Essay On The Alaska Permanent Fund

824 WordsDec 7, 20174 Pages
Alaska is one of the many few states that obtains numerous energy resources such as oil and gas. Ranking second in the nation in crude oil production, many oil reserves are found in the Alaska North Slope and Cook Inlet basins. Prudhoe Bay is also the highest oil field in the United States and North America with a production of 400,000 barrels per day. With that, Alaska’s economy is based upon four factors, petroleum revenue, non petroleum revenue, federal revenue and investment revenue. Being so reliant on oil, in 2015 after a decrease in oil, the state began going into a budget crisis. For every $5 drop in oil prices the state loses $120 million. From 2015 to the present, barrels used to run from $100 each to now $40. Fund revenues have…show more content…
Every fall, when the PFD checks are received, Alaska’s stores experience an economic increase compared to the other states during tax-refund season. Since the Permanent Fund is projected to continue to increase more money from its earnings, the state could still spend a portion of earnings and keep the reserve fund. Another option is the state could put a lock on the amount of Permanent Fund dividends due to how its calculated by the average of the Fund’s income over five years. The States next solution, income tax. HB 115 would raise an estimated $700 million a year, while separate legislation to increase oil taxes and restructure the Permanent Fund would generate $2 billion more. Since the Trans-Alaska Pipeline brought billions of dollars in oil revenue in 1980, Alaska has not had any state taxes. Although statewide income tax would be very unpopular amongst Alaskan residents, it would also be the most effective way to generate revenue. An income tax proposal introduced by the Alaska State House would generate $660 million per year that could be used towards the budget deficit. Revenue from an income tax alone would not be enough to fix the state’s budget deficit, but would take off a significant amount. Introducing income tax would make a significant contribution toward ending Alaska’s budget deficit in a shorter time, while in the future, it’ll
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