Alaska governor's budget plan includes roughly $3,400 checks for residents and deficit of nearly $1B
JUNIAU, Alaska — Alaska's Republican Governor Mike Dunleavy unveiled a budget plan Thursday that would pay residents an oil wealth dividend of about $3,400 next year, using a formula that lawmakers have all but abandoned and using savings to close an estimated $990 million deficit .
The proposal does not include an increase in the per-pupil K-12 education funding formula, although Dunleavy, a former teacher, said he expected education to be at the center of discussions when lawmakers convene next month for their new legislative session. He said he wanted lawmakers to consider his proposal last session to give teachers bonuses as a way to help recruit and retain them.
Dunleavy blasted the federal government and groups that have questioned oil, mining and other development projects in Alaska, saying it has left the state with choices such as making cuts, taxing residents and businesses, or reducing of the size of the annual dividend. Alaska has no state or personal income tax, and for years lawmakers have discussed, without resolution, the need for a budget plan that deviates from the budget boom-bust cycles associated with the state's dependence on a volatile commodity: oil. .
Central to a tax plan is how much the annual dividend should be. For years, until 2015, the dividend was paid according to a formula that many lawmakers have since come to view as unsustainable and unaffordable. In 2016, amid shortages, then-Gov. Bill Walker vetoed half the amount available for dividends, and the state Supreme Court later ruled that the dividend program had to compete for annual funding like any other state program.
The amount has since been determined based on what can get enough votes to get a budget passed, with the debate over the size of the check often overshadowing other issues.
This year's dividend was $1,312 at a cost of about $880 million, with the potential for a bonus check of up to $500 next year if oil prices beat expectations. Dunleavy on Thursday proposed a dividend for next year, in line with the formula last used in 2015, at a cost of about $2.3 billion for checks to residents of about $3,400 each, his budget office estimated.
The toll of inflation “takes a bite out of everyone's pockets. So we hope that we can keep the PFD as high as possible to help Alaskans pay for groceries, fuel, etc.,” Dunleavy said at a news conference, referring to the Permanent Fund Dividend.
The budget proposal is a starting point. The House of Representatives and the Senate will each have the opportunity to prepare their own version of the budget, which is normally reconciled through negotiations at the end of a legislative session. The House of Representatives consists of forty members and has a Republican-led majority. The Senate consists of twenty members and is controlled by a bipartisan majority.
Senate Finance Committee Co-Chairman Bert Stedman, a Republican from Sitka, said in a statement that the focus “will continue to be a balanced budget without dipping into our significantly low reserves. Our job is to allocate resources wisely while meeting the needs of our communities.”
Administration officials on Thursday outlined other items in the budget plan for the fiscal year that begins July 1 and as additional items for the current year, including funding for additional staff to handle a backlog of food stamp benefits.
As part of the current year budget, the Legislature approved a one-time $175 million funding increase for schools, responding to pleas from local officials seeking a more permanent funding increase. School officials have said inflation and fixed costs such as heating took a toll on their budgets and in some cases forced program cuts or required larger class sizes. But Dunleavy vetoed half of that additional funding.
On Thursday, some education leaders said they were disappointed that Dunleavy did not include an increase in the school funding formula in his proposal.
Jharrett Bryantt, superintendent of the Anchorage School District, said Alaska districts “are having difficulty attracting and retaining teachers and classroom support positions due to wages and benefits that are not competitive with those offered in the Lower 48. This directly results in lower student results and larger class sizes.”
He said his district has “hundreds of open positions that it is having difficulty filling because of the way prospective teachers view the current conditions of the profession in Alaska.”