The Institute of Social & Economic Research

The Alaska Citizen's Guide to the Budget

Financial Assistance
provided by:

Fiscal Policy Council of Alaska

Comparisons
Budget FAQs
The Alaska Disconnect
Closing the Fiscal Gap
Crash of '86
Other

 

 

Calculating the Alaska Disconnect
A "Best Case Scenario"

Summary
  • Each new basic sector job is a burden of $1100 on public finances per year.
  • Each new basic sector job generates public revenues of $5,200 and expenditures of $6,300.
  • Local government gains net revenues of about $300 per job.
  • State government loses about $1400 per job.
Assumptions
  • The new basic sector activity is in Anchorage.
  • Family households move in to take new jobs.
  • Households use local services (including public schools) and state transportation services.
  • Households pay their pro-rata share of state and local taxes.
  • The new business development pays its pro-rata share of state income taxes and local property taxes (comparable to FEDEX).
  • No new public infrastructure required for additional population.
  • No public sector expenditures directly related to new business development.
Sources of Per Capita Revenues ($ per employee or person)
New Development
Adults & Indirect Business

Children

  State Income Tax (per job) [1] 
$280
X
X
  Alcohol, Fuel, Tobacco, Insurance Tax [2]     $243
X
  Local Sales Tax  
X
X
  Local Property Tax [3] see last table below   $1,585
X
 

[1] Corporate Income Tax in 2000 was $56.3 million, and about 200K private jobs.
[2] Year 2000 collections of $99.8 million from ADOR, 410K adults aged 21 and over in Alaska in 2000 based on Census. This captures the shares paid by new business activity.
[3] Total property tax in Anchorage in 2000 was about $275 million, adult population was about 173.5 thousand. This estimate includes the commercial share of tax represented by each adult payer (including the basic sector share so there is some double counting of revenues here).

Assumptions for Per Capita Expenditures
Adults & Indirect Business

Children

 
  State Total  
$174
$4,012
 
    Operations [4, 5] 
$174
$4,012
 
    Capital  
$0
$0
 
  Local Total  
$1,297
$2,572
 
    Operations [6]  
$1,297
$2,572
 
    Capital  
$0
$0
 
 

[4] Anchorage School District got $195 million in School Foundation support in 1999 for 48.6 thousand students.
[5] The adult figure is based on the 1999 DOT Budget net of State Ferry System, averaged over the state population net of of South East—about 549 thousand.
[6] The Anchorage General Fund budget in 1999 was about $225 million, net of the transfer to the school district. Anchorage School District revenues in 1999 from property tax = $125 million; enrollment = 48.6 thousand.

Jobs and Population Calculations

Economic Development Creates New Jobs in an Export Industry      
1,000
  Economic Multiplier [7]
1.72
 
Indirect and Induced Jobs Generated by the Multiplier     
 
720
Total Jobs added to the Economy      
 
1,720
  Workers per household [8]
1.72
 
Total Households added to the Population of Alaska      
1,000
  School-aged children per household [9]
0.51
 
Total school-aged children added to the Population       
513
Total Population Added        
2513
    Adults     2000    
    School Aged Children     513    
 

[7] Author assumption
[8] Northstar Analysis (ISER), Table 4. Part c.
[9] Anchorage school enrollment in 1999—48.6 thousand—94.8 thousand households based on census.

Fiscal Results

 
         Total  New Development Adults & Indirect Business Children
 
State + Local 
Revenues   $5,218,458 $1,561,600 $3,656,858 $0
 
 
Expenditures   $6,316,674 $0 $2,941,930 $3,374,744
 
 
Net Change   -$1,098,216 $1,561,600 $714,929 -$3,374,744
       
 
State 
Revenues   $968,429 $481,600 $486,829  X
 
 
Expenditures   $2,404,754 $0 $348,270 $2,056,485
 
 
Net Change   -$1,436,325 $481,600 $138,560 -$2,056,485
 
 
Local
Revenues [10]   $4,250,029 $1,080,000 $3,170,029  X
 
 
Expenditures   $3,911,919 $0 $2,593,660 $1,318,259
 
 
Net Change   $338,109 $1,080,000 $576,369 -$1,318,259
 
[10] FEDEX had assessed property value of about $60 million. New development creates comparable property tax values per employee.
 
Site Map
 
Top ^
< Back

Next >

Fiscal Policy Papers

About ISER


Institute of Social and Economic Research, University of Alaska Anchorage
Mailing Address: 3211 Providence Drive, Anchorage, Alaska 99508
Physical Address: 4500 Diplomacy Drive, Suite 501, Anchorage, Alaska
 
(907)786-7710

Page Updated April 23, 2003

Other Resources
Send a Comment
 © Copyright 2011, Institute of Social and Economic Research