Short Description of Range of Steps to Address

Fiscal ChallengeCliff Groh

Chair, Alaska Common GroundJanuary 7, 2015

Background (or Disclosures)

• Lifelong Alaskan• Helped create Permanent Fund Dividend as legislative assistant in

1982• Author or co-author of four chapters in academic books on

Permanent Fund Dividend• Former Special Assistant to Alaska Commissioner of Revenue• Delegate to Conference of Alaskans in 2004• Lawyer for almost 30 years

Basic List of Steps

• Use up easily spendable savings• Reduce spending• Borrow• Raise revenues• Tap into funds not traditionally or mainly used in the regular budget

Easily Spendable Savings

• $3.14 Billion in Statutory Budget Reserve• $10.93 Billion in Constitutional Budget Reserve

Points on Budget

• Alaska is No. 1 per capita in spending among the states

• Three biggest parts (roughly 2/3 of total) are K-12 education, Medicaid, and retirement assistance

• Capital budget only 10 percent of total budget

• Targeted vs. across-the-board cuts—different effects

Question on Borrowing

• How will any money borrowed by the State of Alaska be paid back?

Data Point on Revenues

• Projected deficit in current fiscal year works out to more than $4,500 per Alaskan

• Combined state sales and state income tax per capita averaged $1,812 for U.S. as a whole in 2010

What is the Permanent Fund

for?

Many of most important questions are psychological,

political, and philosphical

Questions to Consider

• How much longer do you intend to live in Alaska?

• What do you think the alternatives are?

• Do the alternatives change over time?

• If the fiscal challenge will force some losses on Alaskans, by what principle(s) should those losses be allocated?