THE TRUTH ABOUT THE FISCAL GAP

• It has decreased about $500 million since the "Balanced Budget Plan" was unveiled

THE TRUTH ABOUT ALTERNATIVE RESOURCES

• The CBR has a balance of more than $2.6 billion
• Other cash equivalent state reserves total about $2.5 billion

THE TRUTH ABOUT BUDGET CUTS:

The FY 2000 budget:

• added approximately 300 new state employees
• increased spending in the Departments of Administration, Corrections, Education, Fish and Game, Health & Social Services, Public Safety, Transportation/Public Facilities and University System

THE TRUTH ABOUT THE BALANCED BUDGET PLAN

• Does the Plan retain the value of the Permanent Fund?

"In real 1999 dollars, the Plan doesn't quite preserve the total Fund's purchasing power in the median expected case, and the principal of the Fund goes down in real value."*

"It [the 5.88 payout rate] is set too high, however, to maintain the real value of the entire Fund - the principal, the current earnings reserve and the new monies added from the Constitutional Budget Reserve"*

• How does the Plan treat inflation proofing?

"by retaining income in the Alaska Income Account where it remains subject to appropriation by the legislature rather than by annually transferring it to principal as is currently the case."* (emphasis added)

"... under the status quo, the annual deposit of the inflation-proofing amount into principal gives greater assurance that that money would in fact be saved."*

• What guarantees are in the Plan?

None. It only gives politicians permission to cut dividends and reduce future Permanent Fund value.

PROJECTED ECONOMIC LOSS TO SELECTED COMMUNITIES IN 2001

• MS EXCEL Worksheet in PC format. (149 K)

# # #

| Top | Senator Halford's Page |