The Alaska House has sent to the Senate a state operating budget for the fiscal year that starts July 1 with an almost $2,300 Permanent Fund dividend that would be the single largest expenditure in the spending plan.
The budget also includes $175 million in additional one-time school funding, raising the total state contribution to school district operating expenses to just over half of what House members voted to spend on this fall’s dividend.
The boost in state aid for the 2024-2025 school year, if approved by the Senate and signed into law by the governor, would generate about $440,000 in additional funding for Wrangell schools, covering about two-thirds of the district’s budget deficit for next year.
The $175 million statewide is the same amount lawmakers appropriated last year — which Gov. Mike Dunleavy vetoed in half.
Though school supporters have been pushing for a permanent change in the state funding formula, which has not budged in seven years, they have not succeeded in rounding up support from enough legislators and the governor and may be left with a one-year funding increase as the only politically feasible option this legislative session.
The budget also includes a new appropriation of almost $9 million to help school districts provide more help for K-3 students to improve their reading skills. Wrangell schools could receive an additional $22,000 if the Senate and governor concur with the spending item.
House Republicans responsible for crafting the budget said April 11 that their plan would not require drawing from savings — even with a dividend almost twice as large as last year — but that math is somewhat misleading.
Leaders of the Senate majority, along with members of the Democrat-led House minority, said the budget would lead to a more than quarter-billion-dollar deficit because it does not account for several critical spending items not included in the House bill.
The House claim of a balanced spending plan also excludes the annual capital (public works) budget, which the Senate approved on April 12.
The House passed the operating budget along caucus lines on a 23-17 vote, with all members of the Republican-led majority caucus in favor of the spending plan.
The House and Senate have four weeks to reconcile their different versions of budget bills and agree on a spending plan before a mid-May adjournment deadline.
The size of the Permanent Fund dividend again proved contentious in the House budget bill. Gov. Mike Dunleavy has promoted a dividend of almost $3,500 per person, but which would leave a $1 billion hole in the budget that he proposes to fill from savings.
However, there has been a broad unwillingness among legislators to use savings to balance the budget. House Finance Committee Co-Chair DeLena Johnson, a Palmer Republican, said April 8 “it was not possible” to approve such a large dividend.
“I know some at home may be disappointed with the lower dividend in the budget, but this is the biggest PFD that the state can realistically afford,” she said of the House-approved $2,300 payment.
Speaking during debate on the House floor on April 10, Rep. Zack Fields, an Anchorage Democrat, called the $2,300 dividend “a fantasy” and said it was “completely unaffordable” after all state expenses are included in the final budget.
The House dividend is unlikely to survive negotiations with the Senate. Sitka Republican Sen. Bert Stedman, who manages the operating budget in the Senate, said the chamber was likely to support a dividend, with an “energy relief” bump-up, closer to $1,600 per person.
“Their (the House) spending plan has a significant deficit, which is concerning,” Stedman.
In addition to routine spending on public services, road maintenance, courts and jails and state troopers, Medicaid and the university system, the House amended the budget to include an additional $5 million for tourism marketing and an extra $5 million for seafood marketing efforts. The Alaska salmon industry is facing a second year in a row of low prices, an oversupplied market and tough competition for consumer dollars.
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