The Big Three

Three factors account for about half the Alaska "Premium."

Permanent Fund Dividends accounted for $973 million in outlays in fiscal year 1999—30% of the Alaska "Premium."

(The U.S. Department of Commerce includes the dividend as part of government outlays in Alaska when comparing per capita spending to other states.)

Bonus Federal Grants accounted for $278 million in outlays in fiscal year 1999—8% of the Alaska "Premium."

In 1999 Alaska ranked number 1 in the nation in receipt of Federal grants per capita—more than twice the national average. (Grants for capital projects for transportation were 5 times the U.S. average.) The Alaska Bonus (the per capita amount above the COLA-adjusted national average grant) in 1999 was $448 per person.

Extra Agency Interest accounted for $242 million in outlays in fiscal year 1999—7% of the Alaska "Premium."

The extra Alaska agency outlays in the form of interest (amount above the national average) amounted to $391 per capita in 1999.

Outstanding public debt for private purposes in Alaska was 3.7 times the U.S. average in 1996—$5,450 per person (The U.S. average, adjusted upward for the Alaska cost of living, was $1,459 per capita.) Large parts of this consisted of bonds issued by state agencies such as the Alaska Housing Finance Corporation (AHFC) and Alaska Industrial Development and Export Authority (AIDEA). The payment of interest to service these bonds is included in state outlays as reported by the U.S. Department of Commerce. The interest on most AHFC bonds is paid by Alaskan homeowners. AIDEA interest is paid by Alaska businesses. These interest payments do not reflect typical government services and do not represent a financial burden on Alaskans as taxpayers.

If we net out these uniquely Alaska factors, the ratio of Alaska to U.S. average per capita spending was 1.46. The residual "Premium" was $1.782 billion, or $2,874 per capita.

We cannot divide this residual "premium" into program categories since it would exclude the extra spending for those programs that comes from bonus federal grants. But if we add the bonus federal grants back in, we can look at the extra spending by category. We do that in the next section.