The Alaska House of Representatives on April 16 approved a $6.2 billion draft state operating budget, putting Alaska on track for a deficit of as much as several hundred million dollars in the fiscal year that begins July 1.
If the House version of the operating budget is added to the capital budget passed a day earlier by the Senate — and counting a planned supplemental budget needed to fill holes in this fiscal year’s spending plan — total general-purpose spending this legislative session would come in near $6.6 billion.
The Alaska Department of Revenue expects $6.1 billion in general-purpose revenue during the upcoming fiscal year.
The House is proposing to spend from the Constitutional Budget Reserve, the state’s main savings account, to balance the budget.
“This is the best our body can do right now,” said House Majority Leader Chuck Kopp, an Anchorage Republican.
Kopp went on to say that the House-passed budget is preliminary and subject to change by the Senate.
In an effort to hold down state spending, the House voted to appropriate $950 million for this fall’s Permanent Fund dividend, a payout of about $1,400 per recipient. Last year’s payment was $1,702.
The single major increase in the budget is a one-time $1,000 boost to the Base Student Allocation, the core of the state’s per-student funding formula. That works out to about a 17% increase in state aid to local school districts over the 2023-2024 funding level.
Last year, lawmakers approved a one-time $680 increase to the funding formula.
The Wrangell School District is facing a budget deficit for the 2025-2026 school year exceeding $1 million, and a $1,000 boost in the state funding formula could cut that deficit in half. The district also is looking at spending cuts to close the gap.
The April 16 vote in the state House fell along caucus lines, as all 21 members of the House’s coalition majority — two Republicans, five independents and 14 Democrats — voted in favor of the budget draft.
All 19 members of the House’s Republican minority voted against the budget bill, with some citing the deficit.
“This budget makes promises it can’t keep,” said Palmer Republican Rep. DeLena Johnson. “It will probably be the other body that takes on the responsibility that we have given up,” she said, referring to the Senate.
Senate leaders have said throughout the session that their aim is to pass a budget without drawing from savings.
“We’ve got to balance the budget without a CBR (Constitutional Budget Reserve) draw for this year and prepare for next year,” said Sitka Sen. Bert Stedman, co-chair of the Senate Finance Committee, in an April 15 news conference with reporters.
Over the next fiscal year, the Alaska Department of Revenue expects North Slope oil prices to average $68 per barrel. That’s significantly lower than the current year and would reduce the amount of revenue available to the state.
“To the fundamental core question: Can the Senate balance the budget at $68? The answer is yes. Is it going to be fun, without any difficult decisions? No,” Stedman said.
Asked where the Senate’s cuts will be, Stedman said that remains to be determined. “Everything’s in play,” he said.
The Alaska Beacon is an independent, donor-funded news organization. Alaskabeacon.com. The Sentinel contributed reporting for this story.
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