Alaska revenue forecast unchanged for FY2025; FY2026 outlook trimmed after oil price cut

Juneau — The Alaska Department of Revenue presented its spring 2025 revenue forecast to the House Finance Committee on March 13, telling lawmakers that the unrestricted general fund (UGF) outlook for fiscal 2025 is essentially unchanged from the fall forecast but that the FY2026 UGF projection declined by $70 million.

"The UGF forecast for FY '25 has a rare anomaly in the fact that it's essentially unchanged from the fall forecast," Dan Stickel, chief economist with the Department of Revenue, said during the presentation. He said the FY2026 revision is "essentially entirely due to the $2 reduction to the oil price forecast."

The chamber heard the department's assumptions and key figures: an Alaska North Slope oil price assumption of $74.48 per barrel for FY2025 and $68 per barrel for FY2026; an investment-return assumption of 7.9% annualized for the remainder of FY2025 and 7.65% beginning in FY2026; and a permanent fund transfer rule that uses a 5% draw on a trailing market-average of the fund's ending values. Stickel noted the permanent fund value used in the projection was about $81 billion and that the transfer mechanism smooths volatility.

Why it matters: the UGF is the pool of funds most commonly available for the Legislature to appropriate. Department officials told the committee total state revenues were roughly $16.3 billion in FY2024, are forecast at $17.4 billion in FY2025 and $15.9 billion in FY2026. Investment earnings, petroleum revenues and federal funds make up the largest shares of that total, the department said.

Details and drivers: The forecast shows unrestricted investment revenue at about $3.6 billion in FY2024, $3.8 billion in FY2025 and $3.9 billion in FY2026; petroleum-related unrestricted revenue (taxes and royalties) was about $1.9 billion in FY2025 and is forecast just under $1.6 billion in FY2026. Petroleum tax categories the department described were the oil-and-gas production tax (severance), the petroleum corporate income tax, and the petroleum property tax (a 20-mill baseline used in state calculations). Stickel explained that each $1 change in the Alaska North Slope oil price in the forecast equates to about a $35 million change in UGF revenue.

Production and costs: Department materials presented a 10-year production outlook produced with the Department of Natural Resources showing near-term stability in North Slope production and increases later in the decade as new fields — including Pikka and Willow — come online. Capital expenditures on the North Slope were presented at roughly $4 billion in FY2024 and forecast to approach $5 billion in FY2025 before falling and stabilizing in later years. Transportation costs to move oil to market were shown at about $10.53 per barrel in FY2024 and projected to decline modestly as volumes increase.

Nonpetroleum revenues and select taxes: Stickel highlighted nonpetroleum sources including corporate income taxes (nonpetroleum), mining license tax, excise taxes and fisheries-related receipts. The forecast calls for a rebound in the mining license tax to a little over $33 million in FY2025 after a net refund/small collections year in FY2024. The department reported the FY2026 general fund share of marijuana tax receipts at $6.6 million (the department noted that 25% of marijuana collections are assigned to the general fund and that 75% are designated for other uses).

Uncertainty and sensitivity: Officials emphasized forecast uncertainty. Stickel described the forecast as one plausible path and noted recent financial-market volatility since the forecast was compiled. The department presented sensitivity tables and reiterated the heuristic that a $1-per-barrel variance in the North Slope price translates roughly to $35 million in UGF change.

Legislative and fiscal-note follow-up: Committee members asked about pending oil-tax legislation in the other body (identified in committee discussion as Senate Bills 112 and 113). Stickel said the department has fiscal analyses and fiscal notes but was still updating any analyses based on the spring revenue forecast released roughly 24 hours earlier. Committee staff asked the department to provide dollar breakouts and updated fiscal notes to reflect the spring numbers.

Committee reaction and next steps: Lawmakers pressed for additional detail on local property tax interactions with the petroleum property tax, effects of tax credits and net operating losses on near-term petroleum receipts, and the implications of shifting consumer behavior for excise-tax collections (alcohol, tobacco, marijuana). Department staff agreed to provide additional breakouts and sensitivity details to committee staff. Co-chair Representative Josephson closed the hearing after questions and thanked Commissioner Adam Crum and Stickel for the presentation.

The department's spring 2025 revenue forecast document and supporting tables were released March 12, 2025; committee members requested follow-up materials, including dollar-level breakouts behind several slides and updated fiscal notes for pending tax bills.