Alaskas Economic and Revenue Outlook

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Alaskas Economic and Revenue Outlook

• Dan Stickel, EconomistAlaska Dept of Revenue
• Tacoma WA, May 2008

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2007 Decent growth great for budget

• Population Growth 0.9
• Employment Growth 1.1
• Strength Oil, mining, tourism, services
• Weakness Construction, fisheries, Govt.
• Unemployment Rate -0.3 to 6.2
• Per Capita Income Growth 6
• Housing Sales -10, Avg Price 2
• State Budget Higher oil prices Higher oil tax
  rate Really Big Surplus

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Total employment growth Slow Steady
Percentage change in employment from prior year
Source Alaska US Departments of Labor
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Employment growth highlights 2007
Total Employment Growth 1.1
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Employment growth forecasts 2008
Total Forecast Employment Growth 0.6
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Population growth
Alaska population estimate 676,987 as of July 1,
2007
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Unemployment ticks upward
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With huge regional differences
March 2008 Unemployment by region, not seasonally
adjusted. State avg 7.4
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Per capita real income growth
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Housing Sales down, prices steady
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Housing Q4 down from year ago
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Unrestricted revenue 91 from oil
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Oil prices are higherProduction is in decline
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Three severance tax hikes boost state revenue.
Revenue From Oil Gas Severance Tax. Key tax
changes1) Administrative change to ELF tax
(tax rate 15 of gross ELF) 2) New PPT
Severance tax, (tax rate 22.5 on net minus
credits)3) New ACES Severance tax, (tax rate 25
on net minus credits)
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A budget surplus, for now
History Forecast General Purpose Unrestricted
Revenue Spending Estimates are Unofficial for
Illustration Purposes Only.
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Alaskas 40 billion rainy day fund
Historical and Projected Alaska Permanent Fund
Value at end of fiscal year
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And it pays dividends to each Alaskan
Historical and Projected Permanent Fund Dividend
Payment, Per Eligible Alaskan
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On the horizon A gas pipeline

• Two Proposals
• TransCanada proposal
• Selected Under Gov Palins AGIA initiative
• Conoco/BP proposal
• Code name Denali
• Pipe to Alberta/Chicago, Cost 20-40 billion

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On the horizon A Mining boom

• 675mm ED in 2006, likely higher in 2007.
• Pebble worlds largest copper mine
• Donlin Creek will double Alaska gold production
• Dozens of smaller prospects

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Outlook Short term

• Good for business
• 2,000 PFD checks
• High commodity prices (Good for Alaska)
• Great for state government
• Oil-induced revenue surplus
• Uncertain for individuals
• Questions about Housing Inflation
• Two-edged sword of commodity prices
• 2,000 PFD checks, strong business government

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Outlook Longer term

• Oil prices level around 80/bbl
• Continued declines in oil production mean state
  budget deficits return
• Potential economic boom from megaprojects
• Natural Gas pipeline
• Pebble / Donlin Creek mines
• Risk Significantly lower prices for oil, gas,
  minerals

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For more information

• Dan Stickel
• Alaska Department of Revenue
• daniel.stickel_at_alaska.gov
• www.tax.alaska.gov