ANCHORAGE - Gov. Sarah Palin began the 2009 session of the Alaska Legislature on Jan. 20 faced with a potential state deficit in the billions of dollars.
Palin said the state has saved money and, with oil prices in flux, it's too soon to say what the budget will look like.
Palin said this session should be about cooperation between her and legislators, especially on proposals like an in-state natural gas pipeline. Business people, legislators and state officials have discussed such a "bullet line" in recent months to bring cheaper energy to Fairbanks and Southcentral. Palin didn't give a specific plan, but said it would be her main effort.
"My focus is going to be on energy and making sure that Alaskans have access to their resources. In-state gas is top priority for me," Palin said in an interview.
If oil prices average $40 a barrel between now and the end of the budget year in June, the state will fall $2 billion short in covering the current budget, said legislative finance director David Teal. Should prices remain that low over the following year, legislators said the deficit could rise by an additional $3 billion.
Savings could cover such a shortfall for a while. The state has more than $7 billion in savings accounts, most deposited last year when oil prices soared.
Palin's spending plan for next year is based on her revenue department's forecast that oil will rise to average more than $70 a barrel in the year starting in July. The U.S. government's Energy Information Administration is predicting prices more in the $43-$55 barrel range over the next two years. That is a sore point with some legislators, who say the governor is leaving them to deal with a big mess if the state's forecast does not come true.
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