Elections over, but grim fiscal outlook remains

A bump in oil price average will increase state revenues by $190 million this fiscal year, state budget officials told us, but the overall picture hasn’t improved. Meanwhile, the state’s fall revenue and oil production forecast, state economists’ best guess for the near future, is due out in early December.
A somewhat higher oil price average over forecasts should result in a gain of $190 million in state revenue in Fiscal Year 2017 if the trend holds, we were told, but that doesn’t make a big dent in a $3 billion deficit.

The most recent oil forecast was for an average price of $38.89 per barrel and unrestricted general fund revenues of $1.186 billion for FY 2017. However, oil prices are actually averaging $45.55, we’re told, which could increase revenues. The cautionary note: “As we well know, attempting to pinpoint the price of oil is a spin of the lottery wheel,” we were told by a budget official. “The bottom line is that our revenue picture is incrementally better but a $3 billion budget gap
persists and the year is far from over.” Fiscal Year 2017 ends next June 30.
We published projected budget deficits and Constitutional Budget Reserve balances earlier, and there are no changes in the estimates, we’re told:
Projected CBR draw (in millions) to cover budget deficits:FY2016: $3,920.7
FY2017: $3,177.9
Projected CBR year-end balances
FY2016: $6,318.7
FY2017: $3,265.9Note: The CBR balance at the end of FY 2017, or June 30, 2016, is sufficient to cover only one more year of a deficit in the range of $3 billion.
Oil taxes will again be on the Legislature’s agenda in 2017