Alaska Senate passes its budget with $5,500 in cash payments

JUNEAU, Alaska (KTUU) - The Alaska Senate passed a budget on Tuesday with a full statutory Permanent Fund dividend at roughly $4,200 and a separate one-time $1,300 energy relief check.

The budget passed on a 15-5 vote. Typically, if the House of Representatives and the Senate pass different versions of the budget, a conference committee is called to reconcile those differences, so a single bill can pass through both chambers and onto the governor’s desk.

The nonpartisan Legislative Finance Division estimates that the Senate’s budget means that the state would need to draw $1 billion from savings to pay for it with oil prices over $100 a barrel. If oil prices drop, at least one savings account would need to be emptied.

The cash payments in the Senate’s budget would also end a plan to set aside $1.2 billion to fund schools a year ahead of time. Supporters of forward funding for schools say it helps provide greater certainty for teachers and avoids pink slips going out.

Sen. Mike Shower, R-Wasilla, said the state treasury has the funds for a larger dividend and for infrastructure projects after not paying a statutory dividend in recent years. Sen. Roger Holland, R-Anchorage, said substantial savings would have been great, but that the budget should not be balanced on the backs of Alaskans.

Sen. Lyman Hoffman, D-Bethel, said it would take a “miracle” for the size of spending to be addressed during final budget negotiations with the House. Sen. Natasha von Imhof, R-Anchorage was scathing before the final vote.

“I speak for Alaskans today who think beyond the next election cycle,” von Imhof said. “I will not be supportive of this defective budget.”

Shower introduced the full PFD amendment that was adopted on a 10-9 vote on Monday. He said a $5,500 dividend and energy relief check would likely get reduced during final budget negotiations with the House of Representatives.

“I also want the people to hear loud and clear,” Shower said. “That if we start where we are, that’s the maximum you’re going to see. You’re probably going to see less.”

Supporters of a larger dividend said it would help Alaskans struggling with high inflation and high energy prices. Sen. Robb Myers, R-North Pole, argued a full PFD would make a big difference for Alaskans.

“The dividend would be large enough not just to fill our fuel tanks, but to invest in ourselves, in our state, in our small businesses,” Myers said.

Sen. Bert Stedman, R-Sitka, manages the operating budget in the Senate and he argued that the numbers don’t add up.

“Basic math gets in the way. Hate it when that happens,” he said.

• The Senate’s budget includes a maximum of $349 million to pay oil and tax credits owed to producers for a now-defunct program that was intended to increase production,
• $300 million would go out to local governments to help pay for old school construction costs, which were vetoed by multiple governors
• $60 million would be added to the per student school funding formula. Gov. Mike Dunleavy has threatened to veto a school funding increase without a reading bill also passing

The Senate added $380 million to the budget on Tuesday for capital projects: $200 million would go toward repairing and fixing the ailing Port of Alaska over two years; $150 million would go toward expanding the Port of Nome, bringing total state funding for the project to $175 million; and $30 million would help pay for roads to a port in the Matanuska-Susitna Borough.

Goods consumed by 90% of Alaskans come through the Port of Alaska, and so does 50% of all the goods that come to Alaska that are shipped by freight. In 2019, there were estimates that it would cost upwards of $2 billion to repair the crumbling port.

Responding to questions on how the state can afford to repair the port, Sen. Mike Shower asked, “If it’s not now, then when?

“If we’re not going to spend money to turn things into concrete and steel that we clearly know we need, are we supposed to wait until we have no money and then say we need the projects?”

There had been $25 million in the Senate’s budget set aside for the Port of Nome to expand it for icebreakers, commercial ships, and cruise ships. Sen. Donny Olson, D-Golovin, said the $25-million figure was “nowhere near the amount that’s needed” to ensure the state receives $250 million allocated for the project by the federal government.

Sen. Click Bishop, R-Fairbanks, successfully introduced an amendment that would spend $53 million from the state treasury on capital projects. There has been frustration by some House legislators that they haven’t had enough input on this year’s capital budget.

Bishop’s amendment, said to be “a compromise” with the House, includes $6.5 million to help stabilize the bluffs of the Kenai River, $4.1 million to improve a water treatment plant in Wrangell, and $300,000 in canned salmon to be donated to the people of Ukraine.

The Senate rejected a budget amendment on Monday that would cut Medicaid funding for abortions. The House narrowly approved an identical amendment last month over constitutional concerns.

Sen. Bill Wielechowski, D-Anchorage, noted that the Alaska Supreme Court has struck down similar efforts in the past and the state of Alaska could miss out on millions of dollars in federal Medicaid funding if abortion services spending is cut. He said the state’s highest court would make a similar ruling if the Legislature cut abortion funding in the same way again.

Several legislators noted that the legal landscape on abortion may soon change with the U.S. Supreme Court expected to soon overrule Roe vs. Wade. Sen. Lora Reinbold, R-Eagle River, said it is worth another trip to the courts to end state-funded abortions.

“Life is worth fighting for,” Reinbold said.

The budget now heads back over to the House for the concurrence vote. House Speaker Louise Stutes, R-Kodiak, said the plan is to adjourn before the constitutional deadline at midnight on May 18, but that could be tough if a conference committee is called to reconcile the difference between the House and Senate’s budgets.

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