With revenue forecasts as dismal as this year’s have been, the legislature’s passage of a very large budget for fiscal year 2024 (FY 2024) is unfortunate. In this coming fiscal year, legislators plan on spending over $8 billion in state funds on government operations and capital projects (not including Permanent Fund Dividend payments).
In the end, officials plan to spend $8.06 billion in state funds, which includes Undesignated General Funds, Designated General Funds, and “Other” State Funds, but excludes the Permanent Fund Dividend payments. This is $353 million above Alaska Policy Forum’s Responsible Alaska Budget (RAB) of $7.71 billion and 9.7% more than last year’s budget. The RAB represents a strong fiscal rule that sets a maximum budget amount based on the previous year’s budget adjusted for inflation and population growth. Abiding by the RAB limit, $7.71 billion for FY 2024, would have prioritized the needs of Alaskans without excessively growing government.
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Alaska needs to recover from the economic challenges of the last few years, even while continuing to recover from a decade of excessive government spending from 2004 to 2015. More widespread government spending makes the second problem worse while doing nothing to address the first.
On a positive note, policymakers are not expecting to draw any money from the state’s savings accounts. For this, we applaud the legislature.
Rather than showing fiscal restraint during a time when Alaskan families are having to tighten personal budgets, legislators unnecessarily increased the state’s budget. Moving forward, Alaska Policy Forum will continue to call for a Responsible Alaska Budget that grows only by annual population growth and inflation, as well as advising adoption of a meaningful constitutional spending limit, and broader fiscal restraint.
Alaskans deserve fiscal responsibility.
The views expressed here are those of the author.