The document discusses potential fiscal and revenue options for the Walker-Mallott administration to address Alaska's budget deficit. It provides an overview of Alaska's current fiscal situation resulting from declining oil prices. It then summarizes and categorizes over 20 potential options, including continued budget restraint, measures related to the permanent fund and oil/gas taxes, and new statewide taxes. The document emphasizes that multiple substantial changes will be needed to address both short- and long-term budget imbalances.
Musk Ox Coalition letter (May 20, 2015)Brad Keithley
Representatives from the Alaska State Legislature express concerns in a letter to Speaker Chenault regarding a plan to transfer funds from the Permanent Fund Earnings Reserve to help fund the FY2016 operating budget. They consulted constituents who have not felt the full impacts of budget cuts or contemplated future sacrifices. Transferring funds from the reserve so suddenly will sow confusion and mistrust among Alaskans and should go before voters. The representatives fear impacts to PFDs cannot be properly evaluated and transferring funds may impact the reserve's role in reaching sustainable budgets and financing a gas line. They do not intend to vote for the plan and urge continuing negotiations to access the Constitutional Budget Reserve.
Enhancing Accountability in Public Finance through Performance in Bangladeshicgfmconference
The document discusses enhancing accountability in public finance in Bangladesh through linking performance to accountability. It outlines Bangladesh's progress in public financial management reforms over 15 years, including establishing a macroeconomic framework and institutional support for planning and budgeting. While Bangladesh has made progress, public opinion polls are not yet a reality due to limited public awareness of financial processes and nascent performance budgeting systems. Intermediate steps are being taken to evolve performance orientation and accountability, such as pre-budget consultations and training programs to strengthen performance monitoring.
Bangladesh on
Development Highway:
The Time is Ours
Budget Speech 2017-18
Abul Maal Abdul Muhith
Minister
Ministry of Finance
Government of the People’s Republic of Bangladesh
18 Jaisthya 1424
1 June 2017
Budget Speech, 2017-18 ,Bangladesh
Budget Analysis of 2016-17 of BangladeshRasel Ahamed
The document provides an analysis of Bangladesh's budget for fiscal year 2016-2017. Some key points:
- The budget totals Tk. 3,40,605 crore with a GDP growth target of 7.2%. Revenue is projected at 12.4% of GDP and expenditure at 17.4% of GDP, resulting in a budget deficit of 5% of GDP.
- Private investment is expected to rise to 23.3% of GDP. Inflation is projected to decline to 5.8%. The annual development program amounts to Tk. 1,10,700 crore, higher than the previous year.
- Major expenditures include education, public services, interest payments, and transport. Revenue sources
Monetary policy refers to actions undertaken by central banks to influence macroeconomic variables and achieve objectives like price stability and economic growth. The key tools of monetary policy include open market operations, reserve requirements, and interest rates. In India, the Reserve Bank of India is responsible for conducting monetary policy and its primary objective is maintaining price stability while supporting growth. Monetary policy works by targeting intermediate variables like money supply and interest rates to indirectly impact ultimate goals such as inflation, employment, and GDP.
This document discusses fiscal policy, including its definition, objectives, tools, and types. Fiscal policy refers to a government's spending and tax policies that influence macroeconomic conditions and the overall economy. The objectives of fiscal policy include boosting employment, stabilizing economic growth and prices, and raising living standards. The main tools of fiscal policy are taxation and public spending. There are two main types of fiscal policy - expansionary and contractionary. Expansionary policy aims to stimulate the economy through tax cuts or spending increases, while contractionary policy aims to slow growth through tax increases or spending cuts to curb inflation.
Fiscal policy deals with government taxation and spending decisions. The major instruments of fiscal policy include the budget, taxation, public expenditure, public revenue, public debt, and fiscal deficit. The objectives of India's fiscal policy are to promote economic growth, reduce income and wealth inequalities, generate employment, ensure price stability, achieve balanced regional development, and increase national income through mobilizing resources, public investments, and subsidies.
Musk Ox Coalition letter (May 20, 2015)Brad Keithley
Representatives from the Alaska State Legislature express concerns in a letter to Speaker Chenault regarding a plan to transfer funds from the Permanent Fund Earnings Reserve to help fund the FY2016 operating budget. They consulted constituents who have not felt the full impacts of budget cuts or contemplated future sacrifices. Transferring funds from the reserve so suddenly will sow confusion and mistrust among Alaskans and should go before voters. The representatives fear impacts to PFDs cannot be properly evaluated and transferring funds may impact the reserve's role in reaching sustainable budgets and financing a gas line. They do not intend to vote for the plan and urge continuing negotiations to access the Constitutional Budget Reserve.
Enhancing Accountability in Public Finance through Performance in Bangladeshicgfmconference
The document discusses enhancing accountability in public finance in Bangladesh through linking performance to accountability. It outlines Bangladesh's progress in public financial management reforms over 15 years, including establishing a macroeconomic framework and institutional support for planning and budgeting. While Bangladesh has made progress, public opinion polls are not yet a reality due to limited public awareness of financial processes and nascent performance budgeting systems. Intermediate steps are being taken to evolve performance orientation and accountability, such as pre-budget consultations and training programs to strengthen performance monitoring.
Bangladesh on
Development Highway:
The Time is Ours
Budget Speech 2017-18
Abul Maal Abdul Muhith
Minister
Ministry of Finance
Government of the People’s Republic of Bangladesh
18 Jaisthya 1424
1 June 2017
Budget Speech, 2017-18 ,Bangladesh
Budget Analysis of 2016-17 of BangladeshRasel Ahamed
The document provides an analysis of Bangladesh's budget for fiscal year 2016-2017. Some key points:
- The budget totals Tk. 3,40,605 crore with a GDP growth target of 7.2%. Revenue is projected at 12.4% of GDP and expenditure at 17.4% of GDP, resulting in a budget deficit of 5% of GDP.
- Private investment is expected to rise to 23.3% of GDP. Inflation is projected to decline to 5.8%. The annual development program amounts to Tk. 1,10,700 crore, higher than the previous year.
- Major expenditures include education, public services, interest payments, and transport. Revenue sources
Monetary policy refers to actions undertaken by central banks to influence macroeconomic variables and achieve objectives like price stability and economic growth. The key tools of monetary policy include open market operations, reserve requirements, and interest rates. In India, the Reserve Bank of India is responsible for conducting monetary policy and its primary objective is maintaining price stability while supporting growth. Monetary policy works by targeting intermediate variables like money supply and interest rates to indirectly impact ultimate goals such as inflation, employment, and GDP.
This document discusses fiscal policy, including its definition, objectives, tools, and types. Fiscal policy refers to a government's spending and tax policies that influence macroeconomic conditions and the overall economy. The objectives of fiscal policy include boosting employment, stabilizing economic growth and prices, and raising living standards. The main tools of fiscal policy are taxation and public spending. There are two main types of fiscal policy - expansionary and contractionary. Expansionary policy aims to stimulate the economy through tax cuts or spending increases, while contractionary policy aims to slow growth through tax increases or spending cuts to curb inflation.
Fiscal policy deals with government taxation and spending decisions. The major instruments of fiscal policy include the budget, taxation, public expenditure, public revenue, public debt, and fiscal deficit. The objectives of India's fiscal policy are to promote economic growth, reduce income and wealth inequalities, generate employment, ensure price stability, achieve balanced regional development, and increase national income through mobilizing resources, public investments, and subsidies.
A monetary policy that lowers interest rates and stimulates borrowing is anBhawnaBhardwaj24
Fiscal policy deals with government taxation and spending decisions. The major instruments of fiscal policy include the budget, taxation, public expenditure, public revenue, public debt, and fiscal deficit. The objectives of India's fiscal policy are to promote economic growth, reduce income and wealth inequalities, generate employment, ensure price stability, achieve balanced regional development, and increase national income through mobilizing resources, public investments, and subsidies.
Monetary policy manages the money supply through tools like adjusting interest rates, purchasing or selling government securities, and changing required bank reserves. It aims to regulate inflation, unemployment, and currency exchange rates. Johnson defines monetary policy as employing central bank control of the money supply to achieve general economic policy goals, while Shaw defines it as conscious actions to change the quantity, availability, or cost of money.
This document summarizes a study from the C.D. Howe Institute on how Alberta, Canada can achieve fiscal sustainability from its resource revenues. The study finds that Alberta needs to save an even more aggressive amount than Norway, at 139% of direct resource revenues over the next 5 years, in order to evenly distribute spending from resource wealth across current and future generations. Alberta's current fiscal rules will lead to a permanent decline in fiscal capacity this century as resources diminish. The study argues Alberta should follow a Permanent Resource Income Model to set long-term fiscal policy, rather than short-term rules, and consolidate its various savings funds to increase transparency.
The current Bangladesh Economic Update reveals that fall in growth in collection of revenue, rising per capita debt burden and shrinking public sector investment may contract expansion of gross domestic product (GDP).
A study on Budget deficit AND Its impact on the economy of BangladeshMd Showeb
Government budget deficit is the difference between government revenues and expenditures. Government has different sources of revenues. Major portion of government revenues comes from direct and indirect taxes. Direct taxes come from income and profits of individuals and institutions and indirect taxes come from import duty, supplementary duty and value added tax. It can be put in different way. Direct taxes are the part of economic revenues and incomes of individuals and institutions and indirect taxes are the part of economic transactions in the form of buy, sale, export and import transactions. If government wants accelerate its revenues to meet the growing public expenditures and to reduce the budget deficit without reducing the expenditures of different influential sectors, much efforts should be made to increase economic revenues and income as well as the economic transactions so that the government revenues can meet the growing demand of the economy with the increase in revenues from income tax, import duty, supplementary duty and value added tax. In this regard the concentration of the report is on the management of deficit budget to minimize bad effects and maximize the utilization of funds. Having budget deficit is not a problem at all. The problems lie with the government inefficiency in the management of budget deficit. The evaluation of different reasons behind deficit budget and the evaluation of different bad effects of deficit budget are two crucial parts of our discussion. The impact of budget deficit on the different sectors of the economy is addressed here with relevant information. It is further concentration point of the report to find ways to improve the management performance of the government to achieve different macroeconomic goals with the help of expansion of economic revenues and transactions. The government revenues increase with the increase in economic revenues and economic transactions. The key point of our discussion is government should not decrease the public expenditures as the population is growing. The expenditures on different public sectors have to be increased as the population is growing. But budget deficit should not grow to meet the expenditures as budget deficit has some associated problems with it. For this reason government has to concentrate on accelerating the revenue collection rapidly with the expansion of economic revenues and economic transactions. For this reason government should try to integrate different policies to achieve key macroeconomic goals.
This document summarizes the trajectory of India's fiscal policy over several decades. It discusses how fiscal policy evolved from a conservative approach focused on controlling deficits during early post-independence planning, to economic liberalization in 1991 that reformed the tax system. While deficits were brought under control, public debt increased in the 1980s. After the 2008 global financial crisis, India responded with countercyclical fiscal measures, and its economy is now witnessing a return to fiscal consolidation and prudence. Looking ahead, further tax reforms and better targeted social spending will be priorities.
Imbalance between development and non development expenditureFehmeeda Zeenat
The document discusses the imbalance between development and non-development expenditures in Pakistan. It notes that a large portion of Pakistan's expenditures go toward non-development items like defense, debt payments, subsidies, and administration. This leaves little room for development spending on infrastructure and social services. Reducing non-development costs and prioritizing development expenditures could help Pakistan address issues like poverty, unemployment, and economic growth. However, cutting defense spending is challenging given Pakistan's security situation. Overall, striking the right balance between non-development and development budgets is important for Pakistan's fiscal stability and socioeconomic progress.
Analysis of Fiscal and Monetary Policy of India for last decade (2004-2014)Kavi
Fiscal and Monetary Policy are an important tool for growth of any country. Here we have focused on these policies with respect to India over last decade. We have tried to focus on the functioning of these policies, their impact on growth and development of Economy by taking in perspective of human development. We also found the instances when both of these policies were in tandem and when they were not. The presentation also takes into consideration the impacts of Global Crisis on India which occurred in 2008-2009.
Macroeconomic correlates in the FY2015 budget were inconsistent while key fiscal targets did not reflect reality in designing of the framework.
The basis of achieving 7.3 percent GDP growth remains a suspect without substantial private sector investment which has shown a continuous declining trend, underscored the CPD analysis of the National Budget for FY2015.
The analyses flagged that fiscal measures in the budget are largely in order and tuned to budgetary objectives but not adequate to attain expected GDP growth.
This document discusses deficit financing in Pakistan. It begins with introducing the concept of deficit financing and its importance and risks. It then provides background on Pakistan's budget and current account deficits, showing deficit rates from 5.4-8.7% of GDP in recent decades. Sources of deficit financing in Pakistan include printing currency, borrowing, foreign loans/aid, and bank borrowing. Causes include rising expenditures, weak fiscal policy, and low tax revenues. Adverse effects are inflation, higher interest rates, and reduced private investment. The document concludes with recommendations such as improving tax collection, reducing non-essential spending, and attracting foreign investment.
The overall economic condition of bangladeshTanvir777
This document provides an overview of the economic condition of Bangladesh in fiscal year 2011-12. It discusses macroeconomic indicators such as GDP growth, inflation, trade balance, budget deficit, and public debt. Key points include:
- GDP growth target is 7% for FY 2011-12, with projections of 6.82% growth under a business as usual scenario.
- Inflation target is 7.5% while the rate in November 2011 was 10.51%.
- The budget deficit is projected to be 402.66 billion taka, with domestic and foreign borrowing estimated at 272.08 billion and 130.58 billion respectively.
- Foreign exchange reserves declined to USD 9285.20 million in November
The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 to bring fiscal discipline to India's budget and reduce deficits. The Act aimed to eliminate revenue deficit and lower fiscal deficit to 3% of GDP by 2008 through limits on fiscal and revenue deficits. While some targets were met briefly, international crises caused the deadlines to be suspended. The FRBM Act requires regular reporting to Parliament on the country's fiscal policy and macroeconomic indicators to improve management of public funds.
The document discusses India's Fiscal Responsibility and Budget Management Act of 2003. It provides background on fiscal responsibility and defines key fiscal terms like fiscal deficit, revenue deficit, primary deficit, and gross fiscal deficit. It outlines the objectives of the Act, which were to increase fiscal transparency, introduce sustainable debt management, and aim for long-term fiscal stability. It also discusses the impact of fiscal policy on issues like inflation, economic growth, and farmers' suicides. Current implementation of the Act aims to gradually reduce the fiscal deficit target to around 2-3% of GDP.
The Nexus between Fiscal Decentralization and Economic Growth: Evidence from ...RSIS International
Panel Vector Auto Regression is used to examine the
impact of financial decentralization on economic growth in
seventeen sub-national governments (SNGs) in India taking data
from 2000-01 to 2014-15. We find the positive impact of
decentralization on the economic growth of SNGs with feedback
effect.
Fiscal policy deals with the taxation and expenditure decisions made by governments to influence macroeconomic variables. It has several components, including tax policy, expenditure policy, and debt management. The main objectives of fiscal policy are to achieve economic growth and stability, optimal resource allocation, income distribution, full employment, and poverty alleviation. Recent trends in India's fiscal policy include efforts to consolidate the budget and reduce the fiscal deficit through measures like rationalizing subsidies, increasing tax revenues, and easing inflation. The 2013-14 budget continues this consolidation with tax increases and reductions in customs duties on some goods.
The document provides information about monetary policy and fiscal policy. It defines monetary policy as actions by a central bank that determine the money supply and interest rates. It discusses the objectives, tools, and limitations of both monetary policy and fiscal policy. Monetary policy tools include interest rates, reserve requirements, and open market operations. Fiscal policy tools include taxation, government spending, and public debt. Both policies aim to achieve objectives like price stability and economic growth but face challenges like time lags and crowding out effects.
Arsalan Yaqoob is a a corporate finance professional by profession and also passionate about transforming organisations and lives; he is dedicated, ambitious and goal-driven trainer with 8 years’ progressive experience in professional training of Business Analysis subjects (E pillars) of CIMA, BMS of ICAP, Strategic Business Leader (SBL) of ACCA.
.........
Almighty ALLAH SWT has equipped him with professional certifications and academic qualification, in professional he is Professional Accounting Affiliate (PAA-ICAP), ACCA Member, PIPFA Member, and CIA (USA) Member and in academic he has completed post-graduation / 16 years of education from Karachi University. His accountancy career was started with big audit firm, first move to industry was with TRG (A high-tech US Based MNC conglomerate) group Companies (namely Digital Globe Services – DGS Group) listed on London Stock Exchange (AIM), at present he is working as a senior finance professional at leading organization in healthcare industry (Services & Pharma Manufacturing, both).
......
As a true transformational trainer his journey has been like a roller coaster from ICAP Inter-firm presentation skills competition to teaching ACCA Paper F4 at Hot FM105; he champed Chartered Accountants’ Students Association Conference 2012 as a lead presenter on Topic “Hope sustains life” – As a professional trainer he is loaded to connect Academia with Corporate Industry, his next big thing is to progress with his methodology and sharing the same in books and videos.
The document defines key terms related to the Indian union budget such as direct and indirect taxes, goods and services tax (GST), fiscal deficit, revenue deficit, primary deficit, and more. It also provides background on the state of the Indian and global economies in recent years, the reforms announced by the Indian government in the last year, and summaries some of the key policy announcements made in the 2018 union budget related to agriculture, rural development, health, education, and social protection.
Main objectives of fiscal policy in india ↓hiten91
The document outlines the main objectives of fiscal policy in India. It discusses 11 objectives: 1) development through effective resource mobilization, 2) efficient allocation of resources, 3) reduction of income/wealth inequalities, 4) price stability and inflation control, 5) employment generation, 6) balanced regional development, 7) reducing balance of payments deficits, 8) increasing capital formation, 9) increasing national income, 10) infrastructure development, and 11) increasing foreign exchange earnings. The conclusion states that fiscal policy tools like public expenditure, taxation, borrowing, and deficit financing must be used effectively to achieve these objectives.
The Finance Minister missed an opportunity with the recent budget by not meaningfully increasing tax revenues or pursuing other measures that could have boosted resources and stimulated the economy. The modest tax increases will only raise tax-GDP ratio by half a percentage point. Expenditure increases of just 11.7% despite projected 13.4% GDP growth will limit fiscal stimulus. Measures focus more on reducing subsidies and expenditures than addressing issues like high current account deficits, inflation, or supporting key programs. Adherence to fiscal conservatism and demands of foreign investors appear to have driven the budget more than domestic economic needs.
This document discusses Alaska's fiscal challenges and provides recommendations. It notes that growing spending and falling revenues are creating a widening fiscal gap that could lead to a severe crisis after 2023. Simply constraining spending growth is insufficient, and failure to reduce deficits will result in a hard landing. The document recommends capping spending at sustainable levels, enacting legislation to provide annual sustainable budget information, and closely examining programs to ensure consistency with a sustainable overall budget through prioritization and utilizing all revenue sources.
The alaska state budget (mat su business alliance 3.21.2014)Brad Keithley
The document discusses Alaska's state budget challenges, including growing spending outpacing falling revenues. It notes that without significant changes, Alaska will face a severe fiscal crisis after 2023 that will lead to an economic crash. To avoid this, the state needs to save more revenue above sustainable spending levels and restrict spending growth. The key drivers of increasing spending are K-12 education, Medicaid, and retirement assistance. The document recommends capping overall spending at sustainable levels and prioritizing programs to fit within the budget. Failing to address unsustainable spending trends will likely lead to a fiscal and economic crisis for Alaska.
A monetary policy that lowers interest rates and stimulates borrowing is anBhawnaBhardwaj24
Fiscal policy deals with government taxation and spending decisions. The major instruments of fiscal policy include the budget, taxation, public expenditure, public revenue, public debt, and fiscal deficit. The objectives of India's fiscal policy are to promote economic growth, reduce income and wealth inequalities, generate employment, ensure price stability, achieve balanced regional development, and increase national income through mobilizing resources, public investments, and subsidies.
Monetary policy manages the money supply through tools like adjusting interest rates, purchasing or selling government securities, and changing required bank reserves. It aims to regulate inflation, unemployment, and currency exchange rates. Johnson defines monetary policy as employing central bank control of the money supply to achieve general economic policy goals, while Shaw defines it as conscious actions to change the quantity, availability, or cost of money.
This document summarizes a study from the C.D. Howe Institute on how Alberta, Canada can achieve fiscal sustainability from its resource revenues. The study finds that Alberta needs to save an even more aggressive amount than Norway, at 139% of direct resource revenues over the next 5 years, in order to evenly distribute spending from resource wealth across current and future generations. Alberta's current fiscal rules will lead to a permanent decline in fiscal capacity this century as resources diminish. The study argues Alberta should follow a Permanent Resource Income Model to set long-term fiscal policy, rather than short-term rules, and consolidate its various savings funds to increase transparency.
The current Bangladesh Economic Update reveals that fall in growth in collection of revenue, rising per capita debt burden and shrinking public sector investment may contract expansion of gross domestic product (GDP).
A study on Budget deficit AND Its impact on the economy of BangladeshMd Showeb
Government budget deficit is the difference between government revenues and expenditures. Government has different sources of revenues. Major portion of government revenues comes from direct and indirect taxes. Direct taxes come from income and profits of individuals and institutions and indirect taxes come from import duty, supplementary duty and value added tax. It can be put in different way. Direct taxes are the part of economic revenues and incomes of individuals and institutions and indirect taxes are the part of economic transactions in the form of buy, sale, export and import transactions. If government wants accelerate its revenues to meet the growing public expenditures and to reduce the budget deficit without reducing the expenditures of different influential sectors, much efforts should be made to increase economic revenues and income as well as the economic transactions so that the government revenues can meet the growing demand of the economy with the increase in revenues from income tax, import duty, supplementary duty and value added tax. In this regard the concentration of the report is on the management of deficit budget to minimize bad effects and maximize the utilization of funds. Having budget deficit is not a problem at all. The problems lie with the government inefficiency in the management of budget deficit. The evaluation of different reasons behind deficit budget and the evaluation of different bad effects of deficit budget are two crucial parts of our discussion. The impact of budget deficit on the different sectors of the economy is addressed here with relevant information. It is further concentration point of the report to find ways to improve the management performance of the government to achieve different macroeconomic goals with the help of expansion of economic revenues and transactions. The government revenues increase with the increase in economic revenues and economic transactions. The key point of our discussion is government should not decrease the public expenditures as the population is growing. The expenditures on different public sectors have to be increased as the population is growing. But budget deficit should not grow to meet the expenditures as budget deficit has some associated problems with it. For this reason government has to concentrate on accelerating the revenue collection rapidly with the expansion of economic revenues and economic transactions. For this reason government should try to integrate different policies to achieve key macroeconomic goals.
This document summarizes the trajectory of India's fiscal policy over several decades. It discusses how fiscal policy evolved from a conservative approach focused on controlling deficits during early post-independence planning, to economic liberalization in 1991 that reformed the tax system. While deficits were brought under control, public debt increased in the 1980s. After the 2008 global financial crisis, India responded with countercyclical fiscal measures, and its economy is now witnessing a return to fiscal consolidation and prudence. Looking ahead, further tax reforms and better targeted social spending will be priorities.
Imbalance between development and non development expenditureFehmeeda Zeenat
The document discusses the imbalance between development and non-development expenditures in Pakistan. It notes that a large portion of Pakistan's expenditures go toward non-development items like defense, debt payments, subsidies, and administration. This leaves little room for development spending on infrastructure and social services. Reducing non-development costs and prioritizing development expenditures could help Pakistan address issues like poverty, unemployment, and economic growth. However, cutting defense spending is challenging given Pakistan's security situation. Overall, striking the right balance between non-development and development budgets is important for Pakistan's fiscal stability and socioeconomic progress.
Analysis of Fiscal and Monetary Policy of India for last decade (2004-2014)Kavi
Fiscal and Monetary Policy are an important tool for growth of any country. Here we have focused on these policies with respect to India over last decade. We have tried to focus on the functioning of these policies, their impact on growth and development of Economy by taking in perspective of human development. We also found the instances when both of these policies were in tandem and when they were not. The presentation also takes into consideration the impacts of Global Crisis on India which occurred in 2008-2009.
Macroeconomic correlates in the FY2015 budget were inconsistent while key fiscal targets did not reflect reality in designing of the framework.
The basis of achieving 7.3 percent GDP growth remains a suspect without substantial private sector investment which has shown a continuous declining trend, underscored the CPD analysis of the National Budget for FY2015.
The analyses flagged that fiscal measures in the budget are largely in order and tuned to budgetary objectives but not adequate to attain expected GDP growth.
This document discusses deficit financing in Pakistan. It begins with introducing the concept of deficit financing and its importance and risks. It then provides background on Pakistan's budget and current account deficits, showing deficit rates from 5.4-8.7% of GDP in recent decades. Sources of deficit financing in Pakistan include printing currency, borrowing, foreign loans/aid, and bank borrowing. Causes include rising expenditures, weak fiscal policy, and low tax revenues. Adverse effects are inflation, higher interest rates, and reduced private investment. The document concludes with recommendations such as improving tax collection, reducing non-essential spending, and attracting foreign investment.
The overall economic condition of bangladeshTanvir777
This document provides an overview of the economic condition of Bangladesh in fiscal year 2011-12. It discusses macroeconomic indicators such as GDP growth, inflation, trade balance, budget deficit, and public debt. Key points include:
- GDP growth target is 7% for FY 2011-12, with projections of 6.82% growth under a business as usual scenario.
- Inflation target is 7.5% while the rate in November 2011 was 10.51%.
- The budget deficit is projected to be 402.66 billion taka, with domestic and foreign borrowing estimated at 272.08 billion and 130.58 billion respectively.
- Foreign exchange reserves declined to USD 9285.20 million in November
The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 to bring fiscal discipline to India's budget and reduce deficits. The Act aimed to eliminate revenue deficit and lower fiscal deficit to 3% of GDP by 2008 through limits on fiscal and revenue deficits. While some targets were met briefly, international crises caused the deadlines to be suspended. The FRBM Act requires regular reporting to Parliament on the country's fiscal policy and macroeconomic indicators to improve management of public funds.
The document discusses India's Fiscal Responsibility and Budget Management Act of 2003. It provides background on fiscal responsibility and defines key fiscal terms like fiscal deficit, revenue deficit, primary deficit, and gross fiscal deficit. It outlines the objectives of the Act, which were to increase fiscal transparency, introduce sustainable debt management, and aim for long-term fiscal stability. It also discusses the impact of fiscal policy on issues like inflation, economic growth, and farmers' suicides. Current implementation of the Act aims to gradually reduce the fiscal deficit target to around 2-3% of GDP.
The Nexus between Fiscal Decentralization and Economic Growth: Evidence from ...RSIS International
Panel Vector Auto Regression is used to examine the
impact of financial decentralization on economic growth in
seventeen sub-national governments (SNGs) in India taking data
from 2000-01 to 2014-15. We find the positive impact of
decentralization on the economic growth of SNGs with feedback
effect.
Fiscal policy deals with the taxation and expenditure decisions made by governments to influence macroeconomic variables. It has several components, including tax policy, expenditure policy, and debt management. The main objectives of fiscal policy are to achieve economic growth and stability, optimal resource allocation, income distribution, full employment, and poverty alleviation. Recent trends in India's fiscal policy include efforts to consolidate the budget and reduce the fiscal deficit through measures like rationalizing subsidies, increasing tax revenues, and easing inflation. The 2013-14 budget continues this consolidation with tax increases and reductions in customs duties on some goods.
The document provides information about monetary policy and fiscal policy. It defines monetary policy as actions by a central bank that determine the money supply and interest rates. It discusses the objectives, tools, and limitations of both monetary policy and fiscal policy. Monetary policy tools include interest rates, reserve requirements, and open market operations. Fiscal policy tools include taxation, government spending, and public debt. Both policies aim to achieve objectives like price stability and economic growth but face challenges like time lags and crowding out effects.
Arsalan Yaqoob is a a corporate finance professional by profession and also passionate about transforming organisations and lives; he is dedicated, ambitious and goal-driven trainer with 8 years’ progressive experience in professional training of Business Analysis subjects (E pillars) of CIMA, BMS of ICAP, Strategic Business Leader (SBL) of ACCA.
.........
Almighty ALLAH SWT has equipped him with professional certifications and academic qualification, in professional he is Professional Accounting Affiliate (PAA-ICAP), ACCA Member, PIPFA Member, and CIA (USA) Member and in academic he has completed post-graduation / 16 years of education from Karachi University. His accountancy career was started with big audit firm, first move to industry was with TRG (A high-tech US Based MNC conglomerate) group Companies (namely Digital Globe Services – DGS Group) listed on London Stock Exchange (AIM), at present he is working as a senior finance professional at leading organization in healthcare industry (Services & Pharma Manufacturing, both).
......
As a true transformational trainer his journey has been like a roller coaster from ICAP Inter-firm presentation skills competition to teaching ACCA Paper F4 at Hot FM105; he champed Chartered Accountants’ Students Association Conference 2012 as a lead presenter on Topic “Hope sustains life” – As a professional trainer he is loaded to connect Academia with Corporate Industry, his next big thing is to progress with his methodology and sharing the same in books and videos.
The document defines key terms related to the Indian union budget such as direct and indirect taxes, goods and services tax (GST), fiscal deficit, revenue deficit, primary deficit, and more. It also provides background on the state of the Indian and global economies in recent years, the reforms announced by the Indian government in the last year, and summaries some of the key policy announcements made in the 2018 union budget related to agriculture, rural development, health, education, and social protection.
Main objectives of fiscal policy in india ↓hiten91
The document outlines the main objectives of fiscal policy in India. It discusses 11 objectives: 1) development through effective resource mobilization, 2) efficient allocation of resources, 3) reduction of income/wealth inequalities, 4) price stability and inflation control, 5) employment generation, 6) balanced regional development, 7) reducing balance of payments deficits, 8) increasing capital formation, 9) increasing national income, 10) infrastructure development, and 11) increasing foreign exchange earnings. The conclusion states that fiscal policy tools like public expenditure, taxation, borrowing, and deficit financing must be used effectively to achieve these objectives.
The Finance Minister missed an opportunity with the recent budget by not meaningfully increasing tax revenues or pursuing other measures that could have boosted resources and stimulated the economy. The modest tax increases will only raise tax-GDP ratio by half a percentage point. Expenditure increases of just 11.7% despite projected 13.4% GDP growth will limit fiscal stimulus. Measures focus more on reducing subsidies and expenditures than addressing issues like high current account deficits, inflation, or supporting key programs. Adherence to fiscal conservatism and demands of foreign investors appear to have driven the budget more than domestic economic needs.
This document discusses Alaska's fiscal challenges and provides recommendations. It notes that growing spending and falling revenues are creating a widening fiscal gap that could lead to a severe crisis after 2023. Simply constraining spending growth is insufficient, and failure to reduce deficits will result in a hard landing. The document recommends capping spending at sustainable levels, enacting legislation to provide annual sustainable budget information, and closely examining programs to ensure consistency with a sustainable overall budget through prioritization and utilizing all revenue sources.
The alaska state budget (mat su business alliance 3.21.2014)Brad Keithley
The document discusses Alaska's state budget challenges, including growing spending outpacing falling revenues. It notes that without significant changes, Alaska will face a severe fiscal crisis after 2023 that will lead to an economic crash. To avoid this, the state needs to save more revenue above sustainable spending levels and restrict spending growth. The key drivers of increasing spending are K-12 education, Medicaid, and retirement assistance. The document recommends capping overall spending at sustainable levels and prioritizing programs to fit within the budget. Failing to address unsustainable spending trends will likely lead to a fiscal and economic crisis for Alaska.
Fiscal Year 2011-2012 is referred to as the "Cliff Year" because Louisiana faces a $1.6 billion budget shortfall that will be difficult to address. Over 90% of Louisiana's $25.5 billion budget is protected from cuts, so the shortfall must be absorbed by discretionary funding, resulting in cuts over 60% to affected departments. The shortfall is projected to continue through FY2015 even with strong revenue growth, necessitating permanent budget cuts or revenue increases. Addressing the shortfall will require politically difficult decisions about taxes, fees, dedications or expenditures.
Fiscal Year 2011-2012 is referred to as the "Cliff Year" because Louisiana faces a $1.6 billion budget shortfall that will be difficult to address. While the total state budget is $25.5 billion, over 90% of funds are restricted or dedicated, leaving only $2.6 billion of discretionary general funds. Absorbing the entire $1.6 billion shortfall from this unrestricted portion would require cutting it by over 60%. Options to help close the gap include increasing some fees, cutting some statutory dedications, and reducing some unprotected non-discretionary spending, though many of these options are politically challenging.
This document appears to be a project report submitted by students to their faculty member on the topic of Indian fiscal policy and changing tax structures. It includes an acknowledgment thanking the faculty member for the project assignment. The index lists various sections of the report, including introductions to fiscal policy, instruments of fiscal policy like the budget and taxation, discretionary versus non-discretionary fiscal policy, effectiveness of fiscal policy, and fiscal deficits over the past 12 years. The introduction provides an overview of the role and objectives of fiscal policy in developing economies.
BUDGETING AND FINANCIAL MANAGEMENTPublic budgeting and financi.docxAASTHA76
BUDGETING AND FINANCIAL MANAGEMENT
Public budgeting and financial management are concerned with allocating limited resources to problems that governments and other public organizations face. Just as you establish a personal budget to track your income and expenses and, just as businesses create budgets to aid in decisions affecting profits and losses, so do public organizations employ budgets to help in planning and management. Public organizations must carefully and responsibly manage large amounts of money and other resources—taking in taxes and other revenues, purchasing goods and services, investing surplus funds, and managing debt wisely.
From the point of view of the manager or citizen trying to influence public policy, the budget is an extremely important tool for planning and control. To manage public programs effectively, you must be able to manage resources, both practically and politically. In this chapter we focus on the budget process from the standpoint of the individual public manager, examining how budget decisions are made and how you can influence budgetary outcomes. Although much of the budget process is highly charged politically, specific technical knowledge about budgeting systems will give you a distinct advantage.
The elaborate systems that public organizations have developed to manage their fiscal affairs are relatively recent. Prior to 1900, revenues were easily sufficient to cover the expenses of government, and financial management was merely record keeping. As the scope of government grew and new demands were placed on its resources, the need for more sophisticated systems of decision making became apparent. Moreover, repeated instances of corruption and waste made more effective control over the public's resources necessary.
In establishing its executive budget process through the Budgeting and Accounting Act of 1921, the federal government followed the lead of several local and state governments that had already taken similar actions. This municipal reform movement emphasized the budget process as a means of bringing order to public spending; consequently, by the 1920s, most big cities had established a formal budget process. Similar developments were also occurring at the state level. In 1910, Ohio became the first state to require an executive budget; within the next decade, similar actions took place in most other states. At the federal level, a special Commission on Economy and Efficiency, known as the Taft Commission, recommended establishing an executive budget in 1912; the recommendation was implemented nearly a decade later.
Since the 1920s, the federal budget has grown in both size and complexity, as have budgets at the state and local levels. This growth means that budgeting and financial management have come to involve far more than keeping a record of income and expenses. Today, how government spends its money affects many other areas of the economy; consequently, the budget is an instrument of fisc ...
This document provides an overview of fiscal policy, including:
1) Fiscal policy involves a government adjusting its spending levels and tax rates to influence the economy. It is controlled by the government and includes tools like taxes, government spending, and deficit financing.
2) There are two main types of fiscal policy - expansionary and contractionary. Expansionary policy involves government spending exceeding tax revenue through methods like lowering taxes or raising spending. Contractionary policy occurs when spending is lower than tax revenue.
3) Fiscal policy aims to impact unemployment, inflation, and interest rates. However, it faces criticisms like time lags in taking effect, potential crowding out of private sector activity, and inefficient government
The Senate Minority Alternative Biennium Budget for Fiscal Years 2016-2017 aims to balance the budget, reduce spending by $1.59 billion, provide $287 million in tax relief in 2017 and $425 million in 2018, and make government less expensive and more effective. It cuts from the Governor's Budget by adopting many of the House Budget cuts, not funding collective bargaining increases, implementing budget restrictions, and making additional cuts to general spending and programs. The Senate Minority Budget is the only one of the proposed budgets that balances in both the short and long-term without relying on future tax increases.
As with most things in economics, taxation is a mixed blessing. It.docxfredharris32
As with most things in economics, taxation is a mixed blessing. It is a blessing for those who receive dollars from taxpayers, which is about 40% of the population; and it is a nuisance for those who have to pay the taxes. The objective of this unit is to help you understand taxes and understand how they affect your life and the economy.
The income tax system began in earnest in 1913 with the Sixteenth Amendment to the Constitution that gave Congress legal authority to tax income. A rudimentary income tax system was tried during the Civil War but was eventually declared unconstitutional. There was no income tax during the high watermark of America's industrial capitalism, beginning in about 1870 and continuing to 1910. If you made money in that era, you kept it. Many of the most famous capitalist names emerge from this era: Rockefeller, Carnegie, McCormick, Swift, and Vanderbilt.
Two major disasters in our economic history, the Great Depression and World War II, changed the role of taxation and government forever. Beginning in the mid-1930s, following the ideas of John Maynard Keynes, the U.S. government began to spend money much more aggressively. In the past, government believed mostly in a balanced budget, but that changed when the Great Depression lingered for an entire decade.
Later, to finance a two-front, world war, taxes were raised to about 90%. Thus began the era of big taxes to pay for big government. Taxes, of course, have fallen from that lofty peak to a more modest 35% marginal tax rate at present, but the number of taxes has increased exponentially. All but six states have an income tax; likewise, many counties and cities have an income tax.
Though there are many ways to slice the tax onion, perhaps the best is the following:
Progressive taxes: This is a tax system in which tax rates increase as income increases. In other words, the more money you make, the more taxes you pay. This system places a greater burden on those best able to pay and almost no burden on the poor. For example, according to Internal Revenue Service (IRS) statistics, the top 50% of earners pay 97% of the taxes. The top 1% of earners pays 30% of all income taxes. On the other hand, over fifty million people, or one-third of the adult population in the United States, pay no taxes whatsoever.
Regressive taxes: In theory, these are the opposite of progressive taxes; these tax strategies fall more heavily on the poor. Common sense would suggest that these would be rarely used in a well-organized economy, but in fact, they are among the most commonly used because of their relative invisibility. Sometimes called the nickel and dime tax, regressive taxes tend to be small for each individual event; therefore, they are not widely noted. A good example of a regressive tax is the sales tax. It takes a much larger percentage of a poor person’s income than the income of someone of wealth. The reason there is no protest is that it takes such a small amount of money on ...
The document discusses Australia's 2013/2014 budget and fiscal policy. It notes that the budget indicated that taxes like the carbon tax failed to raise expected revenue. The budget reduced expenditure relative to GDP, representing a contractionary fiscal policy that would reduce income. However, to increase income the government would need an expansionary fiscal policy stance. The document uses the IS-LM model to explain how an increase in government spending would shift the IS curve rightward, raising equilibrium income.
Jobs, Innovation, and Opportunity in the StatesALEC
With unemployment remaining stubbornly high, and most Americans worrying about pocketbook issues like jobs, energy costs, retirement security, and health care affordability – ALEC releases its plan for Jobs, Innovation, and Opportunity. State lawmakers today face very difficult economic challenges. Since 1973, ALEC has focused on providing solutions to America’s biggest problems. State lawmakers can conquer today’s economic challenges by refocusing on our nation’s founding principles of limited government and free markets. The states, not Washington, D.C., must take the lead in restarting America’s economic engine and putting people back to work.
For more information, please visit www.alec.org.
State of the States: An Analysis of the 2015 Governors’ AddressesALEC
State of the States is an in-depth study of governors’ tax, budget and pension reform proposals. The report gives insight into which states proposed economic reform to protect taxpayers and which states took steps toward increasing state revenue. This report also features graphics that reveal regional trends in proposed reforms while also highlighting which states have a newly elected governor.
The document discusses the history and current state of the U.S. public debt. As of November 2016, the debt was over $19.9 trillion, nearly double what it was in November 2008. Past administrations, including Reagan, Clinton, Bush, and Obama, pursued different strategies to manage the debt such as deficit reduction acts, stimulus packages, and quantitative easing. The Trump administration plans to focus on 4% GDP growth, trade reform, lowering interest payments on the debt, and budget cuts to entitlement programs to address the debt over the long run through policy changes rather than sole focus on debt reduction.
1) The document analyzes the 2016-2017 budget summaries from the State of California. It finds that while the state is claiming to have balanced its budget, this is likely temporary due to reliance on volatile income tax revenues.
2) A major reason for the balanced budget was paying down debt, including $1.3 billion in pension obligations. However, overall spending increased by 6% and education/housing spending are slated to rise further.
3) The governor acknowledges the budget will be difficult to balance long-term given past patterns of short surplus periods followed by large deficits. The document concludes another recession will likely cause a major debt crisis for California in the next decade.
Assessment 4 Study GuideCiting Shafritz, J. M., Russell, .docxdavezstarr61655
Assessment 4 Study Guide
Citing:
Shafritz, J. M., Russell, E. W., & Borick, C. P. (2013). Introducing public administration
(8th ed.). Upper Saddle River, NJ: Pearson.
Reading Assignment Chapter 13: Public Financial Management
Unit Lesson
Budgeting is an important area within public institutions. This allows the jurisdiction to reference these important documents when there are questions regarding expenditures, line item purchases, and overall capital budgets. Capital budgets normally are written and established in the year prior to the implementation, for example, budgets for 2013 would be asked for during 2012. These budgets can be used for formulating how much of a surplus will be made available for contractors that may be working for the institution, security measures such as cameras that may be needed for security at a public venue, and being able to budget for supplies that are required for everyday functioning capacity within the organization. Budget formatting can be intriguing for most public entities and the professionals working within those organizations.
The size of technological spreadsheets that cite policies and create a timeline for the expenditures being used have a section specially designated for program objectives, and have a section that normally is set aside to delineate the government’s total service effort. The flow of management funds is the backbone of any institution, government entity, or public service venue. Without the flow of monetary compensation and grant money distribution, there will be limited capabilities for the designated organization to perform the work necessary to manage the business. As with many changes over the past several decades, monetary systems and funds being made available are beginning to diminish from the Federal government. The monies that are received, for example, by a fire department can be used to purchase apparatus, new firefighting clothing and protective equipment, and other provisions to support the public organization.
While looking at the budget from the federal, state, local, or community governments, consideration must be given to whether the monies being used and given to local entities are going to be used for economic growth. There will be disagreements concerning the appropriation of funds and fund management for the communities, but also for the main distributor-the federal government. The budget is the key focal point for public administration to function and make decisions. Monies that are received by public entities create a huge sense of power for those who shape the methods of how the monies are going to be spent. The upper management or executives must learn the conceptual framework that is used for budgeting, financing, and the allocation of those funds that have been received. Thus an accountant will be necessary for any good executive team within the organization. There are several different types of budgets that can be issued for an organization:.
This document provides solutions to an ECO 203 Week 2 Quiz. It includes solutions to 10 multiple choice questions covering topics like recessions, inflation, the business cycle, and aggregate supply/demand. It also provides prompts for online discussions on topics like human capital, the role of government, fiscal policy, and efforts to reduce budget deficits. Students are asked to review concepts from assigned readings and respond to other students' posts. A link is provided to access the full quiz solutions.
Alaska faces a serious fiscal challenge due to falling oil revenues from low oil prices. The state is spending over twice as much as its revenues and paying the deficit by drawing down savings, which cannot be sustained. In coming years, Alaska will need to close the large gap between spending and revenues by making significant cuts to spending, enacting new revenues, and/or using earnings from the Permanent Fund. There are no easy choices, as major changes are needed to achieve a balanced budget.
The research paper is based on the US Fiscal Cliff deal, a the popular term to describe the expiry of tax breaks and introduction of spending cuts leading to conundrum that the US economy faced at the end of 2012
Comments of Alaskans for Sustainable Budgets on HJR 23 (March 12, 2018)Brad Keithley
This document provides comments from Alaskans for Sustainable Budgets opposing a proposed resolution (HJR 23) that would change how funds from Alaska's Permanent Fund are allocated and used. The group opposes key aspects of a revised version of the resolution, including uncertain allocation to Permanent Fund Dividends, a fixed draw rate, and allowing the legislature to withdraw more than the draw rate in a given year. The document outlines alternative proposals and reasons for the group's positions, citing economic impact studies and the need for constitutional provisions to be durable over time.
Is fiscal policy effective in Brazil? An empirical analysisFGV Brazil
This document analyzes the effectiveness of fiscal policy in Brazil using empirical analysis from 1997 to 2014. It estimates fiscal multipliers using structural VAR and TVAR models to identify the impact of fiscal stimuli on output. The most robust estimate of the government spending multiplier is approximately 0.5. Higher multipliers are found using other approaches but may be biased. No significant response of output to tax changes was found, but output appears to generate tax revenue. The high level of government spending in Brazil may undermine the importance of fiscal shocks and help explain the country's fiscal conundrum.
Similar to Department of Revenue, Potential Fiscal and Revenue Options (6.4.2015) (20)
Testimony before HRES on South Central GasBrad Keithley
By invitation, we testified before the Alaska House Resources Committee on March 15, 2024, on Southcentral Gas Supply. The presentation was part of the Committee's look into the implications of the challenges currently facing Cook Inlet gas supplies.
The presentation addressed both energy and fiscal policy. Our theme was simple: " Let the market decide" and no subsidies. But if there are subsidies, they should be paid for other than through PFD cuts.
The slide-deck we used is attached here. The hearing itself is available at https://bit.ly/48YyBFf.
Presentation to Greater Fairbanks Chamber of Commerce's Government Relations ...Brad Keithley
Our September 27, 2022, presentation to the Greater Fairbanks Chamber of Commerce's Govt Relations Comm on Alaska's current fiscal situation and our views on the positions of the candidates for Alaska Governor in response.
Comments in opposition to SB 199 & SB 200 (2.20.2022)Brad Keithley
The comments of Alaskans for Sustainable Budgets in opposition to Senate Finance Committee bills SB 199 & SB 200, which propose to substantially restructure and cut the Permanent Fund Dividend.
HB 202 (HFIN): Comments of Alaskans for Sustainable BudgetsBrad Keithley
Comments filed on behalf of Alaskans for Sustainable Budgets with the House Finance Committee on HB 202 (Rep. Merrick) proposing a restructuring of and cuts in the Alaska Permanent Fund Dividend (PFD).
HB 202 & HB 37 (Statutory PFD Reductions): Comments of Alaskans for Sustainab...Brad Keithley
Comments filed on behalf of Alaskans for Sustainable Budgets on HB 202 (Rep. Merrick) & HB 37 (Rep. Wool) proposing (and in the case of HB 37, some substitute revenues to reduce the level of) cuts in the Alaska Permanent Fund Dividend (PFD).
HB 189 (Employment Tax for Education): Comments of Alaskans for Sustainable B...Brad Keithley
Comments filed on behalf of Alaskans for Sustainable Budgets on HB 189, the House Ways & Means Committee bill which would establish an employment tax for education.
HFIN CS for HB69 (work draft presented 4.23.2021): Comments of Alaskans for S...Brad Keithley
Comments filed on behalf of Alaskans for Sustainable Budgets on HFIN CS for HB69, the House Finance Committee's proposed committee substitute for HB69, the Governor's proposed operating budget.
SJR6/SB53 (HJR7/HB73): Comments of Alaskans for Sustainable Budgets Comments ...Brad Keithley
Comments filed on behalf of Alaskans for Sustainable Budgets on SJR6/SB53 (HJR7/HB73), the Governor's proposed Constitutional Amendments relating to the Alaska permanent fund, appropriations from the permanent fund, and the permanent fund dividend.
HJR1 & HB165: Comments of Alaskans for Sustainable Budgets CommentsBrad Keithley
Comments filed on behalf of Alaskans for Sustainable Budgets on HJR 1 & HB165, Rep. Kreiss-Tomkin's proposed Constitutional Amendment to Guarantee the Permanent Fund Dividend
SJR 1 (Guarantee Perm Fund Dividend): Comments of Alaskans for Sustainable Bu...Brad Keithley
Comments filed on behalf of Alaskans for Sustainable Budgets on SJR 1, Sen. Wielechowski's proposed Constitutional Amendment to Guarantee the Permanent Fund Dividend
The Economic Impact on Alaska of Various Fiscal Solutions (4.10.2021)Brad Keithley
This document summarizes several studies on the economic impact of different fiscal solutions for Alaska's budget deficit. The 2016 ISER study examined the impact of options like spending cuts, PFD cuts, and tax increases on income, jobs, distribution across income levels, and regions of Alaska. It found that PFD cuts would have the largest adverse impact on the economy and families. Subsequent ISER studies reinforced that PFDs significantly reduce poverty. A 2019 study argued for reduced spending and analyzed revenue options using static and dynamic models. A 2020 Tax Foundation study argued that certain taxes like sales taxes could have lower economic impact than others, but it provided limited analysis. The presentation concludes by advocating for a flat tax as the best option to
Impact of Proposed PFDCuts on Alaska Income & Jobs (Supplement to 3.4.2021 Le...Brad Keithley
This presentation is to supplement the 3.4.2021 LegFin Presentation to the Senate Finance Committee to analyze the impact of the PFDcuts discussed there on Alaska income & jobs.
Distributional Impact of Proposed PFDCuts on Alaska Families by Income Bracke...Brad Keithley
This presentation is to supplement the 3.4.2021 LegFin Presentation to the Senate Finance Committee to analyze the distributional impact by income bracket of the level of PFDcuts discussed there.
Analysis by the Legislative Finance Division of Alaska's fiscal position: how we got here, where we are and where we are headed under various alternatives.
DNR Fall 2020 Production Forecast (1.27.2021)Brad Keithley
The document provides a summary of Alaska's 2020 oil production forecast. It notes that the COVID-19 pandemic disrupted production in 2020, leading to deferred maintenance and interrupted drilling. The forecast expects average 2021 production of 470,000 barrels per day, within the range of 413,000 to 526,000 barrels per day. Currently producing fields will remain the backbone of production, while future projects under development or evaluation could help offset declining output from mature fields over the long term. However, uncertainty increases in longer-term forecasts due to risks associated with new projects.
LegFin: Preliminary Overview of the Governor's FY22 Budget (1.8.2021)Brad Keithley
The document provides a preliminary overview of Alaska's structural budget deficit and the Governor's FY2022 budget proposal. It notes that Alaska has faced nine consecutive years of budget deficits due to declining oil revenue. The Governor's budget reduces spending from the current law baseline through lower agency budgets and partial funding of items like the PFD. It draws funds from the ERA to fully pay the PFD but still faces a small deficit. The 10-year plan aims to balance the budget starting in FY2023 through dividend reductions, spending cuts, and new revenue.
Upcoming Federal Fiscal Deadlines (10.20.2020)Brad Keithley
The document outlines key fiscal and economic deadlines and expirations for 2020 through 2026, including temporary extensions of appropriations, tax provisions, and entitlement programs. Key dates include the expiration of pandemic unemployment programs and various tax extenders at the end of 2020, debt limit suspension ending in July 2021, and trust funds for Medicare, Social Security, and pensions anticipated to be exhausted between 2024-2031 based on Congressional Budget Office projections.
Concord Coalition: The Current US Fiscal Situation (October 2020)Brad Keithley
A chart talk from The Concord Coalition analyzing the fiscal challenges facing the US before COVID, and how the economic impact of COVID and the federal response has made that situation even more difficult.
Here is Gabe Whitley's response to my defamation lawsuit for him calling me a rapist and perjurer in court documents.
You have to read it to believe it, but after you read it, you won't believe it. And I included eight examples of defamatory statements/
Essential Tools for Modern PR Business .pptxPragencyuk
Discover the essential tools and strategies for modern PR business success. Learn how to craft compelling news releases, leverage press release sites and news wires, stay updated with PR news, and integrate effective PR practices to enhance your brand's visibility and credibility. Elevate your PR efforts with our comprehensive guide.
El Puerto de Algeciras continúa un año más como el más eficiente del continente europeo y vuelve a situarse en el “top ten” mundial, según el informe The Container Port Performance Index 2023 (CPPI), elaborado por el Banco Mundial y la consultora S&P Global.
El informe CPPI utiliza dos enfoques metodológicos diferentes para calcular la clasificación del índice: uno administrativo o técnico y otro estadístico, basado en análisis factorial (FA). Según los autores, esta dualidad pretende asegurar una clasificación que refleje con precisión el rendimiento real del puerto, a la vez que sea estadísticamente sólida. En esta edición del informe CPPI 2023, se han empleado los mismos enfoques metodológicos y se ha aplicado un método de agregación de clasificaciones para combinar los resultados de ambos enfoques y obtener una clasificación agregada.
Acolyte Episodes review (TV series) The Acolyte. Learn about the influence of the program on the Star Wars world, as well as new characters and story twists.
04062024_First India Newspaper Jaipur.pdfFIRST INDIA
Find Latest India News and Breaking News these days from India on Politics, Business, Entertainment, Technology, Sports, Lifestyle and Coronavirus News in India and the world over that you can't miss. For real time update Visit our social media handle. Read First India NewsPaper in your morning replace. Visit First India.
CLICK:- https://firstindia.co.in/
#First_India_NewsPaper
An astonishing, first-of-its-kind, report by the NYT assessing damage in Ukraine. Even if the war ends tomorrow, in many places there will be nothing to go back to.
Department of Revenue, Potential Fiscal and Revenue Options (6.4.2015)
1. Potential Fiscal and Revenue Options for the Walker-Mallott
Administration
Alaska Department of Revenue White Paper
6/4/2015
2. Potential Fiscal and Revenue Options
for the Walker-Mallott Administration
Introduction
The Walker-Mallott administration has tasked the Department of Revenue (Department) with
identifying potential short, medium and long-terms revenue options in order to help transition Alaska
out of its current fiscal situation. Alaska North Slope (ANS) oil prices declined from over $100 in August
2014, to a monthly average of under $50 in January 2015, before recently recovering to the $60 range in
early May 2015. The result has been a significant reduction in the near and mid-term revenue forecast
for the state of Alaska. In an effort to identify as many options as possible the Department leadership
and staff undertook a comprehensive inventory of ideas and concepts that have been proposed and in
some cases considered in the past. In addition the leadership encouraged a discussion of potential new
ideas as well as an analysis of the range and type of solutions being discussed in the legislature.
In the 2015 State of the Budget Address, Governor Walker clearly expressed the administration’s strong
desire to avoid introducing new revenue measures during the 2015 legislative session. However he also
made it clear that if current or similar revenue conditions were sustained into the coming interim and
into the 2016 session that everything, including “traditional revenue increases,” would be on the table.
His expressed concern was that Alaska and Alaskans were still adjusting to a new budgetary reality, and
that the proper first step to fiscal stability was to look to the State budget for cuts and restructuring.
Only after the administration had put “theirs” on the table would they look to new or external sources
of revenue. This document is produced as a first draft or “blueprint” of the myriad of options to be
considered in helping transition and guide Alaska in the direction of long-term fiscal stability.
For purposes of this discussion, revenue is categorized by where it can be spent. Revenue can be either
“unrestricted” (available to fund general state activities and capital projects) or “restricted” (required to
be used for a specific purpose). Alaska traditionally considers “General Fund unrestricted revenue” any
revenue that is not restricted by the constitution, state or federal law, trust or debt restrictions, or
customary practice. Most legislative and public discussion centers on this category of revenue, and it is
the figure most commonly referenced in budget discussions. Throughout this white paper, unless stated
otherwise, revenue and budget numbers refer to the unrestricted General Fund.
As a companion to this report, the Tax Division’s Economic Research Group has produced a fiscal model
that attempts to compare, quantitatively, the various options available for closing the fiscal gap. The
model includes a customizable interface that enables policy makers to adjust multiple revenue items
simultaneously. Each change is shown via its impacts to annual budgets, anticipated budget deficits, and
over time, savings drawdown. The white paper and fiscal model are intended as companion documents.
Revenue Options for Governor Walker p. 1 6/4/15
Department of Revenue White Paper
3. For the purpose of organization the options within the white paper has been categorized as follows. The
ordering of categories is purely for the purpose of a coherent narrative, and should not be construed to
reflect the relative merit or importance of any individual item:
1. Continuing restraint in the state budget
2. Options involving Alaska’s financial assets including the Permanent Fund
3. Tax measures related to oil and gas
4. Tax measures targeted to specific portions of the economy other than oil and gas
5. New statewide tax measures impacting individual Alaskans
6. Non-tax measures and miscellaneous
The current economic reality, borne out by the Department’s fiscal model as well as a model produced
by Legislative Finance, is that there is no “magic solution” to solve Alaska’s fiscal crisis. It is going to take
several substantial changes working in unison to solve both the short- and long-term budget imbalance.
With this in mind, it is recommended that a policy of shared responsibility be pursued built on a four-
legged stool, with the four legs consisting of:
1) The Government, through continued budgetary restraint and prudent use of savings;
2) The People, through broad based taxes that also collect from our transient and seasonal
workforce;
3) The Oil Industry, through a fair and stable tax and revenue structure that protects Alaska’s
interests at a broad range of prices; and
4) The Permanent Fund, through mechanisms that preserve the value and continue to build
Alaska’s sovereign wealth savings account
Background
When the FY15 budget passed last year, the deficit was projected at $1.1 billion and State savings,
traditionally understood as the Constitutional and Statutory Budget Reserves, were expected to be in
the range of $10.5-$11 billion by the end of FY 2015. However, with the downturn in oil prices, Governor
Walker actually took office facing a FY15 budget deficit of $3.5 billion and State savings of less than $10
billon with an anticipated FY16 deficit of another $3.2 billion. The clear takeaway is that absent a
rebound in oil prices or a massive restructuring the State’s fiscal regime, there is only 3-4 years of
savings remaining to preserve government services over the long term, as well as to finance and
complete major projects. Knowing this, the administration began a diligent and systematic process of
addressing the present and future budget challenges, recognizing the opportunities and constraints
provided by the budget reserves.
In order to limit the impacts of shrinking government on the economy of Alaska as well as on the lives of
Alaskans, the decision was made to resist the “shrink government as small as possible” absolutism that
Revenue Options for Governor Walker p. 2 6/4/15
Department of Revenue White Paper
4. some have proposed. Although reducing the size of government is part of the fiscal solution, the idea
that the right size of government is purely a mathematical exercise is fraught with peril. As an example
of this school of thought, a 2012 report from Prof. Goldsmith at the Institute for Social and Economic
Research at the University of Alaska calculated a “sustainable” annual revenue level that, without
supplement, would limit General Fund spending to $5.5 billion. This was recently reduced even further
to $4.5 billion because of reduced estimates for the value of the State’s underlying resources.
Regardless of the fact that this study has several questionable assumptions including the estimate of the
value of the State’s resources, the assumption that the State will only achieve a 4% return on its
financial assets and the assumption that the State, despite a declining fiscal position, will continue a $1.4
billion annual appropriation to the permanent fund dividend program; it nonetheless now underpins
much of the debate on the right size of government in the capitol and in the public.
On its face this mathematical debate over the right size of government is founded on making our savings
last as long as possible, but in doing so it actually exposes a larger and more important issue: are we
going to remain primarily dependent on funding our government from oil, or are we going to make the
transition to the mature and sustainable economy envisioned by visionaries such as Jay Hammond?
When Alaskans fought for and earned statehood in the 1950s, it was with the expectation that the State
would, over time, be able to support itself with revenue from development of its many natural
resources. Since the tapping of the massive Prudhoe Bay field in 1977, the State has relied on Prudhoe
Bay and other large oil fields as the primary source of unrestricted revenue to support not only state
government and community development but also to maintain extremely low tax rates on smaller oil
fields and other resource industries, to attempt to subsidize and attract other economic activity, and of
course to minimize taxes paid by individual Alaskans.
In one way or another, Alaska and Alaskans are entering the next era of our history. Oil revenue can no
longer independently support the same level of state government that Alaskans have become
accustomed to. The question is, how will Alaska and Alaskans adapt to this new fiscal reality?
Revenue Options for Governor Walker p. 3 6/4/15
Department of Revenue White Paper
5. Summary of Options Discussed in This Paper
The following sections of this paper introduce and discuss a substantial number of the revenue options
available for closing the fiscal gap. For simplicity, and as a reference guide, most of the options detailed
in the paper are summarized in the table below. In using the table it should be noted that many of these
options have multiple variables but for consistency the table provides only a midpoint estimate of
additional revenue for a single year in the short term.
In discussing revenue options it is critical to not limit the discussion to the direct revenue impacts but to
also consider the impacts of any decision on the broader economy. Many of these impacts are
qualitative and thus hard to measure. But it is important to understand that both cuts and taxes will
ripple through the economy, and each will do so in unique and different degrees. For example, ISER has
estimated that for every $1 million in state budget cuts costs the state loses about nine jobs. It is also
important to note that different revenue scenarios have differing multipliers, creating significantly
different spin-off effects. For example, reducing the number of state workers also reduces the income
they spend throughout the economy, but cutting contracts to out of state contractors and equipment
suppliers has less indirect impacts. Likewise, some revenue measures may create incentives or
disincentives that will influence the decisions of individuals and businesses on whether to live and invest
here; some add new money to the economy whereas others simply recirculate the money already here;
and some measures can be partly offset against other liabilities, for example by reducing a person’s
federal tax liability.
In estimating the impact of the following options it is important to quantify the budget shortfall in
comparison to the revenue potential of the various options. If oil prices stay in the $60 / barrel range,
the estimated budget shortfall for FY16 is about $3.2 billion.
Item Description
(example proposal)
Potential
Annual
Revenue
Note Impact-
Pro and
Con
Page
Ref.
Permanent
Fund
Endowment
Model (i.e.
Percent of
Market Value)
4.5% of average market
value over past five years
(HJR2)
$2.5 billion Revenue includes
amount available
for dividends
New
money into
economy.
But could
slow
growth of
fund
11
Dividend Cap Assume $1,200 cap $600 million Disproportionate
impact on low-
income Alaskans
12
Royalty Diversion Amount above 25% to GF
(similar to HB11 from
2003)
$80 million 13
Royalty /
Earnings Swap
Per SB114 $1.4 billion 13
Revenue Options for Governor Walker p. 4 6/4/15
Department of Revenue White Paper
6. Oil and Gas
Minimum Tax Increase to 10% $500 million New revenue
only at low prices
New
money in
economy,
and
potential
for
significant
additional
revenue.
But
revenue is
unpredicta
ble and it
could
discourage
investment
15
Per-Barrel Credit Cut in half (SB192) $300 million Most impact at
prices between
$80-$110
15
Gross Value
Reduction (GVR)
Sunset
Revert to full tax after 5
years
$25 million Number will
grow
substantially over
time
15
Interest Rates Revert to 11% $25 million 16
Cook Inlet Credits Replace ACES-type
spending-based credits
with SB21-type
production-based credits
$165 million 16
Progressivity 10% surtax bracket above
$60 / bbl in profits
Indeter-
minate
$0 below $110
oil;
$1 billion at $150
17
Separate
Accounting
Oil & Gas Corporate
Income Tax (HB 191)
Indeter-
minate
Would have
raised $220
million in past
17
Gas Reserves Tax 3 cents / mcf $1 billion Creditable after
production
begins
18
Non-Oil and
Gas
Alcohol 5 cents / drink $20 million 19
Fisheries Increase by 50% $16 million Net to state after
municipal sharing
19
Mining Additional 3% of net $19 million 20
Motor Fuel Double (highway rate
goes from 8 to 16 cents)
$40 million 20
Tobacco Cigarettes from $2 to $3;
Other Tobacco from 75%
to 100%
$27 million 20
Tobacco
(E-cigarettes)
Currently untaxed Unknown 20
Health Care
Provider
6% $59 million 20
Revenue Options for Governor Walker p. 5 6/4/15
Department of Revenue White Paper
7. Business License
Tax (gross
receipts)
0.25% => 0.5% based on
sales
$60 million 21
Statewide
Taxes
Income Tax of fed liability + 10% of
capital gains (HB182)
$655 million 20% is new
money from non-
residents. Little
impact on low-
income Alaskan.
Deductible
from
federal
income tax
22
School Tax $100 - $500 (SB97) $100 million 23
Sales Tax 3% $418 million About 15% less if
food excluded.
Brings in money
from
nonresidents
Affects
low-
income
Alaskans
more
23
Property Tax 2.65 mils $280 million 23
Misc
Lottery Interstate plus AK-
specific
$15 million Could
impact
current
charitable
gaming
25
Revenue Options for Governor Walker p. 6 6/4/15
Department of Revenue White Paper
8. #1: Continued Restraint on Spending
It is generally believed that Alaska’s budget is larger than it has ever been, and is considered by many to
be “bloated.” And, it is true that in nominal terms, the General Fund budget has increased steadily over
time and steeply since the mid-2000’s:
The above graph makes intuitive sense to people who are familiar with state government spending: the
operating budget available to agencies has grown at a relatively even pace, showing a more rapid
increase during the “boom” times when oil prices were higher and the state budget was in surplus.
Conversely, spending was much flatter from year to year during times when oil prices were lower and
the state budget was in deficit. In a similar although more volatile fashion, capital spending has tracked
with revenue supply, with large spikes in spending during the periods of surplus and significant
reductions during reduced revenue years. The third category, statewide operations, presents a different
pattern due to its historic concentration in municipal revenue sharing which was gradually eliminated
during the 1990’s. However since 2006 this category has grown to record levels with the reintroduction
of revenue sharing as well as large direct state contributions to the public employee and teachers’
retirement systems, and the growing reliance on reimbursable tax credits in targeting at attracting
increased activity in the oil and gas industry.
Whatever the issues of boom and bust, the general trend in state budgets has expectedly been upward.
However, the perception of bloated government spending is somewhat mitigated when the analysis is
adjusted for inflation.
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Department of Revenue White Paper
9. As the chart above graphically demonstrates, when adjusted to real dollars the current operating budget
only slightly exceeds 1984 levels after 20 years of steady inflation-adjusted decline. This is important to
recognize, as many believe that the post-2005 operating budget growth was in part making up for a
generation of highly constrained public spending. In addition it also reflects growth in the cost of certain
core services like health care which have become substantially more expensive, even in real terms, over
time.
In analyzing historic spending it is also critical to understand that necessary spending on many essential
government functions, such as education, transportation, and public safety, are influenced by the size of
the community they serve. Alaska’s population has grown steadily over the past 40 years. It is a
testimony to Alaska’s success and quality of life that many individuals and families have chosen to
become Alaskans and make their lives here. However population growth inevitably increases the cost of
providing many public services.
Adjusting for population growth, and presenting the cost of government in terms of inflation adjusted
per-capita spending rather than in terms of total nominal spending, the picture changes dramatically.
Revenue Options for Governor Walker p. 8 6/4/15
Department of Revenue White Paper
10. On March 26, 2015, David Teal of Legislative Finance presented a report on Alaska’s fiscal position and
commented that the budget was smaller than it was in the 1980’s. This was surprising to some, but the
above graph clearly demonstrates his conclusion. When adjusted for inflation and population, the
current unrestricted General Fund budget is indeed lower than during the late 1970’s and early 1980’s
when Alaska was in enjoying the post-pipeline revenue boom.
Although the current budget discussions are not reflected on the above graph, the reductions
anticipated in the FY16 budget will reduce the state’s per-capita spending, adjusted for inflation, to its
lowest level since FY06. Even with spending at near historic lows, the current fiscal outlook requires that
continued spending restraint is essential in the years to come. That being said, it is important to
recognize in any budget discussion that state budgets are not “bloated” in comparison with historical
levels and there is likely very limited potential for further significant cuts if essential services are to be
maintained.
Revenue Options for Governor Walker p. 9 6/4/15
Department of Revenue White Paper
11. #2: Options Involving Alaska’s Financial Assets
Options Involving Non-Permanent Fund Assets
Alaska’s options are unfortunately fewer than they were just a year ago. With the first drawdown of the
Constitutional Budget Reserve (CBR) it puts in place a cycle of annual “sweeps” that will, unless reversed
by a ¾ vote in both bodies, move all general fund sub-funds into the CBR until the debt is repaid. In
addition, in March of 2015 the Treasury Division liquidated the so-called “sub account” of the CBR that
had been invested since 2007 in a more aggressive portfolio. Sub account earnings approached $1 billion
in its best years, but fund managers are required under statute to maintain assets in a relatively risk free
portfolio in order to preserve value to meet the next five years of expected need. With expected large
deficits, it means that the entire CBR, worth roughly $10 billion, is currently held in cash-based assets.
This significantly reduces potential state investment earnings from the CBR.
Options Involving Pension Obligation Bonds, Public Employees’ and Teachers’ Retirement System
(PERS / TRS)
Using existing statutory authority the state could issue pension obligation bonds. This involves
borrowing money backed by the PERS and TRS trusts as collateral, and investing that money in risk
assets such as equities. The theory is that earnings from the investments should be greater than the
debt service, which should provide additional revenue to the trust funds. This parallels in many ways the
“collateralization” of Permanent Fund assets described below.
Historically this represents something of a lost opportunity. Pension obligation bonds were authorized in
2008 by HB13, but have never been used. At the time, the bill was considered a companion to SB125,
which set up the system by which Alaska contributes additional hundreds of millions to the statewide
public employee pension system. Analysts believe that had Alaska gone through with the pension bonds
it could have achieved an additional several billion dollars in investment earnings thereby reducing the
long term shortfalls in the state pension accounts.
Unfortunately implementing the strategy today may expose the funds to significant additional risk at a
time when equity markets are near all-time highs and many observers are projecting that future market
returns will be below historic norms.
Options Involving the Permanent Fund
During the 2014 legislative budget debates it was understood that Alaska would be facing moderate
sized budget deficits for the next several years. Modeling in 2014 showed that the non-Permanent Fund
savings could support the expected deficits up to the expected “first gas” in approximately 2024. These
savings peaked in 2013 at around $18 billion. At the same time, the mid-level estimate of the Permanent
Fund Corporation projected the fund would be worth $78 billion in 2024, a substantially greater increase
in value than the cumulative budget shortfalls (i.e. reductions in savings) over that same time period. It
was only later in 2014 when oil prices dropped dramatically that projected deficits exploded.
These facts, taken in concert, lead to three conclusions. First, non-Permanent Fund savings are expected
to rapidly decline in the next several years. Second, the Permanent Fund is expected to continue to
grow, possibly at a rate greater than the depletion rate of non-Permanent Fund savings. And third, even
Revenue Options for Governor Walker p. 10 6/4/15
Department of Revenue White Paper
12. if the AKLNG project proceeds along at the planned schedule, the state will likely need some sort of
additional funding source before the gasline is complete.
With oil prices projected to remain low over the next four years, it is essential that revenue discussions
include the prudent use of Permanent Fund earnings. Largely due to Permanent Fund performance,
Alaska made more in investment earnings in FY2014 and is projected to earn far more in investment
revenue in FY2015 than all our other revenues combined. The realized portion of these revenues, while
available for appropriation per statute, has historically been considered untouchable.
The Permanent Fund has become in many ways the third rail of Alaska politics, in large part due to the
expectation and in many cases dependence of many Alaskans on the annual dividend program. But
more fundamentally, any effort to change the way in which the Permanent Fund is used will open a
visceral debate over its essential purpose and the original intent of its creators. Most simply put, the two
primary schools of thought define the Permanent Fund as:
1) A sovereign wealth fund to create a sustainable source of public revenue for a time in the
future when the oil is diminished or gone, or
2) A fund dedicated to the direct and immediate sharing of Alaska’s common resource wealth
with its people.
It is highly likely that the sides of this debate are irreconcilable, and it’s possible that neither is entirely
correct. The one thing that can be definitively taken from the early debates is that the fund was
intended to be:
3) A mechanism to keep a portion of our current-year revenue out of the hands of the
legislature, so that it wasn’t spent as fast as it came in. Ultimately this delayed the
conversation about the Permanent Fund’s roll in the state’s long term fiscal planning.
In considering the use of the Permanent Fund in helping to reduce the current fiscal gap, it is important
to remember that today’s Fund is substantially different, both in its actual size as well as its relative size
compared to the rest of the economy, than it was in past fiscal crises. During the post-pipeline crash of
1986, the Fund was worth only about $6 billion, not nearly enough to generate a sustainable, renewable
source of income. In 1999, when the voters were asked to weigh in on the possibility of using it for
government operations, it was worth $26 billion or about half today’s value.
There are four key drivers in determining how much revenue the Permanent Fund could contribute to
future state spending. First is the fund’s actual rate of return. Second is future inflation, which must be
“backed out” of any distributed returns in order to protect the value of the Fund through inflation
proofing. Third is the calculation of total distributions. Fourth, is the allocation or “split” of that
distribution between dividends and funding government.
There are a number of potential options for use of the permanent fund in providing government
funding:
Conversion of Permanent Fund to an Endowment Model
The bigger the Permanent Fund becomes, the more unwieldy it becomes to manage the fund using the
current “principal / earnings reserve” structure. Many have assumed that Permanent Fund will
eventually be converted to and managed as an endowment system similar to a private university. This
Revenue Options for Governor Walker p. 11 6/4/15
Department of Revenue White Paper
13. model, with annual payments based on overall fund value rather than short term performance, is
considered a “best-practice” for management of endowment funds, and has been recommended by the
Permanent Fund Board of Trustees. In this model, every year a specified percentage of the total fund
value would be diverted for public purposes. The percentage could be directed to dividends, to support
government operations, or some combination of the two.
The percent of annual withdrawal would be based on the expected long term average annual earnings,
less the amount needed to inflation proof the principal. Managed in this way the Permanent Fund’s
principal is protected and continues to grow through the addition of new deposits as well as investment
earnings in excess of the withdrawal.
Most recent discussions have assumed an annual payout of about 5%, based on long term earnings
estimates of 8% less 3% to inflation proof. The 2015 legislation, HJR2 introduced by Rep. Hawker, uses
4.5%. To further protect the principal, most proposed endowment models have used the average of the
value for several prior years as the basis for calculating the allowable withdrawal.
As a simplified example, with a $50 billion fund and expected 8% returns, it would generate $4 billion in
annual income. But of this, about 3%, or $1.5 billion, would be needed to inflation proof the principal.
Therefore the annual payout could be set at 5%, making $2.5 billion available. Even if every Alaskan
received a $2,000 dividend, that would only cost about $1.4 billion making another $1.1 billion available
for government operations. The next year, the fund would have $51.5 billion to start with, in addition to
all new deposits from royalty revenue.
As a general observation, Alaska will do better in the long run the longer it waits to spend funds above
the amount presently calculated for the dividend. Currently, the asset base is achieving returns far in
excess of the rate of inflation but only a portion of the earnings are actually distributed, for the purposes
of dividends and inflation proofing. Therefore, the overall fund is growing at a faster than its “natural”
rate of increase. The longer the delay in diverting a larger portion of the Fund’s income to government
funding, the larger the Fund becomes resulting in a larger “baseline” for future annual calculations.
Dividend Cap
The fund has shown strong growth from FY2009-2015. In 2014, the impacts of the market crash of late
2008 fell off the five-year average used in calculating dividends, resulting in the dividend payment
jumping from $900 to $1,884. Looking ahead, and using the Alaska Permanent Fund Corporation’s
midpoint projections, one could easily anticipate several more years of increasing dividends, growing to
$2,000, $2,500, and beyond. If current trends continue, people may very well begin to normalize their
expectation of receiving these larger dividend payments. Thus it may be advisable to pursue a dividend
cap sooner rather than later before these expectations materialize.
A “cap” could be placed on the amount of the dividend, perhaps at $1,200 which is about the average of
the last three years (2012’s $878 + 2013’s $900 + 2014’s $1,884 / 3 = $1,221), and is slightly higher than
the historic average dividend of $1,122. Assuming the current $1.4 billion appropriation for the October
2015 dividend, every Alaskan would receive about $2,100. If instead of paying the entire amount in
dividends, the dividend was capped at $1,200, it would make available about $600 million for
government funding. In considering a cap it is important to recognize that the first year or two of
“splitting the pot” will set its own expectation precedents. The $1,200 figure would represent about a
60/40 split in favor of the dividend payment.
Revenue Options for Governor Walker p. 12 6/4/15
Department of Revenue White Paper
14. Diversion of Earnings Reserve
The entirety of the Permanent Fund’s Earnings Reserve, currently about $9 billion, is available to be
appropriated for government spending by the legislature by simple majority vote.
The existence of the earnings reserve is largely what triggers the need for a ¾ vote to access the
Constitutional Budget Reserve using Article IX, Section 17(c). This is because the courts have determined
the earnings reserve to be part of the “amount available for appropriation,” thus eliminating the ability
to access the CBR by simple majority using Sec. 17(b). In the budget negotiations at the end of the 2015
regular session, there were rumors the legislature might appropriate a significant portion of Earnings
Reserve, in a contingency tied to a failed CBR vote, to balance the FY16 budget. Another option
introduced during the 2nd
Special Session would move funds from the Earnings Reserve to the Corpus (or
Principal) of the Fund, in order to enable a 17(b) majority vote to access the CBR. While this has not yet
materialized, it remains a legally simple but politically very difficult legislative option and creates a
dynamic whereby, even if oil prices recover in the next couple of years, Alaska may lack sufficient
savings to commit to the AKLNG project.
Diversion of Surplus Royalties
Per the constitution, 25% of mineral royalties are deposited into the Permanent Fund. However, by
statute this increases to 50% of royalties from leases signed after December 1, 1979. A bill, HB11 by
former Rep. Norm Rokeberg, passed in 2003 and temporarily reduced the royalty deposit for these
newer leases to the constitutional 25% level. The provision sunset automatically once the impact on
each person’s dividend reached $20; this occurred in 2008. Over the four years this bill was in effect
nearly $550 million was diverted to the General Fund. Based on current price and production,
reinstituting this change would add about $80 million per year to the General Fund.
Endowment with Changes to Payout Mechanism
A modified annual endowment payout option was introduced as SB114 by Sen. Lesil McGuire, at the end
of the 2015 session. Instead of splitting the allowable withdrawal between the dividend and the general
fund, it would divert the entire amount to the general fund. Simultaneously, the dividend itself would be
funded by the 74.5% of royalty and other lease income that is not already constitutionally diverted to
the permanent fund principal and the school fund. Currently, most of that portion of royalty income
goes to the general fund.
This approach would tie the dividend more closely to Alaska’s current production as well as to the price
of oil. Based on current projections, the change in royalty treatment would divert about $1.1 billion
from the general fund to the dividend. By simultaneously appropriating the Permanent Fund
endowment payout into the general fund, the legislature would replace the royalty diversion with about
$2.5 billion of general fund revenue making an additional $1.4 billion per year available for the budget.
Additionally, Sen. McGuire’s bill caps the annual payout to the amount that actually exists in the
Earnings Reserve. This language enables the fund to maintain its current split Principal / Earnings
Reserve structure, and thus could be implemented without a constitutional amendment.
Revenue Options for Governor Walker p. 13 6/4/15
Department of Revenue White Paper
15. Collateralization and Securitization
This falls into a broader category that includes more aggressive leveraged investment strategies for state
assets, attempting to better capitalize on potentials of modern securities markets.
At the most basic level, collateralization, or leverage, would involve borrowing new money using existing
assets as security on long term, low interest loans. The newly borrowed money would be invested
alongside the existing diversified portfolios. As an example, if $10 billion could be borrowed at 4% long
term interest, and then invested at an average annual 7% rate of return, the difference of 3% would
generate $300 million per year in new income for the state.
Once this cash flow was established, an additional step of securitization could be taken. This would
entail separating the income and the borrowed money into two pots- one of which would earn the
revenue to pay the annual interest on the borrowed money, and the other which would be turned into a
tradable security. Using the above example, the state could package the expected 30 year cash flow of
$300 million per year, and sell the cash flow itself for a lump sum of $6 billion or more. This one-time
windfall could then be reinvested, or used for ongoing operations.
The risks of any leveraged investment strategy may be amplified at present, given the lofty levels of
equity markets. Prominent money managers have bemoaned the lack of worthwhile investments,
central bankers have warned of tightening monetary policies, and some analysts project negative real
returns over the next seven years. Although there is little disagreement that in the long term this
strategy would increase the value of the state financial assets, in the short term there is a risk that a
market correction could leave the state liable for debt payments, without offsetting investment gains,
which would only make the current fiscal imbalance worse.
These strategies carry definite risks and uncertainty, but potentially extraordinary rewards. Any
collateralization and leveraged investment strategy should be subject to careful review and analysis by
independent experts. It must also earn the trust and support of Alaska’s citizens, who may be rightly
suspicious of what will no doubt be characterized as, “mortgaging the Permanent Fund.”
Revenue Options for Governor Walker p. 14 6/4/15
Department of Revenue White Paper
16. #3: Oil and Gas Taxes
In looking at options for increasing oil and gas tax revenue it is necessary to analyze revenue options on
a go forward basis and not get caught up in revisiting issues of the past. SB21 is the law of the land and
was upheld by the voters in August of 2014. The basic concepts underlying the structure of SB21 are:
reduced progressivity that is not punitive at high prices, credits that reward production instead of
spending, and specific benefits for “new oil.” Any discussion around changes to the production tax
should remain within this framework. However, that does not mean that there isn’t room for a
discussion on the improvement of the oil production tax structure, or the necessity of tweaking certain
provisions going forward. As a historical note, ACES, the former tax regime, was passed in November
2007 and there were oil bills proposed as early as the 2008 session with substantial ”tweaks” that
ultimately passed in 2010.
The following are several approaches that have been proposed that would increase state revenue. Some
would be more relevant at lower prices and some at high. These include:
Minimum Tax Changes
As a point of reference, the minimum tax floor could be increased to reflect the gross tax that was
received in the last years of ELF, about 7% or 8% of gross value. Another point of reference is the
Governor Palin proposed 10% in her original ACES bill. However, at very low prices, such as Alaska is
currently experiencing, there is limited incremental revenue that can be extracted from the oil industry.
Based on modeling done in the Tax Division, an increase to a 10% minimum tax would generate about
an additional $500 million in revenue.
Modify Per-Barrel Credits
During the last weeks of the 2013 session the per-taxable barrel credit in SB21 was changed from a flat
$5/barrel to a sliding scale that went from $0/barrel at well head value oil prices above $150 to
$8/barrel at prices $80 and below (seen as a low price range at the time but now likely the upper limit of
near term pricing). During the 2014 session, Sen. Bert Stedman introduced SB192 that would have cut
the per-barrel credits in half, to $4/barrel at the lowest prices. An alternative approach that has been
suggested is to merge the SB21 proposals and cut off the credits at the $5 level, removing the $6-$7-$8
credits for wellhead values below $110.
Modifying per barrel credits either by itself or in combination with a strengthening of the minimum tax,
would add revenue protection for Alaska at low oil prices, especially in a high cost environment, with the
greatest fiscal impact likely seen in the price range of $80-$110 per barrel.
Modify New Oil Provisions
The Gross Value Reduction or “GVR” provisions, which provide benefits for “new oil,” are calculated
against the gross value but create an offset against taxable net profits. A 20% “gross value reduction”
can in this way reduce a taxpayer’s liability by 40% or more. A mechanism to minimize the long term
impacts of GVR provisions while still allowing for the recapture of the costs associated with new field
development would be to sunset the GVR after a specified number of years. This would allow sufficient
time to recapture the costs of building a new field, and would prevent the gradual trend towards
Revenue Options for Governor Walker p. 15 6/4/15
Department of Revenue White Paper
17. increasing shares of production receiving the benefit. Other GVR amendments that have been proposed
include reducing the rate from 20% to 10%, or excluding certain fields from being counted as “new oil”.
The SB21 fiscal note from 2013 estimated the cost of the GVR provisions to gradually increase from
about $25 million/year initially to $75 million in FY19. This assumed the higher oil prices of the time and
did not include any projects or developments that did not meet the threshold for inclusion in the
Department of Revenue production forecast, such as any development from Repsol, Great Bear, etc.
Interest Rate Changes
One of the lesser discussed changes in SB21 reduced the tax rate for delinquent or audit-assessed taxes
from 11% to a floating number that is currently about 4%. In addition, a late technical amendment
changed the formula, many believe inadvertently, so that the 4% is only collected on the initial value
and does not compound.
According to the SB21 fiscal note from 2013, the change to the interest rate cost the state an estimated
$25 million/year. If the rates themselves were revisited and restored to the former levels it would add
back that revenue. Another option to consider, which would further increase that $25 million/year
figure, is having a lower statutory interest rate for refunds than for assessments. Many states have
differential interest rates in this manner.
Reform North Slope Credits
Refundable oil and gas credits will remain at approximately $400 million for FY16. These will reduce
slightly starting in FY17 but they may remain a significant general fund cost as the North Slope continues
to develop additional fields. The system is set up to reimburse a portion of the “losses” (in the years
before a field has production and thus taxable income) with cash rebates. The Department of Revenue’s
estimates of the revenue impacts only include known and sanctioned projects; if substantial new oil is
developed it could dramatically increase the state’s expected repurchases.
Alaska’s credit regime was initially set up to be used against tax liability or transferred to taxpayers in an
open market. Only later did state repurchase become the norm. A cap on annual repurchase could help
the state’s cash flow in low revenue years. However, a cap would have to be carefully constructed to
minimize the impact on explorers, some of whom would have to wait to monetize credits or sell them at
a discount to producers who would apply them against their own production taxes. In this scenario, the
state’s net fiscal impact would be unchanged, but a portion of the benefit of the credit would shift from
the explorers to the major taxpaying producers.
As an alternative, there is already some movement towards using AIDEA as a development bank for drill
rigs, processing and other support facilities. In addition, there has been some initial discussion of
transforming parts of Alaska’s credit system into a direct investment model, where the state’s
contribution would be used more like venture capital in exchange for an equity share of projects. This
could be done to provide up-front financing, potentially saving start-up companies the very high interest
rates many of them are currently paying.
Reform Cook Inlet Taxes and Credits
When PPT passed in 2006, changing Alaska’s oil and gas production tax to a net profits-based system,
Cook Inlet was held harmless. Through 2022, Cook Inlet oil and gas production is taxed at a rate tied to
Revenue Options for Governor Walker p. 16 6/4/15
Department of Revenue White Paper
18. the old ELF rates that were in place in 2006. Because of that, production tax on oil is locked into a rate of
zero, and gas is taxed at a rate that varies from field to field but averages about 17 cents/mcf. This
limited tax liability is then generally wiped out by the Small Producer Credit and other credits. A recent
analysis by the Department of Revenue showed that Cook Inlet producers saved an estimated $500-
$800 million over the years 2007-2013 due to the tax cap.
Meanwhile, producers in Cook Inlet are still eligible for many reimbursable credits that result in below-
zero taxation. The Cook Inlet Recovery Act of 2010, while primarily written to provide a tax credit for a
gas storage facility to provide for seasonal demand fluctuations, also included substantial credit changes
and increases targeted at Cook Inlet. As a result, reimbursable oil and gas tax credits have increased
from $33 million in FY11 to an estimated $281 million in FY15. Many of these credits are received by
companies that produce oil and gas and are presumed to be profitable but because of the tax cap have
little or no tax liability against which to apply them. Therefore these are reimbursed through cash
payments by the state.
The underlying tax regime in Cook Inlet was not modified by SB21 and is still effectively an ACES
structure. The result is that Cook Inlet retains the “expenditure-based” credits of the ACES era while the
North Slope tax structure has been replaced with the “production-based” credits of SB21.
If Cook Inlet were converted to a SB21 tax structure (regardless of whether the tax cap was removed),
the reimbursable credits would be limited to the 35% Carried-Forward Annual Loss credit. By eliminating
the 20% capital credit and the 40% well lease expenditure credits, it would reduce the state’s
reimbursable credit liability by $165 million in FY16.
Restore Progressivity at Higher Prices
SB21 is for the most part structured as a flat tax. One or more “tax brackets” could be added to restore a
degree of progressivity at higher prices. One such proposal was introduced as an amendment during the
House floor debate on SB21 bill. This would have added a single “bracket” where only those profits
(production tax value) of greater than $60 / bbl would be subject to an additional 10% on top of the 35%
base tax. This change would have zero impact at prices below about $110 / bbl, but would create an
enhanced profits tax above that point. This would raise roughly $1 billion in additional revenue if oil
reached $150 per barrel.
Separate Accounting
For several years in the late 1970s, Alaska’s corporate income tax for oil and gas companies used a
“separate accounting” method, meaning that Alaska-specific revenues and profits were used as the
basis for the tax. This was in contrast to the worldwide apportionment formula used in the tax for other
corporations, which instead used proportional calculations. This was subject to a major lawsuit, and in
advance of a decision the Hammond administration decided to drop separate accounting and settle the
suit. At the time, the state feared having to refund about $1.8 billion which was the estimated additional
taxes that had been collected in the four years between 1978 and 1981 under separate accounting. In
the end, the former tax regime was upheld at the Supreme Court, but the system was never re-
implemented. In the immediate aftermath of the change, Alaska’s corporate income tax collections
dropped dramatically.
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Department of Revenue White Paper
19. There have been several attempts in the intervening years to reintroduce separate accounting. Analysis
done by Department of Revenue in the mid 2000’s indicated that the effective tax “difference” between
the systems was somewhat less than it was 25 years earlier, due to the changes in the asset base in
Alaska as well as declining production. In 2012 Rep. Paul Seaton introduced HB328. This bill received five
hearings in the House Resources Committee before it eventually stalled. Rep. Seaton introduced a new
version, HB191, in 2015. Although the Department of Revenue’s fiscal note showed an indeterminate
revenue impact from this bill, had separate accounting been in effect for the prior seven years (i.e. 2007
– 2013), the largest oil and gas corporations would have paid approximately $220 million more per year
in corporate income taxes.
Gas Reserves Tax
A natural gas reserves tax was first proposed in a 2006 ballot initiative, which would have raised $1
billion per year via a 3 cents/mcf tax on large proven reserves. In the initiative, the tax would have been
refundable over time from gas production taxes once commercial operations began. Another reserves
tax initiative with improved language was also proposed in 2009 but did not obtain the requisite
signatures to be put on the ballot.
A reserves tax has important precedent in Alaskan history. The legislature in 1975 passed an oil reserves
tax which served as an essential “bridge” revenue source in the years before TAPS was completed. The
taxes were credited back to industry in the early years of North Slope oil production. When considering
a gas reserves tax it is important to also consider the significant dampening effect the liability of a
reserves tax could have on new exploration for both gas and oil.
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20. #4: Non-Oil and Gas Taxes
Alaska has a Corporate Income Tax for non-oil and gas companies, as well as a substantial group of
smaller, primarily excise taxes that have not historically been considered a major component of the
overall revenue picture. In aggregate these generate much of Alaska’s roughly $500 million in annual
“non-oil and gas” revenue. This $500 million, while equaling 10% or less of unrestricted general funds
over most recent years, is closer to 25% of available revenues in FY15 and FY16. Also, all of these taxes
and fees are considered material by the industries they impact, and many also include a substantial
revenue sharing component with municipal governments. They are also less volatile than oil and gas
revenue.
Excise taxes must therefore be part of any comprehensive revenue discussion. The last time Alaska
looked seriously at new revenues, in the early 2000’s, it was in this area that actual changes were made.
This included a doubling of alcoholic beverage taxes in 2002, with an associated diversion of half of
revenues to programs benefiting individuals with alcohol problems. Also during this time period large
increases were made to the cigarette tax plus new taxes were implemented on vehicle rentals and
certain tires.
Although there have been several tax changes made by voter initiative (cruise ship head tax and
gambling tax; marijuana excise tax), there were no legislative-passed tax increases other than changes
to the oil and gas production tax system between 2005 and 2014. In the recently concluded 2015 regular
session, the legislature passed a surcharge of less than 1 cent per gallon on certain refined fuels to fund
the Spill Prevention and Response Division at the Department of Environmental Conservation. This $7.5
million revenue item was the first new or increased tax passed by the legislature in 10 years.
A thumbnail discussion of various options follows. References to specific revenue numbers comes from
the Tax Division’s 2014 Annual Report:
Increases to Existing Taxes
Alcohol Taxes
The alcohol tax is collected from wholesale distributors and is a per-gallon tax with four levels based on
different products: distilled spirits, wine, beer, and beer brewed in-state from small breweries. In
general (with the exception of the in-state breweries), the tax rates are set to be roughly equate to 10
cents per drink and are the highest rates in the US. This excludes the 17 states where government
directly controls the sales of distilled spirits, effectively building their taxes into the price.
Total FY14 revenue was about $40 million. The most recent change was in 2002, when rates were
roughly doubled. At that time, 50% of revenue was diverted to programs that support individuals with
alcohol or drug abuse problems. Currently, about $20 million of Alaska’s alcohol tax revenue supports
programs in the Mental Health budget.
Fisheries Taxes
The state collected $64.2 million between the Fisheries Business Tax and the Fishery Resource Landing
Tax in FY 2014. However, $32 million of these were shared with municipalities, leaving $32.2 million for
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21. the state. Tax rates for fisheries range from 1% to 5% of gross value, with 3% being the most common
rate.
Mining Taxes
Current rates are 0-7% of net income depending the level of net income. The first 3.5 years of income
after production begins for a new mine are exempt from the tax. The first $40,000 of net income is also
exempt. In 2012, new legislation removed sand and gravel from the definition of “mining,” effectively
exempting these operations from the tax. FY 2014 net collections were $23.5 million, and FY 2015
collections are expected to rise to $33.2 million. DOR estimates that if mining license tax rates were
raised one percentage point across the board (thus ranging from 1-8%), the tax would generate $39.4
million total, an increase of $6.2 million. Another option would be to switch from a “net” to a “gross”
value calculation, or to simply reduce the minimum tax threshold.
Motor Fuel Taxes
Alaska’s four motor fuel taxes (highway, marine, jet, and general aviation) together raise about $40
million per year. At 8 cents per gallon, our highway tax is the lowest in the country. The taxes on the
other three fuel types are even lower. Together, about 650 million gallons of fuel are taxed in Alaska per
year. A larger amount, nearly 1 billion gallons, is untaxed due to federal constitutional issues as well as
various exceptions in state law. Each one cent increase to the tax would generate $6.5 million/year.
Tobacco Taxes
At $2/pack, Alaska’s cigarette tax is the 10th
highest in the US. The “other tobacco product” tax is 75% of
the wholesale price. Together these raised $51.9 million in FY 2014. A 50% cigarette tax increase to
$3/pack would raise an additional $24 million/year. A 33% other tobacco tax product increase to 100%
would raise another $3 million.
There is also a major loophole in the current tobacco tax, as so-called “electronic cigarettes” are
currently not subject to the tax. Since e-cigarettes are not a “roll” as defined in current statute, and
since the nicotine in many types is not derived from tobacco, it would require specific legislation to
extend the current tobacco tax to this growing industry. Many states have recently updated their
tobacco statutes to incorporate e-cigarettes.
New or Revived Taxes
Health Care Provider Tax
Alaska is currently the only state in the US that does not levy a health care provider tax. This tax is levied
on hospitals, doctors and other health care providers and the revenue is used to pay for the state’s
share of Medicaid. It allows states to claim a larger share of federal Medicaid funds which can be used to
increase provider reimbursement rates, making it easier for Medicaid recipients to find a provider. In
Alaska, the federal government pays $1.42 for every dollar the state spends on Medicaid. This means
that a new health provider tax would generate $2.42 in total Medicaid spending for every dollar it raises.
Hospitals tend to support these taxes if carefully crafted, because the increased reimbursement rate
more than pays for the tax.
A Vermont study estimated that a 1% tax on providers could raise about $8.3 million per year. Adjusting
this to Alaska’s population, we estimate that a similar tax could raise about $9.5 million in Alaska. Most
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22. states with provider taxes have rates between 3-6% (there is a 6% safe harbor threshold for the federal
government that holds states harmless for taxes up to this rate, so a provider tax should not exceed
this). A 6% tax would raise about $57 million, which in turn would generate about $80.9 million in
federal matching funds. Thus, a 6% provider tax in Alaska could potentially lead to a $137.9 million
increase in Medicaid funding in the state.
Another alternative would be to use the provider tax to finance the state’s participation in the federal
Medicaid expansion. The state’s share of the Medicaid expansion in 2017, the first year of a reduced
federal contribution, could be paid for by a 1.5% provider tax that would be among the lowest in the
nation.
Business License Tax/Gross Receipts
The Business License Tax (AS 43.70), was originally passed in 1949. It consisted of a $25 license fee plus
0.5% of gross receipts over $20,000 plus 0.25% of gross receipts over $50,000. After it was repealed in
1979, the licensing authority was transferred to the Department of Commerce and Economic
Development. Currently the business license is an annual flat fee of $50. A revived business license tax
could be an alternative mechanism to reach the revenues of so-called “pass through entities” like S-
corporations and partnerships, which do not pay the state’s corporate income tax. The other primary
way to reach these companies is via the personal income tax.
In other states, this sort of tax is called a “Gross Receipts Tax” or sometimes a “Commercial Activity
Tax.” Preliminary modeling indicates that restoring this tax at the historic levels would raise about $60
million per year.
Coin Operated Devices Tax
This historic tax (AS 43.35), originally passed in 1941, for many years collected 12.5% of the gross
receipts on coin-operated machines. It was repealed in 1999.
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23. #5: New Statewide Taxes
Alaska earned statehood on the idea that it would be self-sustaining on revenues it could earn from
resource development. To date Alaska has used the revenues from a single resource, the largest oil
fields on the North Slope, to support nearly the entirety of state government as well as to keep taxes
low on all other industries and to subsidize and attract others. As the state seeks to further grow and
diversify its economy, broad based statewide taxes necessarily become the link between economic
growth and the revenues necessary for government services to support that growth.
Income Tax- Traditional
Approximately 43 states currently collect a tax on individual and family income. Alaska had an income
tax for many years, although it was repealed in 1981 at the height of the Prudhoe Bay oil boom. Income
taxes are broad based, touching nearly everyone in the state. They could also have the advantage of
taxing income earned in Alaska by non-residents.
The most straightforward way to implement an income tax would be to piggyback on the federal tax
return. The tax could be based on either a percentage of adjusted gross income, or as a percentage of
federal tax liability. The difference is one of emphasis and progressivity: since the federal system is
relatively progressive, a tax based on a straight percentage of federal liability would provide the
identical level of progressivity to the federal system. In contrast, basing a system on adjusted gross
income could provide a more “flat” tax that would impact all income levels at a similar level. Some
states use adjusted gross income but provide some form of state progressivity via tax brackets for
different income levels.
Based upon the Department of Revenue’s income tax model, for each 1% of federal tax liability, about
$35 million would have been raised in 2016 with gradual increases thereafter based on growth and
inflation in the underlying economy. A tax based on adjusted gross income would raise about $240
million per 1% of adjusted gross income. Taxing the Alaskan income of out of state workers would
increase either of these by up to 10%.
Income Tax- Capital Gains Surtax
Some states have implemented separate capital gains taxes, based again on the federal tax return.
Currently, federal capital gains are taxed at only 15% whereas the top marginal tax rate is nearly 40%. A
capital gains surtax adds another element of progressivity and helps reach income that many feel is
currently under taxed. Based on the Department of Revenue’s income tax model, a 10% capital gains
surtax would raise about $84 million in 2016.
Rep. Paul Seaton’s HB182 was introduced in 2015. It includes a tax of 15% of federal liability, paired with
a 10% capital gains surtax and language that specifically targets out of state residents. The bill would
indirectly tax the earnings of S-corporations. According to the Department of Revenue’s fiscal note, it
would generate an estimated $655 million in its first full year.
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24. Income Tax- Out of State Partnership Income
There is ongoing concern with Alaska’s State Corporate Income Tax (SCIT) which is limited to taxing the
income of traditional corporations. Many have discussed the need to develop a mechanism to tax so-
called “S-corps,” who are not subject to the SCIT.
Receiving revenue from S-corps isn’t just a simple legislative change. By the nature of S Corps, they don’t
actually retain their earnings which would then be subject to taxation. Instead, all of their earnings are
treated as income by their owners, using the same distribution method (federal schedule K-1) as some
partnerships and LLCs.
Therefore, Alaska would need to tax the income of S-corps operating in Alaska directly. Alternatively, a
state personal income tax could be written to tax the income from partnership, S-corp, LLC, and sole
proprietor distributions. The most recent Department of Revenue study, in 2001, estimated that taxing
S-corps could generate $29 million in annual revenue.
Payroll Tax / Former School Tax
For many years, Alaska had a small, flat rate payroll tax for schools until it was repealed in 1980. Sen.
Click Bishop has suggested restoring a form of this, as a payroll tax on a worker’s first two paychecks,
which would maximize proportional revenue from Outside workers. Late in the 2015 session he
introduced this concept as SB97. The tax would be scaled to income level and, as written, be a maximum
of $500 per person. Although the Department of Revenue has not modeled it in detail, our preliminary
estimates is that it would likely raise about $100 million per year.
Pay-as-You-Go Tax
Many countries have a simple form of income tax which is withheld and paid by the employer. The tax is
similar to the payroll tax discussed above but is withheld from every paycheck. It is similar to the State’s
current unemployment insurance tax in that it is a multi-tiered rate based on wages. At the end of the
year the individual receives a letter from the taxing authority stating how much they paid in tax, but
there is no return to file. A pay-as-you-go tax would require far fewer resources to administer than a
traditional income tax. Because of the narrower tax base made up of employers, it would also likely
increase compliance. However, the down sides are that the tax is not progressive, it is difficult to tax the
self-employed, and it does not tax unearned income.
Sales Tax
Of Alaska’s 164 incorporated municipalities, 107 currently collect a sales tax, ranging from 1% to 7%.
Some of these municipalities have expressed concern over the impacts of adding a state sales tax on top
of their existing tax. Conversely, some smaller jurisdictions lacking the resources to implement an
independent sales tax have expressed interest in piggybacking a local sales tax onto a statewide sales
tax.
A statewide sales tax of 3% would raise $418 million. If food were exempted, which is done in 39 states,
it would reduce the revenue to $358 million. In a state with widely varying cost of living such as Alaska,
one major concern with a statewide sales tax would be that it would be quite regressive, placing a
disproportionate share of the burden of revenue on rural Alaska and other high-cost communities.
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25. State Property Tax
The total value of property assessed in Alaska is $108.6 billion, including oil and gas property. A
statewide 10 mil (1% tax) would therefore generate a little over $1 billion. However, a state property tax
already exists for oil and gas property; a 10 mil tax on only non-oil and gas property would generate
closer to $800 million per year.
One option that has been proposed would be to set a state tax at 2.65 mils to replace the Required Local
Contribution education funding, depending on the ultimate outcome of the Ketchikan lawsuit. That
would raise about $280 million per year.
Implementing a statewide property tax would be relatively simple in the incorporated areas of the state
that currently assess real and personal property. However a large portion of the state remains
unincorporated and the data on property ownership and value would have to be developed before the
tax could be collected.
Hybrid / Permanent Fund Linked Tax
A “hybrid” system could be derived that combines a payroll tax with a dividend cap. For example, the
non-resident would directly pay the tax of, say, $500 while the Alaskan would pay it indirectly via a
reduction from the “official calculated” dividend amount down to a specified “capped” amount.
An even simpler mechanism, which was proposed by former Governor Hammond in the later years of
his life, was to implement an income tax and simply cap the tax at the amount of the permanent fund
dividend, so that the amount of the tax would never be more than the dividends earned in the same
year by the adults in the household.
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26. #6: Non Tax Measures & Miscellaneous
Various other proposals have been suggested as a way of reducing the fiscal shortfall. Several are listed
here.
Medicaid Expansion
Accepting Medicaid Expansion, with the federal funds that come with it, has been shown to bring up to
$146 million/year into Alaska’s economy. The direct budgetary estimates are about $8 million in
reduced expenditures and additional tax revenue.
Municipal Revenue Sharing
The default appropriation to replenish the Municipal Revenue Sharing fund is $60 million. In FY 15 the
legislature appropriated $52 million. The program is structured to distribute 1/3 of the find balance each
year, thus providing some cushion to municipalities in times of shortfall. If zero dollars are appropriated
for FY 16, it would mean FY 16 revenue sharing of $57 million (based on a current balance of $172
million) and FY 17 payments of about $38 million (based on a remaining value of $115 million).
Capital Re-appropriation
There are substantial prior years’ capital appropriations, many of which are for only a fraction of a
project’s eventual cost. Many of these funds are not yet encumbered, and may not be fully funded for
several years in the current climate. There has been some discussion of targeted re-appropriation
(cancellation) of this funding. This goes against legislative tradition, which has held that money
appropriated in a district stays in that district. Because of this concern, it is important to share the
impact throughout the state. This could be accomplished by a targeted list of projects where the
administration says it will suspend any spending or encumbering of funds, paired with a bill that would
delete the prior appropriations.
Section 41(d) of this year’s capital budget, SB26, begins this process, which could be an important
component of the “government” leg of the stool.
Indirect Expenditures
The reports mandated in 2014 by HB 306 (Rep. Steve Thompson) documented a large number of tax
exemptions, credits, and other tax avoidance mechanisms imbedded in the current statutes. These
range in annual cost from just a few hundred dollars to hundreds of thousands and more. Follow-up
legislation introduced in 2015 attempts to reduce some of the most obvious “low hanging fruit” of these
indirect expenditures. A more comprehensive program to eliminate these items could, in the aggregate,
save the state several million dollars per year.
Lottery
Lotteries have a long history of being used as a tool of government finance in our country. Jamestown,
the first British colony in the New World, was funded in part by lottery proceeds. Lotteries helped fund
the Colonial Army, provided start-up money for hundreds of institutions including Harvard, Princeton,
and Yale universities, and offered a method for businesses and governments to raise capital before the
U.S. developed a sophisticated banking system. However, during the 1800’s lottery corruption grew and
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27. the criminal elements began to outweigh the benefit of lotteries. In 1905 the last public lottery,
sponsored by the State of Louisiana, was shut down, ending an important chapter in American history
After nearly 60 years, a new era of government-sponsored lotteries began in 1963 when New
Hampshire authorized a state lottery. As of 2013, Alaska was one of only 6 states that do not have state
lotteries. Of the other states, two have significant casino gaming (Mississippi and Nevada) and three
have a strong history of religious or moral opposition to any form of gambling (Utah, Hawaii and
Alabama). While it was once the norm, Alaska is now clearly in the minority of states by not having a
state lottery.
Generally, a state-sponsored entity oversees the lottery (in 2004, 65% of lotteries were administered by
a lottery commission or board, 15% were administered by a lottery corporation, and 20% were
administered directly by a state agency), but lottery sales are made at private retail locations such as
grocery stores, convenience stores and newsstands. Major expenses for the lottery agency include prize
payouts, retailer commissions, marketing, and other administrative and operational expenses. Even with
these expenses, every lottery in the U.S. was profitable in the 2013 fiscal year. Lottery income in FY 2013
varied from $8.3 million in North Dakota to $3.1 billion in New York. On a per capita basis, income
ranged from $11.5 per capita in Montana to $360.4 per person in Rhode Island.
Given the geographical distribution of Alaska’s population, and the relatively small population base, it
could be argued that income would come in on the low end of the range in other states. However, this
may be offset by the lack of access to other gaming opportunities, such as casinos and card rooms.
The most recent proposal for a state lottery in Alaska came in 2003, when Senator Robin Taylor, a
Wrangell Republican, introduced SB178. Sen. Taylor proposed to create a corporation within the
Department of Revenue that would oversee a state lottery, with a board of directors that set policies
and regulations. Revenue would have been directed to a special account to support education in the
state. This legislation could provide a starting point for future lottery proposals.
An Alaska lottery would probably offer games that fit into one or more of three categories:
• Instant ticket lotteries: Players would purchase preprinted scratch-off or pull-tab tickets, similar
to those currently used in Alaska’s charitable gaming activities. Raffle-type drawing would also
be classified under this category.
• Numbers lotteries: This is the type of game most commonly associated with state lotteries.
Players pick from a set of numbers, and win if they match enough numbers to those picked in a
subsequent official drawing. “Pick 3”, “Lotto”, “MegaMillions” and “PowerBall” are all examples.
Often, these are pooled among multiple states, creating potentially much larger jackpots.
• Video lotteries: This type of lottery uses a “video lottery terminal” (VLT), similar to a slot
machine, to play electronic games with instant payout.
To estimate how much revenue an Alaska lottery could bring in, the Department of Revenue looked at
statistics from the 10 lowest population states. We looked closely at Wyoming, the most recent entrant
into the lottery market which expects to earn $13 to $17 million in its first year of operation. It opened
August 2014 with Powerball and Mega Millions and is adding two Wyoming-specific games this year.
Wyoming’s model may be a good model to emulate. Alaska could start off with Powerball and Mega
Millions and then create its own unique Alaska lottery game.
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28. Although the per capita income of the 10 least populated states ranged from $11.45 to over $360, using
the lowest per capita income of North Dakota of $11.45 (which is only able to offer multistate draw
games), Alaska could generate annual proceeds of around $8 million. The addition of video lottery
terminals could have a significant impact on the amount of income that could be generated for the
State.
On the other hand, an expansion of gaming through any sort of lottery, while beneficial to state
revenue, would almost certainly have some negative impact on current gaming activities such as pull
tabs and raffles. These current activities support numerous nonprofits in the state; any changes would
likely be opposed by the entities that benefit from the current system.
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