State senators issued warnings on May 7 as they approved a draft operating budget for the upcoming fiscal year.

The Senate version of the spending bill, which includes an estimated $1,000 Permanent Fund dividend for eligible Alaskans and an increase for K-12 education, also cuts into state money for several services.

The proposal would trim back proposed funding increases for early education programs, reduce funding for state prisons, eliminate the state’s office of citizenship assistance, mostly defund the state militia, reduce road maintenance, and deny salary increases except as required by union contracts.

Legislators are trying to address a significant deficit caused by low oil prices. The 16-4 Senate vote on May 7 keeps the Capitol on schedule for its May 21 adjournment deadline.

The House declined to accept the Senate version of the budget bill on May 9, moving toward the next step in the process — a conference committee to negotiate differences between the House and Senate versions of the spending plan.

The resulting compromise likely will be among the last items completed before lawmakers end their session for the year. The budget bill would then go to Gov. Mike Dunleavy, who has the power to veto or reduce individual items.

Members of the bipartisan group that leads the Senate said they wanted to balance the budget without using the state’s savings accounts. They expect that the state’s worsening fiscal picture — low oil prices and federal funding cutbacks — will almost certainly require drawing down savings next year.

“With all of these budget headwinds, it’s clear to me that the decisions next year will be more difficult than the decisions made today,” said Sen. Lyman Hoffman, a Bethel Democrat and lead author of the Senate budget.

While the House proposed spending from savings to boost the amount of this fall’s Permanent Fund dividend and increase spending on some services, the Senate prioritized protecting the state’s savings accounts.

“Now is the time to preserve our rainy-day fund for that coming storm,” Hoffman said.

“This is a conservative budget, no matter how you look at it. It’s very lean,” said Sen. Mike Cronk, of Tok, one of two members of the Republican minority who voted for the budget bill.

“Is this perfect? No. It’s going to be a lot worse next year, and I think that people in Alaska need to understand that,” he said.

Juneau Sen. Jesse Kiehl joined Anchorage Sen. Bill Wielechowski, both Democrats, in saying that if Alaskans want a larger Permanent Fund dividend and better services, they need to ask their legislators to vote for revenue bills.

“We need to reevaluate how we are doing things in this state,” said Wielechowski, who has long pushed for the Legislature to collect more in production taxes from the oil industry.

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