Conference committee advances $2.1 billion to $2.5 billion cash payouts to Alaskans
Alaska legislators will debate a final budget today that includes total cash payouts to Alaskans ranging from $2.1 billion to $2.5 billion, from $3,200 per person to $3,850, the latter number contingent on gaining a super majority vote.
This is roughly $1 billion to $1.5 billion below the payout totals approved by the Senate last week for dividends and energy relief and rejected by the House.
It is still an enormous amount of money, made possible by how the war in Ukraine has temporarily pumped extra billions into the state treasury. The inflated expectations are also founded on the prayer that high oil prices will continue.
If oil prices remain at $101 in the next fiscal year, this new plan would include setting aside $750 million for forward funding of education. If oil prices drop below $90, on average, the state would have to draw from savings to balance the budget. An $11 drop is not a big one.
With fuel prices sky high across the state, legislators don’t want to leave Juneau and start running for reelection without approving a dividend and extra money to make up for gas and heating oil costs.
A fiscal plan for the years that follow? The pressure to worry about three or four years from now evaporates when election-year thinking takes control and there is a lot of money to be dispensed hither and yon. Having said that, this is still far better than the Senate budget that was nearly rammed through last week.
With oil prices at more than $100 a barrel, the state expects oil revenues to climb by billions above the expectations that were prevalent when the session began in January.
The budget conference committee, with three senators and three representatives, finished resolving differences between the Senate and the House versions Tuesday afternoon. The Legislature is set to adjourn Wednesday night, unless a super majority agrees to extend the session by up to 10 days.
The conference committee version of the budget is to be debated and voted on Wednesday evening. The budget is for the fiscal year that begins July 1.
The per person payouts under the conference committee report would range from $3,200 to $3,850. The higher number would only be paid if there is a three-quarters vote to take $420 million out of the Constitutional Budget Reserve. The conference committee placed this language in the budget to try to get Republicans to support the final plan.
Some will object to being put in this spot and say it is blackmail. If they don’t vote for the plan, they will be blamed for cutting the cash payments to Alaskans by $650.
Over the weekend, the Republicans pushed a plan for $3.5 billion to $3.6 billion in cash payouts.
Here, from the Alaska Beacon, the new nonprofit nonpartisan news site covering Alaska politics, is a good summary of where the budget stands. Beacon reporter James Brooks, who lives in Juneau, filed this Tuesday night.
By JAMES BROOKS, Alaska Beacon
JUNEAU— A compromise state budget containing as much as $3,850 in Permanent Fund dividends and energy payments for each eligible Alaskan is heading to final votes on the last regular day of the Alaska Legislature.
A six-member committee completed work on the compromise budget late Tuesday, three days after the Alaska House failed to agree with a budget proposal passed by the Senate.
The compromise budget has been altered only slightly from the Senate’s version. Its biggest change: Instead of a payout of $5,500 per eligible Alaskan, the compromise offers $3,200. That would cost the state $2.1 billion.
Higher payout depends on draw from savings
That can be increased to $3,850 per recipient if three-quarters of the House and three-quarters of the Senate vote to fund the increase out of the Constitutional Budget Reserve, a key savings account. Doing so would cost $420 million.
Roughly $2,600 of the amount would be this year’s Permanent Fund dividend, with the remainder serving as compensation for high energy prices.
The fiscal year 2023 budget covers state spending from July 1, 2022, through June 30, 2023. Lawmakers have rolled most of the state’s various budget bills together, with the resulting document covering the cost of services, the dividend and the cost of various construction projects.
The preliminary total is $8.4 billion in undesignated general funds, a term that includes state taxes and the annual transfer from the Alaska Permanent Fund.
That would be the 10th-largest budget since statehood, according to inflation-adjusted historical figures kept by the Legislative Finance Division. If federally funded and fee-funded programs are included, the budget will be near the largest in state history.
Those figures are before any vetoes by Gov. Mike Dunleavy.
“I think we’ve got a good budget. It’s balanced, it’s got a good, healthy dividend, a lot of capital around the state to keep people working, and a lot of attention to education, both the university and K-12,” said Sen. Bert Stedman, R-Sitka, chair of the conference committee that wrote the compromise.
Budget would fund capital projects, new items
In addition to the per-person payouts, the budget includes:
more than $200 million for the Port of Alaska in Anchorage
more than $150 million for the Port of Nome;
$57 million in one-time grants for K-12 schools;
more than $300 million deposited into the constitutionally protected section of the Alaska Permanent Fund;
up to $409 million in tax credits to oil and gas companies and their financiers;
funding for a court settlement in which Gov. Mike Dunleavy was found personally liable for illegally firing two Alaska Psychiatric Institute doctors;
about $400 million to recapitalize the investment fund that pays college scholarships and for the state’s equivalent of medical school;
about $89 million toward the state’s unfunded pension debt;
$2.5 million for pre-kindergarten programs;
about $1 million to fund a feasibility study to determine whether the state should take over a major wetlands permitting program from the federal government.
If oil prices average $90 per barrel during the next fiscal year, the budget would balance without spending from savings, except for the extra money needed from the Constitutional Budget Reserve.
The state expects oil prices to average $101 per barrel during the next fiscal year. If that average comes true, the budget would also set aside about $750 million for K-12 funding in fiscal year 2024.
“Everybody’s going home with a win,” said Rep. Kelly Merrick, R-Anchorage, the lead House negotiator.
At average oil prices between $75 per barrel and $90 per barrel, the state’s statutory budget reserve would be used to fill the resulting deficit, and no extra money would be set aside for K-12 funding.
Below $75 per barrel, the Legislature would have to take a special vote next spring to spend additional money from the Constitutional Budget Reserve.
Both Stedman and Senate Minority Leader Tom Begich, D-Anchorage, said they believe they have enough votes to approve the higher payment — and the budget as a whole — in the Senate.
The situation is less certain in the House, where 13 of the 17 members of the House’s Republican minority voted in favor of the Senate’s $5,500 figure.
Vote that could repeat shutdown standoff remains uncertain
Last year, seeking a larger dividend, members of the minority withheld their votes on a technical provision that allows the budget to take effect at the start of the fiscal year.
The dispute was resolved with the creation of a special fiscal policy working group, but not until the minority had brought the state within days of a government shutdown.
The situation could recur if enough members of the minority withhold their votes again.
Rep. Bart LeBon, R-Fairbanks, was the House minority’s representative on the conference committee and said he doesn’t know what will happen.
House Minority Leader Cathy Tilton, R-Wasilla, said she does believe the House will vote to pass the budget but that a majority of the minority will vote no on both the budget and the effective date.
Pressed about the final result, she said, “I potentially think there are enough votes to pass the effective date.”
All of the content of the Alaska Beacon is available for republishing online or in print. For more information about the daily reports, go to www.alaskabeacon.com. In its first week the Beacon has had solid reporting on several key Alaska issues. Some Alaska newspapers are taking advantage of this positive addition and reprinting the stories, while others, including the Fairbanks Daily News-Miner, have yet to do so.
This is a management blunder by the News-Miner publisher and by the paper’s owner, the Snedden Foundation. The paper should reconsider.
The near-total lack of state news coverage in the News-Miner over the final days of the legislative session could have been easily remedied by picking up stories from the Beacon. It is serving a function that the Associated Press, which no longer has much coverage from the capital, used to perform when it had a larger staff.
In any case, the News-Miner is not a member of the Associated Press anymore, a cost-cutting move that has placed an unreasonable burden on the tiny staff of the Fairbanks paper.
The Alaska Beacon is the best option open to Fairbanks readers who are looking for increased nonpartisan political coverage from experienced Alaska reporters. I have no connection with the Beacon, but the four reporters working for the site have long track records in the state and a working knowledge of the major issues.
They have credibility with Alaskans based on what they’ve done in years past. I expect this site to be the main source for nonpartisan Alaska political news from now on. I encourage everyone to check out the site, subscribe to the free daily update and see what you think.