In my most recent column for State Tax Notes, I look at the numbers in the Alaska Department of Revenue’s (DOR) 2022 Fall Revenue Sources Book, which tabulates historical revenues and provides the revenue forecast that the governor and Legislature will rely on for budget discussions during the legislative session. I also discuss the status of the refundable/rebatable tax credits that have been available for more than a decade in Alaska to companies that invested in oil and gas exploration and development and in refinery infrastructure in the state.
Unrestricted revenues in Alaska, which fund government operations, are driven by royalties for oil produced from state leases and by three categories of taxes—oil and gas production taxes, petroleum property taxes, and corporate income taxes. As a result of lower predicted oil prices and reduced production, DOR lowered its 2022 fall forecast for unrestricted general fund revenue from that of its official spring 2022 forecast to $3.9 billion ($1.1 billion decrease) for fiscal 2023 and $3.4 billion ($0.7 billion decrease) for fiscal 2024.
The government’s slackening progress in paying the refundable/rebatable tax credits started in 2015 and 2016, thanks to falling oil prices, culminating with lawmakers and policymakers authorizing no appropriations for payments for fiscal years 2020 and 2021. Rebounding oil prices may yield the government enough revenue to pay for, and clear the queue of, tax credits, good news for companies that have been holding the credits for many years.
Read “Bracing for Another Budget Debate,” published on January 16, 2023, by State Tax Notes.