Senate Finance co-chair criticizes governor's proposal for larger PFD

Sen. Bert Stedman, co-chairman of the Senate Finance Committee, says Gov. Dunleavy’s proposed $3,800 Permanent Fund dividend in 2023 would mean “starting the year underwater.”

“It’s not a prudent way to administer the state’s financial resources.” Stedman said, reacting to his first review of Dunleavy’s proposed budget for the fiscal year that starts July 1. “Revenues would not meet recurring expenditures. We’d be talking about going into the hole by about $300 million.”

Stedman was reelected Nov. 8 to a sixth term in the Senate representing southern Southeast communities, including Sitka, Wrangell, Petersburg, Ketchikan and smaller communities. He also has been selected to another term as co-chair of Senate Finance in charge of the operating budget.

The governor released his budget mid-December, which included following through on his campaign promise of a full “statutory” dividend. “Statutory” is shorthand for computing the dividend amount under a 40-year-old formula that the Legislature has not used in recent years because the state treasury could not afford a large PFD and maintaining public services.

Stedman said the Legislative Finance division is analyzing Dunleavy’s budget, and looking for areas that were left out, and already has some reactions to the governor’s plan.

He said Dunleavy’s pledge for a $3,800 dividend — the largest ever, and hundreds of dollars higher than the 2022 PFD — not only means a $300 million draw on the diminished Constitutional Budget Reserve, but also result in failing to address other problems in the state.

“It leaves you with no money, no ability to address issues we have in our schools, our capital budget, our shrinking population and our stagnant economy,” Stedman said.

He was also skeptical that oil would be as high as the $81 per barrel price that the governor used in creating a budget for next year.

“You have no cushion for any oil price fluctuations when you start eroding $300 million a year,” Stedman said. “You’re just playing with fire.”

Oil has been around $80 a barrel in the past week.

Stedman said the large PFD promised by Dunleavy on his way to reelection by a sizable majority should not come at the cost of ignoring transportation, social problems, schools and the economy.

Stedman said the Legislature will face additional challenges in making ends meet because of high inflation. He said the effects will be felt everywhere, including in capital projects and schools.

“We have to have a conversation on the base student allocation, the per capita distributed to schools, because it’s been flat for several years,” he said.


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