Alaska Senate adds $5,500 in cash per Alaskan to proposed budget

Four legislators on the Senate floor
From left to right, Senate Minority Leader Tom Begich, D-Anchorage; Sen. Click Bishop, R-Fairbanks; Sen. Mike Shower, R-Wasilla; and Sen. Bert Stedman, R-Sitka, gather on the Senate floor to discuss budget amendments on Monday, May 9, 2022. (Photo by Iris Samuels/ADN)

JUNEAU — The Alaska Senate voted Monday to amend the budget to include $5,500 payments per Alaska resident, capitalizing on the oil price surge that brought billions in unexpected revenue to the state.

But the fate of the payments remains unknown as the Senate is set to finalize its budget Tuesday and send it to the House, which may reduce the payment amounts.

The payments approved by the Senate include both a full statutory $4,200 Permanent Fund dividend and $1,300 one-time energy relief checks meant to offset the rising costs of fuel.

That is significantly more than the payments the House approved in the operating budget they passed last month, which included a $1,300 energy relief check and a $1,300 dividend, for a total of $2,600.

The increase in cash payments to Alaskans obliterates a previous plan to cover education funding for the 2024 fiscal year, in addition to the upcoming 2023 fiscal year. Forward funding of education would have given schools needed stability and provided a cushion for future state spending, supporters argued.

Gov. Mike Dunleavy proposed earlier this year a dividend of about $2,600 on top of a supplemental payment of $1,250.

The energy relief checks were approved by the Senate on Monday in a 12-7 vote. The Senate also voted on Monday to increase the dividend from around $2,600 to $4,200, in a 10-9 vote. Sen. Natasha Von Imhof was excused from Senate proceedings.

The vote in favor of the dividend increase cut across party lines. Those in favor of the change included members of the Republican majority — Sen. Mia Costello, R-Anchorage; Sen. Roger Holland, R-Anchorage; Sen. Shelley Hughes, R-Palmer; Sen. Robert Myers, R-North Pole; Sen. Lora Reinbold, R-Eagle River; Sen. Mike Shower, R-Wasilla; and Sen. David Wilson, R-Wasilla. Members of Democratic minority — Sen. Scott Kawasaki, D-Fairbanks; Sen. Donald Olson, D-Golovin; and Sen. Bill Wielechowski, D-Anchorage — also voted in favor of the bill.

“The people could use a blessing right now in this state,” Reinbold said before voting in favor of the measure.

Those opposed included both Senate President Peter Micciche, R-Soldotna, and Senate Minority Leader Tom Begich, D-Anchorage.

“This is really saying, ‘We have the money today, let’s just spend it down,’” said Begich.

“You can’t sustain this,” said Senate Finance committee co-chair Bert Stedman, R-Sitka.

Shower, who brought the amendment to increase the dividend, said it would provide a higher vantage point from which to negotiate with the House, whose bipartisan majority sought a smaller dividend that would allow for more funding to be allocated to savings, state services and capital projects.

The dividend increase alone amounts to a $1.1 billion increase in spending and would require the state to dip into the Statutory Budget Reserve, leaving less than $1 million in the savings account, according to Stedman. The energy relief checks would cost the state over $800 million.

In order for the state to balance the budget with that kind of spending, oil prices would have to remain at $100 per barrel, Stedman said.

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Senate President Peter Micciche, R-Soldotna (center) talks with Senate Finance Committee co-chair Bert Stedman, R-Sitka (left) and Sen. Lora Reinbold, R-Eagle River (right), during a Senate floor session on Monday, May 9, 2022. (Photo by Iris Samuels/ADN)

Forecasters at the Alaska Department of Revenue gave a spring forecast estimate of oil prices at $101 per barrel, an increase of $30 from December. But Stedman preferred to rely on a more conservative figure, he said, due to the volatility of oil prices.

The Senate Finance Committee previously voted to combine the operating and capital budgets.

Typically, the House crafts an operating budget and sends it to the Senate, while the Senate crafts a capital budget and sends it to the House. The decision to combine the budgets limits the House’s ability to add their priorities to the capital budget.

The Senate considered nearly 50 amendments to the budget crafted by the Senate Finance committee during a marathon floor session that went from 9 a.m. until past dinnertime. Many of the amendments came from lawmakers seeking to add capital priorities to the bill. The Senate is expected to discuss two additional amendments to the budget Tuesday before voting on whether to pass the budget.

Among the amendments still coming is funding for ports in Anchorage, Nome and the Mat-Su. The Senate has already approved of $25 million for the modernization of the Port of Alaska in Anchorage and $25 million for the construction of a deep sea port in Nome. The amendments Tuesday could add millions more at the behest of lawmakers hoping to bring a windfall to their communities.

Once the Senate passes the budget, it goes to the House, which must either accept or reject it. If they reject it, the budget will go to a conference committee, where members of the Senate and House must find middle ground.

Lawmakers have until May 18 to pass a budget or they will be forced to enter a special session.

This story was originally published by the Anchorage Daily News and is republished here with permission.

Correction: An earlier version of this story stated Senate President Peter Micciche was the state senator for Wasilla. Micciche is the state senator for Soldotna.

Anchorage Daily News

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