Performance Details

Department of Revenue

Mission

The mission of the Department of Revenue is to collect, distribute and invest funds for public purposes. Alaska Constitution Article 9; AS 25.27, AS 37, AS 43

Core Services

  • Funds Collection
  • Funds Distribution
  • Funds Investment
  • Safety for Alaskans

Arrow GraphicResults

Core Services
A: Department Result  Details >
A1: Funds Collection  Details >
  • TARGET #1: Conduct five new compliance projects to identify non-filers.
  • TARGET #2: 90% of existing taxpayers file their tax returns and make tax payments timely.
  • TARGET #3: Increase child support collections by 1.0%, net of Permanent Fund Dividend collections.
  • TARGET #4: 1,000 hour increase in audit hours over prior year.
A2: Funds Distribution  Details >
  • TARGET #1: Increase disbursements of child support payments by 0.5%.
  • TARGET #2: Maintain or reduce administrative costs from year to year.
A3: Funds Investment  Details >
  • TARGET #1: For the funds under the fiduciary responsibility of the Commissioner of Revenue, exceed the applicable 1-year target returns.
  • TARGET #3: Formal visit, bond issue update, or updated document template sent or presented to ratings agencies at least four times per year.
  • TARGET #4: 100% of new financings will result in savings.
A4: Safety for Alaskans  Details >
  • TARGET #1: 90% of all complaints received are resolved to the satisfaction of the resident or complainant.

Performance Detail


A: Result - Department Result

A1: Core Service - Funds Collection
    
Target #1: Conduct five new compliance projects to identify non-filers.


Compliance Projects Conducted
Fiscal Year # of Compliance Projects # New Taypayers
FY 2014
15
11
FY 2013
8
62
FY 2012
24
109
FY 2011
68
98
FY 2010
17
87
FY 2009
23
68

Analysis of results and challenges: The Tax Division encourages voluntary compliance as the most effective tool for collecting tax revenues. An important aspect of voluntary compliance is for taxpayers to believe that they are paying about the same amount in taxes as other similarly situated taxpayers. Seeking out and finding new taxpayers and bringing them into compliance assists revenue both in long-term voluntary compliance as well as bringing in the revenues from the new taxpayers. The division does not believe there are any major oil and gas taxpayers not filing, but we are focusing on the tax types that constitute the other 20% of our revenue responsibilities. This target and measure does not include federal or multi-state compliance programs in which we currently participate.

The division conducted 11 compliance projects in FY2014. Compliance projects include analyzing databases of other state, federal and local agencies to ensure that a person engaged in a taxable activity is filing required tax returns, as well as conducting taxpayer outreach and education through attendance at industry meetings and conferences.
    
Target #2: 90% of existing taxpayers file their tax returns and make tax payments timely.

Methodology: This measure was added in FY2009.

Taxpayers Filing and Paying Taxes Timely
Fiscal Year % of Timely Filers
FY 2014
98.5%
FY 2013
98.5%
FY 2012
96.1%
FY 2011
98.5%
FY 2010
95.0%
FY 2009
96.1%

Analysis of results and challenges: The Tax Divisionís primary function is to encourage voluntary compliance by all taxpayers across all tax programs. This is achieved in a variety of ways, i.e. taxpayer education and outreach programs, compliance activities where we actively look for non-filers, and collection activities. Taxpayers are more apt to voluntarily comply if they believe that everyone else is paying their fair share and the Division makes it relatively easy to file returns and pay taxes. As such, the most effective way to measure our performance is to look at the percentage of known taxpayers who timely file their returns and pay their taxes.

During the last few years, the Division has focused on making it easier for taxpayers to file returns and pay taxes due with an online payment system. We have had great success with this system and believe it is a factor in our ability to achieve this performance goal. At the end of FY2014 the Division introduced an improved online payment system for corporate income and excise taxpayers to file returns online. The new online services are part of the Revenue Management System the Tax Division has been developing since FY2013. The Division is currently developing the Revenue Management System for oil and gas property and production taxes which is scheduled to be implemented in FY2015. The Division expects improved compliance due to the ease of filing and paying online. Although this measure looks specifically at known taxpayers, it is important for the Division to continually update its existing taxpayers on changes to tax statutes and regulations while also looking for non-filers. We will strive to retain a 90% or better level of compliance by existing taxpayers in future years.
    
Target #3: Increase child support collections by 1.0%, net of Permanent Fund Dividend collections.


Percent Change in Total Child Support Collections for a Fiscal Year
Fiscal Year % Change
FY 2014
0.22%
FY 2013
-2.20%
FY 2012
4.22%
FY 2011
3.53%
FY 2010
-0.08%
FY 2009
-0.08%
FY 2008
3.25%
FY 2007
3.66%

Analysis of results and challenges: FY2014 collections net of Permanent Fund Dividends (PFDs) increased by .222% over FY2013. Collections in all categories (including PFDs) increased .3% in FY2014.

Continued high staff turnover has resulted in a lack of experience among front line staff, with more than 42% of the front line staff having less than 1.5 years in their current jobs. Staff turnover this past year was 42.3%.

The division exceeded last yearís target of 1% and the target for the next fiscal year is 1%.
    
Target #4: 1,000 hour increase in audit hours over prior year.


Change in Audit Hours over Prior Year
Fiscal Year # of Hours
FY 2013
-4,957
FY 2012
1,006
FY 2011
-3,202
FY 2010
3,742
FY 2009
8,102

Analysis of results and challenges: Although voluntary compliance remains our best tool for effective tax collection, that voluntary effort is enhanced by an audit presence, and therefore, we need to increase our audit numbers.

In FY2013, the Division began implementing an integrated tax revenue management system. In order to ensure that implementation is successful, the Division deliberately cut back on the number of audits conducted and diverted those resources to the implementation of the new system. Full implementation of the system will take approximately 3 years and the Division expects that the number of new audits and the number of audit hours will continue to decrease over previous years until the system is fully operational. The Production Audit Group remains current on all oil and gas productions audits.

A2: Core Service - Funds Distribution
    
Target #1: Increase disbursements of child support payments by 0.5%.


Disbursements of Child Support Payments
Fiscal Year % of Change
FY 2014
-0.04%
FY 2013
-4.20%
FY 2012
3.85%
FY 2011
2.94%
FY 2010
-10.03%
FY 2009
8.72%
FY 2008
5.55%
FY 2007
4.85%

Analysis of results and challenges: This measure works with the amount of collections received in the fiscal year; if collections have increased then disbursements should also increase. This measure also works in conjunction with the "money on hold" measure (see CSSD strategy A2, measure #2); if there is less money on hold then disbursements should also increase.

Overall collections increased by .3% while disbursements decreased only .04%

As the economy continues to improve, the target will be an increase of 0.5% for the current year and will be reevaluated again next year.
    
Target #2: Maintain or reduce administrative costs from year to year.

Methodology: Calendar/dividend year is used for PFD application and payment statistics. Appropriations are based on state fiscal year and become effective on July 1 of the dividend year shown.
*Total PFD appropriation includes funding for fiscal notes, prior year supplementals, and new capital appropriations.
**Number of applications received by PFDD at time of dividend calculation.


Estimated Cost per Dividend Paid
Fiscal Year Dividend Year Total PFD Appropriation* #Applications Received** Estimated # PFD's Paid Estimated Cost Per PFD
FY 2014
2013
8,290,900
672,951
640,249
$12.95
FY 2013
2012
$8,221,000
677,733
646,805
$12.71
FY 2012
2011
$8,310,100
676,148
647,549
$12.83
FY 2011
2010
$8,634,800
668,214
641,595
$13.46
FY 2010
2009
$7,539,900
657,804
628,499
$12.00
FY 2009
2008
$7,910,300
641,291
610,768
$12.95

Analysis of results and challenges: The Division was successful in operating the PFD program with only seeing a nominal increase in the amount per dividend. Although the overall number of applicants slightly decreased, the costs associated with other Division services to prior and future applicants remain constant.
    
Target #3: Increase Senior Housing units by 5%


Senior Housing Units
Fiscal Year New Senior Units Total Senior Units % Change
FY 2014
64
1142
5.93%
FY 2013
94
1078
9.55%
FY 2012
20
984
2.07%
FY 2011
58
964
6.40%
FY 2010
30
906
3.42%
FY 2009
45
876
5.42%
FY 2008
53
831
6.81%
FY 2007
48
778
6.58%
FY 2006
42
730
6.10%
FY 2005
25
688
3.77%
FY 2004
64
663
10.68%
FY 2003
144
599
31.65%
FY 2002
88
455
23.98%
FY 2001
24
367
7.00%

Analysis of results and challenges: The recent unit production is a function award criteria modifications made by AHFC since 2010 for rental development subsidies and match funding included in projects funded. While development costs remain high, rating criteria revision have reduced cost escalation trends in funded projects and increased the incentives for leverage / match funding included proposed developments. Although program funding has remained flat in recent years and historical match sources have been reduced, the unit production goal was realized by leveraging the incentives used in the competitive allocation process where $3+ in subsidy is typically requested for every $1 available.

Although AHFC provides mortgage financing for assisted living facilities, those developments report beds rather than units; consequently, AHFC mortgages to assisted living properties are excluded from these ďunitĒ data. AHFC's annual Capital budget appropriation is responsible for 93% of the units added this year. The gap between the need and what is developed grows each year. Senior and special needs housing remains a high priority for the Corporation.

    
Target #4: Increase Multi-Family units by 3%


Multi-Family Units
Year New Units Total Units % Change
2014
305
16,213
1.91%
2013
403
15,908
2.59%
2012
537
15,505
3.58%
2011
262
14,968
1.78%
2010
94
14,706
0.64%
2009
658
14,612
4.72%
2008
547
13,954
4.08%
2007
437
13,407
3.37%
2006
839
12,970
6.92%
2005
1,067
12,131
9.64%
2004
1,491
11,064
15.58%
2003
938
9,573
10.99%
2002
748
8,625
9.36%
2001
2,897
7,887
58.06%
2000
1,438
4,990
40.00%

Analysis of results and challenges: The change in unit production from FY13 is a function of rate competitiveness, development costs and flat funding. AHFC remains challenged by the federal governmentís access to less expensive capital through Fannie Mae and Freddie Mac, and increased warehousing of multifamily loans by large, national lenders. AHFCís programs offer advantages, such as assumability in a rising interest rate environment and longer terms that may increase production in the upcoming fiscal year.

Multi-family housing activity is subject to interest rate fluctuations, local economic conditions and other unpredictable market influences Ė including rehabilitation activities utilizing AHFC funds which are omitted from these data by methodology. Affordable rental housing remains in demand and benefits markets by freeing proportional household income to be spent in the community. However, new construction faces marginal feasibility due to the spread of achievable rents and rents needed to supporting development costs. Unit production will remain a challenge due to high development costs, flat funding and reductions in match funding available for AHFC funded projects.

A3: Core Service - Funds Investment
    
Target #1: For the funds under the fiduciary responsibility of the Commissioner of Revenue, exceed the applicable 1-year target returns.

Methodology: FY2014 one-year return data is for the period 7/1/2013 through 6/30/2014.

One-year Return Data for Funds Managed by the Treasury Division
Fiscal Year Fund Actual Return Target Return
FY 2014
Gen Fund/Other Non-segregated Fu
.57%
.38%
FY 2014
Public School Trust Fund
12.50%
12.62%
FY 2014
Int'l Airports Revenue Fund
.57%
.38%
FY 2014
Const Budg Resv Fund-Main Acc
1.45%
1.35%
FY 2014
Const Budg Resv Fund- Sub Acc
15.88%
15.88%
FY 2014
Retirement Hlth Ins Fund-LongTer
11.55%
11.58%
FY 2014
Retirement Hlth Ins Fund- Maj Me
.26%
.05%
FY 2014
Power Cost Equalization Fund
20.72%
20.44%
FY 2014
Int'l Airports Development Fund
.59%
.38%

Analysis of results and challenges: A combination of investments that is expected to produce the highest investment return for a given amount of risk is known as a "point on the efficient frontier." Each fiduciary for a fund reviews points on the efficient frontier and selects the combination of investments consistent with their appetite for risk and return of the fund. This selection is known as the target asset allocation. Target returns assume the total rate of return of passively managed indexes invested in the same proportions as the target asset allocation. A fundís investment return will differ from its target return if its asset allocation differs from the target asset allocation or if the returns of the underlying investments differ from those of the passively managed indexes.
    
Target #2: A long-term 5% real rate of return


Analysis of results and challenges: The Alaska Permanent Fundís long-term real rate of return for the period FY2005 Ė FY2014 was 4.6%. This performance period includes the challenging markets of 2008 Ė 2009. The Fund's annualized real return for 30.5 years, ended June 30, 2014, was 9.0%.

The Permanent Fund recorded another year of positive performance, up 15.5 percent for fiscal year 2014, ending the year with a value of $51.2 billion. This is the first time that the Fund has ended a fiscal year above $50 billion, and is a $6.3 billion increase over the closing value for the prior fiscal year. The Fundís return trailed the composite benchmark return of 15.7 percent, a result of taking on less risk in the Fundís investments than this benchmark and other public funds.

The Board of Trustees strategically allocates the Fund among stocks, bonds, real estate, and alternative investments. Different types of assets are influenced differently by factors such as the economic cycle, interest rates, inflation and fiscal policy. This creates a mix of asset types whose returns move out of sync with one another, moderates the Fundís total volatility, and increases the possibility of achieving a positive return.

All of the Permanent Fundís asset classes produced positive returns for the fiscal year, from 5 percent gains for the bond portfolio, to almost 30 percent returns on the Fundís U.S. stock holdings. While it does happen at times, it is not usual for all of the Fundís asset classes to be in positive territory, and it certainly contributed to the strong total return for fiscal year 2014.

    
Target #3: Formal visit, bond issue update, or updated document template sent or presented to ratings agencies at least four times per year.


Updates Provided to Ratings Agencies
Fiscal Year # of Updates
FY 2014
5
FY 2013
4
FY 2012
4
FY 2011
4
FY 2010
5
FY 2009
4
FY 2008
4
    
Target #4: 100% of new financings will result in savings.


New Financings That Resulted in Savings
Fiscal Year Percent Aggregated Savings
FY 2014
100%
$12.7 million
FY 2013
100%
$19.6 million
FY 2012
100%
$17.2 million
FY 2011
100%
$13.6 million
FY 2010
100%
$9.6 million
FY 2009
100%
n/a
FY 2008
100%
n/a

Analysis of results and challenges: In each fiscal year shown all communities that borrowed funds through the Bond Bank are projected to be paying less debt service (realized savings) than they otherwise might have using other means of financing their project.

A4: Core Service - Safety for Alaskans
    
Target #1: 90% of all complaints received are resolved to the satisfaction of the resident or complainant.


Complaints Resolved to Satisfaction or Partial Satisfaction of Complainant
Fiscal Year Complaints Received % Resolved
FY 2014
1264
90%
FY 2013
1319
93%
FY 2012
1149
81%
FY 2011
711
55%
FY 2010
305
54%
FY 2009
337
32%

Analysis of results and challenges: In FY2014 this target was met. Only 1% of cases were not resolved to the satisfaction of the complainant or resident and 9% were either referred to another agency, withdrawn or required no action.

 

Current as of September 23, 2014