This presentation is to supplement the 3.4.2021 LegFin Presentation to the Senate Finance Committee to analyze the impact of the PFDcuts discussed there on Alaska income & jobs.

1. Impact of Proposed PFDCuts
on Alaska Income & Jobs
Supplement to 3.4.2021 LegFin Presentation to SFIN
March 8, 2021

2. Why a Supplement
1. While LegFin’s 3.4.2021 Presentation to SFIN analyzed the impact on
the overall budget of three sets of proposed PFDcuts, LegFin did not
analyze the impact of those cuts on Alaska families (the so-called
#WhoPays issue) or the impact on the Alaska economy
2. We analyzed the #WhoPays issue in our previous supplement
(“Supplement 1”), “Distributional Impact of Proposed PFDCuts on
Alaska Families by Income Bracket” (3.7.2021)
3. This supplement (“Supplement 2”) analyzes the impact of the
PFDcuts on the Alaska economy (overall income & jobs)

3. Methodology
1. ISER’s March 2016 Report, “Short-Run Economic Impacts of Alaska
Fiscal Options” calculates the impact of various budget balancing
options on overall Alaska income and jobs
2. This analysis uses the data from that report to analyze the impact on
the Alaska economy of PFD cuts for three cases:
a. The reduction from the Statutory PFD to POMV 50/50, $1000 PFD
and $500 PFD (the reductions analyzed by LegFin),
b. The reduction from POMV 50/50 to $1000 and $500 PFDs, and
c. The use of PFD cuts compared to various other balancing
options
3. This analysis focuses on the anticipated FY 22 PFD, calculating the
Statutory and POMV 50/50 PFD’s using data from the APFC’s
January 2021 “History & Projections”

4. Conclusions
1. ISER’s 2016 report concludes that using PFDcuts to balance the
budget (compared to various other types of revenue) “has the
largest adverse impact on the economy per dollar of revenues
raised”
2. This analysis confirms that, finding that PFD reductions at the levels
analyzed in LegFin’s 3.4.2021 Presentation reduces both income and
jobs more than any other revenue option analyzed in the ISER report
3. Consistent with ISER’s 2016 report, the analysis also finds that PFD
cuts have a larger adverse impact on overall Alaska income than
reducing the deficit through an equivalent amount of spending cuts,
but that using spending cuts have a larger adverse impact on jobs