The Department of Revenue’s Fall 2020 Revenue Sources Book today forecasted that funding from the Permanent Fund Earnings Reserve account will be $1.6 billion in this fiscal year, and will be only $1.2 billion in both FY 2021 and 2022.
The Permanent Fund is expected to transfer $3.1 billion to the General Fund in both fiscal years, which begin July 1, 2021. These amounts include funds for general government spending.
The forecast indicates that the State of Alaska’s budget gap is much larger than it was last year.
Between continued growth of the fund and continued low oil prices, the Permanent Fund transfer is now the state’s largest source of UGF revenue, contributing 65% of undesignated general funds in FY 2020 and projected to contribute at least 67% for each of the next 10 years.
The current balance of the Earnings Reserve Account of the Permanent Fund is $6.7 billion, including realized and unrealized gains.
The fund itself has a value of over $70 billion but that fluctuates with the market and is not liquid assets. It cannot be accessed by the Legislature.
For FY 2020, Alaska North Slope oil prices averaged $52.12 per barrel.
ANS oil price of $45.32 per barrel for FY 2021 and $48.00 per barrel for FY 2022.
For FY 2020, ANS oil production averaged 472,200 barrels per day. ANS oil production is expected to average 477,300 barrels per day in FY 2021 and 439,600 barrels per day in FY 2022, before climbing to 481,800 barrels per day by FY 2030.
Drilling and investment were sharply reduced over the past year, and are reflected in the lower near-term forecast, but the department is optimistic that new developments will contribute to stabilizing production over the coming decade.
The Revenue Sources Book is an annual publication that provides basic information about state revenue, as well as a forecast of state revenue over the next ten years.
The Revenue Sources Book is at www.tax.alaska.gov.
Has there been economic analysis on the historical State budget needs for areas of Alaska that have a Borough compared to those areas that do not have a Borough? I just ask because if the Bristol Bay created a Borough, could they tax the commercial fishery industry – it’s way larger than the local commercial fisherman, as we know.
I know the oil and gas industry pay taxes to the North Slope Borough. Red Dog Mine pays taxes to the Northwest Arctic Borough.
Does the state tax the commercial fishing industry? Does the federal government? Could a Borough if created in the Bristol Bay area? I just ask because regardless if fish are a “renewable resource” the industry brings with it a lot of other risk factors as well as public infrastructure use. …potentials for fuel spillage, waste dumping, public health issues – COVID, potential trafficking of a variety of things, increased use on roads, etc. (Just examples that cross my mind)…
There are so many external drivers that leave the State of Alaska Budget unstable when solely relying on the oil and gas industry such as COVID-19, who gets elected into federal leadership roles every four years, or foreign countries having their own issues like what happened with Russia and Saudi Arabia where they both release a bunch of their oil and gas into the market over some political controversy with each other – which directly effected the North Slope almost concurrent to the COVID outbreak.
As elected officials in the Alaska Legislature, there needs to be a real ‘coming to Jesus’ communication plan implemented. I do not think this works coming directly from elected officials of any sort, because to be extremely candid – I see two issues on that:
1. Communication needs to be made for local people on things that local people connect to. 30,000 foot op-eds, etc. are effective for other political junkies that are naturally interested in that. But I believe people are more involved in their own day-to-day lives to pay attention too much because it doesn’t translate to ground zero – the home front.
2. Elected officials have a big job to do already in State Government. And, what they communicate is easily impeached locally by what side of the aisle they are on – speaking about both the official and the individual community members sides of the aisle…
For the record, I also do not believe that utilizing the other regular ‘go-to’ entities such as the State University system to take something like this on is helpful. There are libraries full of research studies that are accessible but not translatable.
I don’t have the answer, obviously. There are just enormous risks that need mitigating for the State to balance the needs of Alaskans. Local people all want to do their part for the greater good.
Maybe the Department of Revenue might look into creating a large role in communications – including listening – throughout the State.
Maybe the Congressional Delegation could take this up with their colleagues throughout the Nation, to see if there are other models for communication in their states that are working well when speaking to individual residents.
Anyways, my thoughts for the day.
Bristol Bay does have a borough; it was created in 1962. They do tax fisheries.
See, there is so much I don’t know! ?. Thanks for sharing that.
Guess what? There’s a pandemic. Government workers are no longer necessary. Let them be on unemployment like the rest of us. “Work at home?” BS . Hunker down. It’s good enough for the private sector, then it’s good enough for you. After all, we must be fair. Try eating some of the crap you’ve been dishing out. That will fix the budget. We just have no need for parks and recs, roads, police, or any other services from our self appointed dictators, because they told us to stay home and hunker down. And quit spending our money, because we may not have it for long. Time for the government sector to start consuming themselves. Only then can true socialism be achieved. We have much more to worry about than a flu.
And how many state government and local government employees got layed-off during the pandemic? ZERO. They all went to work out of their homes, while still receiving full pay. Those in the private sector are all out of work and broke. Where is the class parity? Let the effing civil war commence. Parity will be reached when government employee’s private property is confiscated, and is taken by force.
Wow. All? Generalize much? I haven’t worked a single hour from home; every worked hour for Alaska (authorizing resource use) has been worked in a publicly accessible building IN SPITE OF the “pandemic”. Other members of my family are self-employed business owners and operators and work in the private sector (including me as we have more than one job), and have had to cope with a large reduction in gross income due to the lockdown-created business cycle downturn including business closures and use of unemployment programs. So assuming you can get past all of our guns when storming our home (I’m pro 2A prob. just like you) and when you come to confiscate my private property for an alleged infraction that I haven’t committed, how are you going to determine how much of my private property is from my State employment versus my TWO other part-time private sector jobs? And how are you going to determine how much of my family’s private property was solely from my contribution as a State employee (not much as I don’t really get paid a lot given the low-payscale position I hold) and how much was garnered through years of private sector business operation and other jobs? Do you have some kind of formula for parsing multi-income-contribution households that happen to include a fraction of earned income from State employment? Or are you yourself so tyrannical that you would attempt to destroy a family because you subscribe to the the binary one-size-fits-all false-dichotomy tactic of “if you are not 100% with us then you are the enemy too” ?
I think Meenahan was injecting a bit of hyperbole, although his frustration was well-placed because he got your goat. There is a huge political rift in Alaska between government employees and those who work in the private sector. I get it! And because government has swelled to gargantuan proportions in Alaska, the private sector feels disenfranchised. I don’t think Meenahan is coming to your house after midnight to do you harm or separate you from your property. But I bet he carries.
Not a Trooper….you idiot.
I’m thinking more like dozens of University of Alaska associate professors and UA assistants to the Dean’s and Vice-Presidents of athletics who make $200K; dozens of mid-level bureaucrats at state and local levels who produce…….NOTHING;
and all of those park and rec employees who mow the borough lawns in January.
You must be of them…..BW.
Hey BW, try to THINK a little bit larger before you post at MRAK.
Your comments indicate a low level of intelligence.
So selectively confiscate the possessions of people you deem unacceptable? Have I got that right? Judge, jury and executioner?
Just the freeloaders who have those high-salaried jobs with the government and sacrifice nothing, while telling us little folks in the private sector, who have lost our businesses, to tough it out until next year. The answer will be borne out with fire and brimstone from the piping hot barrels of forged steel. You people who think you make the rules for others to live by, while you drop your government paychecks into your savings accounts should be scared. Very scared. We will come for you first. Personal property is meaningless, when you are no longer around to possess it.
Mind the Gap ought to be the order of the day. Alas, our elected officials will adhere to the sentiment that never minding the gap is the path forward.
Forecasts are just that and have seldom been any where close to what really happens…things happen and things change….is this forecast based on a Trump Presidency for the next four years..?? Because if we should happen to end up with a Biden Presidency I think you can kiss the country, much less Alaska good bye…We managed to keep our companies going throughout this entire Pandemic period and did so without taking outside help from any any the government programs in either State we operate in, but our business has declined at a steady rate everywhere and we will have a tough time making it through many more government shut downs….as for now we are steady as it goes and hope the courts act and the lawless left is held in check and we are allowed again to at least have a chance at making a living ….
What if productive Alaskans decide they’ve had enough China-flu lies and hysteria; they don’t want their lives disrupted, economy wrecked, themselves demoralized any longer?
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Answer: Keep them disrupted, broke, demoralized by hitting them nonstop with “Budget Gap” lies and hysteria.
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Then they’ll beg for taxes… income, sales, real-estate, school, death, capital-gains, maybe a toll road or two just so they don’t have to feel even more demoralized about not paying their fair share.
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May we congratulate our lobbyist-legislator team on winning the jackpot. Alaska’s Dominion voting equipment and brand-new ranked-choice voting system opened a sky’s-the-limit opportunity for them to get whatever they want, do with it whatever they wish, with no worries about re-election.
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A lobbyist-legislator’s dream come true, yes?
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We should expect great things, the best-est and biggest shiny new government money can buy, yes?
I know my post was about alternative tax revenue. Preferably, I would tax less and damn well want less government.
My point was and is, there will always be an inherent role for government unless someone else has a better idea at least.
So until that day comes, we have a State Government.
It depends on oil and gas.
As business people, you all have to appreciate the fact that diversifying your revenue is just good business. For any hope of stability or longevity.
That same thing applies to where our State is at.
How can this State take the blame and kick in the teeth when any other idea for diversifying their revenue is shot down?
So to me, we are the citizens that perpetuate this insanity and we also do not get to keep pointing the finger (or giving it for that matter) while at the same time expecting some magic trick to come flying outta thin air.
You don’t run your business that way, and even the state employee that commented here, has to diversify their income.
The reason everyone is so freaking uptight about the permanent fund, is because oddly people connect how unstable that savings account is.
But it is unstable FOR THE SAME EXACT REASON.
It comes from oil and gas.
All the eggs in Alaska are derived from one basket – regardless of where those eggs have been stored – savings or checking.
It is time to think more creatively instead of automatically digging your heals in the ground and loading your weapons.
Sheesh.
What no comment about the fat state budget and cutting it down to where it needs to be.
I just think that “fat” budget and cutting it down “to where it needs to be” are very subjective concepts.
My point is that regardless of what any of the budget is – Alaska is primarily dependent on the oil and gas industry to fund that budget.
I am a wholehearted supporter of industries of all kinds; including oil and gas.
I know oil and gas is the bread and butter for Alaska.
But does that fact in itself, not warrant a conversation on preparing for the future?
We analyze “Strengths, Weakness, Opportunities and Threats” in strategic planning – as a starting point.
As Alaskans, not to mention just humans, conflict is an advantage we have as an asset and tool.
But communication has been focused on speaking.
I think the most valuable part of communication is listening.
When everyone is speaking louder and louder, who are they speaking to? And for what, if no one is listening to each other?
And I think everyone collectively feels frustrated because they do not feel like they are being heard…
TS – everyone would do well to read your comment. -sd
Listening and being heard are also subjective concepts, Trudy. One doesn’t necessarily define the other. Politicians will often say they are “listening” and then turn around and do the opposite of what they “heard.”
The point is, individuals who do the speaking need to use the facts in a truthful manner, not deceptively, or with sophistry. An educated public will already know the facts, and thus, will know when they are being manipulated. Listening and hearing are mutually exclusive to the extent that the communication is truthful and the communicator is intentionally honest with her audience.
I will not beg for taxes cut the crap out of the budget.
Artfull Dogger,
I agree with your points. Communication should be intentionally honest – for me, I am not a politician – never have been.
My point focuses on the weakness and threat (from a strategic planning perspective of Strength, Weakness, Opportunity and Threats – SWOT Analysis) regarding the Alaska State revenue.
That weakness and threat for Alaska Citizens is that State of Alaska programs, functions, services and activities is dependant primarily (if not solely) on the oil and gas industry for revenue.
This is the most simplified reality that has not been the focused conversation with citizens statewide. Educated or not, people all pay bills. Bills come every 30 days.
I just am done sitting silent while groups advocate in one hand to stop development; while holding out the other hand to demand increased programs, functions, services and activities from government. Government can only feed the voracious appetite of need, when the economy is supported with an equal voracious appetite to fuel it.
That is my honest and truthful communication.
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