Both the state House and Senate have passed their versions of the FY 2017 state operating budget and both make several hundred millions of dollars in cuts from the current FY 2016 spending. But with about a month remaining before the Legislature’s scheduled April 17 adjournment, several big spending issues are still unresolved that will affect the final bottom line: (1) A budget figure for oil and gas tax incentive payments, which depends on what happens to House Bill 247, now being worked in the House Resources Committee; (2) payments on state teachers’ and public employees’ pension liabilities; (3) certain education programs.

How these will come out remains to be determined, but overall, House and Senate leaders are hoping to keep the FY 2016 budget including a bare-bones capital budget at about $4.5 billion. A big unknown is what the spring revenue forecast update will say. The assumed oil price will surely be lower than used in the December, 2015 forecast ($49 per barrel). Some House leaders are working under an assumption that FY 2017 oil revenues may drop to $1.2 billion to $1.5 billion, down from about $1.8 billion estimated in December. If revenues are $1.5 billion and spending is $4.5 billion, that’s a $3 billion draw from reserves. While that’s steep, it would be better than the $4 billion assumed widely since the session began in January. Meanwhile, there’s no sense yet on what legislators may do about new revenues. Passage of any several tax bills proposed is unlikely, but some use of Permanent Fund earnings may be devised. More to come on all this.  (See our weekly Legislative Digest edition for more).