JUNEAU — The state of Alaska is projecting revenue from oil and gas production taxes at $172 million this year, a dramatic drop from two years ago when production taxes totaled $2.6 billion.

Continued low oil prices contributed to the decline. “Nobody’s making any money on oil,” deputy Revenue Commissioner Jerry Burnett said.

In a report released Tuesday, the state Revenue department said production taxes for fiscal year 2015, which ended June 30, totaled nearly $390 million.

Alaska relies heavily on oil revenues to fund state government and is currently grappling with an estimated $3.5 billion budget deficit amid chronically low prices. In recent years, petroleum revenue provided about 90 percent of the money available for spending. Last year, that dropped to 75 percent, and it’s not projected to provide more than 72 percent during the rest of the decade, the report said.

Gov. Bill Walker is expected to release his budget proposal for fiscal year 2017 on Wednesday. In an opinion piece released Tuesday afternoon, Walker said his plan “might not make me the most popular governor, but I didn’t run to be popular. I ran because I love Alaska and am committed to doing the best by our state and our people.”

The state is also pinning high hopes on a major proposed liquefied natural gas project.

The revenue forecast is based on an annual average North Slope oil price of about $50 a barrel for the current fiscal year. Alaska crude closed just over $38 a barrel on Monday. This past spring, the department forecast a price of $66 a barrel.

The department is forecasting $1.6 billion in unrestricted general fund revenue for the current year. That is money that has no restrictions on how it can be spent. It’s down from $2.3 billion last year. The department attributed the projection to low oil prices.

North Slope oil production decreased from 531,100 barrels a day in fiscal year 2014 to 501,500 barrels per day last year. The department is projecting production around 500,000 during the current year.

A fuller report is expected to be published later this month.