The state of Alaska's expected revenue surplus has surged another $1.9 billion for the state's current fiscal year 2008, which ends June 30, and an additional $1.78 billion for fiscal 2009, beginning July 1.
Alaska's Department of Revenue released the new estimates March 14. They are based on higher oil prices than were used in previous revenue estimates released in January.
When added to a $4.5 billion surplus estimated by Gov. Sarah Palin last December for both years, the additional revenue increases the two-year surplus to $7.2 billion.
State legislators approved a plan to appropriate $3.5 billion of the surplus into two state cash reserve accounts, but the legislation awaits Palin's approval. The governor also has proposed establishing a $1 billion endowment for state transportation projects to supplement declining federal funds.
The updated revenue forecast assumes an average sales price for North Slope crude oil of $84.18 per barrel for fiscal 2008, up from an average price of $61.63 per barrel assumed in the previous estimate.
If crude oil prices stay in the $90-plus per barrel range for the remaining three months of the fiscal year the final revenues for fiscal 2008 will be higher.
On the downside, the department is forecasting an acceleration of oil production declines. North Slope oil production is expected to average 719,000 barrels per day during fiscal 2008, a 2.7 percent decline from 2007. But production is now expected to decline 5.8 percent in fiscal 2009 to an average of 678,000 barrels per day.
The updated revenue forecast released March 14 puts total state unrestricted revenues, or money that is available for appropriation by the Legislature, at $8.5 billion, up from $6.6 billion estimated in January.
The new estimate is $3.4 billion up from unrestricted revenue during fiscal 2007, which ended last June 30.
Total funds received by the state for 2008, the current year, is estimated in the new forecast at $15.64 billion, including federal funds and restricted state revenues, such as oil royalties paid into the permanent fund, certain rents and license income and investment income of the constitutional budget reserve, a state cash account that requires a two-thirds vote of the Legislature to spend.
The new estimate of a $7.2 billion surplus for fiscal years 2008 and 2009, when combined with the current $3 billion balance in the constitutional budget reserve and the roughly $6 billion value of the permanent fund earnings reserve account would give the state $16.2 billion in liquid cash assets that are available. In April, the Department of Revenue will issue a more complete and updated spring forecast.
Tim Bradner is a reporter for the Alaska Journal of Commerce. He can be reached at tim.bradner@alaskajournal.com
