Citing declining oil prices, Alaska Gov. Sarah Palin Wednesday submitted a package of amendments to her fiscal 2010 budget proposal that she said would reduce general fund spending by $445.5 million.
The general fund budget is almost entirely dependant on revenue from taxes on oil production. The state Department of Revenue issued an interim revenue forecast Wednesday that assumed an average oil price per barrel of $57.78, down from its previous fall forecast of $74.41. The result is estimated general fund revenue of $3.18 billion in fiscal 2010, down $2.1 billion from the fall forecast.
“Given current market conditions and oil prices, we have made reductions in the proposed spending plan for next year,” Palin said in a statement. “We are continuing our efforts to provide important public services, while cutting back on areas that can certainly wait until we see improvement in our revenue stream.”
Palin wants to reduce the operating budget by $382 million, with the largest chunk coming by eliminating $166 million of additional payments that had been proposed to reduce the unfunded liabilities of the state’s two main employee retirement programs. The state’s regular annual contribution to those programs would remain unchanged.
Lower oil prices mean Alaska will be spending more than it takes in — even after the budget reductions.
The state expects to draw $1.36 billion from its reserves during the current fiscal year, and $1.2 billion in fiscal 2010. The government has more than $8 billion in various reserve accounts, Palin said.
