Alaska’s annual oil fund payments could be facing cuts as the state grapples with a multi-billion budget deficit.
According to ABC News, the Alaskan government could forego handing out its annual oil wealth fund checks for the first time in 30 years.
Low oil prices have sunk the state’s oil revenues and contributed to a deficit of about $3 billion in the coming budget year.
Alaskan governor Bill Walker has also proposed capping the payments at $1,000 per eligible recipient.
Walker has threatened to veto all or part of the $1.4 billion oil fund appropriation included in the budget lawmakers have sent to him, ABC News said.
Alaska residents received a record-breaking $2,072 payment from the Alaska Permanent Fund in 2015.
Despite the record payments, Alaskan lawmakers had already begun discussing potential payment caps last year.
Walker told Reuters last September that he believed it was “time to have an open and honest conversation about our finances, and how resources like the Permanent Fund can be used as an asset.”
Sinking production levels have also put a dent in the state’s oil revenues.
According to the U.S. Energy Information Administration, crude production in Alaska has fallen from a high of 64,688 barrels per day in March 1988 to just 15,843 bpd in March 2016.
Production at Alaska’s Prudhoe Bay field has slumped to less than 300,000 barrels per day from its peak of 1.6 million barrels per day in 1988, the EIA said.
The Alaska Permanent Fund Corporation said in May that the fund’s was up only 1.2 percent in the third quarter of fiscal year 2016, trailing the performance benchmark return of 2.3 percent.
The Permanent Fund took in $719 million in statutory net income during the third quarter, bringing the year-to-date total to $1.9 million.
The payment amounts are calculated using a formula that averages the fund’s earnings over a five-year period.
Residents must live in Alaska for a full calendar year before they are eligible to receive payments.
The payments are usually distributed in early October.