Alaska depends on oil tax revenue from development on state lands to fund much of state government. Oil prices are volatile, and Alaska's economy has ridden out ups and downs. With no state income or sales tax and no commitment to tap the $52 billion Permanent Fund, oil dictates most everything in Alaska.
Alaska's oil production peaked at more than 2 million barrels a day in 1989. Since then, it's steadily declined. Meanwhile, Alaska lawmakers have instituted various policies for taxing oil production.
As oil prices have gone up and down, so has state spending. At times of low oil prices, the state has found itself in a dangerous climate of trying to fund government, which covers everything from schools to roads to state troopers and much more. At times of high oil prices -- and tax structures that took advantage of these rising prices -- the state accumulated billions of dollars in savings and surpluses. Now that money is at risk of drying up.
But the growing value of the Permanent Fund, which has soared about $13 billion in five years, is a glimmer of good news amid Alaska's economic woes. At the same time, growth in the number of state residents -- many of whom collect a Permanent Fund dividend -- appears to have leveled off.
