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| C | Alaska |
• Population (rank): 670,053 (47)
• Average per capita income (rank): $26,919 (13)
• Total state spending (rank): $8,599,090,000 (39)
• Spending per capita (rank): $12,833 (1)
• Governor: Sarah Palin (R)
• First elected: 11/2006
• Senate: 20 members: 9 D, 11 R
• Term limits: None
• House: 40 members: 17 D, 23 R
• Term limits: None
We aren't poor," says Jeff Ottesen, a director in Alaska's Department of Transportation and Public Facilities. "But we act poor." His particular worry is underfunded maintenance for the state's roads and buildings, but he might as well speak for nearly every agency in Alaska.
Recently, for example, Governor Sarah Palin announced a plan to salt away a two-year $7.1 billion surplus produced by high-priced oil. Yet, not long ago, the Division of Finance had to cancel a plan to procure a much needed new payroll system because it was short a few million dollars. The present payroll system has a backlog of more than 20 man-years of requested fixes, and the time isn't far away when the system will simply be unredeemable.
There's a justification for these fiscal contradictions. Since most of Alaska's current largess comes from oil revenue, there's no guarantee that it will continue flowing in the future. "If we were a person, we'd be wealthy; but in terms of income, we're shaky," explains Legislative Fiscal Analyst David Teal. Some observers of Alaska's fiscal picture may wonder why the state has any concerns at all, given the enormous pot of money it has set aside — $40 billion or so — in the Alaska Permanent Fund. But the reality is that the state can't touch most of this money, as dividends from the fund flow to citizens and have become a politically sacred promise.
In Alaska, information works about the same way as money — agencies have a lot, but they often lack the capacity to use it. The state has gone from using old-fashioned output measures, such as the number of people trained, to using robust outcome measures detailing more-important factors, such as how many trainees were hired. But the next step — linking the performance numbers to the budget — hasn't been taken yet. "Our performance measures are on the Web but not linked to one another nor to the budget dollars," says Jo Ellen Hanrahan, of the Office of Management and Budget. If the state can improve that link the way it has improved the measures themselves, the results could be impressive.
Workforce planning is another fallow field. There is a strong template for agency workforce plans, but only one agency currently takes advantage of it. As for the others, "they are so busy trying to get their daily work done, they don't realize how important it is," explains Nicki Neal, director of the state personnel division. The executive branch is well aware of the need to develop this expertise in the future. The governor recently formed a working group that will examine recruitment and retention tactics in order to address the declining number and quality of applicants — almost 40 percent of 2006 state employee recruitments found fewer than five strong applicants — as well as a rising tide of retirements.
The esprit de corps of state workers plummeted after it was discovered that a 2006 change in the oil tax was pushed by several state legislators who were receiving cash from an oil company that stood to benefit from it. Three legislators have been convicted, and lawmakers went back and increased the tax in November 2007. Still, the damage will take considerable time to overcome. Even with the corruption unearthed and the reform efforts being undertaken by the present administration, Alaska continues to face a grave problem in the mentality that guides its spending decisions. "The fake sound bite of cutting the budget drives policy here," groans state Representative Les Gara, "but the money is still being spent unwisely."
That seems especially true when it comes to infrastructure. In 2007, the legislature added $200 million in supplemental projects to the $734 million capital budget. Very little went to a deferred-maintenance backlog that exceeds $1 billion for state buildings alone. A Department of Transportation and Public Facilities official says, "I don't have a clue how they prioritize."
For additional data and analysis, go to pewcenteronthestates.org/gpp.