Slumping oil prices have helped push Alaska’s potential budget deficit this year to $3.5 billion — an increase of $2.1 billion from what lawmakers expected in April.
The price of oil, forecast at $105 a barrel in the state’s spring revenue forecast, is now expected to average about $76 a barrel for the fiscal year that ends June 30. The price is forecast to dip even lower, to $66 a barrel, during fiscal 2016 before rebounding.
The average price last fiscal year was $107 a barrel, according to the fall revenue forecast released Wednesday.
The forecast expects unrestricted general fund revenue of $2.6 billion this year, down from $5.4 billion in 2014. That, combined with about $200 million in anticipated supplemental budget items like oil and gas credits, accounts for the predicted $3.5 billion deficit, said Jerry Burnett, a deputy Revenue commissioner. The revenue forecast itself does not delve into the overall budget.
Alaska relies heavily on oil revenue to fund the operations of state government. It has ridden this wave before and recovered. One major difference this time, Burnett said, is lower oil production. Production has been on a downward trend since the late 1980s.
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