Next Year’s State Revenue Forecast Appears Strong

Dave Donaldson, APRN – Juneau

With more than $11 billion in reserves,  the state is looking for another good year as far as having money to spend.  But don’t look for more big spending next year.

Revenue Commissioner Pat Galvin Friday morning released the most recent revenue forecast –showing an expected revenue of $5.4 billion in the current fiscal year, and $5.7 billion available for the budgets the governor will give the legislature on Dec. 15.  He says Alaska is in the strongest financial position in its history.

The forecasts are mostly based on the expected price of oil – which is directly linked to national and world economic conditions.   The department’s economists predict that the annual average of price of a barrel of oil for the current year – which ends at the end of June 2011 – will be $77.96.  For the following fiscal year, they expect oil to average $82.67.

Oil this morning was trading at $87.80 a barrel.

Galvin says oil production will drop slightly in the coming year, but will begin to trend higher in 2012 because of new fields expected to come on line then. He credits the oil tax passed by the legislature in 2006 for the strong economic returns.

Galvin would not discuss the possible effects of Governor Parnell’s campaign statements that the oil and gas tax might need to be changed this year to encourage yet more investment.   Galvin is leaving his revenue position when the new Parnell administration takes over next Monday.

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