gateway): $0.7 million


• Alaska Gateway School District : $0.4 million


46



Tok: Examples of Other State Impacts

Payments to recipients in Tok



• Behavioral Health Prevention/Intervention/Treatment/Recovery

Grants: $0.1 million






47



Glennallen: Examples of Direct State Funding

• School Formula (Copper River): $6.2 million

• School Pupil Transportation (Copper River): $0.6 million


– Copper River School District: $0.3 million


48



Glennallen: Examples of Other State Impacts

Payments to recipients in the Glennallen








49



For more information on the budget


www.omb.alaska.gov

Pat Pitney, DirectorOffice of Management and Budget

907-465-4660

Email: [email protected]

50

Documents

Governor Walker’s Fiscal Plan - akml.orgA Few of State’s Services • DOT Plowed & Maintained 5,612 miles of roadway • DOT Operated 242 airports • Troopers responded to 114,933