BREAKING: Higher prices, more production, more revenue in state’s forecast.

In News by wp_sysadmin

The Department of Revenue’s (DOR) spring revenue forecast update was released yesterday and presented this morning in Senate Finance.  You can access the full presentation here

In a nutshell:   An increase in oil prices and production has led to an adjustment in the state’s forecast that adds $332 million in unrestricted general fund revenue in 2021 and $460 million in 2022. 

Dan Stickel, chief economist for DOR, led the committee through the details of the forecast, focusing on background and key assumptions. 

Key Alaska Economic Indicators

  • Real state GDP is up 7.2% from Q2 2020 but still down 4.9% from Q3 2019.
  • Employment is down 23,000 compared to January 2020 with leisure/hospitality, transportation/warehousing and oil/gas industries seeing heaviest impacts.
  • Wages & Salaries are up 5.2% from Q2 200 and flam from Q3 2019.
  • Foreclosures:  98 in Q3 2020, 303 for calendar year 2020 (through Q3) compared to 197 in Q3 2019 and 729 for calendar year 2019.
  • Housing Starts:  1, 494 for calendar year 2020 compared to 1,689 for calendar year 2019.
  • Delinquency Rates:  1.4% for mortgages 30-89 days delinquent, .4% for mortgages 90+days delinquent at end of FY 2020.  Compared to 1.5 % for mortgages 39-89 days delinquent, .4% for mortgages 90+ days delinquent at end of FY 19. 

Key Assumptions:

  • Stable growth in investment markets.
  • New stimulus package passed in March not included.
  • ANS oil price of $53.05 per barrel for FY 2021 ($7 increase over fall forecast) and $61.00 per barrel for FY 2022 ($13 increase over fall forecast).
  • No further oil production curtailments.
  • Most economic activity will return to baseline levels by FY 2022, except tourism full recovery by summer 2024. 

To access the entire Spring 2021 Revenue Forecast, click here.