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 History
General Fund
Appropriations
Operating Spending
Outlays
Jobs
Payroll
Budget Shifting

 

3. Budget History

How Has Alaska's Budget Been Changing Over Time?

Three things account for most of the growth in the state budget in recent years: growth of federal grants to the state, growth in spending from the Permanent Fund earnings, and growth in programs self-funded from expansion of economic activity within the state.

It is hard to get a clear picture of the change in the size of the budget over time because there are many ways to define the budget and reporting conventions change from year to year. In this section we look at 4 ways to track the growth of the budget. We also look at growth in state govenment jobs and payroll as proxies for growth in the budget. Finally we look at how tracking budget growth is complicated by the movement of funding for certain activities outside of the state general fund.

The best way to see what is happening is to look at its 4 parts (distinguished by source of revenues and allowable uses of those revenues). These are the general fund, special funds, federal grants, and the Permanent Fund.

The general fund, the part of the budget that pays for basic services financed by discretionary revenues, has clearly been falling in nominal, real, and real per capita dollars.

The general fund is only about 1/3 of the entire state budget. Approprations consists of all the dollars that the legislature directs to a specific purpose each year—including transfers from one state account to another. Revenues come from the general fund, other state funds (we refer to them here as special funds), federal grants, and earnings of the Permanent Fund. Appropriations have been growing funded by increasing special fund spending, federal grants, and Permanent Fund earnings.

Real per capita appropriations have been increasing, but relatively constant net of appropriations from the Permanent Fund earnings (for payment of the dividend and inflation proofing). And real per capita appropriations from own sources (net of Permanent Fund earnings, federal grants, and some transfers amoung funds) have been slightly trending downward.

The operations of state government can be tracked by looking at operating approprations funded by the general fund, special funds, and federal grants. The operating budget has been growing but in real and real per capita terms has been relatively flat or slightly trending downward. Appropriations from own sources (general fund plus special funds but excluding federal grants) has clearly been trending downward in real per capital terms. All the categories of the special funds have been growing.

Outlays is a measure of state spending reported by the federal government that provides another perspective. It is defined to include all the dollars that flow out of the state treasury—including such things as interest on all state loans, but excluding such things as transfers from one state account to another (like inflation proofing). Outlays have been growing, but trending downward in real per capita terms.

Jobs have grown very little in the last decade, and Payroll has been falling in real, inflation corrected dollars.

One of the complicating factors for tracking the size of the budget has been the creation of a large number of new funds for the handling of revenues and expenditures. Some activities formerly paid for out of the general fund are now reported in other parts of the budget. If only the general fund is considered, this gives the impression that the state budget is growing more slowly than is the case. Budget shifting comes largely from the expansion of self-financed activities like the International Airports and management of the portfolio of Permanent Fund assets.

 

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Institute of Social and Economic Research, University of Alaska Anchorage
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Page Updated April 22, 2003

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