The House of Representatives has advanced a proposed state budget with a $1,500 Permanent Fund dividend for eligible Alaskans this fall.
Members passed the annual operating budget bill along caucus lines on a 21-19 vote April 14, with the Republican minority unanimously against the spending plan.
Lawmakers spent four days debating amendments — additions, cuts and reallocations to the draft budget — amid deep political divides around state priorities, how to spend war-driven higher oil revenues and how to balance paying for government services versus distributing more cash to Alaskans through the dividend.
The budget now moves to the Senate for consideration, where it will be revised and then a compromise version will be negotiated between the House and Senate before it goes to the governor for possible vetoes.
Senate leadership has talked of a smaller dividend than $1,500 to allow more spending on other needs, such as school repairs statewide. Last year’s PFD was $1,000.
The Legislature faces an adjournment deadline of May 20.
“The difficulty we’re in is that overall, the war in Iran, which is most unfortunate, is very helpful to budgeting,” Anchorage Rep. Andy Josephson, co-chair of the House Finance Committee that drafted the budget, said after the vote.
The U.S.-led war against Iran has led to severe curtailments in oil and gas shipments from the Persian Gulf, driving up oil prices which adds to Alaska’s state oil tax and royalty revenues.
“But the Alaska people are hurting more, particularly when it comes to fuel prices. So that’s a problem as well,” Josephson said.
Lawmakers have been closely watching Alaska oil prices. State forecasters project a potential $500 million boost in state revenues next year, but lawmakers are divided on what that should mean for state spending.
The all-Republican House minority caucus advocated for putting money toward a much larger Permanent Fund dividend, even as high as $3,800 per person, but the majority coalition comprised of Democrats, independents and a couple of Republicans pushed the balance toward spending on public services, particularly schools.
The House-approved budget includes nearly $158 million in a one-time funding boost for public schools and tens of millions for disaster relief, firefighting, heating assistance and higher operating expenses at the state’s prisons.
The additional state aid to school districts could direct as much as $350,000 more to the Wrangell school district for the 2026-2027 school year, as estimated by District Business Manager Kristy Andrew last week.
That would cut by more than half the district’s projected $563,000 budget deficit, reducing how much the school board would need to pull out of savings.
At $1,500, the dividend would cost nearly $1 billion, putting it in second place in state spending to the almost $1.3 billion budgeted under the funding formula for public K-12 education.
Minority Republican lawmakers introduced nearly 50 amendments on the House floor over three days, which varied from cutting additional funding for education, funds for teacher recruitment and for community and regional jails, to cutting travel budgets and reallocating public employee salaries for vacant positions to add funding for school maintenance. Most of them failed along caucus lines.
The minority’s most strident call was for a maximum Permanent Fund dividend of about $3,800.
“The removal of the statutory dividend — that equates to removing $42.5 million from the economy of my district,” said Homer Rep. Sara Vance.
Even with higher oil revenues, paying that large of a dividend would have required either massive cuts to public services and/or a large drawdown of the state’s budget reserve fund.
House majority members said they decided on the additional one-time increase in state aid to schools as many districts are grappling with decisions on school closures, staff cuts and increasing class sizes to address large budget shortfalls — including the potential closure of three schools in Anchorage, three schools in the Matanuska Susitna Borough, four schools on the Kenai Peninsula and two of the four elementary schools in Ketchikan.
Josephson said one-time funding this year for schools seems to be more politically viable than an attempt to permanently raise the state funding formula, given the governor’s history of vetoing education funding increases.
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