The Alaska Senate rolled out its latest version of the operating budget on April 26, with a $1,300 Permanent Fund dividend, a $175 million one-time boost for public schools and a $90 million surplus to cover contingencies or if oil prices drop.
The 17-member bipartisan Senate majority caucus — unlike the House Republican-led majority — has insisted that lawmakers should not draw from state savings to balance the budget.
Following gloomy revenue projections last month, the House spending plan — with a $2,700 dividend — was projected to create a $600 million deficit, which would further balloon to almost $800 million with additional capital expenditures for public works projects announced last week by the Senate.
Though the Senate had earlier announced it would trim back the funding increase for K-12 education to about $128 million, that quickly changed after most members of the majority coalition expressed frustration behind closed doors with that figure and pushed for a $175 million school funding increase — matching the House number.
If lawmakers settle on the $175 million one-year increase in state funding to local school districts, Wrangell could receive an additional $425,000 for the 2023-2024 school year, about a 14% gain in state aid. The state’s per-student funding formula for education has not moved since 2017.
Separate from the budget bill, the Senate still is considering legislation that would adopt a permanent increase in the state funding formula, though its chances of passage this year are slim.
Ketchikan Rep. Dan Ortiz is among the sponsors of legislation that would permanently increase the state funding formula for public schools. He is “disappointed” with the one-year increase proposed by the Senate, but added, “it’s a negotiation process.”
The Senate Finance Committee draft spending plan released April 26 conflicts with spending priorities pushed by the Republican-led House majority caucus, which passed its version of the state budget last month.
Big Lake Republican Kevin McCabe — echoing members of House leadership — said during an April 25 press conference that the Senate’s $1,300 dividend figure was “a nonstarter” for him and that the House’s $2,700 dividend was already a compromise from an even larger PFD, around $3,500.
That big of a dividend would add $500 million to the budget deficit, requiring either large-scale spending cuts on services, taxes or drawing on savings.
Typically, the House and Senate pass different versions of the budget, which are then reconciled through negotiations so a single bill can pass through both legislative chambers and onto the governor’s desk. But it’s unclear how the two vastly different spending plans can be reconciled without one side capitulating.
Three-quarters of lawmakers from both legislative chambers would need to approve any draw from the Constitutional Budget Reserve, the state’s $2 billion savings account. Such a draw would be required to pay the larger PFD advocated by the House. Stedman said there are simply not enough votes in the Senate to support drawing from savings. “There’s no reason to do it. We’ve got a balanced budget.”
“We are absolutely divided between the House and the Senate,” said Senate President Gary Stevens of Kodiak. “The basic problem is that (the House is) proposing an unsustainable budget,” Stevens said at an April 27 press conference with the governor and legislative leaders to talk about the need for a long-term state fiscal plan.
To stabilize the budget and bridge a projected fiscal gap for the long term, legislators have introduced new taxes on Alaskans and the oil industry. But none have advanced anywhere near a final vote, and lawmakers from across the political spectrum agreed on April 25 that new taxes are unlikely to be approved before the legislative adjournment deadline of May 17.
Fluctuating oil prices have also been a factor in budget debates. Alexei Painter, director of the nonpartisan Legislative Finance Division, said during an April 25 Senate Finance Committee hearing that the Senate spending plan would leave the state with an estimated $93 million surplus, but that could quickly be erased by a small drop in oil prices over the next fiscal year.
Other differences between the House and Senate versions of the budget include state aid to help child care providers. The Senate version would add $15 million to raise wages for child care operators after they reported the system was in crisis due to staffing shortages. Gov. Mike Dunleavy said last month he did not support a child care boost of that size when announcing a task force to study the problem.
A House plan to spend $4.5 million for the state to take over management from the federal government of permitting wetlands for development was removed in the Senate spending plan. But it could be added again during final budget negotiations with the House.
The Senate stripped out funding for a Dunleavy-backed parental rights in education advocate, which was largely intended to be a mediator answering questions from concerned parents about how sex education classes are taught in schools. The House previously cut the same position through its budget process.
The Senate’s $357 million capital budget — used to pay for infrastructure and maintenance projects at public facilities statewide — would largely be used for the required match to capture federal funding for infrastructure projects and highways.
The Senate budget is scheduled to head to the floor for a vote of the full body this next week, then likely to negotiations with the House to resolve differences.
Reader Comments(0)