Who pays what among state’s resource industries? All are net positive for the state against expenses

A new study by University of Alaska researchers documents who pays what among the state’s natural resource industries. The study compares revenues paid to state and local governments against costs imposed on the state.

Tourism is included as a “resource” industry because it relies on the state’s natural beauty and its wildlife to attract visitors and brings in money from outside the state, as do fisheries, mining and oil and gas.

Bob Loeffler and Steve Colt of the University of Alaska’s Institute of Social and Economic Research did the work, which was released Feb. 24. A similar report was done in 2015. The new report updates it with average revenues and expenditures for state Fiscal Years 2016-2019. The conclusions in 2022 are similar to 2015, although the numbers are different.

Commercial fishing costs the state a bit more, $8.3 million, than state taxes paid, but when municipal revenues paid by fishing are included things go positive. Average annual state revenue for FY 2016-2019 was $64.4 million per year; average expenses (for fisheries management) were $70.9 million per year, for a net deficit for state government of $8.3 million per year. However, when average taxes paid to local governments are included ($49 million per year) the public benefit goes positive by $40.7 million.

Mining pays the state far more than it costs for agencies to regulate the industry and when minerals taxes to municipalities are included miners are far in the black in the benefit/cost comparison. Average annual state revenue for FY 2016-2019 was $66.6 million per year; average expenses for agency management were $6.5 million per year, for a net to the state government of $59.9 million per year. When average taxes paid to local governments are included, at $36.8 million per year, the public gain is $96.7 million per year.

Tourism, like mining, pays far more to the state in taxes than the industry costs even including capital costs to support visitors. When revenues to municipalities are included the benefits over cost are even more substantial. Average annual state revenues attributed to tourism for FY 2016-2019 was $66 million per year; average expenses (mainly for state-funded marketing) was $19.9 million per year, for a net positive (for state government) of $41.1 million per year. However, when average taxes paid to local governments are included ($101.8 million per year) the equation goes positive by $81.8 million.

Oil and gas was the biggest money-maker among resource industries. Revenues averaged about $2.1 billion per year from FY 2016-2019. State expenses were not available but revenues far exceeded those. It should also be noted that the four years included in the study included the sharp recession that began in 2016. In other years oil revenue would be far greater.

The state’s biggest source of income, however, is the portion of Alaska Permanent Fund income shared with the state to pay Permanent Fund Dividends and to help support the state budget. This now amount to about $3.1 billion per year, paying about two thirds of the state’s general fund budget.