New Sustainable Alaska Plan FY2017 Budget Overview. December 14, 2015 Office of Management and Budget

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1 New Sustainable Alaska Plan FY2017 Budget Overview December 14, 2015 Office of Management and Budget 1

2 Alaska s Fiscal Challenge Federal Funds $3.3 billion (27%) Unrestricted General Fund Gap $3.4 billion (28%) Permanent Fund Inflation Proofing & Dividends $2.3 billion (19%) Designated General Funds and Other State Funds $1.5 billion (13%) Unrestricted General Funds $1.6 billion (13%) 2

3 Doing Nothing is Irresponsible $9,000 $8,000 $7,000 $6,000 CBR Balance is Depleted Dividends End 2020 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Oil and Gas Production Tax CBR Draw Earnings Reserve Draw Other UGF Revenue Draw from Permanent Fund Corpus? FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 3

4 Conversations with Alaskans The Alaska State Legislature Alaska State Chamber of Commerce Juneau Chamber of Commerce Fairbanks Chamber of Commerce Anchorage Chamber of Commerce Kenai/Soldotna Chamber of Commerce Ketchikan Chamber of Commerce Sitka Chamber of Commerce Juneau Rotary Clubs Fairbanks Rotary Clubs Anchorage Rotary Clubs Mat-Su Community Town Hall Homer Community Town Hall Ninilchik Community Town Hall Juneau Community Town Hall Dillingham Community Town Hall Wrangell Community Town Hall Fairbanks Economic Development Rasmuson Foundation Foraker Group Forums Island Institute Commonwealth North Alaska Conference of Mayors Alaska Municipal League Alaska Commission on Aging Alaska Common Ground Pioneers of Alaska Southeast Conference Association of Alaska School Boards Alaska Association of School Business Officials Alaska Principals Conference Alaska Council of School Administration Alaska Oil and Gas Association United Fishermen of Alaska Institute of the North Alaska Federation of Natives League of Women Voters Odom Corporation K&L Distributors ConocoPhillips Alaska Municipal Managers Association Anchorage Board of Realtors Alaska CHARR More than 50 events held since June with many more scheduled 4

5 Comprehensive Plan Elements for long term balanced and sustainable budget 1. Sustainably Utilize the Earnings Reserve 2. Provide Dividends at 50% of Royalty 3. Reduced Spending 4. Broad Based Taxes 5. Priority Investments 5

6 Comprehensive Plan: Sustainable and Balanced by FY19 Gap $3,400 Alaska Permanent Fund Protection Act (annual draw) $3,200 Less oil and gas revenue diverted from the general fund ($ 950) Net $2,250 New Revenue Components (estimated amounts) Earnings on Savings $ 135 Mining $ 12 Fishing $ 20 Tourism $ 15 Motor Fuel $ 45 Alcohol $ 40 Tobacco $ 27 Oil and Gas $ 100 Individual Alaskans (Income Tax) $ 200 Spending Reductions (estimated amounts) Continue Cuts (through FY19) $ 200 Reform O&G Tax Credits $ 400 Net Priority Investments* ($ 44) Total $3,400 *Priorities such as the gasline project require planned revenue as well as further spending cuts for a balance budget. Dollars in millions 6

7 Comprehensive Plan: Sustainable and Balanced by FY19 New Sustainable Alaska Plan Components Dollars in millions 7

8 Spending Reductions Multi-year approach All agencies and programs involved Service reductions and closures Reduced grants and subsidies Efficiency initiatives 8

9 Spending Reductions Workforce 600 fewer state employees compared to last year 150 additional staff reductions est. in FY17 By FY19 there will be 900 fewer employees than FY15 Hold personnel costs Agency Operating Budgets $400M cut in FY16 $139M cut in FY17 Education, UA, AVTEC reduced by $25M (1.5%) Health, Life Safety, and Justice reduced $64M (3.6%) Other agencies reduced $50M (8.5%) 9

10 FY17 Overview Unrestricted General Fund Budget by Category Agency Nonformula 41% $1,980 million K-12 26% Medicaid 13% Formula Programs 42% $2,018 million Other formula 3% Capital Budget 4% $195 million Statewide Appropriations 12% $561 million * Statewide Appropriations does not include $1,200 million for oil and gas tax credits 10

11 FY17 Overview Unrestricted General Fund Agency Operating Budget Trend $5,000.0 Non Formula Programs below FY12 level $4,000.0 $3,000.0 $2,000.0 $1,000.0 Formula Programs below FY13 level $- FY2012 FY2013 FY2014 FY2015 FY2016 FY

12 FY17 Overview Capital Budget Priority Area All Funds State General Fund Federal Match/Leverage $1,079,188.9 $82,860.0 Energy and Energy $52,930.0 $21,280.0 Maintenance $92,076.2 $53,001.2 Legal Obligations $11,012.4 $10,457.6 Initiatives and School Replacement $27,811.3 $27,691.3 TOTAL $1,263,018.8 $195,290.1 Dollars in thousands 12

13 FY17 Overview Budget Highlights Budget Agency Reductions -$544M Since FY15 -$140M this year Gasline Support $38M investment Additional for FEED Oil & Gas Tax Credits Reform Legislation $73M included $1.2B transition pending Medicaid State Savings $106M $62.3M FY16, $43.7 FY17 K-12 Support Funded at BSA FY17 Level Reduced grant funding Federal Funds -$300M for acct changes 13

14 New Sustainable Alaska Plan $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Existing Revenue Past Deficits New Sustainable Alaska Plan New Revenue 14

15 For more information on the budget Pat Pitney, Director Office of Management and Budget