link: http://www.alaskajournal.com/stories/060808/hom_20080608002.shtml
Alaska treats as its common treasure a significant share of the economic value of its oil. Oil revenues finance a significant part of Alaska spending (supplemented by generous amounts of federal pork brought home by powerful senators who argue that because Alaska is such a new state and relatively low in population, the rest of us should be financing their infrastructure needs). And a portion of the oil revenue goes into the Alaska Permanent Fund, which is invested in a diversified portfolio and provides annual payments to every man, woman and child in Alaska. One of the results is that Alaska has among the lowest range of incomes,because even a low-income person in Alaska receives an annual dividend from that invested oil money. Pretty smart, huh?
A few lifts from the article:
The state Department of Revenue projected $8.49 billion in total oil income for fiscal year 2008, which ends June 30. That is now likely to be $9.14 billion to $9.19 billion, state economist Cherie Nienhuis said.
The outlook for next year is even rosier. If crude oil prices stay in the current ranges, petroleum revenues could exceed $14 billion in fiscal 2009.
The state spends about $4.5 billion per year on state programs and has authorized in the state capital budget about $2 billion in state funds on construction and other one-time projects next year.
About $700 million in state oil royalty income is to go to the Alaska permanent fund this year, which now totals about $37 billion in value. As it adjourned in mid-April the Legislature also appropriated $5 billion of surplus revenues from the past two years into two other state cash reserve accounts.
The amount of money rolling into the treasury is startling. Nienhuis said a change in the state petroleum production tax made by the Legislature last year as well as higher crude oil prices are primarily responsible for the increases.
The latest estimates are that Alaska will get more than twice as much income from oil production taxes and royalties in July, August and September, compared to what had been predicted as recently as April.
Alaska now expects to receive $3.384 billion in oil production tax and royalty income in July, August and September, the first quarter of the new state fiscal year, according to estimates released by the state. That is more than twice the $1.571 billion that was estimated April 11.
and
Nienhuis' said revenues to Alaska are increasing faster than oil prices because of a progressivity formula in the new production tax that hikes the tax rate as the oil price increases.
North Slope oil producers acknowledge the tax changes have substantially increased the effective tax rates on production.
BP spokesman Steve Rinehart said that, at current prices, BP is paying more than half its net revenues from production to the state's production tax. The burden gets higher when other payments to government are added, such as the state royalty.
Is this any way to run a natural resources policy? You bet it is!
When are the other states going to stop leaving the value of our natural resources in the pockets of our Exxon-Mobils and our Jed Clampetts?
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