With oil prices near a five-year low budget officials in about a half-dozen states have begun cutting budgets and some predict Alaska may have to dip into its savings.
In this year’s spring revenue forecast oil prices were suspected to drop to $105 a barrel and are now expected to average $76 per barrel for the rest of the fiscal year.
The price is forecast to continue its slump to $66 a barrel during fiscal year 2016 before rebounding with increasing oil production starting sometime in 2016 and 2017.
In his inaugural address Governor Bill Walker warned of tightening budgets.
Walker: “We’re heading into some lean times. There is no reason we cannot turn that around. We live in one of the most resource-rich states in one of the wealthiest countries in the world. However, the key to every growing economy is low-cost energy. Alaska is rich in resources. We don’t have a resource problem. We have a distribution problem.”
Based on the slumping oil prices, the state of Alaska is facing a $3.5 billion budget deficit, $2.1 billion more than when lawmakers left Juneau in April.
The fall revenue forecast expects unrestricted general fund revenue of $2.6 billion this year, down from $5.4 billion in 2014.
