Alaska’s Department of Revenue is predicting a significant drop in oil and gas production tax revenues: just $172 million this year compared to $2.6 billion two years ago.
The state reported that production taxes for the last fiscal year totaled nearly $390 million. Continued low oil prices are contributing to the decline.
While Alaska grapples with a projected $3.5 billion budget deficit, crude oil prices have plummeted to the lowest level seen in the last seven years this week.
Alaska’s revenue forecast is based on an annual average North Slope oil price of about $50 per barrel.
On Monday Alaska crude closed at just over $38 a barrel.