Sunday, November 06, 2011

Energy-Boom States Are Oases of Optimism In A Barren Landscape of State Budget Cuts and Layoffs

From the Associated Press:

"Resource-rich Alaska took in nearly $1.9 billion more than expected last fiscal year thanks largely to high oil prices and ended the fiscal year with an estimated $260 million surplus, an amount equal to nearly 4 percent of its general fund.

A handful of states — led by those that enjoy bountiful energy reserves such as West Virginia, Wyoming and North Dakota — have found themselves in similarly enviable positions, oases of optimism in an otherwise barren landscape of budget cuts and government layoffs. A few other states, including Massachusetts, South Carolina and Virginia, have combined slight increases in tax revenue with tight spending controls to produce modest surpluses.

In West Virginia, the surplus is going toward reserves, pension programs and debt. Wyoming put much of the extra money into savings after years of investing heavily in roads and schools.

And in North Dakota, which is experiencing an energy boom similar to the one Wyoming went through several years ago, investments included an extra $370 million for road repair and construction, especially in the oil-producing western part of the state. Some $340 million will go to schools over the next two years to help reduce property taxes, while $22 million will go toward a disaster relief fund for a state that has been inundated with floods in recent years.

At the same time they are saving and investing, North Dakota and West Virginia are reducing their corporate income tax rates, a move that could make them even more attractive to certain businesses."

6 Comments:

At 11/06/2011 1:46 PM, Blogger Buddy R Pacifico said...

The forecast for North Dakota oil tax revenue is $2.041 billion for 2011 and 2012.

Here is a chart that shows where the 6.5% Extraction Tax and 5% Production Tax streams go to in ND state government. Thirty percent of the revenues go to the North Dakota Legacy Fund that can't start being used until 2017.

 
At 11/07/2011 1:07 PM, Blogger Ron H. said...

Buddy: "Thirty percent of the revenues go to the North Dakota Legacy Fund that can't start being used until 2017."

Of course there's no guarantee that a successful future referendum won't change or eliminate this promise of future riches.

We can only wonder why, if people want to govern themselves by popular vote, they bother to elect legislative bodies to represent them?

 
At 11/07/2011 1:40 PM, Blogger Buddy R Pacifico said...

Ron H., Maybe the people just need referendum.com?

 
At 11/07/2011 4:12 PM, Blogger $9,000,000,000 Write Off said...

How about California? We have as much untapped energy as North Dakota.

 
At 11/07/2011 4:54 PM, Blogger Ron H. said...

Buddy: "Ron H., Maybe the people just need referendum.com?"

Oh, that would be just great. Sometimes after seeing sites like that, I question the wisdom of allowing everyone a vote.

 
At 11/08/2011 3:52 PM, Blogger VangelV said...

Resource-rich Alaska took in nearly $1.9 billion more than expected last fiscal year thanks largely to high oil prices and ended the fiscal year with an estimated $260 million surplus, an amount equal to nearly 4 percent of its general fund.

This makes sense. Alaska still has a lot of oil production and plenty of timber and mining production. As long as the BP pipeline continues to bring oil to markets the good times should continue.

A handful of states — led by those that enjoy bountiful energy reserves such as West Virginia, Wyoming and North Dakota — have found themselves in similarly enviable positions, oases of optimism in an otherwise barren landscape of budget cuts and government layoffs.

This is not sustainable because the shale oil and gas producers are having trouble making a real profit from shale production and are looking for ways that would deal with the 'funding gap' issues. We should have a better idea what is going on by the end of 2012. If you see a lot of asset sales it may make sense to run to legitimate producers.

 

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