Posted on 12/11/2014 6:07:51 AM PST by thackney
Slumping oil prices have helped push Alaska’s potential budget deficit this year to $3.5 billion — an increase of $2.1 billion from what lawmakers expected in April.
The price of oil, forecast at $105 a barrel in the state’s spring revenue forecast, is now expected to average about $76 a barrel for the fiscal year that ends June 30. The price is forecast to dip even lower, to $66 a barrel, during fiscal 2016 before rebounding.
The average price last fiscal year was $107 a barrel, according to the fall revenue forecast released Wednesday.
The forecast expects unrestricted general fund revenue of $2.6 billion this year, down from $5.4 billion in 2014
Choking the Golden Goose is far too normal in Alaskan History. The last time it was done, work slowed while it boomed in the lower 48.
Falling oil prices, revenue forecast paint gloomy picture for Alaska
http://www.adn.com/article/20141210/falling-oil-prices-revenue-forecast-paint-gloomy-picture-alaska
In 2014, production sat at an average of 531,000 barrels per day. In fiscal year 2015, that number is expected to drop to 509,000 barrels, before climbing back up to 534,000 barrels by 2017. But that small gain may be short-lived; the report estimates that production will drop again in 2018 to an average of 503,000 barrels per day.
The state received a total of $17.2 billion in the fiscal year that ended last summer, the second highest in history. For the current fiscal year, the state expects a drop to $10.1 billion, and $9.9 billion in fiscal year 2016.
Unrestricted petroleum revenue is now expected to drop from $4.7 billion in the last fiscal year to $2 billion this fiscal year and $1.6 billion in the fiscal year that starts next July. The oil revenue drop from last fiscal year to this year is expected to be 58 percent.
The biggest drop is expected in the production tax, which totaled $2.6 billion last fiscal year and is expected to be nearly 90 percent lower in fiscal year 2016, at $308 million. The decline is largely a function of lower prices and higher expenses under a net profits system, not the change in oil taxes from the previous structure, known as Alaska’s Clear and Equitable Share, to the new structure, most commonly known as SB 21.
Ms. Palin..Ms. Palin....White courtesy phone please...
Yo, Alaska, cut everything back to where it was before oil prices began to rise.
HA! Riiiiiight.
That is how they missed out on the past oil boom.
So did the AK state government plan for rainy days or did they spend every last penny during the good times
Wow, for a state with a population of less than 750,000 people, that’s a MASSIVE deficit. The Obama regime’s (and also going back to Billy Clinton’s veto of ANWR drilling legislation) refusal to allow drilling at ANWR has contributed to this problem.
Because their revenue isn't based upon the workings of the people, almost entirely upon taxes on a single industry, oil.
People learn to survive & thrive oblivious to the political/economic climate; especially in Alaska.
“No one wants to pay high prices for gasoline, but at the same time we want to fund our roads and schools and opportunities for young people,” Gara said. Alaskans, especially those in remote areas, pay some of the highest prices in the country for basic goods, such as milk or gasoline. And before oil prices jumped to record high levels over the past four years, Alaska was running far behind on maintenance projects and provided little education aid for its residents.
“While low oil prices are very good for consumers whether in rural Alaska where people rely on diesel fuel or across the country, it is terrible for finding ways to fund disadvantaged kids, foster youth programs, or pre-kindergarten education,” said Gara. “So it’s a mixed bag for Alaskans.”
The new governor Walker has said he would review several controversial expensive projects such as the Knik Arm Bridge, Juneau Access, and Susitna Dam. He also favors taking federal money for Medicaid, which his predecessor opposed.
I thought I read that they were literally mailing checks to people because of the money made from oil production.
Too bad the state didn’t live well below their means, and stockpile away a huge pile of loot.
The state has built up three different rainy day funds — two of which are dedicated to covering deficits in lean years and the third a sacrosanct $51 billion Permanent Fund, which every year writes checks to every person living in Alaska. On Oct. 2, payments of $1,884 each were paid out. The wisdom of building up such funds was supposed to make Alaska look more like Norway, which has a huge oil-financed investment fund, and less like Venezuela.
However, the Permanent Fund is not supposed to be touched to fill budget gaps; it is supposed to help Alaskan families as production in Prudhoe Bay declines. And the two rainy day funds are running a little dry. The Constitutional Budget Reserve was worth $11.8 billion on Oct 31 and the Statutory Budget Reserve was worth $3.7 billion. But the state legislature has voted to transfer $3 billion from those funds to cover part of a $12 billion gap in state’s pension funds; Alaska has the seventh worst pension funding shortfall in the United States, according to a Bloomberg News report. Another $3 billion will go to cover the deficit in the fiscal year that will end June 2015.
That will leave the Constitutional Budget Reserve with about $9.5 billion, barely more than the remaining pension fund shortfall. “And that’s assuming today’s oil prices continue, which is a wild card,” said Gara.
Alaska has done that for decades. In the past decade or two, most of that money is actually earning from the investments from the massive fund, rather than oil profits. The only spend about half of what comes in, so the fund continues to grow.
That fund is now worth more than $50 billion dollars.
Awwwwwww. It's always about the poor, disadvanted kids, isn't it?
I got a question for you, Gara, if it stands to reason that lower gas and oil prices negatively affect the poor and disadvantaged doesn't it also stand to reason that high gas and oil prices positively affect them?
That being the case, why are there even ANY poor or disadvantaged kids in Alaska in light of the years of high gas and oil prices you've enjoyed?
Take your time pondering that one. I'm sure you'll come up with something rich. You always do.
My daughter has attended a deaf school in Texas, at Big Springs. They charge crazy outta state prices, but tell me all the locals go to school for free. Ahh those poor disadvantaged Texas kids; goes the same all over I believe.
Amen.
It's even worse here in Caliphornia. We're something like 400 billion dollars in debt and we STILL have poor disadvantaged kids here.
All the people cheering about how Venezuela, Russia and/or OPEC might be affected by lower oil prices seem to have forgotten what it will do to states/companies in the U.S.
I understand that at the state level you don't, but don't most of the cities/boroughs have a sales tax?
Out here in the interior, we don't have any taxes, ya right no sales taxes, no income taxes, no, (wait for it) NO PROP TAXES. Heck we don't even have any law enforcement, that's better than any taxes; nearest state boys are 200 miles away and the road is closed until Spring. We live in an unorganized borough, no local ordinances and everybody wants it to stay that way too. We see it as the real deal FREEDOM.
Last person to get killed here was 35 years back, drowned by accident in the YUkon by his drunk friends. When was the last murder down your way?
No joke, when it comes to taxes it don't get no better than Alaska. Honestly though, Ak could be the highest taxed place on this earth, and they couldn't drive me out.
So you would prop up oil prices to benefit our enemies? I don't think so Tim. Alaska can just tighten their belt a little.
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