What’s in the Department of Revenue’s spring revenue forecast?

The Alaska Department of Revenue released its Spring 2025 Revenue Forecast, providing updated projections for oil prices, oil production, and state revenues.

Unrestricted General Fund revenue, prior to the transfer of revenue from the Permanent Fund Earnings Reserve Account, is forecasted at $2.6 billion for Fiscal Year 2025 and $2.3 billion for FY 2026. These figures indicate a relatively stable financial outlook despite fluctuations in oil prices.

The Alaska Permanent Fund is expected to transfer $3.7 billion to the General Fund in FY 2025 and $3.8 billion in FY 2026. These transfers remain the largest source of funding for government operations and the annual dividends paid to Alaskan residents. Permanent Fund revenue makes up 59% of the Unrestricted General Fund in Fiscal Year 2025. Over the next decade, the Permanent Fund’s contribution is anticipated to range from 62% to 65% of total UGF revenues.

Oil Prices
In FY 2024, Alaska North Slope oil prices averaged $85.24 per barrel. The Spring 2025 forecast projects a drop to an annual average price of $74.48 per barrel for FY 2025 and $68 per barrel for FY 2026. Future projections suggest oil prices will remain within a nominal range of $66 to $72 per barrel over the coming years.

Oil Production
North Slope oil production in FY 2024 averaged 461,000 barrels per day. The updated forecast pops it up to 466,800 barrels per day in FY 2025, followed by a slight decline to 464,000 barrels per day in FY 2026.

Long-term projections indicate a production peak of 663,500 barrels per day in FY 2034.

The Spring 2025 forecast reflects modest adjustments from the Fall 2024 Revenue Forecast, released in December 2024:

• ANS oil price estimates increases by $0.62 per barrel for FY 2025 but decreases by $2 per barrel for FY 2026.
• ANS oil production forecasts saw a minor increase of 200 barrels per day for FY 2025 but a reduction of 5,400 barrels per day for FY 2026.
• The UGF revenue projection for FY 2025 remains largely unchanged, while FY 2026’s forecast saw a $70 million reduction due to lower expected oil revenues.

The Democrat-controlled Alaska State Legislature appears to be prepared to send a budget to the governor that explodes spending on state worker pensions and the state Department of Education, at a time when revenue will be flat and then somewhat reduced. The only fund that would be able to patch the hole created by the budget’s current trajectory is Alaskans’ Permanent Fund dividends, which appear to be on the list for hospice.

The full report is available on the Alaska Department of Revenue’s website at https://tax.alaska.gov.