Alaskans told us to go to Juneau and rein in spending, control costs, protect vital services and continue to diligently put the state on a sustainable fiscal path. We're well on our way, and with continued diligence, prudence and wherewithal to keep reducing the budget next year to a level Alaska can afford.
Faced with two years of extremely low oil prices and unprecedented budget deficits, this Legislature brought down the size and scope of government, and did so in two years instead of the proposed three. We've reduced funding for each state department and agency, in some cases pushing departments' funding back to 2002 levels, with the average at 2006 levels.
The total operating budget was reduced more than 21 percent from two years ago — Alaskans told us to reduce the budget and we listened, to the tune of $1.16 billion. The operating budget comes in below the University of Alaska Anchorage's Institute of Social and Economic Research model, which called for $4.5 billion. We're investing $4.26 billion in the operating budget this year and will continue to work toward further reductions without sacrificing critical services.
We were able to give the next Legislature a head start on the fiscal year 2018 budget thanks to key reforms in Medicaid (projected savings of $500 million over eight years), community assistance program funding (more than $200 million over six years) and criminal justice reform ($380 million over the next decade).
It's easy to get lost in the budgeting terms; here is one of the most important to understand: "Unrestricted General Funds," or UGF, are the monies we can invest in services however we'd like.
It is important to pay attention to UGF dollars because the difference between UGF annual revenue and expenditures equals our fiscal gap. The size of the fiscal gap determines how much we have to use from savings or increase in revenue to balance our budget.
With that in mind, here are some budget facts, taken from reports from the nonpartisan legislative finance division:
The UGF operating budget is $4.26 billion, down 16 percent from last year and down 21.4 percent from two years ago. The operating budget comprises two categories:
1. UGF agency operations (formula and nonformula) is $3.88 billion, $621 million less than two years ago, down 5.3 percent from last year and down 13.8 percent from two years ago.
a. Agency operations nonformula (day-to-day state government) is $1.89 billion, $389 million less than two years ago, down 7.1 percent from last year and 17 percent from two years ago.
b. Agency operations formula (programs such as Medicaid) is $1.98 billion, $232.1 million less than two years ago, down 3.5 percent from last year and 10.5 percent from two years ago.
2. UGF statewide operating (programs such as debt service, fund capitalizations and retirement assistance payments) is $384 million.
The total UGF budget, operating and capital, is $4.36 billion — that is how much the Legislature appropriated to pay all the bills next year.
In summary, the Legislature worked to reduce the budget and honor the will of Alaskans who told us to focus on efficiencies first, before even thinking about going to their wallets. We listened. We ratcheted down our budget, paid our bills and passed some historic reform measures, which in any other year would be news in and of itself. Although we've made strides, I do feel Alaskans believe we need to make further reductions.
Despite our fiscal challenges, Alaska is still a great place to live, work and raise a family. We're excited to adjourn this special session soon, so we can return home and hold meaningful dialogue with all of you in our districts.
Rep. Mark Neuman represents House District 8, and serves as the Alaska House Finance Committee co-chair, responsible for writing the House version of the state operating budget. Neuman is in his sixth term representing the Susitna Valley. The views expressed are the author's own.
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