JUNEAU — Falling oil prices are projected to slice $925 million from state revenues this year and next, bolstering the argument of legislators who support a smaller Permanent Fund dividend this fall and the years beyond.

More immediately, lower oil prices have torn big holes in the state budget. The Department of Revenue on March 21 released new estimates showing a deficit of about $220 million in the fiscal year that ends June 30.

Legislators have agreed to use savings to fill this year’s deficit by spending from the state’s Constitutional Budget Reserve, they said March 21, but itâ€...