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The state is looking at about a $1.65 billion shortfall for fiscal year 09, which ends in June, according to the latest estimates.

Meanwhile, Gov. Sarah Palin sent her FY09 Supplemental Budget to the Legislature, touting $268 million in reductions. That would bring the estimated gap to $1.36 billion.

But House Finance Committee Chair Rep. Mike Hawker, R-Anchorage, issued a statement this afternoon suggesting the governor's cuts are really no such thing.

"The apparent reduction of $218 million is real, but we have to look at the components," Hawker's statement says.

"There’s $200 million that reflects lowering the estimate of the amount of oil and gas exploration credits that were going to be paid. That’s not a savings. That’s really a fact that we’re not getting the exploration credits claimed that the administration anticipated were going to be claimed. So that’s not a reduction."

He also notes a 415 million general fund reduction in medicaid that was already not going to be spent.

That leaves about a $17 million unallocated reduction, something he didn't expect the Finance committees to regard favorably.

The supplemental budget — which includes a request to the Legislature to dip into state savings to balance the budget at the end of the fiscal year — is on the Finance committee's agenda for 9 a.m. Wednesday, Feb 4. Karen Rehfeld, director of the state Office of Management and Budget, is expected to testify.