Department of Revenue releases Fall 2017 Revenue Sources Book
Juneau – Department of Revenue (DOR) Commissioner Sheldon Fisher released the Fall 2017 Revenue Sources Book today. The Revenue Sources Book includes the Department’s final fall forecast of oil price, oil production, and state revenue.
A preliminary forecast was issued in October. Compared to this preliminary forecast, the FY2018 General fund unrestricted revenue (GFUR) forecast was increased by $247 million. The GFUR forecast for all other years was adjusted by no more than $50 million in any given year.
The $247 million increase for FY2018 is attributable to unexpected prior-year production tax payments received after the preliminary forecast was compiled, an adjustment to the share of royalties being deposited in the general fund, an increased oil price forecast, and general refinement of the estimate and modeling with completion of the final forecast.
GFUR totaled $1.35 billion in FY2017, the lowest level since the late 1990’s. GFUR is forecast to be $2.1 billion in fiscal year FY2018 and $2.0 billion in FY2019. By the end of the forecast period, FY 2027 GFUR is expected to be $2.8 billion per year.
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Meanwhile, the State of Alaska received an estimated total of $12.3 billion in revenue in FY2017 from all sources, buoyed by strong investment returns as the Alaska Permanent Fund returned over 12% for the fiscal year. Total revenue is forecast to be $10.3 billion in FY2018 and $11.0 billion in FY2019. The difference between total revenue and GFUR is attributable to restrictions on how certain revenues can be used, such as federal funding rules, statutory requirements, or customary practice.
Alaska North Slope oil prices are forecast to average $56.00 per barrel for FY2018 and $57 for FY2019, an increase of $2.00 per barrel for FY2018 and $1.00 per barrel for FY2019 compared to the preliminary forecast. Commissioner Fisher stated: “Oil markets appear to have come into balance compared to prior periods, and the Department of Revenue projects that annual average prices will stabilize around $60 per barrel in real terms going forward. In nominal terms, this means that oil prices are expected to increase to $75 per barrel by the end of the ten year forecast period.” Chapter Three of this year’s Revenue Sources Book is dedicated to an in-depth focus on the medium and long term outlook for oil prices.
The revenue forecast is driven by an expectation of North Slope oil production averaging 533,400 barrels per day in FY2018, declining moderately to 492,900 barrels per day by FY2027. This forecast is
essentially unchanged from the preliminary forecast and is based on the expectation of several new developments beginning production over the coming decade to help offset most of the declines from existing fields.
The Revenue Sources Book is an annual publication that provides basic information about state revenue, as well as a forecast of state revenue over the next ten years. The Revenue Sources Book will be made available December 12, 2017 at 1:15pm on the Department’s website, at www.tax.alaska.gov.
