Alaska state government forecasts lower revenue for this year and next

Policy Director Mike Barnhill of the Office of Management and Budget answers a reporter’s question about the most recent version of Gov. Michael Dunleavy’s state operating budget in the governor’s cabinet room in the Capitol in Juneau on Feb. 13, 2019. OMB Deputy Director Laura Cramer, is seated next to him. They were at a budget briefing held for the press.
Acting Revenue Commissioner Mike Barnhill, then with the state Office of Management and Budget, in February. OMB Deputy Director Laura Cramer is seated next to him. On Friday, Barnhill said a decline in the revenue forecast is consistent with oil prices being lower in recent years than they were historically. (Photo by Skip Gray/360 North)

The money coming into the state government from oil and other sources is forecast to be down this year and next.

The Alaska Department of Revenue forecasts $187.3 million less in state revenue this year than it did in the spring. The department released the forecast on Friday.

Acting Revenue Commissioner Mike Barnhill said the forecast is consistent with oil prices over the past five years being lower than they were historically.

“We still have a strained revenue situation, and that’s going to continue into the fiscal ’21 year,” he said, referring to the 12 months beginning next July. “So we will still have difficult discussions within the Legislature about how to balance the budget.”

The decrease is based in part on a drop in the price of oil. It was projected to average $66 per barrel in the spring. Now the forecast is $63.54 per barrel.

The forecast for oil production is also down, from an average of 529,500 barrels per day this year to an average of 492,100 in the new forecast.

Money coming into the state from sources other than oil is up, from a forecast of $469.1 million in the spring to $502.9 million in the new forecast.

The forecast for state revenue is down for next year as well, from $5.33 billion in the spring to $5.06 billion now, a drop of $263 million.

That adds to the challenge facing Gov. Mike Dunleavy and the Legislature in writing a budget for next year. Dunleavy’s budget proposal is due by Dec. 15.

Oil forecasts were lowered for the rest of the next 10 years as well. That could make  it harder to bring the state budget into balance in the long run.

Andrew Kitchenman

State Government Reporter, Alaska Public Media & KTOO

State government plays an outsized role in the life of Alaskans. As the state continues to go through the painful process of deciding what its priorities are, I bring Alaskans to the scene of a government in transition.

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