Alaska state budget
From Sunshine Review
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Alaska faced a $1.3 billion budget gap for fiscal year 2010.[1] Alaska’s estimated fiscal 2011 shortfall is reportedly $677 million.[2] The steep decline in oil prices, the state’s dominant source of revenue, ended their historical annual surplus requiring dipping into its special reserve fund of approximately $8 billion.[3] The Alaskan oil forecast for FY09 was 0.689 mbd at $65.70 per barrel; the FY2010 forecast was 0.655 mbd at $58.29/bbl.[4]
Gov. Sean Parnell explained the challenges faced in putting together the 2011 budget include built in increases for education and Medicaid that could total $163 million combined with 5% to 6% personnel increases of new labor contracts for state workers.[5]
Alaska revised surplus projections for fiscal year 2009 and faced a $360 million budget deficit.[6] Fiscal year 2009 budget revenue was $5.87 billion and fiscal year 2010 enacted budget revenue is $3.21 billion, a 45.3% decrease from 2009.[7]
[edit] Budget Background
Alaska does not have a state income tax or statewide sales tax. 82% of Alaska’s estimated state revenues for 2010 are from oil taxes, royalties and fees.[8] The FY2011 proposed budget is due to the Legislature by December 15, 2009.[9] The 2010 Legislative Session is scheduled to meet January 19 to April 18, 2010.[10]
Alaska's fiscal year runs from July 1 to June 30 of the following year, with year-end accruals made through August. Every state agency submits requests and statistics on the revenue and spending before the Governor releases a recommended budget to the Legislature by December 15. The Legislature convenes on the third Tuesday in January. Once the House and the Senate approve and make any necessary changes to the budget bill, the bill is passed back to the Governor. If an appropriation bill is transmitted to the governor after session, the governor has 20 days to review the bill and exercise line item veto power.[11]
See Alaska state budget (2008-2009) for more information.
[edit] Accounting Principles
Article IX, Section 14 of the Alaska State Constitution provides that "The legislature shall appoint an auditor to serve at its pleasure. He shall be a certified public accountant. The Auditor shall conduct post-audits as prescribed by law and shall report to the legislature and to the governor.”[12]
The Legislative Budget and Audit Committee is responsible for overseeing the Division of Legislative Audit. The Committee is composed of five members from the Senate and five members from the House of Representatives.[13]
Audits are performed by the Division of Legislative Audit in order to ensure that Alaska state administrators comply with financial regulations and adequately manage their state programs and are published on their Web site. Pat K. Davidson has served as Legislative Auditor since 1997.[14]
| Credit Rating | Fitch | Moody's | S&P |
| Alaska[15] | AA | Aa2 | AA+ |
The Institute for Truth in Accounting (IFTA) rates Alaska “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Alaska’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[16] Alaska’s Department of Administration, Division of Finance is responsible for filing the CAFR, which are published on their Web site. Kim Garnero is Division Director.[17]
[edit] 2008-2009 budget crisis
Alaska faced a $1.65 billion budget shortfall for fiscal year 2009[18] and a similar shortfall for fiscal year 2010, $1.25 billion, in light of drops in oil revenue.[19] In early January 2009 Senate President Gary Stevens stated that the state was facing a budget deficit as large as $2 to $3 billion for FY 2010. [20] The state budget spending-versus-revenue gap is largely due to a decline in the price of oil. In December 2008 state officials anticipated a $388.7 million surplus for FY 2010 but in just two months revenues dropped.[19] In response to the state budget crisis Gov. Sarah Palin proposed that the state draw on reserves. A total of $1.36 billion and approximately $1.2 billion are estimated to be withdrawn for FY 2009 and FY 2010 respectively. “Responsible reductions and prudent use of reserve funds that we had set aside for tougher times will help us weather the storm,” said Palin. The includes Constitutional Budget Reserve totals $7 billion. [21]
[edit] Ideas about the budget deficit
- Oil prices rose every year for the last seven years, topping out at an average of more than $91 a barrel last year. Prices in 2008 peaked at above $140, but closed at $32.26 on January 23, 2009. According to the Department of Revenue oil production levels for FY 2009 are relatively stable but are falling approximately 3,000 barrels a day. State officials reported that unrestricted revenue for FY 2009 is projected at $5.5 billion, or $1.2 billion less than projected in the Fall 2008 forecast. In total oil revenues provide 87 percent of the anticipated unrestricted revenue. [22]
- Alaskan oil companies are saw a decline in profits in 2008. For example, in 2008 BP Exploration (Alaska) Inc. earned a total of $1.95 billion in profits, down 21 percent from 2007. Additionally BP paid $3.3 billion in taxes in Alaska last year. 71 percent of the total taxes paid in 2008 71 percent came in the form of production taxes, compared to $1 billion in 2007 and $665 million in 2006. Conoco Phillips, the state's largest oil producer, reported similar statistics. BP Alaska averaged 197,000 barrels per day last year, a 6 percent decline from 2007 and down 12 percent from 2006. [23]
[edit] Budget transparency
Alaska currently has partial transparency, because of its Checkbook Register Online.
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[24]
- It is estimated that Alaska will receive approximately $930.7 million from the economic stimulus package.
- The economic recovery website for Alaska is available here.
[edit] Legislation
Alaskan lawmakers have not yet passed legislation to place spending transparency online. However, in the first week of February 2008, the Division of Finance created a new website, the Alaska Checkbook Online, that discloses some aspects of the Alaska state government's spending practices on an ongoing basis. The site is similar to having a checkbook register online.[25]
[edit] Government tools
Alaska Checkbook Register Online features:
- Payments to vendors and grantees who received at least one payment of $1,000 or more in the current fiscal year through the end of June 2008 are included. (Individual payments of less than $1,000 are not included.)
- The information provided includes the name and location of the vendor or grantee, the purpose of the payment, and the state agency or department that requested the payment.
- Twenty-six different types of payments are excluded for confidentiality reasons.[26]
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary |
|---|---|---|---|---|---|---|
| Alaska: Checkbook Online |  |  | | | | |
- Community funding databases:
Alaskans can access two online databases that allow users to search state grants, revenue sharing, and capital project funding given to Alaskan cities and towns. The Community Funding Database provides information on the year, grant type, recipient, project description and status, award amount, disbursement information, and staff contact for each entry.[27]
The Capital Projects Database contains descriptions, funding levels, and status for over 16,000 capital projects in Alaska communities.[28]
[edit] Support for creation of the database
Alaska's Checkbook Online was placed made available thanks to the support of Governor Palin.[29]
The original sponsor of the legislation authorizing the online spending database was Sen. Bill Wielechowski (D - Anchorage).[30]
In early 2008, Sens. Wielechowski and Ellis proposed SB 201, known as the Alaska Open Government Act, that would mandate additional information be added to the Alaska Checkbook Online database.[31],[32]
Alaska Senate Bill 201 was supported by Americans for Tax Reform[33] and the National Taxpayers Union.[34]
[edit] Independent transparency sites
None.
[edit] Public employee salaries
None. Alaska Checkbook Online does not feature state employee salaries.
[edit] See Also
Alaska taxpayer-funded lobbying
[edit] External links
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Institute of the North
- Alaska Checkbook Online, official website
- Division of Finance, Alaskan government
- State budget surpluses could dry up
- The Alaska Citizen's Guide to the Budget
[edit] Additional reading
- Gov. Sarah Palin,"2009 State of the state address," January 22,2009
- Fairbanks Daily News-Miner,"Alaska Legislature considers uncoupling oil and natural gas taxes to boost state revenue," March 13,2009
[edit] References
- ↑ Center on Budget & Policy Priorities, “New Fiscal Year Brings No Relief From Unprecedented State Budget Problems,” September 3, 2009
- ↑ Center on Budget & Policy Priorities, “New Fiscal Year Brings No Relief From Unprecedented State Budget Problems,” September 3, 2009
- ↑ Alaska Journal of Commerce, “Parnell says he'll tackle state budget planning with care,” September 18, 2009
- ↑ Alaska FY 2010 Budget, August 18, 2009
- ↑ Alaska Journal of Commerce, “Parnell says he'll tackle state budget planning with care,” September 18, 2009
- ↑ Center on Budget & Policy Priorities, “New Fiscal Year Brings No Relief From Unprecedented State Budget Problems,” September 3, 2009
- ↑ Alaska FY 2010 Budget, August 18, 2009
- ↑ Reuters, “Alaska sees $1.25 billion budget gap on oil price drop,” February 19, 2009
- ↑ Gov. Sean Parnell, “Fiscally Conservative Approach to Budget,” Sept. 4, 2009
- ↑ The Alaska State Legislature Web Site
- ↑ State of Alaska, "Life cycle of a budget," retrieved October 7,2009
- ↑ Alaska Division of Legislative Audit Web site, retrieved October 7, 2009
- ↑ Legislative Budget & Audit Committee Web site, retrieved October 7, 2009
- ↑ Legislative Budget & Audit Committee Web site, retrieved October 7, 2009
- ↑ California State Treasurer, “Comparison of Other States’ General Obligation Bond Ratings”
- ↑ Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
- ↑ Alaska Division of Finance Web site, retrieved October 7, 2009
- ↑ Anchorage Daily News,"Alaska budget hole is $1.65 billion," February 4,2009
- ↑ 19.0 19.1 Reuters,"Alaska sees $1.25 billion budget gap on oil price drop," February 19,2009
- ↑ Juneau Empire, "Declining oil prices leave state facing shortfall", January 21, 2009
- ↑ Gov. Sarah Palin,"Palin Reduces FY2010 Spending Plan," February 18,2009
- ↑ Department of Revenue,"Revenue Releases FY09 Forecast Update," February 3,2009
- ↑ Anchorage Daily News,"BP profits decline in '08," March 18,2009
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ National Public Radio, http://www.npr.org/templates/story/story.php?storyId=18764744, February 7, 2008
- ↑ Payment systems excluded based on confidentiality analysis
- ↑ Grants: Community Funding Database
- ↑ Capital Funding: Capital Projects Database
- ↑ Alaska Checkbook Online, "Overview"
- ↑ SitNews, "New Legislation Would Open The State's Checkbook to Public Scrutiny," January 7, 2008
- ↑ Text of SB 201
- ↑ Americans for Tax Reform, "Letter endorsing SB 201," February 20, 2008
- ↑ Americans for Tax Reform, "Letter support SB 201," February 20, 2008
- ↑ National Taxpayers Union, "An Open Letter to the Alaska Senate: Taxpayers Support Online Spending Transparency (SB 201)," March 7, 2008
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