Friday, April 15, 2016

ALASKA RESIDENTS WATCH YOUR WALLETS: Oil Producing States Experience the Fracking Crash

Although the United States is currently in the boom phase of a Fed-created boom-bust cycle, the 2015 crash in oil prices is causing severe financial pain for states heavily dependent on tax revenue from oil sales. It's so bad, Alaska is considering implementing an income tax.

Via  The Brooking Institute:
North Dakota’s total severance (extraction tax) revenue fell from more than $3.5 billion in 2014 to $2 billion in 2015. Gov. Jack Dalrymple has now ordered state agencies to slash their budgets by 4 percent to close a $1 billion budget shortfall. The state has drawn down its entire $331.7 million surplus, and also plans to tap nearly $500 million from its budget stabilization fund.

Alaska faces a whopping $3.8 billion budget deficit, or two-thirds of its budget. As a result, Gov. Bill Walker is proposing to use earnings of the Alaska Permanent Fund to help pay for government. The rest of the deficit would be overcome by implementing an income tax, cutting government spending, and raising other taxes.

Louisiana has announced across-the-board program cuts to address an estimated $900 million gap in the current fiscal year. Next year’s shortfall is expected to be more than $2 billion.

Oklahoma is contending with a $1.3 billion budget shortfall, nearly 20 percent of last year’s spending. As a result, state agencies are faced with cuts totaling 7 percent in annual state allocations. Public schools, for instance, will have $110 million cut from their budget for the fiscal year ending June 30.


  1. I live in the CSSCT (Crony Socialist State of CT). Once an income tax is started, the urge to keep tweaking it upward is irresistible to politicians.

  2. It's the most talked about subject here in Alaska, the income tax.
    It's mind numbing listening to the politicians here going on and on about how there is no way to "cut our way out of this".
    Quit spending and you will still have a deficit?
    The most frustrating thing is that every day they are trying to spend more and more, of course.
    The hit on the North Slope also has hit our local economies, people all over are out of work. Booming oil produces a lot more jobs than people realize, until they pull the plug.
    Layoffs are rampant. And I mean thousands of people. Last year I had to put ads out looking for employees. This year already I have 8-12 people a week coming in looking for work.
    Our energy costs are still ridiculous. People are packing up and leaving.
    Alaska also wants to raise our fuel tax to $.18 a gallon (from the current $.08), and implement a state sales tax.
    Typical state, the people are struggling and the State wants to tax us. The people are merely tax cows to keep the State cronies living high on the hog. The governor just hired 3 of his old business partners at $100,000 a month each as "consultants".
    They are all crooks and cronies. State granted monopolies are rampant here, making our COL even higher.
    From oil industry folks I know, if oil goes below $30 DAB then the North Slope will shut down completely.
    They also say nothing is going to change until oil is back up and maintains $55 a barrel.
    This state government has spent a kings ransom, blown it.
    It really is a real example of Hoppe's "Democracy the god that failed", and his comparison of elected officials to a king.
    One only has a short time to loot as much as possible.
    That would be our Alaska State government.