By Larry Persily
Alaska lawmakers recently reached a compromise on the state budget, bringing good news for Alaskans eagerly anticipating their dividends. After a one-day special session, a $1,300 Permanent Fund dividend (PFD) was approved for this fall, with the potential for a smaller payment next year if projected oil revenues exceed expectations.
A Compromised Solution
The PFD amount and the capital budget were the final sticking points that led to the special session. While the Republican-led House and Governor Mike Dunleavy advocated for a larger PFD, the bipartisan Senate majority coalition insisted on the $1,300 dividend and a balanced budget without drawing from savings.
Energy Relief Payment
The budget also includes provisions for a second payment next year, known as an energy relief payment. If Alaska North Slope oil prices surpass the projected average of $73 per barrel over the next year, the additional tax and royalty revenue will be shared between a bonus payment to individual Alaskans, capped at $500, and a deposit into state savings.
A Budget Approved with Overwhelming Support
The final budget received overwhelming support, with only two no votes out of 20 Senate members and a 26-14 vote in the House. Both chambers’ consent signaled an end to the special session, which could have extended for up to 30 days according to the law.
The approved budget totals $6.1 billion in unrestricted general fund revenues, with the largest appropriations allocated to K-12 education, Medicaid, and the Permanent Fund dividend.
Investments in Local Projects
Following negotiations, more than $34 million was added to the budget for two dozen projects requested by House majority members. Notable additions included funds for the rebuilding of the Palmer Public Library, which suffered a roof collapse due to heavy snow, as well as contributions towards tearing down the derelict Polaris Hotel in Fairbanks and various infrastructure projects like harbor floats, airport runway extensions, and water and sewer improvements.
Unfortunately, the budget does not include any state funding for Wrangell projects, while other districts received financial support for their respective initiatives.
Varied Opinions and Concerns
Despite the budget’s passage, some legislators expressed their reservations. Representative DeLena Johnson voted for the budget but voiced her unease, emphasizing her worry about the consequences of further disagreement.
Representative Craig Johnson also voted in favor but acknowledged that he saw no better alternative in further negotiations. He weighed the potential shutdown, cost, and practicality, ultimately deeming the approved budget as the best possible outcome.
A Pragmatic Approach
While not all members were entirely satisfied with the outcome, House Speaker Cathy Tilton defended the decision made by ten members of her caucus to support the budget, emphasizing the importance of the process involved.
The compromise spending plan accommodated items favored by both the House minority and the Senate, including child care grants, public broadcasting, tourism and seafood marketing, and aid to home health care services. However, education advocates fell short in their push for a permanent increase in the state’s per-student public school funding formula, with a one-time increase of $175 million instead.
Reaching a Stalemate on the PFD
Considerable negotiations centered on the amount of the Permanent Fund dividend. While the House majority supported a $2,700 PFD, requiring a withdrawal of approximately $800 million from savings, the Senate held firm at $1,300 without touching savings.
The state constitution mandates a three-quarters majority vote to tap into savings, and it became clear that the Senate majority and House minority were not willing to support the House Republicans’ plan, making it impossible to reach a consensus.
A Struggle for Long-Term Fiscal Stability
Looking ahead, lawmakers may be called back into session this fall. Governor Mike Dunleavy intends to convene a 30-day special session to consider legislation for a long-term fiscal plan. Achieving a balance between state revenues and spending has been a challenge for Alaska’s elected officials since the 1990s.
As Alaskans anticipate their dividends and lawmakers prepare for future sessions, the compromise reached on the state budget brings both relief and fresh challenges to the forefront.
This story includes reporting by the Anchorage Daily News and the Alaska Beacon, an independent, donor-funded news organization.
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