With oil prices currently below $30 a barrel, the Palin administration's prediction that prices will average $74 during the year that starts July 1 is unrealistic, said state Rep. Mike Hawker, R-Anchorage. The state could face a multibillion-dollar revenue shortfall for that year, and the governor should revise her proposed budget, said Hawker, who will co-chair the budget-writing House Finance Committee next year.
"The governor's budget anticipates the most optimistic circumstances," Hawker said. "We also have to be honest with the people of Alaska and look at perhaps the more difficult circumstances of significant deficits, which we will face if the price of oil does not rise rapidly."
A Palin spokesman said there is no immediate reason to revise the budget proposal. "Depending on what happens with the price of oil, there could be some dramatic shifts, but you want to wait to see what happens," said Bill McAllister. "With oil price forecasting, the one thing you know about it is you're going to be wrong, so we have to see in what way we were wrong on the upside or the downside."
The governor's budget proposal predicts a surplus of $388 million in the next fiscal year if oil prices do average out at $74 a barrel.
Hawker said the revenue shortfall could be as high as $3 billion because of lower oil prices.
The Legislature starts meeting on the budget and other matters next month.
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