The Institute of Social & Economic Research

The Alaska Citizen's Guide to the Budget

Financial Assistance
provided by:

Fiscal Policy Council of Alaska

Comparisons
Cash on the Street
Labor Cost
Grants to Local Govt
Payments to Individuals
Purchases from Business
Inflation Proofing, etc.
Intragovernmental Charges
Appropriations to COTS
Economic Impact of COTS
 
 
 

 

 

2. Cash on the Street

2.7 How to Derive "Cash on the Street"
from Appropriations

Cash on the Street (COTS) generates jobs and income throughout the economy. Most, but not all, appropriations become cash on the street, although some appropriations, particularly capital, take quite a while to filter out into the economy. In addition, there are some activities of state government that generate jobs and income but are outside the annual appropriations process.

Derivation of "Cash on the Street" from 1999 Appropriations (billion $)

Category

Appropriations Minus
Plus
Cash on the Street
TOTAL
$6.708
$.975
$1.025
$6.758
Operations
$4.031
$.454
-
$3.577
Capital
$1.403
$.100
-
$1.303
PF Dividend
$.853
-
$.853
Other
$.421
$.421
-
-
Public Employee Retirement
-
-
$.600
$.600
Unemployment Compensation
-
-
$.100
$.100
AK Railroad
-
-
$.075
$.075
State Shared Taxes
-
-
$.250
$.250
Loans
-
-
-
-
Source: Institute of Social and Economic Research


Subtractions from Appropriations

1. $.454 billion in Intragovernmental Charges (duplicated appropriations) is an artifact of the way the budget is built and presented. This does not represent two state agencies doing the same job, but rather one state agency contracting with another for a particular service. For example, the Department of Administration provides administrative services to most other state departments. These expenditures appear as appropriations in the budgets of both the Department of Administration and the contracting department. When the budgets of all departments are added together, these appropriations get counted twice.

2. $.421 billion set aside for inflation proofing the Permanent Fund is money transferred from one account to another. It is saved and does not influence current economic activity.

3. $.077 billion of debt service is paid mostly to bond holders outside Alaska.

4. $.023 billion of loan fund capitalization is transfers from one government account to another.

Additions to Appropriations

1. About $.600 billion of public employee retirement benefits was paid out of the pension funds managed by the state. Not all of this goes to residents. See the Annual Financial Report of the Department of Administration for further details on the $13 billion plus in pension trust funds.

2. More than $.250 billion was taxes collected by the state, but passed through to local governments. The largest of these is the petroleum property tax, but Shared Taxes and Fisheries Enhancement Tax Receipts also flow through to local governments. See Alaska Taxable, published by the Department of Community and Regional Affairs.

3.About $.100 billion was unemployment compensation benefits paid out of the Unemployment Insurance Trust Fund. Not all of this goes to residents. See the Annual Financial Report of the Department of Administration.

4. About $.075 billion was Alaska Railroad operating expenditures. By law the operations spending of the Alaska Railroad is not included in the state budget. See the Annual Financial Report of the Alaska Railroad Corporation.

5. Loans were made by state agencies such as the Alaska Industrial Development and Export Authority and Alaska Housing Finance Corporation (some spending financed by AHFC bonds is included in the capital budget). These loans put money to work, usually within the Alaska economy. Since we don't know what portion of these loans represents "new money" into the economy, rather than the substitution of public money for private loans, we do not put in a dollar amount for loans.

Further Notes

1. Debt service on the bonds issued by state agencies such as the Alaska Housing Finance Corporation and the Alaska Industrial Development and Export Authority are not included in the budget. Like the included category of Debt Service (see above) most of this is paid outside Alaska and so does not become cash on the street.

2. The U.S. Department of Commerce publishes an estimate of the annual outlays by each state that is often used for comparisons (see the section comparing our Budget to other states). Their definition of outlays is all cash on the street except pension fund payments and unemployment insurance payments, but it also excludes debt retirement, loans, and investments. This shows there are a number of different ways to measure cash on the street. See Governmental Finances published by the U.S. Department of Commerce, Bureau of the Census.

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Page Updated April 16, 2003

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