Here’s some bad, some good and some interesting news gleaned from the Revenue Sources Book Fall 2014, which the Department of Revenue released today.
Here’s some of the bad:
In FY 2014, the State received $5.4 billion in revenue from unrestricted sources, $4.8 billion of which came from petroleum related activities. For FY 2015, the department is forecasting a significant decrease in unrestricted general fund revenue to $2.6 billion.
Here’s a chart which brings it home:
Brad Keithley, as he’s wont to do, has his way with the numbers:
FY 2014 deficit: $1.8 billion (budget 25% financed from savings); projected FY 2015 deficit: $3.7 billion (budget 60% financed from savings); projected FY 2016 deficit under Parnell “work in progress budget”: $3.3 billion (budget 60% financed from savings). Savings remaining at the end of FY 2016 under the Parnell “work in progress budget”: ~$6.5 billion
The department projects ANS oil prices will average around $76 per barrel in FY 2015 and $66 per barrel in FY 2016. In the longer-term, the department forecasts ANS to increase over $100 starting in FY 2018.
Now for some good news, which many, particularly the oil companies and AOGA, are using as evidence that tax reform is working:
Another change is that we now have a trend for higher production than previously forecast. Between FY 2013 and FY 2014, North Slope oil production stayed steady and for the first time since 2002.North Slope oil production between FY 2013 and FY 2014 held steady, and it is expected to increase by approximately 15,000 barrels per day and 10,000 barrels per day in FY 2016 and 2017, following decline of 22,000 barrels per day in FY 2015. Given the forecast in investment trends, we expect that oil production should remain above 500,000 barrels per day for the next three fiscal years.
More good news:
Three main North Slope oil producers and the State of Alaska are working on a preliminary project concept whose current estimated cost is at least $40 billion for a 42-inch pipeline from the North Slope and an LNG export facility in Nikiski on the Kenai Peninsula. A project of this scale would likely subject the Alaska economy to growth rates that are unprecedented, even taking into account the previous North Slope oil boom.
In recent years, the total number of cigarettes purchased in Alaska has fallen by about 20 million per year, translating to a roughly $2 million yearly decline in cigarette tax revenue.
Alaska over the past 5 years, wine consumption has grown at an annual rate of 2.25% and liquor consumption has grown at an annual rate of 3.7%. Consumption of beer, cider, and malt liquor has grown at an annual rate of 0.4%, and the share of these beverages produced by qualifying small breweries is steadily increasing, from 17.4% in 2009 to 27.1% in 2014.
Interesting chart. These numbers are for fiscal year 2014, 2015, and 2016. Notice in 2015, the state is projected to collect $17.5 million more from taxes on tobacco than on fishing. In 2016, that number jumps to $17.7 million. Taxes on tobacco overtake mining taxes by $11 million in 2015 and $7.8 million in 2016.
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