Alaska’s got a lot less money than expected a few months ago, as a spring revenue forecast released Tuesday predicting average oil prices of $85.25 for the fiscal year ending July 1 and $73 for next year means lawmakers are facing huge deficits and huge questions about downsizing Permanent Fund Dividends as they craft a budget during the coming weeks.<\/p>\n
The lower forecast by the Alaska Department of Revenue means there is a deficit of about $220 million in this year’s budget and $917 million in the budget Gov. Mike Dunleavy is proposing for next year. Lawmakers said Wednesday they intend to address at least this year’s gap by tapping into the roughly $2.5 billion Constitutional Budget Reserve, which requires a three-fourths vote of the Legislature, so that among other things emergency supplemental funds to help resolve a food stamp backlog crisis<\/a> are not held up.<\/p>\n [PFD application deadline is approaching<\/a>]<\/ins><\/p>\n But the governor and legislative leaders agreed Tuesday that coming up with a spending plan for next year and beyond will be a far more complex series of negotiations.<\/p>\n “The real process of hammering out this budget begins now,” Dunleavy said during a press conference in Anchorage as the revenue forecast was released. “Again, we’re all going to have to come together. It’s a very diverse Legislature.”<\/p>\n Members of both the House and Senate finance committees are scheduled to discuss the revenue forecast with officials from the revenue department during hearings on Wednesday.<\/p>\n A year ago, following Russia’s invasion of Ukraine, the revenue department estimated prices would average $101 during the current fiscal year. Prices of $88.45 for the current year and $81 next year were predicted by revenue officials when the legislative session began in mid-January.<\/p>\n The lower-than-forecast prices are do to ongoing uncertainty in global markets due to events ranging from the ongoing Ukraine war to the recent failure of a U.S. bank that is causing concerns about a possible large-scale economic downturn, Adam Crum, commissioner of the revenue department, said during Tuesday’s press conference.<\/p>\n The size of the deficit in Dunleavy’s budget is due largely to a Permanent Fund dividend calculated according to the 1982 statutory formula, which at present would exceed $3,000 (but below the $3,860 dividend he estimated in December based on the fall revenue forecast).<\/p>\n The Republican-led state House, which adopted its version of next year’s budget on Monday, is facing a far lower deficit by using a different formula that would divide Permanent Fund earnings equally between state spending and dividends (a so-called “50-50 plan”) resulting in a PFD of about <\/a>$2,700<\/a>. Leaders with the state Senate’s bipartisan majority, however, said Tuesday the 50-50 split may still not be sufficient for a balanced budget and are discussing a 75-25 split that would result in a dividend of about $1,300<\/a>.<\/p>\n There are also vast differences in major spending priorities of the governor and legislative majorities, such as whether to raise the per-student education funding formula. Dunleavy proposed no increase, while the Senate majority that’s been the most active hearing the issue is seeking a $1,000 increase in the current $5,960 allocation.<\/p>\n While oil revenue and Permanent Fund earnings account for most of the state’s general fund revenue, discussions about other sources such as a broad-based tax have been discussed for years. Dunleavy and legislative leaders offered a collective “all options open” response when asked what additional revenue sources might receive consideration this session.<\/p>\n Dunleavy used Tuesday’s revenue forecast to again pitch his plan to enter carbon credit markets, which he claims could earn $900 million or more a year. House and Senate legislative leaders, speaking during press conferences on Tuesday, said that while they are encouraged so far about the longer-term potential of carbon, any revenue from it is likely at least a few years away.<\/p>\n • Contact reporter Mark Sabbatini at mark.sabbatini@juneauempire.com<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Coming up with a spending plan for next year and beyond will be a complex series of negotiations. <\/p>\n","protected":false},"author":868,"featured_media":96870,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":9,"footnotes":""},"categories":[9,4],"tags":[34,873],"yst_prominent_words":[],"class_list":["post-96869","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home","category-news","tag-alaska-legislature","tag-oil-prices"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/96869","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/868"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=96869"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/96869\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media\/96870"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=96869"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=96869"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=96869"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=96869"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}