Though the state of Alaska is anticipating more oil production in the fiscal year that starts July 1, money from oil continues to make up a dwindling share of general-purpose state revenue, according to a forecast published Wednesday by the Alaska Department of Revenue.
The projection, one of two per year published by the department, was released in conjunction with Gov. Mike Dunleavy’s draft budget for fiscal year 2027.
Altogether, the state expects to earn $6.2 billion in general-purpose dollars between July 1, 2026 and June 30, 2027, the next fiscal year. Officially known as “unrestricted general fund revenue,” it’s the section of the budget where lawmakers and governors focus most of their attention.
Federal money and money designated for specific programs can sometimes be shifted around to different priorities, but not easily. General-fund dollars can (and are) assigned to different priorities each year.
The forecast for next year’s unrestricted general fund revenue is higher by almost $260 million than the current year’s expectation, but most of that increase isn’t coming from oil.
Since 2018, an annual transfer from the Alaska Permanent Fund to the state treasury has been the No. 1 source of general-purpose dollars for services and the Permanent Fund dividend.
That’s more true than ever, according to the state forecast.
In the next fiscal year, just 23% of the state’s general-purpose revenue is expected to come from petroleum revenue — royalties, property taxes and production taxes.
The Permanent Fund transfer would account for almost 66% of the general-purpose money.
That difference comes despite an expectation that oil production will rise significantly between this fiscal year and next — from an average of 457,000 barrels of oil per day to 517,800 per day on average.
According to the Alaska Department of Natural Resources, that’s due to the startup of production in the Pikka oil field and other new production on the North Slope.
Despite that new production, oil revenue is expected to rise only slightly — from $1.43 billion to $1.44 billion.
That’s because the state is expecting North Slope oil prices to average just $62 per barrel during the next fiscal year, down from $65.48 in the current fiscal year.
At the same time, the Permanent Fund transfer is rising by almost $200 million, causing oil to become a still-smaller share of state revenue.
Even though revenue is expected to rise between the current fiscal year and the next one, the projected deficit in Dunleavy’s proposed spending plan stands at more than $1.8 billion.
If oil revenue alone were needed to fill that deficit, average North Slope prices would have to be near $100 per barrel, or the state would have to produce more than 1.2 million barrels of oil per day during the next fiscal year, an amount that is geologically, economically and mechanically unfeasible. The state hasn’t posted an annual average of over 1 million barrels of North Slope oil per day since the turn of the century.
James Brooks is a longtime Alaska reporter, having previously worked at the Anchorage Daily News, Juneau Empire, Kodiak Mirror and Fairbanks Daily News-Miner. A graduate of Virginia Tech, he is married and has a daughter, owns a house in Juneau and has a small sled dog named Barley.
Alaska Beacon is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.
