JUNEAU — The state is facing a budget shortfall of about $1.65 billion this year, the Alaska Department of Revenue said Tuesday.
It's a far bigger problem than the Palin administration predicted two months ago in its last budget forecast. The revenue department in December forecast a shortfall of about $450 million and suggested an oil price rebound was coming.
That hasn't happened.
Gov. Sarah Palin just put out a statement saying she's reducing state general fund spending by $268.8 million and wants to use savings to absorb the rest of the budget shortfall.
She gave no specifics on cuts.
"With changing market conditions and declining oil prices, our state agencies have been working hard to find savings and still provide needed public services," Palin said in the statement. "Through savings targets we implemented at the beginning of the fiscal year and by efficiently managing our programs, we have been able to reduce the current budget and minimize supplemental funding. The more we reduce now, the less we will have to draw from savings at the end of the year."
The state has more than $7 billion in savings.
But that could go fast.
Legislators say they are expecting an additional shortfall of $2 billion to $3 billion in the next budget year, which starts in July.