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
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11 Budget FAQs

11.2 What is the job loss from different methods
of closing the fiscal gap?

Every method used to fill the state fiscal gap will cause the economy to contract. (Drawing down savings is only a temporary measure that obviously cannot go on for long.) If the state government fills a $1 billion fiscal gap with taxes or budget cuts, how many jobs in the economy will be lost? Here are some of the options.

   
million $
Jobs Lost
OPTION 1. IMPOSE INCOME TAX        
  Revenues required     $1,000  
 

Collected from reduction in federal tax payments

 $190  
    Federal leak 19%    
 

Collected from non-residents 

   $60  
    Non-resident leak 6%    
 

Net collected from Alaska households

 $750  
    Jobs bang per buck 10    
  Total jobs lost       7,500
    Private     7,500
    Public     0
           
OPTION 2. IMPOSE SALES TAX
      
 
Revenues required
     $1,000  
 
        Collected from reduction in federal tax payments
–
  
 
Federal leak
–
    
 
        Collected from non-residents
   $70  
 
Non-resident leak 7%    
 
        Net collected from Alaska households
   $930  
 
Jobs bang per buck 10    
 
Total jobs lost
       9,300
 
Private     9,300
 
Public     0
           
OPTION 3. IMPOSE 5 MONTH SEASONAL SALES TAX
  
  Revenues required     $1,000  
 

Collected from reduction in federal tax payments

 -  
    Federal leak -    
 

Collected from non-residents

 $150  
    Non-resident leak 15%    
 

Net collected from Alaska households

 $850  
    Jobs bang per buck 10    
  Total jobs lost       8,500
    Private     8,500
    Public     0
 
OPTION 4. REDUCE PERMANENT FUND DIVIDEND        
  Revenues required     $1,000  
 

Collected from reduction in federal tax payments

 $140  
    Federal leak 14%    
 

Collected from non-residents

 $20  
    Non-resident leak 2%    
 

Net collected from Alaska households

 $840  
    Jobs bang per buck 11    
  Total jobs lost       9,240
    Private     9,240
    Public     0
           
OPTION 5. REDUCE STATE OPERATING BUDGET ACROSS THE BOARD      
  Revenues required     $1,000  
    Jobs bang per buck 18.6    
  Total jobs lost       18,600
    Private 8.4   8,441
    Public 10.2   10,159
           
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Page Updated April 23, 2003

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