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11 Budget FAQs
11.3 Other FAQs
FAQ 3: What is a $1 increase in oil price worth to the state treasury?
FAQ 5: What share of Permanent Fund earnings has historically gone to dividend and other uses?
FAQ 7: What revenues does the state receive from petroleum production in different locations?
FAQ 8: How big is the state travel budget?
FAQ 9: Which are the biggest departments in state government?
FAQ 10: What would a Capital move cost?
FAQ 12: Are oil prices rising?
FAQ 13: What is the tax burden on the typical Alaskan household?
FAQ 14: What population groups cost the state the most?
FAQ 15: How much does it cost to drill an oil well in Alaska versus Outside?
FAQ 16: How attractive is Alaska for oil development?
FAQ 17: How much more does the state spend on educating rural students?
FAQ 3: What is a $1 increase in oil price worth to the state treasury?
A $1
per barrel increase in the price of oil lasting for an entire year results
in an additional $65 million to the state treasury (as of 2002).
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FAQ 4: What is the crude oil energy equivalent of 2 bcf * per day of natural gas (the range of options for a gas pipeline is about 2-4 bcf per day)?
The crude
oil energy equivalent is 350,000 barrels of oil, or about 1/6 the capacity
of the oil pipeline (*
bcf: billion cubic feet).
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FAQ 5: What share of Permanent Fund earnings has historically gone to dividend and other uses?
About
44 percent of the income to the Permanent Fund has been distributed as
dividends, 29 percent deposited into the corpus of the Permanent Fund
as inflation proofing, and 27 percent has been left for "other"
(mainly reinvested in the Fund or held in the Earnings Reserve).
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FAQ 6: How has state General Fund spending changed in the last decade, particularly in relation to population and the price level?
During the 1990s, Alaska's population increased by nearly 13 percent and prices increased by nearly 25 percent. Comparatively, General Fund spending declined by about 13 percent. After adjusting for inflation, real General Fund spending actually declined by 30 percent from 1991 through 2000. Real (inflation adjusted) per capita spending decreased even more, by nearly 38 percent (see graph below).
FAQ 7: What revenues does the state receive from petroleum production in different locations?
Revenue to the state of Alaska from petroleum production comes from taxes, lease bonuses, and royalties. The Revenue Matrix (below) shows which North Slope Alaska existing and potential oil fields contribute which source of revenue.
| State Revenue Matrix — North Slope Alaska | |||||
|---|---|---|---|---|---|
| Severance
Tax |
Property
Tax |
Corporate
Income Tax |
Lease
Bonus & Royalties (share to state) |
||
| Onshore | |||||
| Prudhoe Bay (state owned) | Yes |
Yes |
Yes |
Yes |
|
| ANWR | Yes |
Yes |
Yes |
90% |
|
| NPRA | Yes |
Yes |
Yes |
50% |
|
| Private | Yes |
Yes |
Yes |
No |
|
| Offshore | |
|
|
|
|
| 3-6 Miles | No |
No |
No |
27% |
|
| >6 Miles | No |
No |
No |
No |
|
FAQ 8: How big is the state travel budget?
In fiscal year 2002, the travel portion of the operating budget was $51 million, about 1.1 percent of the total. The share of each department’s budget that is travel depends on the activities of that department. As one might expect, the Legislature tops the list as the agency that spends the largest share of its budget on travel, but it only amounts to $2.6 million in total. Travel per employee is tops for public safety, at over $6 thousand.
In the largest state in the nation, we would expect there to be a considerable amount of travel, particularly for some departments. This is reflected in high travel per employee in Environmental Conservation, Public Safety, Fish and Game, and the Governor's office.
Travel
Expenditures in the 2002 Operating Budget
(000)
FAQ 9: Which are the biggest departments in state government?
The University of Alaska and the Department of Transportation have the largest number of employees. The Departments of Health and Social Services and Education and Early Development have the largest budgets. Their share of state workers is small because they administer the largest "pass through" programs—medical assistance and K-12 school aid.
| Alaska FY02 Operating Budget Personnel Expenditures by Department | |||||
| Agency | Personnel Services (000 $) | Total Expenditures (000 $) | Personnel Exp. as % of Total Exp. | Avg. Personnel Cost/ Employee | Total Employees |
| University of Alaska | $259,254 |
$548,265 |
47% |
$71,597 |
3,621 |
| Transportation & Public Fac | 218,378 |
327,437 |
67 |
62,092 |
3,517 |
| Health & Social Services | 139,268 |
1,196,800 |
12 |
57,501 |
2,422 |
| Corrections | 89,839 |
175,724 |
51 |
61,450 |
1,462 |
| Administration | 82,452 |
284,812 |
29 |
52,053 |
1,584 |
| Fish and Game | 75,265 |
127,948 |
59 |
39,655 |
1,898 |
| Public Safety | 56,243 |
102,738 |
55 |
74,101 |
759 |
| Revenue | 50,017 |
169,702 |
29 |
56,326 |
888 |
| Labor & Workforce Dev | 49,694 |
119,120 |
42 |
56,923 |
873 |
| Natural Resources | 45,459 |
72,753 |
62 |
50,010 |
909 |
| Alaska Court System | 39,109 |
51,778 |
76 |
52,425 |
746 |
| Law | 32,685 |
45,426 |
72 |
68,378 |
478 |
| Environmental Conservation | 30,726 |
50,956 |
60 |
62,579 |
491 |
| Community & Economic Dev | 29,505 |
148,973 |
20 |
60,960 |
484 |
| Education & Early Dev | 27,310 |
948,711 |
3 |
56,194 |
486 |
| Legislature | 26,355 |
37,640 |
70 |
51,982 |
507 |
| Military & Veterans Affairs | 14,151 |
30,079 |
47 |
54,637 |
259 |
| Governor | 12,688 |
19,997 |
63 |
61,890 |
205 |
| Debt Service & Specials | 0 |
189,398 |
0 |
|
0 |
| Total: | 1,278,396 |
4,648,255 |
28 |
59,215 |
21,589 |
| Source: Legislative Finance (02enact.xls) data | |||||
Alaska
FY02 Operating Budget:
Total Expenditures and Personnel Costs
FAQ 10: What would a Capital move cost?
The cost of a "full-blown" move was estimated at $2.5 billion in 1982, or $3.9 billion in today's dollars. Less comprehensive moves would be less expensive.
Updating the 1982 Capital Move Ballot Proposition Estimated Costs |
||
| Estimated 1982 Costs of Moving the Alaska Capital to Willow | 1982 Estimated costs inflated to 2001 Dollars* | |
| Capital improvements in the new capital site at Willow | 1,286,327,000 | 2,039,105,634 |
| Relocation of personnel and equipment to the new capital site at Willow | 46,769,000 | 74,138,949 |
| Indemnification of Juneau residents under AS 44.08 | 589,323,000 | 934,204,016 |
| Other costs (financing costs and subsidies) | 920,728,000 | 1,459,552,394 |
| Subtotal | 2,843,147,000 | 4,507,000,994 |
| Net Revenue from Land sales | 384,122,000 | 608,916,189 |
| TOTAL | 2,459,025,000 | 3,898,084,805 |
| * 1982 Anchorage CPI was 97.4; 2001 Anchorage CPI was 154.4. | ||
| Source: http://www.gov.state.ak.us/ltgov/elections/capmove.htm | ||
Read more:
History
of the Move the Capital Movement
Alaska
Division of Audit Review of State Travel Costs in Relation to the Capital
Location
FAQ 11: What did the Alaska Commission on Privatization and Delivery of Government Services recommend?
Here are the top 20 recommendations made by the Legislative Commission. No cost savings were estimated for this list.
1. The Commission recommends giving 250,000 acres to the University of Alaska.
2. The Commission recommends selling the Matanuska Maid dairy and associated facilities.
3. The Commission recommends changing DWI laws so that most offenders will be electronically monitored along with community service, but without requiring incarceration.
4. Charter Schools: The Commission recommends the legislature enact revised charter school laws that provide for educational choice by:
(1) increasing the number of charter schools allowed in Alaska
(2) extending the contract period from five to ten years
(3) require school districts to provide equal funding for charter school students in their district
(4) provide school facilities equal to other schools in their district without impeding their creation or development.
5. The Commission recommends vouchers for K-12 education to parents at maximum 75 percent of the per-pupil cost in each district with standards limited to reading, writing, and arithmetic.
6. The Commission recommends the University of Alaska determine the true cost/benefit of providing utilities at the three main campuses.
7. The Commission recommends determination of the true cost/benefit to privatizing property management functions of all University of Alaska buildings.
8. The Commission recommends putting up state land for sale similar to open entry for oil leases.
9. The Commission recommends the Legislature devise a task-based budget format and require, by statute, that the Governor's budget be submitted in that format.
10. The Commission recommends issuing a Request for Proposal for the purpose of all collection of Court Systems—fines.
11. The Commission recommends privatizing the collection of delinquent child support debt owed to the State of Alaska.
12. The Commission recommends selling or soliciting proposals for a sale of
Electric Intertie,
for fair market value
Four/Dam pool,
for fair market value
Bradley Lake,
for fair market value
Either get a consultant to try to find an economical method of sale or request proposal ideas from potential buyers.
13. The Commission recommends withdrawing AHFC from the secondary mortgage market wherein taxable bonds or assets of AHFC would be used.
14. The Commission recommends the legislature pass a law making land available for homesteading.
15. The Commission recommends the Legislature consider an ongoing effort for the delivery of government services in the most effective and cost-efficient manner and provide the public with budgeting and performance measures of government services.
16. The Commission recommends the Alaska Railroad implement a vegetation control program including use of herbicides.
17. The Commission recommends privatizing telephony, turning it over to an Alaska company with core competency in telephone service, but seeing to it that bush and emergency service continue to be provided as at present.
18. The Commission recommends that any privatization efforts ensure that there is a cost savings to the state on an immediate and long-term basis.
19. The Commission recommends a statute that labor contracts may not contain language restricting privatization activities.
20. The Commission recommends that legislative sessions be held in Anchorage, Alaska.
Source: 21st Alaska Legislature, Commission on Privatization and Delivery of Government Services, Final Report, January 2000, pp. 28-29.
FAQ 12: Are oil prices rising?
Oil prices fluctuate depending on world market activities and other factors such as seasons, weather, and economic well-being. Since 1990 the Alaska North Slope (ANS) wellhead price has been over $30 and under $10. Unfortunately, there is no upward trend in the oil price over time.
Alaska
Department of Revenue |
|||
| FY |
West
Texas Intermediate |
Alaska
North Slope (ANS) Wellhead |
ANS
West Coast |
| 1982 | $32.98 | $21.12 | |
| 1983 | 35.52 | 18.96 | |
| 1984 | 30.59 | 17.54 | |
| 1985 | 28.15 | 17.37 | |
| 1986 | 23.11 | 13.36 | |
| 1987 | 16.14 | 6.92 | |
| 1988 | 18.53 | 10.53 | 16.12 |
| 1989 | 16.93 | 9.36 | 14.61 |
| 1990 | 20.06 | 11.9 | 17.22 |
| 1991 | 24.95 | 15.38 | 21.57 |
| 1992 | 20.69 | 11.21 | 16.64 |
| 1993 | 20.69 | 12.81 | 17.83 |
| 1994 | 16.69 | 9.57 | 14.05 |
| 1995 | 18.54 | 11.51 | 16.77 |
| 1996 | 19.20 | 12.60 | 17.74 |
| 1997 | 22.54 | 16.40 | 20.9 |
| 1998 | 18.03 | 11.91 | 15.86 |
| 1999 | 14.09 | 8.47 | 12.73 |
| 2000 | 24.82 | 18.82 | 23.27 |
| 2001 | 30.41 | 20.06 | 27.85 |
| 2002 | 23.38 | 16.39 | 21.5 |
| Source 1982-1989: Dept of Revenue, Fall 2001, Revenue Sources Book. Source 1990-present: Dept of Revenue, Spring 2002, Revenue Sources Book. |
|||
FAQ 13: What is the tax burden on the typical Alaskan household?
The state taxes that fall on households are tobacco, alcohol, motor fuels, and insurance policy taxes, although a portion of these are paid by businesses and nonresident tourists and workers. Summing these tax revenues in FY 2001 of $132.1 million (Alaska Department of Revenue, Revenue Sources, Spring 2002) and dividing by the 2001 population of 634,892 (Alaska Department of Labor) yields a per capita tax bite of $208.
Local governments impose property, sales, and other types of taxes (like hotel taxes and fish taxes). According to the Alaska Department of Community and Economic Development (Alaska Taxable 2001), the statewide average per capita local tax revenue (excluding the North Slope Borough where most petroleum property is located) was $996. It was higher in places with taxable petroleum property, lots of tourists, and lots of fish; it was lower in places with little or no business-related tax base.
The combined state and local tax bite on the average Alaskan in 2001 was $1204—assuming no businesses, tourists, or nonresident workers pick up any of the tab. Of course, this excludes fees that are tied to specific services like fishing licenses or state park entrance fees.
In contrast in 2001, the Permanent Fund dividend was $1,850.
FAQ 14: What population groups cost the state the most?
The peak of the echo of the baby boom is now 10–12 years old and in elementary school. The average cost per year of educating a K-12 student is $7,945.
Young men account for most of the criminal justice system costs: prosecution, courts, prison. Keeping an inmate in state prison costs $40,839 per year.
The population of seniors will continue to grow during the next 25 years. The average state-federal cost for all Medicaid recipients is $516 per month, but seniors cost $1,209 per month (the disabled cost $1,624 per month). Pioneer Home costs average $5,973 per month (of which residents pay about 38%).
From: "Alaska's Fiscal Problem, The Past, Present and Future of Paying for Public Services," Department of Revenue and Office of Management and Budget, Fall 2001.
FAQ 15: How much does it cost to drill an oil well in Alaska versus Outside?
Figures
from the American Petroleum Institute report that the average cost of
drilling an oil well in Alaska was over seven times the U.S. average.
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FAQ 16: How attractive is Alaska for oil development?
Alaska is neither the most nor the least attractive for oil development; it is about in the middle of the pack. According to a recent study by Pedro Van Meurs, used by the state of Alaska, we ranked 148 out of 226 countries in terms of its attractiveness to investors. In this study, Alaska Onshore is ranked as more aggressive in its system of take* than Montana (75), Wyoming (80), Colorado (104), New Mexico (107), and California Onshore (114). Alaska and Texas rank about the same for Onshore development (Texas = 150). Alaska Offshore development is ranked 165 and Texas Offshore is ranked 164.
Compared to Canada, Alaska's system is more aggressive than Alberta's system for oil sand (100) but less than Alberta third tier oil (168) or new oil (200).
Yemen is ranked as the world's most aggressive fiscal system while Ireland has the world's least aggressive system of government take.
*"Take" is what government gets when oil resources are developed and there is production, usually some combination of taxes and royalties.
Source:
Alaska Department of Revenue.
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of Page
FAQ 17: How much more does the state spend on educating rural students?
Defining the "urban" part of Alaska as Anchorage, Fairbanks, Juneau, Kenai Peninsula, and the Matanuska-Susitna Borough and the "rural" part of Alaska as the remainder of the state, we've calculated the state funding of public education by region. There are many factors that affect the cost of education in Alaska including teacher salaries and benefits, cost of operating buildings (heat, electricity, etc.), books and supplies, technology, travel, and administrative costs. In FY2001, 70 percent of the students attended urban schools and 30 percent attended rural schools. Entitlement program spending on public education was split 61 percent to urban schools and 39 percent to rural schools. Average spending per K-12 student was $4,159 for urban schools and $6,428 for rural schools. Rural spending per student was approximately 55 percent higher than for students attending urban schools.
| Urban–Rural*
Comparison of Alaska School |
|||
| Region |
Average
$/K-12 Student |
State
Aid Entitlement |
Total
Student K-12 Enrollment |
| Urban |
$4,159 | $386,690,279 | 92,981 |
| Rural |
$6,428 | $251,771,677 | 39,165 |
| |
$638,461,956 | 132,146 | |
| |
|
Percent
of Total |
|
| Urban |
61 | 70 | |
| Rural |
39 | 30 | |
| |
100 | 100 | |
| * "Urban" is defined to include Anchorage, Fairbanks, Juneau, Kenai Peninsula, and Mat-Su Borough; "rural" is defined as the rest of the state. Source:
2000-01 Teacher/Student Data by District |
|||
| Budget
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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