Alaska House rejects Senate budget with $5,500 in cash payments
JUNEAU, Alaska (KTUU) – The Alaska House of Representatives rejected the Senate budget, meaning another round of budget negotiations must now begin in the final days of the legislative session.
The Senate budget calls for a full Permanent Fund dividend of approximately $4,200 and a one-time energy relief check of $1,300. Together, the two checks would cost the state nearly $3.6 billion. These cash payments are more than double those of the House budget.
A conference committee is to meet to negotiate the differences between the House and Senate budget so that a single bill can pass through both houses and onto Governor Mike Dunleavy’s desk for consideration. Representatives Kelly Merrick, R-Eagle River and Dan Ortiz, I-Ketchikan, will represent the majority and Representative Bart LeBon, R-Fairbanks, will represent the minority.
Sen. Bert Stedman, R-Sitka, and Sen. Click Bishop, R-Fairbanks, will represent the majority caucus in the Senate. Sen. Bill Wielechowski, D-Anchorage, will represent the minority. Wasilla Republican Sen. Mike Shower opposed the nominations, arguing that the committee’s membership will not benefit his constituents.
The Senate budget has been called irresponsible, unbalanced and flawed by some lawmakers. Other members of the Alaska Legislative Assembly said it would go a long way toward providing tax relief to Alaskans and investing in critical infrastructure projects like Port of Alaska and Port of Nome.
The approval vote failed 18-22 Saturday afternoon. Representatives Neal Foster, Tiffany Zulkosky and Josiah Patkotak joined Republicans in voting for the Senate budget. Minority Republican Representatives Steve Thompson, Bart LeBon and James Kaufman joined the overwhelmingly Democratic majority coalition in voting to reject it. Wasilla Republican Representatives David Eastman and Chris Kurka voted against passing the Senate budget because it uses Medicaid funding for abortions.
In the last days, a coalition Alaskan businesses urged the House to reject the Senate budget, saying state savings were needed and the Senate budget risked being taxed in the future. Resource Development Groups made a similar appeal to lawmakers, as did Alaska Unions.
Lawmakers have also heard moving stories from Alaskans who say a full-body PFD would make a big difference during a time of high inflation and high energy prices. The rising cost of fuel and fuel oil in rural Alaska is of particular concern.
The Senate Finance Committee obtained an updated financial picture on Friday. The nonpartisan Legislative Finance Division showed the Senate budget had a $1 billion deficit with the price of crude oil above $101 a barrel, meaning savings would have to be used to fill the budget gap .
If the price of oil averages $93 or less over the next fiscal year, a government savings account would be emptied. If the price of oil averages $75 or less over the same period, the constitutional fiscal reserve would also be emptied, but that requires three-quarters of lawmakers to vote together to spend it.
The Permanent Fund could be overdrawn with a simple majority vote, but this would come from the fund currently used to pay for state services and the dividend. It would also violate an enduring rules-based system, which has been defined in state law.
The value of the Permanent Fund has fallen below $80 billion in recent weeks with a stock market pullback. If the price of oil drops $2 a barrel in the next fiscal year, the state will lose between $150 million and $200 million. The projected surplus for the current fiscal year is expected to be lower than forecast earlier in the year, said Alexei Painter, head of the Legislative Finance Division.
Several minority Republicans have said the price of oil isn’t expected to drop anytime soon, meaning the Senate budget numbers could work. Rep. Kevin McCabe, R-Wasilla, called the shortfall “hype and fear.” Other lawmakers, like LeBon, called the Senate budget lopsided and said it was based on “very optimistic” oil prices.
Dunleavy held closed-door discussions with lawmakers after the Senate passed its budget on Tuesday. Several lawmakers said he pledged to veto the $1,300 energy relief check to bolster the state savings account and to encourage fiscal conservatives to support the Senate budget, but some lawmakers noted that there had been no public assurances regarding the veto plans.
“As policymakers, we need to understand that the serious financial issues facing Alaskan families, primarily rising costs due to inflation, should be at the forefront of the budget process. We can never lose sight of why we are here, it is the people of Alaska,” the governor said in a prepared statement after the House rejected the Senate budget.
The legislative session is due to end Wednesday at midnight.
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