Morning Headlamp – Oil production up – an extra $191 million for the state this year!

More Oil, More Money. Better than expected oil production and price figures mean the State of Alaska should have an extra $191 million in revenue when the 2017 fiscal year ends. A 20% increase in the spendable portion of the state’s overall petroleum-sourced revenue.

The tax man cometh. The Alaska House voted on Saturday to institute a state personal income tax. 22 House majority members — 17 Democrats, three Republicans and two independents — voted for House Bill 115, with 17 Republican minority members opposed and Big Lake Republican Rep. Mark Neuman absent. The Alaska income tax was approved the same day federal income taxes would have been due had it not been a Saturday. HB 115 would raise an estimated $700 million a year. HB 115 would leave Alaska with an effective tax rate of 1.66 percent. The bill would take effect in 2019. Taxes would be withheld from wage-earner paychecks beginning in January of that year. The first taxes would be due in early 2020.
Headlamp would note the bill would ADD a minimum of 60 new state employees to implement the tax, the majority of the taxes paid would come from the Railbelt (72%) according to DOL numbers, the $700 million estimate does not recognize the recent lay-offs from the state’s highest paying industry, and less than 300,000 Alaskans will actually be paying an income tax. In other words, it increases the size of government, revenue estimates are bad and it isn’t broad based. 

VP hears about LNG. Alaska officials are lobbying the White House for federal support for the Alaska LNG project. On Saturday, Gov. Walker met with Vice President Mike Pence when Pence’s plane made a refueling stop in Alaska. The governor used the opportunity to promote the Alaska LNG project, as well as the state’s strategic location for military operations in the Asia-Pacific region. In submitting the Alaska LNG application to federal regulators, AGDC officials are asking FERC to complete work on a draft environmental impact statement in the second quarter of 2018, and to issue the final EIS by the end of 2018. Under that schedule, the state hopes to make a final investment decision on the project in early 2019. But given the size and complexity of the ambitious project, energy experts suggest the state’s proposed timeline is unrealistic.

 

First Reads

Alaska brings ambitious LNG export project to FERC

EnergyWire, Margaret Kriz Hobson, April 17, 2017

Alaska House votes to levy income tax, sending bill to a hostile Senate

Alaska Dispatch News, Nathaniel Herz, April 17, 2017

Prudhoe Bay well continues venting gas

Alaska Dispatch News, Michelle Theriault Boots, April 17, 2017

Oil production up for second year in a row

Alaska Journal of Commerce, Elwood Brehmer, April 14, 2017