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Alaska facing $3.5 billion budget deficit in oil revenue slump

Lower oil prices are putting Alaska in a budgetary bind. Other states like Louisiana have already made revisions to the 2015 budget based on the decrease in revenue from the oil and gas industry. Alaskan Governor Bill Walker has been forced to push back six projects planned for this year. The projects placed on the back burner include a natural gas pipeline for North Slope, a hydroelectric dam and two new roads, according to Petro Global News.

For the time being, these projects, which already have contracts with industry companies, will be delayed until state officials can complete a review of Alaska’s budget. A gap of $3.5 billion is currently hanging over the state government. Officials anticipate a finalized prioritization of state projects during the next legislative session between January 20 and February 18.

Alaska had initially anticipated a $1.4 billion deficit, but the recent plummet in oil revenues caused it to inflate the original projection by 250 percent. A major contribution to this discrepancy is the forecast of oil at $105 per barrel. The spring budget was drafted before oil crashed to a five-year low.

While contracted companies will continue to receive funds required under the agreement, such as employee pay, Walker has requested that a hiring freeze be initiated, as well as a brief moratorium on signing new contracts.

In related news, Will North Dakota follow Alaska in budget problems?