March 20, 2023: Congressman Delena Johnson (R-Palmer, center) stands with her chief of staff, Lemond Henderson, and presents the budget with Congressman Neil Foster (D-L) and Congressman Bryce Edgmon (R-Dillingham). Discuss the bill. (Mark Sabatini/Juno Empire file photo)
A variety of provisions, including a $2,272 Permanent Fund Dividend, a $680 per student increase in education funding, a small surplus to cover uncertain expenses, and a ban on elective abortions with Medicaid funds, were approved by the state House of Representatives. It is included in next year's revised budget proposal released by the committee. Friday.
The proposed spending plan for the fiscal year that begins July 1 is, in some ways, a repeat of last year's budget battles at the Alaska State Capitol, most notably with the PFD lower than Gov. Mike Dunleavy's. , which is higher than what the Senate is proposing. How much dividend funding will be available for other key issue areas, such as education, and whether the state will run into a deficit that would require the economically and politically unstable step of drawing on reserve funds. It will greatly influence what happens.
But if oil prices were higher than expected, the House budget boosted the PFD by $444, reneging on an agreement last year by lawmakers to pay half of the surplus for dividends and keep half in budget reserves. There are also important new elements. The state Department of Revenue expects to spend an additional $222 on PFDs this year under the deal, but the House budget directs all the funds toward dividends.
“This is the third largest dividend in Alaska history,” Delena Johnson, a Palmer Republican who co-chairs the House Finance Committee, said during Friday’s meeting. “And we still have a $150 million surplus. So I think we felt, in terms of inflation and energy, that this is a way to strike a balance between increasing state services and increasing education (and) listened to public comments. We tried to lean into that and incorporate what people want, and this fall we focused on that health screening and delivered it.”
An added bonus for Alaskans, so to speak, is that additional energy-related payments will be exempted from federal income taxes, Johnson's chief of staff, Lemond Henderson, said in a presentation at Friday's meeting.
The provision is likely to meet resistance in the Senate, where bipartisan majority leaders are pushing for a similar approach to last year's dividend, which would have been about $1,600, including a previously agreed-upon $222 bonus payment. I support it. The money saved compared to the House PFD would go toward reserve funds, state programs, and infrastructure projects.
The House Finance Committee is scheduled to begin considering budget amendments on Wednesday.
Much of the House budget framework is similar to the plan Gov. Mike Dunleavy proposed last December and updated in February, but his budget does not include increases in education funding. A statutory PFD of $3,429 ($3,651 with $222 bonus payment) is proposed. ) resulting in a $1 billion deficit. Mr Johnson noted that no statutory dividend had been paid since 2015 and said the House's goal was to avoid a budget deficit while including the largest possible PFD.
Another major item and policy difference between the House and Governor's budgets is that the base student allocation for public schools will increase by $680, for a total of approximately $175 million.
Congress passed a bill containing those funds, but Dunleavy vetoed them and Congress failed to override them by a single vote last week, making the increases one of the most contentious issues in this year's legislative session. It has become. Additionally, Dunleavy is prepared to use a line-item veto to reject some or all of the BSA increases at the June budget signing unless Congress approves his specific policy goals, such as increasing state funding. revealed something. Charter school authority.
Senate majority leaders have said increasing the BSA is one of their top priorities this Congress.
Henderson said the House budget, which includes about $10.4 billion in total spending and $6.2 billion in operational spending, includes many of the governor's proposed cuts that would result in a roughly 1.8% decrease in statewide spending.
This includes a $40 million increase in overtime pay for staff, as the Department of Corrections' budget has increased 36% over the past five years due to reported staff shortages. The House also made several cuts to the Department of Justice budget, including cutting about $500,000 from the governor's proposed $2 million for “state defense,” which involves numerous legal challenges primarily by states to the federal government. went.
But while the budget has a $152 million surplus, it doesn't include many items that will likely continue to need funding, so “that $152 million will disappear quickly.” That's a possibility,” Henderson said. The Alaska Marine Highway System, for example, could face a $38 million shortfall depending on its operational plans for next year, he said.
Other costs not yet funded include an extension of the Low-Income Senior Benefits program that seems likely to pass Congress, school and college maintenance costs, and increases to state employee contracts currently being negotiated. , including nearly $24 million for some emergency services.
The House budget also includes a provision regarding Medicaid services, stating that “funds appropriated in this budget may not be spent on abortion, which is not a mandatory service…The U.S. Supreme Court's decision provides no new precedent. “limited'' is specified. Similar provisions and laws have been proposed and sometimes adopted over the years, but the Alaska Supreme Court has ruled they violate the state constitution.
The House version also states that the Alaska Permanent Fund Corporation cannot establish or maintain a new office in Anchorage without legislative approval, after APFC opened such an office last year despite funding authorization. It also contains language that prohibits doing so.
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
