The Alaska Citizen's Guide to the Budget

GENERIC FISCAL PLAN: 2004

FY 2005    Cut GF Budget $250 Million to keep draw on CBR to $400 Million
FY 2006    Institute Endowment plan for PF and split draw between dividend and GF
FY 2006+  GF Growth at rate of inflation
FY 2006+  Add limited excise tax and new resource revenues
FY 2006+  Use CBR to meet any shortfall in the GF budget

  2004  2005 2006 2007 2008 2009 2010 2011 2012 2013
ANS West Coast Oil Price $25.28 $21.67 $22.00 $22.00 $22.00 $22.00 $22.00 $22.00 $22.00 $22.00
ANS Oil and NGL Production
(MILL BARRELS/Day)
0.993 0.992 0.962 0.957 0.984 1.031 1.008 1.008 1.008 1.008
TOTAL FISCAL GAP [MILLION $] $551 $912 $1,037 $1,183 $1,308 $1,423 $1,616 $1,736 $1,861 $1,991
BUDGET CUTS BELOW MAINTENANCE 
$0
$343 $380 $419 $460 $503 $549 $598 $649 $704
BROAD BASED TAX [INCOME TAX] 
$0
$0
$0 $0 $0 $0 $0 $0 $0 $0
PF EARNINGS & EARNINGS RESERVE
 $0
$0 $619 $615 $639 $677 $719 $765 $815 $852
MISC EXCISE TAXES 
 $40
$80 $82 $85 $87 $90 $93 $96 $98 $101
CONSTITUTIONAL BUDGET RESERVE 
 $511
$489 -$44 $64 $122 $152 $255 $277 $298 $333
                     
PLAN EXPENDITURES =
$2,990
$2,546 $2,731 $2,790 $2,879 $2,984 $3,096 $3,213 $3,336 $3,449
      GENERAL FUND
 $2,299
$2,050 $2,112 $2,175 $2,240 $2,307 $2,377 $2,448 $2,521 $2,597
      PF DIVIDEND       ACCOUNT
$691 
$496 $619 $615 $639 $677 $719 $765 $815 $852
PLAN REVENUES =
$2,990
$2,546 $2,731 $2,790 $2,879 $2,984 $3,096 $3,213 $3,336 $3,449
   GENERAL FUND
 $2,299
$2,050 $2,112 $2,175 $2,240 $2,307 $2,377 $2,448 $2,521 $2,597
       GF CURRENT SOURCES
 $1,748 $1,481 $1,454 $1,411 $1,392 $1,388 $1,310 $1,310 $1,310 $1,310
               OIL
$1,469
$1,202 $1,174 $1,130 $1,110 $1,105 $1,025 $1,025 $1,025 $1,025
               NON-OIL
  $353 $323 $325 $326 $327 $329 $328 $327 $328
        GF NEW SOURCES
  $864 $975 $939 $348 $436 $1,374 $1,513 $1,646 $1,783
    PF DIVIDEND
  $1,040 $935 $799 $709 $734 $738 $729 $668 $603
DIVIDEND AMOUNT ($)   $1,760 $1,564 $1,322 $1,161 $1,189 $1,182 $1,155 $1,047 $934
PER CAPITA GF SPENDING ($)   $3,758 $3,782 $3,797 $3,812 $3,827 $3,899 $3,973 $4,047 $4,123
PERMANENT FUND START OF YEAR   $21,047 $21,950 $22,136 $22,346 $22,534 $25,408 $26,335 $27,283 $28,251
        + OIL REVENUES
  $223 $186 $210 $188 $165 $157 $151 $144 $134
        + INFLATION PROOF
  $680 $0 $0 $0 $684 $770 $797 $825 $853
        + IN FROM EARNINGS RESERVE & CBR
  $0 $0 $0 $0 $2,025 $0 $0 $0 $0
 = BAL END OF YEAR
  $21,950 $22,136 $22,346 $22,534 $25,408 $26,335 $27,283 $28,251 $29,238
UNREALIZED GAINS START OF YEAR   $1,383 $203 $165 $134 $108 $88 $71 $58 $47
        + EARNINGS
  -$1,180 $17 $13 $11 $9 $7 $6 $5 $4
        - OUT TO EARNINGS RESERVE
    $55 $45 $36 $29 $24 $19 $16 $13
 = BAL END OF YEAR
  $203 $165 $134 $108 $88 $71 $58 $47 $38
EARNINGS RESERVE START OF YEAR   $2,384 $2,013 $3,094 $4,404 $5,169 $3,219 $3,243 $3,262 $3,278
        + IN FROM UNREALIZED GAINS
  $0 $55 $45 $36 $29 $24 $19 $16 $13
        +EARNINGS (PF+ER)
  $1,349 $1,961 $2,065 $2,188 $2,264 $2,340 $2,417 $2,495 $2,575
        - PF INFLATION PROOF
  $680       $684 $770 $797 $825 $853
        -OUT TO DIVIDEND (PAID AFTER FY)
  $1,040 $935 $799 $709 $734 $738 $729 $668 $603
        -DIRECT TO GF SPEND
            $832 $891 $1,002 $1,119
        -OUT TO GF SPEND
        $750 $800        
        -OUT TO PF
          $2,025        
 = BAL END OF YEAR
  $2,013 $3,094 $4,404 $5,169 $3,219 $3,243 $3,262 $3,278 $3,290
CBR START OF YEAR   $2,995 $2,400 $1,658 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
        + REVENUES
  $100 $45 $0 $0 $0 $0 $0 $0 $0
        + EARNINGS
  $169 $113 $92 $56 $56 $56 $56 $56 $56
        - SPENT
  $864 $900 $750 $56 $56 $56 $56 $56 $56
 = BAL END OF YEAR
  $2,400 $1,658 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
TOTAL $$$ ASSETS START OF YR   $27,809 $26,566 $27,052 $27,883 $28,811 $29,715 $30,649 $31,602 $32,575
       TOTAL EARNINGS
  $338 $2,090 $2,171 $2,254 $2,329 $2,402 $2,478 $2,556 $2,635
       NEEDED TO INFLATION PROOF
  $834 $797 $812 $836 $864 $891 $919 $948 $977
       EARNINGS NET INFLATION PROOFING
    $1,293 $1,359 $1,418 $1,465 $1,511 $1,559 $1,608 $1,657
       EARNINGS USED
  $1,581 $1,604 $1,339 $1,327 $1,425 $1,469 $1,525 $1,582 $1,644
= TOTAL FINANCIAL ASSETS END OF YR
  $26,566 $27,052 $27,883 $28,811 $29,715 $30,649 $31,602 $32,575 $33,566
YR END FINANCIAL ASSETS (02 MILL$)   $26,566 $26,264 $26,283 $26,366 $26,401 $26,438 $26,466 $26,487 $26,498
       PERMANENT FUND
  $21,950 $21,491 $21,063 $20,621 $22,575 $22,717 $22,849 $22,971 $23,081
       EARNINGS RESERVE
  $2,013 $3,004 $4,151 $4,730 $2,860 $2,797 $2,732 $2,665 $2,597
       CBR
  $2,400 $1,609 $943 $915 $888 $863 $837 $813 $789
       UNREALIZED GAINS
  $203 $160 $126 $99 $78 $61 $48 $38 $30
       PF + UNREALIZED GAINS
  $22,153 $21,651 $21,189 $20,721 $22,653 $22,778 $22,897 $23,009 $23,111
TOTAL EXPENDITURES (02 MILL$)   $3,448 $3,190 $3,007 $2,873 $2,843 $2,828 $2,803 $2,737 $2,672
       GENERAL FUND
  $2,408 $2,379 $2,344 $2,310 $2,276 $2,276 $2,276 $2,276 $2,276
       PERMANENT FUND DIVIDEND
  $1,040 $907 $753 $649 $652 $636 $611 $543 $476
PER CAPITA EXPENDITURES (02$)   $5,519 $5,191 $4,826 $4,551 $4,457 $4,383 $4,294 $4,142 $3,993
       GENERAL FUND
  $3,758 $3,672 $3,579 $3,489 $3,401 $3,364 $3,327 $3,291 $3,255
       PERMANENT FUND PER DIV
  $1,760 $1,518 $1,246 $1,062 $1,056 $1,019 $967 $852 $738
JOBS IMPACT                    
        +GF SPENDING
  42,218 41,703 41,096 40,497 39,908 39,908 39,908 39,908 39,908
        + DIVIDEND
  10,788 9,408 7,808 6,729 6,763 6,599 6,330 5,634 4,933
        - HOUSEHOLD TAXES
  0 -412 -1,199 -1,941 -2,638 -3,293 -3,552 -3,625 -3,699
 = EMPLOYMENT FROM GOVT
  53,006 50,699 47,705 45,285 44,032 43,214 42,685 41,917 41,142
        CHANGE FROM 2002
  0 -2,306 -5,301 -7,721 -8,974 -9,792 -10,320 -11,089 -11,864
    2002 2003 2004 2005 2006 2007 2008 2009 2010
 DIVIDEND SHARE OF ENDOWMENT EARNINGS             47% 45% 40% 35%
DIVIDEND COMPARISON CALCULATION               
 DIVIDENDS USING EARNINGS FORMULA
  $1,040 $980 $934 $934 $1,049 $1,156 $1,200 $1,242 $1,280
 DIVIDEND UNDER THIS PLAN
  $1,040 $935 $799 $709 $734 $738 $729 $668 $603
 DIFFERENCE
  $0 $45 $135 $225 $315 $418 $471 $574 $677
 
                   
 TOTAL EARNINGS FROM PF AND ER
  $1,349 $1,961 $2,065 $2,188 $2,264 $2,340 $2,417 $2,495 $2,575
 INFLATION PROOFING OF PF
  $680 $670 $675 $680 $684 $770 $797 $825 $853
 AVAILABLE TO SPEND
  $669 $1,290 $1,389 $1,508 $1,580 $1,570 $1,620 $1,671 $1,722
        DIVIDEND
            $738 $729 $668 $603
        GF SPENDING
            $832 $891 $1,002 $1,119
 
                   
 GROSS PLAN USE OF ER
  $0 $0 $0 $750 $800 $832 $891 $1,002 $1,119
        ER DIVERTED FROM DIV
        $225 $315 $418 $471 $574 $677
        NET ER TO GF
            $414 $420 $429 $442
        NET ER DRAW
        $525 $485        
CUTS FROM BUSINESS AS USUAL BUDGET     $57 $123 $192 $266 $305 $347 $391 $437
FISCAL IMPACT ON HOUSEHOLD OF 3 AT DIFFERENT INCOME LEVELS            
  DIVIDEND                    
  $20,000   $5,281               $2,803
  $40,000   $5,281               $2,803
  $60,000   $5,281               $2,803
  $80,000   $5,281               $2,803
  $100,000   $5,281               $2,803
 INCOME TAX                    
0.02 $5,000                   -$100
0.02 $25,000                   -$500
0.03 $45,000                   -$1,125
0.03 $65,000                   -$1,950
0.03 $85,000                   -$2,550
  NET IMPACT                    
  $20,000   $5,281               $2,703
  $40,000   $5,281               $2,303
  $60,000   $5,281               $1,678
  $80,000   $5,281               $853
  $100,000   $5,281               $253
NET IMPACT PERCENTAGE                    
  $20,000   26.4%               13.5%
  $40,000   13.2%               5.8%
  $60,000   8.8%               2.8%
  $80,000   6.6%               1.1%
  $100,000   5.3%               0.3%
EMPLOYMENT MULTIPLIERS                    
       GF SPENDING
  17.5 17.0 16.5 16.0 15.6 15.1 14.7 14.3 13.8
       DIVIDEND
  10.4 10.1 9.8 9.5 9.2 8.9 8.7 8.4 8.2
       HOUSEHOLD TAXES
  9.4 9.2 8.9 8.6 8.4 8.1 7.9 7.7 7.4
WAGE AND SALARY JOBS                    

JOBS INDEPENDENT OF STATE SPENDING

  250.0 253.8 257.6 261.4 265.3 269.3 273.4 277.5 281.6

THIS SCENARIO

  303.0 304.4 305.3 306.7 309.4 312.5 316.0 319.4 322.8

BUSINESS AS USUAL CUT THE BUDGET SCENARIO

  303.0 305.3 307.8 293.2 295.7 298.8 301.5 304.4 307.3
INFLATION   3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
DISCOUNT FACTOR (2002 = 1)
  1.000 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789
LONG TERM FINANCIAL ASSETS                    

NOMINAL RATE OF RETURN

  8.2% 8.2% 8.2% 8.2% 8.2% 8.2% 8.2% 8.2% 8.2%

REAL RATE OF RETURN

  5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
SHORT TERM FINANCIAL ASSETS               

NOMINAL RATE OF RETURN

  5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6%

REAL RATE OF RETURN

  2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
POPULATION                    

PF DIV ELIGIBLE POPULATION (000)

  591.1 597.6 604.2 610.8 617.5 624.3 631.2 638.1 645.1

ALASKA POPULATION

  640.7 647.7 654.9 662.1 669.4 676.7 684.2 691.7 699.3
REAL PER CAPITA TAXABLE INCOME   1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
OIL REVENUES                    

UNRESTRICTED OIL REVENUES

  $1,191 $1,122 $1,193 $1,070 $969 $906 $847 $796 $742

UNRESTRICTED REVENUE

  $1,544 $1,445 $1,518 $1,396 $1,296 $1,235 $1,175 $1,123 $1,070

UNRESTRICTED NON OIL

  $353 $323 $325 $326 $327 $329 $328 $327 $328
                     

PERMANENT FUND OIL REVENUES @ 50%

  $223 $216 $240 $218 $195 $187 $181 $174 $164

PF OIL REVENUE ABOVE 25 % RATE

    $30 $30 $30 $30 $30 $30 $30 $30
UNRESTRICTED OIL @ 25 % RATE   $1,191 $1,152 $1,223 $1,100 $999 $936 $877 $826 $772
PF OIL @ 25% RATE   $223 $186 $210 $188 $165 $157 $151 $144 $134
PAST YEAR
  97 98 99 0 1        
PF EARNINGS FOR PFD CALC
  $2,036 $2,595 $2,544 $2,222 $1,199        
SUM PF UG ER -- START OF YEAR   $24,814 $24,166 $25,394 $26,883 $27,811 $28,715 $29,649 $30,602 $31,576
SUM PF UG ER -- END OF YEAR (AFTER PFD)   $24,166 $25,394 $26,883 $27,811 $28,715 $29,649 $30,602 $31,576 $32,566
                     
NOMINAL RATE OF RETURN ON ASSETS   1.22% 7.87% 8.02% 8.09% 8.08% 8.08% 8.09% 8.09% 8.09%
REAL RATE OF RETURN ON ASSETS   -1.73% 4.72% 4.88% 4.94% 4.94% 4.94% 4.94% 4.94% 4.94%
                     
GF EXPENDITURES AT MAINTENANCE LEVEL   $2,408 $2,507 $2,610 $2,716 $2,828 $2,944 $3,065 $3,190 $3,321
    2002 2003 2004 2005 2006 2007 2008 2009 2010

 

GENERIC FISCAL PLAN [2002 VERSION 1]

NOTES

PARAMETER ASSUMPTIONS 50% SHARE OF INFLATION ALLOWED IN BUDGET GROWTH UNDER CAP  
         
  25% SHARE OF UNREALIZED GAIN TAKEN AS EARNINGS EACH YEAR  
         
  1.1% PFD POPULATION GROWTH RATE  
  1.1% TOTAL POPULATION GROWTH RATE  
         
  INCOME TAX ASSUMPTIONS     
         
  AGI CATEGORY   EXEMPTIONS DEDUCTIONS
         
  $20,000   $8,000 $6,000
  $40,000   $8,000 $7,000
  $60,000   $8,000 $8,000
  $80,000   $8,000 $9,000
  $100,000   $8,000 $1,000
         
DATA SOURCES        
    ADOR, FALL 2001 P 33  
    ADOR, FALL 2001 P 105  
    ADOR, FALL 2001 P 97  
    US CENSUS  
    ADOR, FALL 2001 P 32  
    APFC 2ND Q 2002 P 6 (IGNORE SETTLEMENT EARNINGS)  
         
STATE FINANCIAL ASSETS AT START OF FISCAL YEAR 2002   $27,809  
  $24,814      
PERMANENT FUND   $21,047   ADOR, FALL 2001, PAGE 105
UNREALIZED GAINS   $1,383   ADOR, FALL 2001, PAGE 105
EARNINGS RESERVE   $2,384   ADOR, FALL 2001, PAGE 105
         
CONST BUDGET RESERVE   $2,995   ADOR, FALL 2001, PAGE 97

 

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Page updated September 9, 2003

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