With the state Legislature scheduled to adjourn sometime Wednesday, May 20, House and Senate negotiators over the weekend settled on a budget that will send $1,200 to every eligible Alaskan this fall — a $1,000 Permanent Fund Dividend plus a $200 energy relief payment.

The $200 add-on is intended to share the wealth of increased state oil tax and royalty revenues from higher prices due to global supply constraints caused by the U.S.-Iran war.

The dividend and energy relief payment will cost the state treasury more than $750 million.

Last year’s dividend was $1,000.

The budget deal, which was expected to win final approval in the House and Senate before adjournment, also includes a $144 million one-time boost in education funding.

The additional state aid for K-12 public schools could direct about $300,000 to the Wrangell district for the 2026-2027 school year, covering about half of the district’s gap between revenues and expenses and reducing the need to withdraw as much from reserves.

The one-year increase in state funding for schools, along with every other item in the legislative budget plan, is subject to reduction or a full veto by Gov. Mike Dunleavy before the state’s new fiscal year starts on July 1.

The governor has used his veto authority in past years to cut back legislative appropriations for schools.

A joint House-Senate committee adopted the budget on Sunday, May 17.

The spending plan is conservatively based on oil prices averaging $75 a barrel during the upcoming fiscal year.

“I would say that we are going to see a substantially higher number as the year goes on,” said Bethel Sen. Lyman Hoffman, a co-chairman of the Senate Finance Committee and a member of the House-Senate budget negotiating team.

Oil prices are at their highest in four years because of tight global oil supplies caused by the blockage of tanker traffic through the Persian Gulf. Alaska North Slope oil was selling last week at over $110 a barrel. Prices started this year at $61.80.

Prices could come down if the U.S. and Iran succeed in negotiating a deal to reopen the Strait of Hormuz for tanker traffic in and out of the Persian Gulf.

In addition to boosting payments to individual Alaskans, the additional revenues from higher oil prices also allowed lawmakers to appropriate more money for schools without having to draw from the state’s reserves.

The school funding awaiting final approval in the House and Senate in the last days of the session includes about $29 million in energy relief aid to help school districts pay higher fuel bills, and $115 million for general operating expenses.

How that $115 million will be distributed was to be decided in the final days of the session.

The total of $144 million in increased school funding from the state was a compromise between the Senate’s proposal of up to $140 million and the House proposal of $158 million.

Anchorage Rep. Andy Josephson, House Finance Committee co-chair, said high oil prices made this year’s budget work easier, allowing lawmakers to fund more priorities.

Though the session began in January with warnings about a tight budget, the war “1,000% changed the landscape,” he said.

“In February, subcommittees were trying to find $500,000 cuts, $200,000 cuts,” he said. “This whole thing changed on Feb. 28 with the start of the war, and the building sort of was able to relax in a sense.”

If oil prices remain above projections, additional funding would be allocated under the negotiated budget to a bulk fuel loan program which subsidizes fuel purchases for rural communities. Lawmakers wanted to do something to help those communities facing significantly higher fuel costs due to the war.

The budget also calls for added funding to restore a heating assistance program for Alaskans in need; boosting infant learning programs; increasing the reimbursement rate for some Medicaid services, such as private nursing and personal care attendants; sharing more state revenue with cities and boroughs; and increasing spending on disaster relief and fire suppression.

The Anchorage Daily News contributed reporting for this story.