Official: Call for fiscal plan stands amid new forecast

  • By Becky Bohrer
  • Saturday, April 15, 2017 8:08pm
  • NewsState

JUNEAU — A forecast calling for higher-than-expected revenue this year and next will help Alaska’s fiscal situation, but it doesn’t eliminate the need for a comprehensive plan to address Alaska’s multibillion-dollar deficit, the state revenue commissioner said Friday.

The Revenue Department, in a new report, projected for this fiscal year and next increases of about $200 million in unrestricted general fund revenue compared to last fall’s forecast. Unrestricted revenue can be used as lawmakers wish.

Revenue Commissioner Randall Hoffbeck told The Associated Press that’s not insignificant but it doesn’t eliminate the need for a full fiscal plan.

Tax division director Ken Alper attributed the increase for this fiscal year, which ends June 30, to higher-than-expected oil production and prices.

He said much of the projected increase for the coming year stems from a change in how credits can be applied by companies in calculating oil taxes.

Senators requested more information on the impact that oil production might have on next year’s revenue estimates. Production forecasts are made in the fall, meaning Friday’s report did not include updated production projections for the fiscal year starting July 1.

Current-year production is expected to average 523,700 barrels a day, outpacing the fall estimate by about 33,000 barrels a day. The Senate Finance Committee was told Friday that the major North Slope oil companies outperformed their own estimates.

Each increase of about 50,000 barrels a day is equal to about $100 million in new revenue, at oil prices of about $54 a barrel, Hoffbeck said. That’s the average price the department is forecasting for the coming fiscal year.

Current prices are hovering in that range. There is general agreement among legislators that the state will need to use earnings from Alaska’s oil-wealth fund, the Alaska Permanent Fund, to help fill the deficit, which has been fueled by low oil prices.

But there’s disagreement about what other steps may need to be taken.

Members of the House majority, composed largely of Democrats, have opposed cuts proposed by the Senate to areas like K-12 education and the university system. Leaders of the Republican-led Senate majority have said they aren’t interested in House plans to reinstitute a personal income tax or raise taxes on the oil industry.

Senate Finance Committee Co-Chair Anna MacKinnon said oil production will play a huge role as lawmakers weigh the best path forward.

The Eagle River Republican said it can make a difference in the economic picture being painted as some legislators pursue “taxing individual Alaskans and calling that a mandate that must be done because of the economic crisis we’re in.”

She requested modeling looking at production that would be flat compared to this year’s estimate and potential production variations.

Gov. Bill Walker’s administration has estimated next year’s deficit at about $2.8 billion. Hoffbeck said a plan to make structured draws from permanent fund earnings could address nearly $2 billion of the deficit. Even with the projected new revenue for next year, there would be a hole, he said. Walker favors a “revenue-solution” over further budget cuts, Hoffbeck said. By the end of the coming fiscal year, the department said the state could owe $1 billion to companies in oil and gas tax credits. Walker used his veto authority to limit how much could be spent on credits the last two years, helping to create a backlog.

More in News

A promotional graphic for Zach’s Fight (Facebook)
Zach’s Fight fundraiser to benefit Kenai athlete during Tuesday basketball

A fundraiser will be held for a sophomore diagnosed with leukemia.

The deadline for the Alaska Permanent Fund Dividend, which comes from the fund managed by the Alaska Permanent Fund Corporation, is coming up fast, landing on March 31, 2023. (Michael S. Lockett / Juneau Empire)
2023 PFD filing available, ends March 31

Applications can be filed online through myAlaska, or by visiting

Seward Middle School students ride the chair lift at Alyeska Resort in Girdwood, Alaska, on Jan. 26, 2023. (Photo courtesy Myla Lijemark)
Hitting the slopes

Seward Middle School students get outside and onto the side of a mountain

Kachemak Emergency Services logo.
Lawsuit: Borough retaliated against harassment complaint

The suit says the borough violated the “covenant of good faith and fair dealing” and caused “severe emotional distress”

Flowers bloom at Soldotna City Hall on Wednesday, June 24, 2021, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Soldotna OKs bumps to city water, sewer rates

The changes are effective July 1

Triumvirate Theatre President Joe Rizzo testifies before the Kenai Planning & Zoning Commission on Wednesday, Jan. 25, 2023, in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Kenai OKs permit for new Triumvirate playhouse

The playhouse design describes a $4.7 million facility that is two stories with an audience capacity of 150 people

Kenai City Council member Alex Douthit testifies in support of legislation allowing chickens on some city lots during a meeting of the Kenai Planning & Zoning Commission on Wednesday, Jan. 25, 2023, in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Kenai planning group gives conditional thumbs-up to chicken ordinance

The legislation would allow Kenai residents to keep up to 12 chicken hens on certain lots

Most Read