Understanding Alaska State Finances: What Citizens Want to Know and How to Convey that Information Effectively

Abstract

Fiscal policy is a major dilemma for this state. State oil revenues have been declining since 1982. Despite cuts in the state’s general fund spending--down from a high of $2.9 billion in FY1982 to $2.5 billion in FY2002--the state budget has been in deficit eight of the last ten years. The FY 2002 deficit constituted nearly one third of the state general fund budget.

At the current rate, the Constitutional Budget Reserve—the savings account which is being drawn down to cover the deficit—will be exhausted in about two years. Political opinion is so fragmented on the question of what to do that the legislature has been unable to forge a fiscal plan to address the issue. Indeed, the very nature of the problem is contested. Results from a state wide fiscal opinion survey last year (Moore, 2001) suggest that voter attitudes are a major factor in the current policy impasse. While 80 percent feel that some kind of fiscal plan is needed, only one third are very likely to support some kind of plan involving taxes and permanent fund earnings, another one third somewhat likely to support such a plan, and one third not very or not at all likely. Analysis of the data shows that more informed voters, with a more accurate understanding of some basic facts about Alaska’s fiscal structure, are more likely to support a plan involving taxes and permanent fund earnings.