Amid a severe state budget deficit, the Alaska Senate Finance Committee is proposing the lowest Permanent Fund dividend in five years and — if adjusted for inflation — the lowest dividend ever.
On Thursday, the committee unveiled a new version of its proposed state operating budget with a $1,000 dividend, a $400 reduction from its first draft.
That cut reduces the Senate’s budget draft by $265 million, likely balancing it once additional legislation is considered.
The dividend figure is not final: The committee will consider budget amendments on Friday, and the full Senate will vote on the committee’s proposal next week.
If the Senate adopts the $1,000 figure, it would have to be negotiated with the House, which approved a $1,400 dividend in April.
The House’s budget contained a significant deficit, however, and differing policy positions between the House and Senate have left lawmakers with no choice but to cut services and the dividend in order to balance the budget.
The document unveiled Thursday is the committee’s second draft operating budget, and it follows prior drafts from both the House and Gov. Mike Dunleavy.
The new Senate committee draft is $1.7 billion less than the governor’s proposed operating budget and $384 million below the draft approved by the House.
In both cases, the primary difference is the amount of the Permanent Fund dividend.
Dunleavy proposed a dividend of roughly $3,900 per recipient based on the formula in state law, which would have resulted in a $2.1 billion deficit.
He proposed solving that deficit by taking the money from the Constitutional Budget Reserve, the state’s chief savings account. That account contains $2.8 billion, and members of the Senate have refused to spend from the CBR for the coming fiscal year, citing the prospect of larger deficits next year.