Gov. Mike Dunleavy speaks about state revenue during a press conference on Tuesday, March 15, 2022 in Juneau, Alaska. (Screenshot)

Gov. Mike Dunleavy speaks about state revenue during a press conference on Tuesday, March 15, 2022 in Juneau, Alaska. (Screenshot)

Citing spike in oil prices, Dunleavy urges $3,700 PFD

Dunleavy said oil prices are still up overall and high inflation demands action

Citing a spike in oil prices, Gov. Mike Dunleavy during a press conference Tuesday in Juneau announced a projected $3.6 billion surplus in state funding and teased $3,700 in Alaska Permanent Fund dividend payments. Dunleavy called the projection “really good news” for Alaska and encouraged the Legislature to greenlight higher PFD payments.

Acknowledging the price of oil is “volatile” and that prices are down this week compared to a couple of weeks ago, Dunleavy said oil prices are still up overall and high inflation demands action. Dunleavy proposed putting what isn’t used for PFD payments into savings.

“We’re seeing inflation like we’ve never seen before,” Dunleavy said Tuesday. “We can afford — I repeat, we can afford — a much higher PFD than people have been contemplating. We need to help the people now.”

Even with a $3,700 PFD, Dunleavy said, Alaska is still looking at a $3.4 billion surplus. That payment, he said, reflects a retroactive dividend payment from 2021 as well the 2022 payment under a fifty-fifty plan. That plan splits permanent fund earnings equally between dividend payments and state services.

Alaska Department of Revenue Deputy Commissioner Brian Fechter said during Tuesday’s press conference that the state’s economic research group uses a five-day median of the futures market to calculate revenue projections. A release from Dunleavy’s office says that the forecast is based on Alaska North Slope crude oil prices.

The oil price forecast, which is based on futures markets prices through fiscal year 2029, forecasts oil prices of $91.68 in fiscal year 2022 and $101.00 for fiscal year 2023, to then stabilize at $77 by fiscal year 2031. Those numbers assume prices will increase with inflation.

“Based on the higher forecasted oil prices, petroleum is once again expected to be the largest source of (Unrestricted General Fund) revenue for FY 2022 and FY 2023, contributing over 50% of expected UGF in each of those two years,” the Alaska Department of Revenue’s Spring 2022 Revenue Forecast says.

As it relates to the PFD, Dunleavy emphasized that the Alaska Legislature will have the final say. He urged the body to support the $3,700 in payments and said his department is “looking forward” to start working on the issue.

The department’s full forecast can be accessed at tax.alaska.gov. Dunleavy’s full Tuesday press conference can be viewed on the governor’s Facebook page.

Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.

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