4. Budget Comparisons
with Other States
4.1 Alaska Spending Compared to Other States and the Alaska Premium
Taking into account Alaska's heavy reliance on state rather than local government and the higher cost of living, per capita public spending was 85 percent higher than the U.S. average in 1999. ( If we net out three uniquely Alaska factors—the Permanent Fund Dividend, Extra Federal Grants, and Extra Agency Interest Payments—the ratio of Alaska to U.S. average spending is 1.46 in 1999. See Section 4.2.)
Alaska State Expenditures Per Capita Were 2.75 Times the National Average in 1999
But a Disproportionate Share of Public Services in Alaska is Delivered by State Government
In Alaska about 60%
of combined state and local government spending takes place at the state
level, compared to about 40% for the U.S. overall. (See the section on
State Share.) Concentration at the
state level is most pronounced in K-12 education but is evident in virtually
all expenditure categories. Because of this concentration of expenditures,
if not ultimate responsibility for service delivery, combined state and
local government spending, net of transfers from state to local government,
is the best representation of the size of government spending in Alaska.
Combined state and local government expenditures were 2.24 times
the U.S. average of $5,129 ($11,502 vs. $5,129).
But the Cost of Living in Alaska is Higher than in Other States
To get a figure that
represents the cost of providing the U.S. average per capita public service
level in Alaska, we adjust the U.S. average figure of $5,129 upward by
the Alaska cost of living differential. (We estimate this differential
to be 21% [$1,091] taking into account the distribution of public services
over the urban and rural (higher cost) parts of Alaska.) The resulting
U.S. average per capita expenditure at Alaska prices was $6,220. Combined
state and local public spending in Alaska was 1.85 times this cost-adjusted
Go to Outlay—History to see how the differential has been falling.
This definition of spending is Outlays.
The Alaska Spending Premium = $5,282 per person.
The Alaska "Premium" is the difference between Alaska per capita public spending and the COLA-adjusted U.S. average. This is the Premium at the Alaska Price level.
We could also measure
the premium at the U.S. average price level. In 1999 it was $4,355.
Page Updated April 1, 2003
© Copyright 2011, Institute of Social and Economic Research