Slide #1.

Governor Walker’s Fiscal Plan Overview February 21, 2017 Office of Management and Budget Pat Pitney, Director 1 Office of Management and Budget www.omb.alaska.gov
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Slide #2.

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 Office of Management and Budget www.omb.alaska.gov
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Slide #3.

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 Office of Management and Budget www.omb.alaska.gov
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Slide #4.

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 of Management and were 14 years ago in 2002, evenOffice though thereBudget 4 are 15 percent more Alaska residents using state www.omb.alaska.gov
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Slide #5.

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 Office of Management and Provide Medicaid insurance to 178,000 Alaskans Budget 5 5 5 562 Seniors living in Pioneer Homes 5 www.omb.alaska.gov
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Slide #6.

FY2018 Budget by All Fund Sources Total Federal Funds $3,442.3 33% Dollars in millions Total Unrestricted GF 49% $5,026.5 TOTAL w/o PFD: $9.5 billion TOTAL w/ PFD: $10.2 billion 6 Office of Management and Budget www.omb.alaska.gov
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Slide #7.

FY2018 Unrestricted General Fund Spending With Dividends: $5.0 Billion $9.00 $8.00 $7.00 $6.00 $5.00 Savings PFPA Existing UGF $4.00 $3.00 $2.00 $1.00 $2013 2014 2015 2016 Dollars in billions 7 2017 2018 Office of Management and Budget www.omb.alaska.gov
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Slide #8.

FY2018 Unrestricted General Fund Agency Operating Budget All Other Executive Agency; 472.63; 12.59% Education, UA, AVTEC; 1627.16; 43.33% Health, Life, Safety, Justice; 1655.49; 44.08% Dollars in millions 8 Office of Management and Budget www.omb.alaska.gov
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Slide #9.

Spending on Major Items FY2013 Compared to FY2018 Dollars in millions Dollars in millions 9 Office of Management and Budget www.omb.alaska.gov
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Slide #10.

Agency Reductions Dollar Reduction ($millions) Unrestricted General Fund Reduction by Agency FY15 Management Plan to FY18 Governor FY17-18 Reduction FY16-17 Reduction FY15-16 Reduction $(13.7) Commerce* $(12.5) Labor & Workforce Develop $(28.9) 54.3% 37.3% 36.4% Fish & Game $(8.3) $(28.9) $(7.2) $(8.6) Military & Veterans' Affairs 33.3% Natural Resources 32.8% 31.9% Environmental Conservation 25.7% Governor $(8.4) $(63.6) 24.9% Revenue 22.8% Transportation* $(19.1) 21.7% Administration $(12.4) Law $(12.4) Legislature (190.6) $(190.6) 20.2% 16.0% 15.2% Health & Social Services $(39.4) $(7.1) $(50.0) 9.9% Public Safety Education & Early Develop $(111.8) $(100.0) 12.3% University of Alaska $(17.0) $(150.0) 13.2% Corrections $(45.6) $(200.0) Percentage Reduction 7.9% Judiciary $- 6.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Dollars in millions 10 Office of Management and Budget www.omb.alaska.gov
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Slide #11.

Closures Throughout the State 11 Office of Management and Budget www.omb.alaska.gov
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Slide #12.

Fairbanks: Examples of Direct State Funding • School Formula: $119.5 million • School Pupil Transportation: $12.3 million • School Debt: • PERS/TRS: $13.1 million $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 1212 12 Office of Management and Budget 12 www.omb.alaska.gov
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Slide #13.

Fairbanks: Examples of Other State Impacts Payments 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 1313 13 Office of Management and Budget 13 www.omb.alaska.gov
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Slide #14.

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 14 Office of Management and Budget www.omb.alaska.gov
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Slide #15.

Future Reserve Balances Governor's Plan ($B) Status Quo FY201 FY202 FY202 9 2 7 FY2019 FY2022 FY2027 CBR Balance ERA Balance $ $ $ 6.6 7.8 10.3 $ $ $ 8.0 8.0 8.2 0 $ 9.3 0 0 $ 2.3 0 • CBR/SBR savings peaked$at $16.3B in$FY2013, after the last five $ years of deficits, an 57.0 estimated $2.1B will$ exist the $end 61.5 69.9 Permanent Fund 56.5 $at53.2 43.8June 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. Office of Management and 15 Budget 15 www.omb.alaska.gov
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Slide #16.

Active Discussions in Juneau? • • • • • • 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 16 Office of Management and Budget 16 www.omb.alaska.gov
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Slide #17.

For more information on the budget Pat Pitney, Director Office of Management and Budget 907-465-4660 Email: [email protected] 17 Office of Management and Budget www.omb.alaska.gov
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