Alaskan's share of monetary assets owned by state in 2011 was $92,821 per person
January 31, 2012
“Alaska’s State government owned financial investments have weathered the tumultuous world markets and successfully rebounded in 2011,” said Joe Beedle, Commonwealth North’s Past President and President of Northrim Bank, who presented the results. “Here in Alaska, oil production continues to fall and several state infrastructure entities required public subsidy in 2011, yet our substantial financial assets and significant natural resources helped conclude a favorable fiscal year ending June 30, 2011 made public on December 15, 2011 per audited financial statements.” Beedle concluded that absent ‘booking’ our considerable lands and resources at a financial value, and given that the State is required to ‘expense’ depreciation for our fixed assets, it is often not easy to stay even from a financial perspective, let alone grow so significantly. These recent numbers allowed one credit rating agency to award Alaska State the best investment grade on State debt in the country.
Alaska’s per capita income from all sources grew at a slower rate than the rest of the nation in 2010, but at $44,205 it is 111% the national average.
Commonwealth North’s review indicates an individual Alaskan’s share of the state financial treasure has gone up to $92,821 per person from $80,747 per person in 2010. The total value of the State’s assets to which Commonwealth North can attribute a value – financial and enterprise assets – is $66.3 billion, up from $56.4 billion in 2010.
While the Permanent Fund pays dividends to individual Alaskans, other state assets add to, or are subsidized by, the State’s treasury. Well performing assets are one of the reasons why individual Alaskans do not have to pay state income or sales taxes.
The Permanent Fund, which is the 18th largest sovereign wealth fund in the world and the largest in the United States, has a market value of $40.1 billion, up 20% from $33.3 billion at the end of Fiscal Year 2011, June 30 of last year.
The State’s other investment funds operated by the Division of Economic Development, Division of Treasury, and particularly the Constitutional Budget Reserve all had a better 201. As the market rebounded, all had profitable investment portfolios in 2011.
Indicators of the current value of the state’s non-financial assets, including the state’s land, timber, minerals including oil and gas, and fisheries – while not as easy to measure – are mixed, with some bright spots.
One indicator of future oil revenues is the number of acres of lands leased, as it indicates broad efforts to explore for oil and gas. The number of state oil leases is down, from 1,499 in 2010 to 1,446 in 2011, but revenues from rentals and royalties rose from $2.2 billion in 2010 to $2.7 billion in 2011. Besides royalty revenue, Alaska receives substantial funds from oil production taxes and property taxes on production facilities.
Overall, the state’s daily oil production fell to a new low of 579,171 barrels per day in 2011, way down from the peak of 2.05 million barrels per day in 1988. Additional production may depend primarily on successful exploration of federal lands, including the Outer Continental Shelf, the National Petroleum Reserve Alaska, and the Arctic National Wildlife Refuge. Each of these areas have legislative restrictions and court battles pending, and the state’s share of revenues varies widely depending on where the federal government leases its lands.
The State does not “lease” its fisheries resources, but it does tax the catch. Fisheries landing and business tax revenue was up from $58.66 to $68.98 million.
While revenues from fees to visits to Alaska state parks remained relatively stable, park officials estimate park visits dropped slightly last year, from 5.4 million visitor days to 5.2 million.
Alaska continues to inch toward final conveyance of the 103 million acres of federal land promised with statehood. Total received as of 2011 is 100.3 million acres.
Among state owned enterprises, the Alaska Railroad earned money last year, while the Alaska Marine Highway, International Airports, Energy Authority, and Alaska Aerospace Development Corporation lost money. Yet each enterprise has a case to make of how it has “leveraged” state and federal investments to provide jobs and basic infrastructure for Alaska.
The Alaska Marine Highway, which operates ferries on Alaska’s coasts where highways are not available, had an operating loss of $110.1 million, the highest loss in five years.
The Alaska Energy Authority, which provides electric power support to the state’s utilities, lost $71.4 million in operations, a 38% increase from 2010, but its investment/revenue share showed a $70.89 million gain in 2011.
Alaska’s two international airports lost $24.4 million in 2011, versus a loss of $6.3 million a year before.
The Alaska Railroad, which the state acquired from the federal government in 1985, made more money from its real estate ($8.3 million) than it did from operating trains ($6.2 million) last year. In some years, that has been the opposite, but this has become the norm over the last four years.
The University of Alaska showed moderate gains of 9%, bringing its endowment funds up to $127.4 million from $116.4 million. The Alaska Mental Health Trust did even better with gains of 17% in 2011 increasing its trust from $427.5 in 2010 to $501.8 million at the end of 2011.
The University of Alaska’s statewide fall student headcount in 2010-2011 was up slightly from the previous year, with 34,480 students earning 283,385 credit hours. Research grant funding at the University was up slightly, $137.9 million from $128 the year before.
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