Legislature settles on $1,300 PFD, with bonus if oil prices climb higher

Alaska lawmakers reached a compromise on the state budget and adjourned after a one-day special session last week, approving a $1,300 Permanent Fund dividend for this fall with the possibility of a second, smaller payment next year if oil revenues exceed projections.

The amount of the PFD and the capital budget — construction and maintenance projects in legislators’ home districts — were the final items that forced legislators into a special session after the regular session ended May 17 without a budget.

The governor called them back to work starting the next day.

While the Republican-led House and Republican Gov. Mike Dunleavy wanted a larger PFD, which would have required drawing hundreds of millions of dollars from the state’s dwindling savings account, the bipartisan Senate majority coalition insisted on the $1,300 dividend and a balanced budget without taking from savings.

The budget includes provisions that will provide a second payment next year — called an energy relief payment — if Alaska North Slope oil prices exceed the projected $73-a-barrel average over the next 12 months.

If prices are high, the additional tax and royalty revenue would be shared 50-50 between the bonus payment to individual Alaskans, capped at $500, and a deposit into state savings.

The Senate approved the final budget with only two no votes out of 20 members. The House consented on a 26-14 vote after almost half of the majority joined with the Democrat-led minority to adopt the spending plan and end the special session, which by law could have run as long as 30 days.

The state fiscal year starts July 1.

The budget totals $6.1 billion in unrestricted general fund revenues, of which K-12 education, Medicaid and the Permanent Fund dividend are the three largest appropriations.

After an all-day session of negotiations behind closed doors, legislative leaders on May 18 reached a deal to add more than $34 million to the budget for two dozen projects requested by House majority members.

House Finance Committee Co-Chair Rep. DeLena Johnson, of Palmer, voted for the budget but said she wasn’t happy about it. The Republican said she was worried about the consequences of further disagreement. “What I didn’t want to see was a government shutdown, and I didn’t want to bring it down to the brink,” she told the Alaska Beacon.

Her colleague in the majority leadership, Anchorage Rep. Craig Johnson, also voted yes. He didn’t believe that further negotiations would have resulted in a better deal, he told reporters. “I would prefer not to vote for it, but when I weigh the shutdown, the cost and the practicality, I’m a pragmatist. I’ll fight for what I believe in. But at the end of the day, I think this is the best we can get.”

Among the local projects added in the last day of negotiations was $5 million to rebuild the Palmer Public Library, which is in DeLena Johnson’s district. The library roof collapsed under heavy snow last winter.

Other additions included $3 million to help Fairbanks tear down the derelict Polaris Hotel; $5 million for a harbor float in Dillingham; $5 million for the Wasilla Airport runway extension; $4.75 million for water and sewer projects in Talkeetna; and a series of road and maintenance projects across the state.

The budget does not include any state money for Wrangell projects.

The district of Rep. Justin Ruffridge, a Soldotna Republican, received $600,000 for a road project, but he voted against the budget. “I don’t like being bought, frankly. It’s kind of what that felt like,” the freshman legislator told reporters.

Another no vote came from first-year Anchorage Republican Rep. Julie Coulombe. “I guess I can’t concur with bullies and bribers,” she told reporters.

“It might not have been the process that all of us wanted to get to, but it was a process,” said House Speaker Cathy Tilton, a Wasilla Republican, defending the decision by 10 members of her caucus to vote for the budget.

In addition to rounding up votes from the House majority, the budget, written in large part by the Senate, added several items favored by members of the House minority. Those included $7.5 million in child care grants, money for public broadcasting, funding for tourism marketing and seafood marketing, and aid to home health care services.

The compromise spending plan includes a one-time increase of $175 million, about 15%, in the state’s per-student public school funding formula, though education advocates had been pushing hard for a permanent increase in the program.

Much of the final weeks of legislative negotiations focused on the amount of the Permanent Fund dividend, with the House majority supporting a $2,700 PFD that would require withdrawing about $800 million from savings. The Senate held firm to a $1,300 dividend and not touching savings.

The state constitution requires a three-quarters majority vote to tap the savings, and it was clear that the Senate majority and House minority were not willing to go along with the House Republicans’ plan, denying anything close to the three-quarters vote.

Meanwhile, legislators could be back at work this fall. The governor has indicated he will call a 30-day special session for lawmakers to consider legislation for a long-term fiscal plan to balance state revenues and spending, something that has eluded Alaska’s elected officials since the early 1990s.

This story includes reporting by the Anchorage Daily News and the Alaska Beacon, an independent, donor-funded news organization.


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