Alaska Department of Revenue releases Spring 2021 Forecast
March 29, 2021
Unrestricted General Fund (UGF) revenue, before accounting for the transfer from the Permanent Fund Earnings Reserve, totaled $1.6 billion in FY 2020 and is forecast to be $1.7 billion in both FY 2021 and FY 2022.
The Permanent Fund is expected to transfer $3.1 billion to the General Fund in both FY 2021 and FY 2022. These amounts include funds for general government spending. Between continued growth of the fund and continued low oil prices, the Permanent Fund transfer is now the state’s largest source of UGF revenue, contributing 65% of UGF in FY 2020 and projected to contribute at least 58% for each of the next ten years.
For FY 2020, Alaska North Slope (ANS) oil prices averaged $52.12 per barrel. The revenue forecast incorporates the most current indications from financial markets and is based on an annual average ANS oil price of $53.05 per barrel for FY 2021 and $61.00 per barrel for FY 2022.
For FY 2020, ANS oil production averaged 471,800 barrels per day. ANS oil production is expected to average 482,000 barrels per day in FY 2021 and 459,700 barrels per day in FY 2022, before climbing to 565,500 barrels per day by FY 2030. Drilling and investment were sharply reduced last year and are reflected in the near-term forecast. Over the coming decade, the forecast represents a lower expected decline rate for the larger currently producing fields as well as an improved outlook for new developments due to higher oil price expectations.
Compared to the Fall 2020 forecast, the ANS oil price forecast has been increased by $7.73 per barrel for FY 2021 and $13.00 per barrel for FY 2022. The ANS oil production forecast has been increased by 4,700 barrels per day for FY 2021 and 20,100 barrels per day for FY 2022. Driven by this improved outlook for oil price and production, the UGF revenue forecast has been increased by $332 million for FY 2021 and $460 million for FY 2022. Forecasts for oil price, oil production, and revenue have also been materially increased for all forecast years beyond FY 2022.
The Spring Revenue Forecast provides basic information about state revenue, as well as a forecast of state revenue over the next ten years. The Spring 2021 Forecast is available on the Department’s website, at www.tax.alaska.gov.
Edited By Mary Kauffman, SitNews
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