The state’s spring forecast is typically released in April, but Governor Bill Walker decided the information needed to be released now so the predicted changes in revenues is included in budget talks.
Department of Revenue Commissioner Randy Hoffbeck says significant changes amounting to around $300 million less revenues that developed since the state’s fall forecast due to low oil prices.
Hoffbeck: “The General Fund unrestricted revenue is now forecast at $1.3 billion for FY16, that’s a reduction of $277 million from the fall forecast, and it’s at $1.2 billion for FY 17, which is $564 million less than the fall forecast. The 2016 is about a 17 percent decrease in revenues.”
He says that forecast is based on a couple of assumptions: 1.) oil production will be at 500,000 barrels per day, and 2.) that the oil market’s price point will stabilize somewhere around $40 per barrel.
He says their data suggests oil prices will remain around $40 per barrel for 15 months and will then climb up gradually over the following four years to $60 per barrel. Previous revenue forecasts had been based on a $50 a barrel price.
Governor Walker reiterated that the impact of more revenue sources such as his proposed income tax and sales tax won’t be felt all at once. He says while the legislations can all be passed this year, the changes will be phased in.
Gov. Walker: “We’re looking at reduced spending significantly over the last couple years, now we need to look at a portion of the earnings from the Permanent Fund and new revenues, which we’ve tried to be as broad based as possible, not impacting any one particular sector of the economy more than any other sector of the economy. And really our message from this is that if we don’t resolve it this year, we will take the uncertainty into the next year, and the next year, and the next year.”
He says if legislators do not pass his New Sustainable Alaska Plan, he will call a special session because implementing a strategy this year is integral to Alaskans’ fiscal future.