We provide an update of the FY 2016 budgets actions (lower item this page).
A bump in oil price average will increase state revenues by $190 million this fiscal year, state budget officials told us, but the overall picture hasn’t improved. Meanwhile, the state’s fall revenue and oil production forecast, state economists’ best guess for the near future, is due out in early December.
A somewhat higher oil price average over forecasts should result in a gain of $190 million in state revenue in Fiscal Year 2017 if the trend holds, we were told, but that doesn’t make a big dent in a $3 billion deficit.
This issue has embroiled the Legislature for several years now and it looks like 2017 will be a repeat. Gov. Bill Walker argues that there is unfinished business, with changes still needed that were not done in a 2016 overhaul of the state oil tax incentive program. This will be a hot-button issue once again, and its outcome will be influenced by how the Legislature organizes. The new coalition House organization will likely favor changes in the tax code, while the Republican-led Senate will likely resist.House and Senate organize.
The 2016 election is over, with results that stunned the nation. We’ll comment separately on how the national changes will affect Alaska, but we can’t resist passing on a report from Politico that Donald Trump may consider Sarah Palin for Secretary of the Interior. Alaska went Republican as expected, heavily favoring Trump. Lisa Murkowski and Don Young were returned to the U.S. Senate and U.S. House. All of the 40 members of the state House were up for reelection as were 10 members of the 20-member state Senate. Republican incumbents in two high-profile state senate races, John Coghill in Fairbanks and Cathy Giessel in Anchorage, retained their seats after spirited challenges by Luke Hopkins against Coghill and Vince Beltrami against Giessel. The results confirm that the Senate will retain its heavily Republican majority.
The Alaska LNG Project is making progress in cost-reductions as preliminary engineering nears completion, managers of a joint industry-state consortium told state legislators in recent briefings. Wednesday. Estimates made earlier were for costs to range from $45 billion to $65 billion, but changes in the project made in preliminary Front-End Engineering and Design have lowered the cost to about $45 billion, industry members of the Alaska LNG Groups told lawmakers. The state of Alaska will take over the project at the end of 2016. Ongoing management will be by the Alaska Gasline Development Corp., the state-owned gas corporation. Alaska LNG involves an 800-mile, 48-inch pipeline built from the North Slope to a large natural gas liquefaction plant in southern Alaska and a large gas treatment plant on the slope needed mainly to remove the 12.5 percent carbon dioxide that is in Prudhoe Bay field gas, Butt said. About 35 trillion cubic feet of gas reserves have been identified on the slope to support the pipeline and LNG project. Read the rest of this entry »