Gov. Sean Parnell, a Republican, is set to release his budget proposal for the upcoming fiscal year on Thursday.
State revenue is forecast at $6.9 billion, a drop of roughly $2 billion from what the state took in last year.
The Alaska Department of Revenue attributes the shortfall mainly to a drop in oil revenue, which makes up 92 percent of the state's income.
In a statement released Wednesday, Alaska Democrats blame the projected shortfall on new oil tax laws slated to take effect in January.
House Speaker Mike Chenault, a Nikiski Republican, disagrees with that assessment.
"The value of the oil dropping, regardless of which program we were under, whether Senate Bill 21 or ACES, we were going to be spending in deficit mode," said Chenault, referring to the current and former oil tax structure.
Whatever is to blame, lawmakers in Juneau will have to consider priorities in the coming years.
"I want to see money there for road," Chenault said. " I want to see money in there for State Troopers. You know, those are the main concerns in my district."
Sen. Bill Wielechowski, a Democrat, said that "money for education and money for energy relief" are his top priorities.
"I think those are the things Alaskans are concerned with," he said. "They want to see great education and they want to see low cost energy."
The governor will unveil his budget Thursday at noon at the Denai'na Convention Center.