Section 3 Present System Notes

Present System. The present system for funding state government is described in Section 3. Present Fiscal System.

Oil Revenue. This is all of the money the state derives from the sale of oil and related taxation, except what is constitutionally dedicated (mainly to the Permanent Fund). It is available for general purpose spending. [As presented here, oil revenue decreases steadily. That's what it's officially projected to do. In reality, however, it fluctuates substantially. And the detrimental effects of the fluctuation cannot be shown here, because the times and extent of it are unpredictable.]

Other Revenue. This is the rest of the revenue that is available for general purpose spending.

Of course, Other Revenue does not include any revenue from the Permanent Fund. Part of that fund's investment income is spent on one governmental function, wealth distribution. Another part of the investment income is added to the fund's principal to account for inflation. The rest is either added to the principal or remains in the fund as accumulated income, which is principal, virtually, and is invested as such.

Spend. In FY 2007, the assumed budget (Table 2) is in the amount that has been appropriated. After 2007, it increases annually at the rate indicated in Table 2. In any fiscal year in which Total Revenue and Reserve Funds, combined, are insufficient to fund spending in the amount budgeted, Spend is limited to Total Revenue and the balance of Reserve Funds.

Revenue Surplus/Deficit. A surplus/deficit is the positive/negative difference between Total Revenue and Spend. A deficit is covered by reserves drawn from Reserve Funds. A surplus is added to Reserve Funds.