Higher oil prices reduce, but don't eliminate gap
The Department of Revenue projects North Slope oil will average $20.50 per barrel in fiscal year 2003, which begins July 1, and $19.50 per barrel in fiscal year 2004. That’s compared to a historical average of $17.50. The 2003 projection is up $1.70 from the department’s fall forecast.
Oil is the revenue source for nearly 80 percent of state general fund spending.
Assuming stable budgets, the department now expects the fiscal gap to come in slightly under $1 billion in 2003 and slightly over in 2004. The Legislature, without new revenue, could plug those gaps by drawing from the dwindling Constitutional Budget Reserve.
"At those projections, the budget reserve will run out of money in October 2004," said Wilson Condon, Revenue commissioner, in a written statement. "The higher (oil) prices are certainly good news, but they reduce the total three-year draw from the budget reserve by only $143 million for fiscal years 2002-04."