Monday, July 17, 2017

How much would the Senate's proposal to advance pay cashable credits cost Alaskans ...

Earlier today we wrote an article discussing in part the Alaska Senate Majority's proposal in its version of the FY 2018 capital budget to "advance pay" so-called "cashable" oil credits accrued prior to Saturday night's passage of HB 111 (which terminates the program from July 1 forward).  See "We aren't done yet with cashable oil credits ...,"

The Senate's proposal is to deposit $288 million in state savings into the state's "oil and gas tax credit fund" this year, which would then be used to cash out additional credits potentially up to five years in advance of the time that the statutes require the state otherwise to pay them.

A reader asked this evening how much the Senate Majority's proposal to advance pay the credits "costs" Alaskans.

As we  thought about it, one way of looking at the issue is to analyze what the amount would mean to Alaska families if used this year to make an additional, supplemental payment on the PFD -- which the Alaska Senate Majority has proposed to underfund this year relative to the requirements of the governing statute -- instead of being used to overfund the "oil and gas tax credit fund."

In other words, to look at how much the Alaska Senate Majority's proposal would cost Alaskans in terms of a reduced PFD.

The answer is roughly $450 per Alaskan ($288 million, divided by 636,000 -- the number of Alaskans that qualified last year for a PFD,, or $1,800 for a family of four.

Put another way, if the money was used to make an additional payment this year on the PFD rather than to make "advance payments" of cashable oil credits, the level of this year's PFD would be at roughly 70% of its statutory level, rather than the 50% level which is currently reflected in the FY 2018 operating budget.

In short, adoption of the Alaska Senate Majority's proposal would cost each Alaskan 20% of their PFD.