Rising oil prices drove up state oil revenues in the 2011 fiscal year by more than $2 billion, with total oil revenues to the state topping $7 billion for the year, according to the Alaska Department of Revenue.
For the current fiscal year, revenues are projected to go up even further and top $8.2 billion, driving the state to another budget surplus, according to the department’s Fall Revenue Sources Book, released Thursday.
Those numbers are for unrestricted general fund revenues; other oil revenue was allocated directly into the Alaska Permanent Fund, more than $1 billion last year.
Alaska’s strong financial status was driven largely by the state’s ACES oil tax, passed in 2007 under former Gov. Sarah Palin. It allows the state to reap big rewards from the current high oil prices.
That’s given Alaska billions of dollars in savings and enabled the state to easily balance its budgets at a time when many other states are arguing about cutting services and raising taxes.
“Unlike most states, we have savings in the bank and we have healthy surpluses,” Parnell said.
Parnell and Department of Revenue Commissioner Bryan Butcher continued to advocate for reducing oil taxes, and called attention to the continued decline in oil production.
High prices, Butcher said, are “masking the underlying production decline.”
In 2011, the report shows, oil production declined by 6.3 percent, and was expected to drop 4.7 percent in the current fiscal year.
Parnell and Butcher have been highlighting the decline in oil production as they advocate for cutting the state’s oil tax, but Rep. Beth Kerttula, D-Juneau, said slashing it would be bad for the state.
“If we want to join the other 47 states that are in a depression, then the way to do it is to get rid of our oil tax,” she said.
As House minority leader, Kerttula joined with Palin to back the tax increase in 2007.
While oil revenues fund most state government operations and are closely watched, total revenue for the state is far higher, including federal dollars and investment earnings.
The total state revenues in 2011 were $19.5 billion, according to the Revenue Sources Book. Total oil revenue, unrestricted and restricted, was $8.1 billion, followed by investment earnings of $8 billion, federal contributions of $2.4 billion and $1 billion in other revenues.
Most of the investment earnings are in the Alaska Permanent Fund and Constitutional Budget Reserve and are not available for spending. The federal dollars going to the Alaska state government include funding for Medicaid and other formula programs.
• Contact reporter Pat Forgey at 523-2250 or at firstname.lastname@example.org.