JUNEAU, Alaska (AP) — A new forecast from the Department of Revenue anticipates about $320 million less in unrestricted general fund revenue than earlier forecast between this year and next.
The spring forecast, released Friday, has been hotly anticipated as lawmakers seek to finalize budgets for state government and infrastructure projects before the Legislature's scheduled adjournment next week. The fiscal analysis for the governor's proposed oil tax overhaul also is based on the revenue forecast for oil prices and production.
The state had already been facing the prospect of having to dip into savings to cover costs for the current year, which ends June 30. Gov. Sean Parnell's budget director, Karen Rehfeld, said it's too early to say how big any budget hole will be until the final level of spending is known. The Senate is expected to pass its version of the capital budget Saturday, and House and Senate negotiators are working to hammer out differences on the state operating budget.
"Clearly, the drop in revenue will put more pressure on the overall spending," Rehfeld said in an email, adding that is why Parnell and lawmakers are working on a spending target for next year and toward a five-year fiscal plan. Parnell has proposed an overall spending cap of about $6.8 billion in unrestricted general funds for fiscal year 2014. That designation refers to money that isn't restricted in its use by the law, constitution or something else.
Parnell and legislative leaders say they want to limit spending amid declining oil production, but they realize, too, that if an oil tax-cut meant to boost investment and oil production passes, it will mean an immediate hit to state revenues.
Rehfeld has said that authorized spending for the current year includes about $7.9 billion in unrestricted general funds.
Revenue forecasts are issued each spring and fall.
The forecast released Friday revises the level of oil production for the current budget year, from about 552,800 barrels a day expected in the fall forecast to 538,300 barrels a day. The revised forecast for production next year is also lower — 526,600 barrels a day, compared to the earlier forecast 538,400.
Revenue said the 2.7-percent drop in forecast production for this year was largely offset by 54-cent increase in oil prices. The forecast anticipates about $35 million less in unrestricted general fund revenue this year and about $289 million next year.