Alaska House passes operating budget with roughly $2,300 PFD

The Alaska House of Representatives passed its $6 billion operating budget Thursday. That’s the spending plan for day-to-day government operations beginning next June. 

Alaska News Nightly host Casey Grove spoke with Alaska Public Media’s Capitol reporter, Eric Stone, to learn more.

This transcript has been lightly edited for clarity.

Casey Grove: So, what’s in the budget?

Eric Stone: For that, let’s hear from Rep. DeLena Johnson. She’s a Palmer Republican and the House’s operating budget chair.

“This budget prioritizes public safety, education, a strong Permanent Fund dividend, essential services to Alaskans and provides support to Alaska’s most vulnerable populations,” Johnson said.

Some of the highlights are $175 million in one-time funding for public schools, which is equivalent to a $680-per-student increase. And another $44 million for school bond debt reimbursement. There are 10 new Village Public Safety Officers, more attorneys in the Department of Law, and $90 million in community assistance. 

And lots of priorities from the mostly Democratic and independent minority are in there too. Couple of note — an amendment from Ketchikan independent Dan Ortiz that, after some modifications, wound up adding $5 million each to statewide seafood and tourism marketing programs. And another from Juneau Democrat Andi Story adds about $9 million to help with reading programs for young students.

Johnson says nobody’s totally satisfied — and that makes it a good compromise.

“Each person here gave a little and each person got a little. That’s what this budget represents,” Johnson said.

And one of those compromises is the Permanent Fund dividend.

CG: Yeah — always a topic of interest. What is the PFD looking like?

ES: At this point, the House is sticking with about $2,300. That’s the amount set by the Finance Committee. There were a few attempts to change it on the floor, but none wound up sticking. Johnson says the budget as written has a surplus of nearly $80 million. And Rep. Jaime Allard, an Eagle River Republican, says it’s an attempt to pay the biggest dividend possible without jeopardizing future payouts.

“No, it’s not a full PFD, but I want the community and the state constituents to recognize that it is the third largest. We’re doing the best that we can, and in order to make that PFD and the dividend for the long duration of the time, we have to be very careful and wise to what we’re doing,” Allard said.

But not everybody agrees that the state can afford it. Members of the House minority, mostly Democrats and independents, say the budget is artificially low and doesn’t account for lots of stuff that will eventually need to be rolled into the budget — like more than half a billion dollars in capital projects that the House and Senate have agreed to spend. Rep. Cliff Groh, an Anchorage Democrat, put it this way.

“This budget is based on fantasy and it’s, it’s not set us up for success either in the next few years or across generations,” Groh said.

He said new revenues could help with that. And minority members also pointed to some other missing pieces.

CG: What sorts of things?

ES: One missing piece we heard a lot about is the rising cost of energy. Here’s Rep. Maxine Dibert, a Democrat from Fairbanks.

“I can’t in good conscience send a budget over to the other body without addressing energy,” Dibert said.

One specific item is funding for electrical transmission line upgrades that could make energy more affordable, especially in the Interior. The state got a giant federal grant for that, and it requires more than $200 million in matching state funds over several years.

But members of the Republican-led majority said there’s another place for that. Here’s Rep. Will Stapp, a Republican from Fairbanks.

“Energy is certainly the number one problem facing the Interior. It is however, a problem that can best be solved through the budget in the capital budget, Madam Speaker, not the operating budget,” Stapp said.

And the Senate rolled out its draft of the capital budget today — they’ll work through amendments in the coming days and pass it over to the House.

CG: So where do things go from here?

ES: Well, pretty soon, the Senate will take its crack at the operating budget. And they are pretty skeptical that the budget is in fact balanced. The Senate’s operating budget chair, Sitka Republican Sen. Bert Stedman, sounds a lot like what we heard from the Democrats and independents in the House. He’s been beating this drum all session — asking folks to look at what’s not in the budget, and he says with capital projects, bills and everything else, it’s not balanced.

“So (by the) time you add that all in, you’re underwater, somewhere around $276 million. So that’s a lot of gap-osas to deal with in the conference committee. And we have to get the ends to meet,” Stedman said at a press availability on Wednesday.

And that was before amendments added a little under $20 million to the budget. Stedman has been pretty consistent that the dividend should be a quarter of the state’s annual draw from the Permanent Fund, which this year would come out to about $1,600 per person.

For now, though, we’re on track to avoid a government shutdown. This week was the agreed-upon deadline for the operating budget to pass, and it did. But it remains to be seen whether it’ll stay on track.