The Alaska House of Representatives voted Saturday to turn an oil-price surge into money for schools, repayment of tax credits the state has owed to oil explorers for years, and $2,600 payments for Alaska residents this fall.
The House voted 25-14 to send its state operating budget proposal to the Senate, which is developing its own version. The two budget plans, which set spending for public services starting with the new fiscal year on July 1, will be negotiated into a compromise bill and sent to Gov. Mike Dunleavy, who can accept or reject any items in the budget bill line by line.
The Legislature faces a May 18 adjournment deadline.
“Yes, the budget is larger than last year, but I think it’s not due to any one group. We’ve all had a hand in that,” said Nome Rep. Neal Foster, co-chair of the House Finance Committee.
Oil prices have surged since the Russian invasion of Ukraine in late February, and the state expects more than enough revenue to pay for the higher budget. Oil prices were climbing even before Russia attacked Ukraine, moving up from the high $60s per barrel last August to $90 by the end of January and about $105 late last week.
Larger oil production tax and royalty payments have swelled the state treasury, easing the budget pressure after several years of lower prices.
Looking to stash away some of the windfall, the House budget put $2.2 billion into the Statutory Budget Reserve, an empty state savings account. Lawmakers said that as the budget process continues, some of that money could instead be earmarked for construction, renovation and maintenance spending, known as the capital budget. That spending bill will be written in the Senate this month.
The biggest addition to the operating budget passed last Saturday is a second year of K-12 school funding. The House plan contains money for both the 2022-23 school year and the 2023-24 school year, at $1.2 billion per year. Advance funding for the next year is intended to reassure school districts that the money will be there.
For individual Alaskans, the House budget includes a $1,300 Permanent Fund dividend this year, plus an “energy rebate” of $1,300. “We expect this to be paid out at the same time as the dividend, for a total payout of nearly $2,600,” Foster said.
Dunleavy proposed a Permanent Fund dividend of about $2,600, plus an additional supplemental payment of $1,250.
The House Republican minority criticized the Democratic-led majority coalition budget plan of a $1,300 PFD and a similar amount to help Alaskans with high energy costs, asking why the Legislature wouldn’t simply pay a $2,600 dividend.
Members of the majority, including Speaker Louise Stutes, of Kodiak, have said they do not want to create the perception that future dividends will be that high, and would prefer that Alaskans understand this year’s bigger total payment — more than double last year’s PFD — is the exception because of high heating fuel and gasoline prices.
Minority Republicans also objected to the size of the combined payout, saying there is enough money available to pay a $4,200 dividend, the amount called for under a distribution formula in state law. That formula has not been used since 2016. Legislators have not been able to reach consensus on a new formula and instead debate the size of the payout each year.
The budget spends about $409 million to buy back oil and gas tax credits held by drilling companies and their lenders. The state years ago offered tax credits — which could be redeemed for cash — to entice companies to explore for more oil in Alaska.
When oil prices were high, the state paid the credits each year, then stopped repayment in full as oil revenues fell, accumulating hundreds of millions of dollars in unpaid credits.
The House spending plan would leave $123 million still to repay in future years.
The majority was joined in supporting the budget by minority Reps. DeLena Johnson, of Palmer; Bart LeBon, of Fairbanks; and Steve Thompson, of Fairbanks; and Rep. Sara Rasmussen, of Anchorage, who does not belong to either the majority or minority.
Reader Comments(0)