Energy states bracing for declining tax revenues

Energy states bracing for declining tax revenues
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Oil- and gas-producing states are bracing for revenue shortfalls brought on by declines in commodity prices. 

Bloomberg News reported Tuesday that several oil-dependent states are facing tax shortfalls after oil prices fell by a half over the past two years. 

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Income and sales tax collections are at a 17-year low in Oklahoma, according to the report, and North Dakota’s are at their lowest point since 2010.

Many states are dealing with budget shortfalls by dipping into rainy day funds or cutting spending — Wyoming is cutting $248 million from its state budget, Louisiana increased taxes on cigarettes and alcohol to help fill a budget deficit and Alaska’s governor last week vetoed nearly $1.3 billion in spending bills, with the state facing a $4 billion deficit.  

Several states — Alaska, North Dakota and Louisiana — have had their credit ratings downgraded as a result of the lower revenue. 

Declining employment and state tax revenue have been key symptoms of the cheap oil and gas prices that have recently taken hold in the United States and around the world. States are scrambling to make up for the lost tax revenue that one energy lobbyist in April said is causing “mini-recessions, if not depressions” around the country. 

Alaska lawmakers, workers and industry officials have said the state’s need for more tax revenue is a reason to expand drilling in the Arctic Ocean off the state’s northern coast. President Obama is currently considering whether to allow new drilling there over the next five years.