The Alaska House approved its version of the state operating budget Monday afternoon. The budget passed along caucus lines, with all 21 members of the Democrat-heavy bipartisan majority voting in favor and all 19 minority Republicans opposed.
The bill underwent a few major changes on the House floor, most notably to the Permanent Fund dividend.
It came to the floor with a roughly $3,800 dividend, contingent on a supermajority vote to draw nearly $1.5 billion from the state’s main savings account, the Constitutional Budget Reserve. But in a dramatic vote Friday night, three minority Republicans sided with the majority to eliminate the savings draw, and the $3,800 dividend, from the budget. One of those was Ketchikan Rep. Jeremy Bynum, who said the state simply couldn’t afford it.
“Maybe it doesn't suit being here in this body very well, but I've spent my whole career trying to make sure that the numbers match,” he said. “And when I disagree with what those numbers are, at the end of the day, they still need to match.”
Fairbanks Rep. Will Stapp and Eagle River Rep. Dan Saddler joined nearly all of the bipartisan majority to instead set the dividend at roughly $1,500. That would cost roughly $1 billion, about 15% of the general-purpose funds in the state budget.
Rep. Neal Foster, a Nome Democrat who cast the decisive vote in the House Finance Committee to insert the larger dividend into the budget, joined most Republicans in voting against the lower figure.
It’s far from the final word on the dividend, which will likely remain unsettled until the House and Senate agree on a final budget in the closing days of the session. But House Minority Leader DeLena Johnson, a Palmer Republican, said Friday she’d rather see the House push for a larger dividend.
“We're setting the price for Alaskans at $1,500, and it's just going to go down from there,” she said.
During the House’s final debate on the budget on Monday, Rep. Andy Josephson, an Anchorage Democrat who led the House’s consideration of the operating budget, said the $1,500 figure represented a “sustainable” dividend.
“A yes vote reflects that, at least at this moment in time, we would like to pay $1,500,” he said. “All in all, this budget prioritizes and values crucial areas impacting every Alaskan.”
In addition to the dividend, the House’s budget adds $148 million to the state’s budget for public schools and $11 million for student transportation as districts across the state struggle to make ends meet. It also includes $41 million to fund school bond debt reimbursement and a corresponding $20 million for schools outside organized boroughs in so-called Regional Education Attendance Areas.
“Nothing is more important to stop a decade-long trend of outmigration than stabilizing our public school system,” said Rep. Zack Fields, an Anchorage Democrat. “It is impossible for kids to learn when there are 30 kids in a kindergarten or first grade class, so this funding is essential for economic growth in Alaska.”
The House’s version of the budget also sets aside $17 million to restore and expand a long-unfunded heating assistance program for low-income Alaskans known as the Alaska Affordable Heating Program and adds smaller amounts of funding for a variety of social support programs.
Republicans opposed the budget on a wide range of grounds. Though many supported a larger dividend funded from savings, Rep. Justin Ruffridge of Soldotna said the budget was irresponsibly large. He criticized the majority’s decision to craft a budget that assumes oil prices remain elevated in the wake of the war in Iran.
The budget is built around the Department of Revenue’s spring forecast, which projected last month that high oil prices would add more than half a billion dollars more in revenue than previously anticipated. But the department warned that the war injected tremendous uncertainty into the oil market and cautioned that revenues could be much lower — or, perhaps, higher — than the forecast reflected.
“I think that the members who sit in these seats a year from now are going to be saying, man, what were those guys thinking?” Ruffridge said. “They really made a budget on $75 a barrel oil? Do we think that's reasonable?”
Some other Republicans said the House’s budget left little room for capital projects despite a state facility maintenance backlog estimated in the hundreds of millions.
The budget now heads to the Senate, which will consider the House’s version, come up with its own draft and set the stage for final negotiations in the closing days of the legislative session in May.
