After a week of delay, state House finally passes its budget to Senate

The state House passed the state operating budget to the Senate Monday, April 17, by a vote of 23-17 along partisan lines. The budget for state mental health programs, which is approved separately, passed by 30-1.The budget approval came on the 91st day of the 120-day legislative session.

As of Monday there were 28 days left until the Constitutionally-required adjournment on May 17. This puts a time-crunch on major legislation. Besides the state capital and operating budgets, which must be passed by May 17, there are other priorities including Gov. Mike Dunleavy’s carbon storage and credit bills, HB 49 and HB 50.

These are in the House Finance Committee and in the Senate Resources Committee. The Senate is waiting for the House to move the bill. More hearings are planned in the House on April 18.

The operating budget passed by the House includes funds for a Permanent Fund Dividend of $2,689 per Alaskan and has a one-time boost to education funding of $175 million. The Senate has been working on its own version of the operating budget, which will likely include a smaller dividend in the $1,300 range that will leave money for more funding for schools as well as more state capital, or construction, projects than would be possible under the House budget and PFD.

In its allocation for dividends the House follows the so-called 50-50 plan, which splits the Permanent Fund’s annual payment to support state services between support for the budget and the PFD. That would resulon a dividend check of $2,689.

The Senate is meanwhile leaning toward a more modest split of the Permanent Fund money that allocates 75 percent for budget support and 25 percent for the PFD, which would pay an approximate $1,300 check. The precise amounts of the PFD won’t be known until after the budget is approved and the number of Alaskans signing up for the dividend is known.

One of the key differences between the House budget and the evolving Senate version is education funding. School districts are pushing hard for an inflation adjustment in the Base Student Allocation, or BSA, the amount that determines how much state aid is paid to schools. The BSA amount, about $5,960 per student, hasn’t seen an inflation adjustment since 2017, although there was a $30 increase last year given wwhen the Legislature passed the Alaska Reads Act. Since then inflation has taken a bite out of the BSA purchasing power, particularly last year.

The House balked at an overall increase to the allocation, however, but did approve the one-time funding for next year. School officials say a one-time increase doesn’t help solve systemic problems like higher fuel bills and the need to pay teachers more.

School officials can’t allocate the money to ongoing costs because it is not certain, and indeed unlikely, that the money will be approved for the following years, unlike an increase in the formula allocation, the BSA.

House Republican leaders are still happy with the budget they produced for a lean-money year. “After extensive work from the House Finance Subcommittees, House Finance Committee, and many hours of deliberation and debate over additional amendments on the House Floor, the Alaska House Majority has included critical provisions that will positively affect all Alaskans,” House Republican leaders said in a statement.

Rep. DeLena Johnson (R-Palmer), who co-chairs the House Finance Committee, went further: “Despite the spring forecast’s less-than-positive revenue projections, the budget we passed today provides for a robust PFD and other essential services like public safety and education,” she said

“There is no doubt that Alaska needs a comprehensive fiscal plan; in the meantime, this budget strikes a delicate balance between our current situation and the services Alaskans expect and deserve.” The budget includes important provisions to support fisheries, the Department of Corrections, and resource development, Johnson said.

However, there is still a $600 million deficit in the House budget for FY 2024 that must be paid for somehow. The state Constitution requires the Legislature to pass a balanced budget, so money will have to be raised to cover the deficit as well as pay for any more money for schools or other priorities.

The House action came after the budget was essentially stalled on the floor of that body for a week, four days of that caused by political uncertainties as the Republican House leaders worked to ensure they had enough of their members present to stave off new efforts to amend the budget by Democrats.

Another day of delay came last Friday when the volcano erupting in the Russian Far East sent ash over parts of Alaska causing disruptions in air travel. Several legislators were stranded in Anchorage and elsewhere when flights were cancelled.

The Senate has meanwhile started work on the state capital budget, a companion spending bill to the state operating budget that is passed separately by the Legislatures. Last week the Senate Finance Committee adopted a skeleton capital bill that has the necessary appropriations for major federal surface transportation programs such as for highway and airports but also rural safe water and sanitation projects.

This week senators on the finance committee will hear from budget officials in the state administration on Gov. Mike Dunleavy’s proposal for capita spending, which was made in mid-December when the governor presented his Fiscal Year 2024 budget proposal.

What else goes into the capital budget won’t be known until later in the session when there will be a better picture of what money will be available. One critical need that is not yet in the budget is money for deferred maintenance of state buildings and particularly on University of Alaska campuses around the state.