1.3.3
Why is the State Budget a Moving Target?
In the early spring the legislature
passes a budget for the fiscal year that begins on July 1. By
the time the fiscal year ends 12 months later, the budget has
changed size many times.
There are a number of logical reasons
why the state budget is a moving target. Just like a family
budget, neither revenues nor expenditures turn out to be exactly
as expected. It makes sense for the budget to be flexible to
adjust to these changing conditions, but it does add to the
confusion in trying to understand what is in the budget. These
tables show how the Fy 2002 budget changed between the time
it was passed before the year began (Enacted), and the time
the year had ended (Authorized). It is only some time after
the year has ended that we really know how much was spent (Actual).
Evolution
of the FY 2002 State Budget—By Expenditure
(million
$)
|
| Budget Version |
Enacted
|
Authorized
|
Difference
|
| |
Spring 2001
|
Fall 2002
|
-
|
| Authorization |
$5,407
|
$5,927
|
$520
|
| ...Operating |
3,995
|
4,225
|
230
|
| ...Capital |
1,163
|
1,425
|
262
|
| ...Statewide |
250
|
277
|
27
|
| PF Inflation Proofing |
693
|
602
|
-91
|
| PF Dividend |
1,106
|
850
|
-256
|
| TOTAL |
$7,206
|
$7,379
|
$173
|
| Item: Draw from CBR |
474
|
777
|
303
|
| Source: Summary of Appropriations,
9/14/01 for Enacted, 8/16/02 for Authorized including
Personal Communication with David Teal, 10/25/02. |
|
Evolution
of the FY 2002 State Budget—By Source of Funds
(million
$)
|
| Budget Version |
Enacted
|
Authorized
|
Difference
|
| |
Spring 2001
|
Fall 2002
|
-
|
| Authorization |
$5,407
|
$5,927
|
$520
|
| ...General Fund (+ CBR) |
2,404
|
2,504
|
100
|
| ...Federal |
2,082
|
2,306
|
224
|
| ...Other |
921
|
1,117
|
196
|
| PF Inflation Proofing |
693
|
602
|
-91
|
| PF Dividend |
1,106
|
850
|
-256
|
| TOTAL |
$7,206
|
$7,379
|
$173
|
| Source: Summary of Appropriations,
9/14/01 for Enacted, 8/16/02 for Authorized including
Personal Communication with David Teal, 10/25/02. |
Here are some reasons why the budget
changes in size as the year progresses.
1. There are always some supplemental
appropriations added to the capital and operating budgets to
account for unanticipated expenses. There are also reappropriations
of funds that were previously appropriated but not spent.
2. The amount that the state receives
in Federal grants is never exactly the predicted amount.
3. Expenditures for fee-supported
activities, like the International Airports, will probably be
different from the levels originally budgeted.
4. Inflation proofing is based
on the actual rate of inflation during the budget year. At the
start of the year this is just an estimate.
5. The amount paid out as Permanent
Fund dividends at the end of the year is based partly on the
earnings of the fund during the year. If the actual earnings
are higher or lower than predicted, the dividend payout will
be higher or lower than in the enacted budget.
The size of the draw on the Constitutional
Budget Reserve (CBR) depends upon how big the gap is between
general fund spending and general fund revenues. Since general
fund revenues come primarily from oil, they are very sensitive
to the price of oil and are never estimated with complete accuracy
at the start of the year. Variation in the estimated size of
the CBR draw during the year does not affect the overall size
of the budget, but it is an important indicator of the short-term
fiscal health of the state.
|
|