JUNEAU (AP) -- North Slope oil prices will average nearly $1 higher per barrel this year than state officials estimated earlier, cutting the state budget deficit, the state Department of Revenue said Monday.
The state's immediate fiscal picture looks a bit less gloomy, Revenue Commissioner Wilson Condon said, but ''it doesn't really change the problems we face.''
North Slope oil is expected to bring an average of $21.50 per barrel for the fiscal year that ends June 30, says the department's spring revenue forecast. The state's estimate in December was $20.55.
The average price for the fiscal year so far is $21.28 per barrel, the department said. The new estimate assumes the price will inch up 4.5 percent more by June 30.
Unrest in the Middle East, combined with a strategic cut in production by members of the Organization of Petroleum Exporting Countries helped fuel a recent rebound in prices.
North Slope oil reached $26 a barrel two weeks ago, but has since fallen back by more than $3.50.
Alaska relies on oil for about 80 percent of state revenues, and the contribution increases substantially when prices are up. If oil averages a dollar more over the course of a year, that means $60 million more for the Alaska treasury.
The projected budget deficit for this fiscal year now stands at $826.7 million, down from $865 million in the prior forecast. For the coming fiscal year, the deficit is now projected at $963.4 million, down from the prior forecast of $1.1 billion.
Under the department's current reckoning, the state's Constitutional Budget Reserve, now $2.4 billion, will be drained by October 2004 if it's used to fill the deficit hole. Previously, the department figured the reserve would be depleted three months sooner.
''The higher prices are certainly good news, but they reduce the total three-year draw from the Budget Reserve by only $143 million for fiscal years 2002-2004,'' Condon said in a statement.
The forecast assumes the state's general fund spending will remain steady at $2.5 billion. It also assumes that non-OPEC production will continue to grow and world oil prices will gradually decline.
North Slope Crude delivered to West Coast markets is expected to slide to $17.50 per barrel by 2010, the department said.
Lawmakers in the state House have been working this session on several tax proposals and the use of Permanent Fund earnings to help close the state's fiscal gap, but so far have been unable to reach an agreement.
Earlier this session, the House rejected a plan to impose a statewide income tax for the first time since 1980.
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