House approves $6.4 billion proposal would cover state services for 12 months starting July 1 and includes a $2,700 PFD
April 20, 2023
The Alaska House of Representatives on Monday approved a $6.4 billion state operating budget for the 12 months that begin July 1, passing by a 23-17 vote a major hurdle needed for final acceptance of the state’s annual operating plan.
“This bill is far from perfect … but it is a good-faith, collaborative effort, with strong input from the governor,” said Rep. DeLena Johnson, R-Palmer and co-chair of the House Finance Committee.
The proposal passed by the House now goes to the Senate, which is preparing an alternative proposal whose first draft will be unveiled Wednesday in the Senate Finance Committee.
The legislative calendar calls for both plans to be combined into a final compromise before May 17, the final day of the Alaska legislative session. If the work isn’t done on time, an extended session or special session would ensue.
The House proposal includes a $2,700 Permanent Fund dividend, $680 per student in extra funding for K-12 public schools, the state takeover of a major federal construction permitting program, and some increases in funding for education and public safety programs.
Critically and controversially, the proposal also contains a deficit of almost $590 million, which would be balanced by spending from the $2 billion Constitutional Budget Reserve, the state’s main savings account.
Thirty votes are needed to spend from the CBR, but members of the House’s predominantly Democratic minority voted against that spending, citing the need for a smaller dividend or new taxes to balance the budget instead.
Denying a CBR vote has become an annual tradition by members of minority caucuses searching for leverage in the budgetary process. Before this year, Republican-led minorities repeatedly voted against the initial budget in search of a larger Permanent Fund dividend.
On Monday, members of the House said there is plenty of time to find consensus before the end of the legislative session.
“We’ve got a lot of pieces at play. It’s a pretty fluid time. This is not the first time a budget has gone over without a CBR vote,” Johnson said.
The Alaska Senate is expected to advance a plan that contains a smaller Permanent Fund dividend as a means of balancing the budget without a deficit.
Monday’s vote followed more than a week of inaction on the budget, which was mostly shelved after minority lawmakers staged a brief walkout to protest a budgetary pressure tactic intended to encourage their vote on the CBR.
Rep. Andrew Gray, D-Anchorage, apologized on Monday for his role in the walkout, saying he fell into “a spiral of righteous indignation” and that since then, “our feelings have tamped down a little bit.”
Republicans, Democrats and independents each acknowledged problems with the budget passed Monday, particularly the large structural deficit within, but most Republicans generally said they were willing to go along with the proposal for the time being, while most Democrats were opposed.
Rep. Maxine Dibert, D-Fairbanks, noted the failure of budget amendments intended to deal with child care.
“We have a child care crisis. When I was knocking on doors, that was the No. 1 issue. This plan, we’re not focused on that,” she said.
Other lawmakers noted that the extra funding for K-12 schools is a one-time bonus and not the long-term change that public school advocates have requested.
Still others cited their opposition to the budget because it doesn’t appear sustainable. (At an average oil price above $79 per barrel, the budget could pencil out.)
But a majority of House lawmakers said they believe this spending plan is the first step toward a sustainable long-term spending plan.
“There are many other things we are deliberating as a body on, because they are important … but this is what’s before us right now, and it’s the first piece of the budget negotiations,” said Rep. Sarah Vance, R-Homer. “I’m supporting this to stay at the negotiating table for Alaskans.”
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