Alaska revenue forecast shows lower unrestricted receipts as oil price and production outlooks fall

Juneau — The Alaska Department of Revenue on Jan. 24 told the Senate Finance Committee it expects total state revenue to fall modestly in the near term and that unrestricted revenue available for legislative appropriations will be weaker than earlier projections, driven largely by lower oil-price and production assumptions.

Dan Stickel, chief economist for the Department of Revenue, presented the fall 2024 revenue forecast and told the committee that the state received $16.3 billion in total revenue in fiscal 2024 and the department is forecasting $16.8 billion for fiscal 2025 and $15.7 billion for fiscal 2026. "The fall forecast was released on December 12th, concurrent with the governor's budget release," Stickel said, summarizing the department's published Revenue Sources Book and its assumptions.

The forecast assumes an Alaska North Slope oil price of $73.86 per barrel for fiscal 2025 and $70 per barrel for fiscal 2026, down roughly $4 per barrel from the spring outlook. Stickel said updated futures-market data and some actual price data informed the change. He noted the department used actual investment returns through October and assumed a 7.9% return for the Permanent Fund for the remainder of fiscal 2025 and a 7.65% annual long-term return thereafter.

Those price and production adjustments translated into a roughly $220 million reduction in unrestricted general fund revenue for fiscal 2025 and about $232 million for fiscal 2026, Stickel said. He also gave a sensitivity rule of…