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Alaska Legislature Passes Budget That Includes $3,200 Payments

In the final hours of the state’s session, the budget proposal passed in a 33-7 vote. The budget compromise would include a $2,550 Permanent Fund dividend and one-time energy relief payments.

(TNS) — The Alaska state Legislature on Wednesday night passed a budget compromise that includes $3,200 payments to Alaskans, in the final hours of a legislative session marked by a windfall of revenue from high oil prices.

The budget next heads to the desk of Gov. Mike Dunleavy. The Republican governor did not say whether he supported the final budget when the session ended just after midnight, but spokesman Jeff Turner said Dunleavy "will not be calling an immediate special session."

The budget compromise includes a $2,550 Permanent Fund dividend — half of the 5% draw of the Permanent Fund's overall value that lawmakers have designated for spending. It also includes $650 in one-time energy relief assistance for every dividend recipient.

That marks a departure from the budget passed by the Senate last week, which included a full statutory dividend of $4,200 on top of the $1,300 energy relief checks. The House — which agreed last month on $2,600 payments to Alaskans — rejected the Senate's plan on Saturday, leading to the formation of the conference committee made up of Senate and House members tasked with finding a middle ground.

"We were tasked with completing two weeks' worth of work and negotiations in three days. But when you put a woman in charge, it gets done," said Rep. Kelly Merrick, an Eagle River Republican who helped lead the conference committee negotiations.

Both chambers adjourned around midnight.

The committee's plan also includes long-sought-after funding increases for public education, and a capital budget that encompasses hundreds of millions for port projects in Anchorage and Nome.

The compromise reverses a Senate plan that would have spent most of the state's revenue windfall from higher oil prices stemming from the war in Ukraine. Instead, the current plan leaves around $700 million for forward funding of K-12 education. It also puts around $800 million in the Statutory Budget Reverse account by the end of the next fiscal year, if oil prices remain close to the Department of Revenue's most recent projection of $100 per barrel.

The state depends on high oil prices attributed to the war in Ukraine in order to balance the budget. If the price per barrel drops below around $94 in the coming fiscal year, the Statutory Budget Reserve would be emptied.

The Senate favored the spending plan overwhelmingly, with only Eagle River Republican Sen. Lora Reinbold opposed.

"The biggest threat to the Permanent Fund dividend has always been and will always be big bloated government," said Reinbold, a staunch supporter of a full statutory dividend who said she had hoped to see less spending on state services and capital projects.

In the House, the budget passed in a 33-7 vote around 10:30 p.m. on May18, after only a brief discussion. All no votes came from Republicans, including Minority Leader Rep. Cathy Tilton from Wasilla.

In the Senate, Republican supporters of the full dividend said the budget compromise was good enough to earn their support.

"I can't say no at this point," said Sen. Mike Shower, a Wasilla Republican who last week made the key amendment to increase the Senate's dividend to the full statutory amount. "Standing on my principle — for what?"

"This is life-saving for some people," Shower said.

A separate vote to approve a draw from the Constitutional Budget Reserve to cover an additional $650 in energy relief per dividend recipient required support from three-quarters of both the House and the Senate. The Senate just reached that threshold, with 15 senators in favor. In the House, the vote narrowly failed in a 29-11 split.

Rep. Grier Hopkins, a Fairbanks Democrat, was the last to cast his vote on the draw, ultimately voting against the bill in a move that cut the energy relief amount in half and saved the state $420 million in spending.

"It was a hard vote. I think the dividend amount plus the $650 will help Alaskans and I think that's important," Hopkins said after the vote. "I don't think any elected officials should make their votes based on reelection. I think they should make it based on what's right for their state and all of Alaskans."

Among the five opponents of the draw was Sen. Lyman Hoffman, a Bethel Democrat. He said that he wanted smaller energy relief checks this year to ensure that the dividend amount next year would not drop significantly.

"I wanted to save that money for next year so that we can start to level out and try to make it possible to spend a dividend on a 50-50 basis next year," Hoffman said. "It's either feast or famine, and we need to stabilize the dividend."

Senate and House meetings on Wednesday were relatively tame after a tense several days in the Capitol. During conference committee proceedings Tuesday, Chairman Sen. Bert Stedman, a Sitka Republican, twice instructed for doors to be barricaded to stop others from slowing down the work of the committee ahead of the budget deadline.

While the payments to Alaskans originally approved by the Senate were lowered by $2,300 in the budget compromise and the failure of the vote on the Constitutional Budget Reserve draw, the dividend amount would still be one of the highest in state history even accounting for inflation.

Stedman — who supported the budget but opposed the Constitutional Budget Reserve draw — said giving out that high payment, without a permanent solution to a years-long conflict over the way the dividend amount is calculated each year, would make it more difficult to resolve the conflict in the coming year. An effort by the Senate to change the statute this year failed amid high earnings that translated to a proposed dividend three times higher than the one paid out last year.

"The conversation is going to be more difficult for the public," Stedman said.

Lawmakers acknowledged that the upcoming election season — the first under a new ranked choice voting system approved in 2020 — factored into some elected officials' support for the higher dividend.

"If it wasn't an election year, you wouldn't see the dividend size that it is," Stedman said. "There are a lot of folks in the building who feel that their chances of reelections are a lot higher if the treasury is a lot lower and the dividend is higher."

Gov. Mike Dunleavy, a Republican also up for reelection this year, previously said he wanted a minimum dividend of $3,700 this year. The governor on Wednesday afternoon urged lawmakers to vote in favor of the Constitutional Budget Reserve draw to bring energy relief checks up to $1,300.

Dunleavy could veto line items within the budget once it lands on his desk — a move some lawmakers said they would support.

"Yeah, I'd like to see some trimming. I assume the third floor will probably do some of that," said Shower, referring to Dunleavy's office on the third floor of the state Capitol.

Members of the House majority caucus said Wednesday evening that Speaker Louise Stutes, a Kodiak Republican, told caucus members that Dunleavy threatened to veto capital projects in the districts of House members who vote against the draw. A spokesman for Dunleavy did not immediately respond to questions about that position.

In a statement released after the Senate vote, Dunleavy thanked the Senate members who voted in favor of the draw, saying they "voted with the people in mind first and foremost." He did not release an additional statement after the vote on the draw failed in the House.

The Legislature worked up until the last moment, with negotiations on bill coming down to the wire.

An effort to pass campaign contribution limits ground to a halt in the final hours of the session — leaving the state with no immediate prospects to limit money going into local and statewide political races after a court invalidated Alaska's contribution limits earlier this year.

The House voted narrowly Wednesday evening to advance a reading bill that would target lagging reading performance in the state with new programs, early education funding, and an overall increase to the formula used to calculate school funding in the state.

The vote was seen as a win for the governor, who has threatened to veto other education funding without a reading bill on the books.

The measure was attached to another bill in the Senate and passed unanimously there on Tuesday, in a move meant to circumvent the House committee process after the House Education committee voted against advancing the measure.

The House voted 21-19 to advance the bill, with several majority members strongly opposed to what they said amounted to too little funding and too much local control taken away from schools. Some also said the bill would disadvantage rural students and those for whom English is a second language.

Rep. Ben Carpenter, a Nikiski Republican, called the bill "a poster child for the dysfunction that exists within the legislature," while Majority Leader Chris Tuck, an Anchorage Democrat, said it is "an opportunity to really do something" to improve education in the state.

(c)2022 the Alaska Dispatch News (Anchorage, Alaska) Distributed by Tribune Content Agency, LLC.
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