The Alaska House approved the operating budget on Monday, allocating $1.7 billion for $2,689 Permanent Fund dividends for this fall. However, there is a shortfall of about $600 million, which means the budget may need to rely on cuts in the Senate or dipping into the Constitutional Budget Reserve to balance. Using funds from this reserve requires a three-quarters vote from both the House and Senate.
The budget comes to about $6.4 billion. The House minority voted against using the Constitutional Budget Reserve to balance it, and also voted against a $175 million one-year appropriation for education, leaving room and plenty of items for negotiations with the Senate before the constitutional adjournment date of May 17. The Senate will probably tie the Permanent Fund dividend appropriation and education funding to the Constitutional Budget Reserve, forcing the dividend down. Generally, the budget gets hammered out in conference committee at the very end of the legislative session.
“Despite the spring forecast’s less-than-positive revenue projections, the budget we passed today provides for a robust PFD and other essential services like public safety and education,” said House Finance Co-Chair DeLena Johnson of Palmer. “There is no doubt that Alaska needs a comprehensive fiscal plan; in the meantime, this budget strikes a delicate balance between our current situation and the services Alaskans expect and deserve.”
The House vote was largely divided along caucus lines, with the Republican-Bush-led majority voting in favor and Wasilla Republican David Eastman aligning with the Democrat-led caucus against advancing the budget to the Senate. Eastman is not part of either caucus.
“This operating budget puts us one step closer towards a sustainable fiscal plan for the state of Alaska. The looming issue of falling state revenue has cast a shadow over the budgetary process the past few years,” said House Speaker Cathy Tilton of Wasilla. “This budget – along with the fiscal working group and the thorough work of the House Ways and Means committee – shines a light at the end of the tunnel. I am excited to see the meaningful steps this body will continue to take towards a more stable and predictable fiscal future.”
HB 39 and the Mental Health Budget, HB 41, move to the Senate for a month of deliberation. On the Senate side, the liberal-led majority has expressed support for a dividend of $1,300 and permanent increases in school spending through a higher Base Student Allocation, the formula for public school spending..
The $2,700 Permanent Fund dividend approved by the House on Monday is smaller than the amount proposed by Gov. Mike Dunleavy in his budget, which was $3,400 – the full statutory amount, which needs an appropriation of around $2.2 billion. The House dividend plan is closer to the 50-50 split that some have proposed for a new dividend formula, while the Senate plan allocates 75% of Permanent Fund earnings to the government and 25% to PFDs.
Read Gov. Dunleavy’s budget details at this link.
