It's official: the money from high oil prices and a new oil production tax is feeding a record level of revenue for the state of Alaska this year.
Revenue officials, in a final forecast issued Friday, expect the state's spending money will add up to $8.6 billion by the end of the fiscal year on June 30 - about 90 percent is from oil.
Fifty-eight percent of the total revenue is from the new oil tax. Passed in special session last fall, the new tax, with its so-called progressivity factor that kicks in extra revenues when prices are high, brought in $780 million more than the tax it replaced.
The Department of Revenue released its official forecast two days before the end of the legislative session.
State lawmakers use the forecasts to help determine the level of spending on state government. The department issued a preliminary forecast last month because of the shortened session this year, which was 90 days instead of 121 days.
State officials expect oil will bring in less money next year. The average price of oil over the year is expected to slip from $85 in 2008 to $83 a barrel in 2009 and oil production is expected to drop about 5 percent.
The forecast is the effort of about 20 experts from around the state, including economists, the director of the tax division, members of legislative finance division, the labor department and the Institute of Social and Economic Research at the University of Alaska.
Cherie Neinhuis, acting chief economist, said when members met in late February, they did things a little differently. They invited three outside experts to offer perspectives on financial markets and analysis, potential scenarios that could affect prices and the oil and gas industry.
"All three combined led us to forecast what we did, and I think at the time we felt pretty aggressive on the price forecast. It was much more aggressive than our previous forecast," Neinhuis said.
Previous forecasts predicted oil prices would drop to about $40 dollars a barrel by the year 2015, but that figure was revised upward to almost $80 a barrel.
Neinhuis said demand for oil and its prices are expected to remain high - driven by burgeoning economies in China and India. Even the softening economy should not affect demand in the U.S., at least for another year, she said.
Production on the North Slope is forecast to average about 722,000 barrels per day in 2008, down 2.4 percent from 2007. It's forecast to decline to 689,000 barrel per day in 2009.