State House working on state capital budget with Mat-Su projects included; Senate passes its operating budget back to House

Legislators are right on schedule with state budget work as a May 15 mandatory adjournment for the Legislature approaches. The Senate passed its version of the state operating budget, sending it back to the House last Wednesday, May 1.

Meanwhile, the House Finance committee has presented a draft of its version of the state capital budget, SB 187, which passed earlier in the Senate.

So far the House and Senate are sticking to an agreement on a budget schedule, Sen. Bert Stedman, R-Sitka, said in a briefing last week. Stedman is cochair of the Senate Finance Committee and in charge of the operating budget.

In the capital budget there are several projects for Mat-Su but there can be no guarantees until the Legislature “gavels out” on May 15 and Gov. Mike Dunleavy signs the budget later. The House Committee is continuing work on the capital budget with a cost target of $500 million in state general funds. Rep. Bryce Edgmon, I-Dillingham, House Finance chair for the capital budget, said hiss goal is to finish the work and get it back to the Senate by May 9.

When the operating budget, House Bill 268, passed out of the Senate last week there were lengthy floor speeches about the need for larger Permanent Fund Dividends, or PFDs. The Senate’s dividend is much lower than what the House proposed but it is also more affordable, Stedman said.

A budget conference committee will be appointed to reconcile the differing versions of the operating budget. The House bill has a deficit due to the larger dividend but the Senate version is close to being balanced.

The Senate’s operating budget passed on a vote of 17-3 with two of Mat-Su’s three senators voting no, Sen. Shelley Hughes and Sen. Mike Shower, both Republican. Sen. Robert Myer, R-North Pole, also voted no. The third Mat-Su senator, Republican Sen. David Wilson, voted yes.

The $6.25 billion operating budget leaves $196 million in a surplus available for pending legislation, including the capital budget. Modification will still be needed in the budget conference to make room for items not yet in the budget, mainly the cost of new legislation as well as funds for the capital budget, the total for which is not yet decided. Funds for state labor contracts are included in the budget, however.

If there is an FY 2025 surplus – if oil prices rise – the Senate proposes to split extra revenue first to savings and then to a 2025 additional dividend, or “energy relief” checks in the fall of that year. An additional dividend is also coming this fall as part of the FY 2024 current year budget.

The Senate also provided a “waterfall” provision for FY 2025. capped at $90 million, that allocates any surplus oil revenue for next year if oil prices range between $78 to $80 per barrel. This would be available for unforeseen costs in the remaining months of the state’s FY 2024, or by June 30. Should the oil price average be higher, between $80 and $93 per barrel, the extra funds will be divided equally between the energy relief payment for fall 2025, capped at $500 per check, and the state’s Statutory Budget Reserve account. Any surplus beyond $93 per barrel will be directed to the Constitutional Budget Reserve, the state’s main savings account.

Major Senate operating budget appropriations include:

• $174.7 million for an additional school support outside of the Base Student Allocation formula for education. This is equal to a $680 increase in Base Student Allocation increase per student, but as one-time funding

• $7.3 million in additional pupil transportation for school district increased costs. School districts like in Mat-Su are having to subsidize transportation, or school bus operations, from funds for teaching and school operations

• $5.2 million for the Alaska Reads Act to help with K-3 reading instruction. The Alaska Reads Act helps young children learn to read

• $5.2 million for Head Start to match federal funds to serve more children

• $1.2 million for rural Public Broadcasting to enhance emergency communication capability

• $30 million for Community Assistance for FY 25 and 26 to help lower local property taxes throughout the state

• $4 million into the Municipality of Anchorage for the summer operations of the municipal homeless shelter

• $1.3 million for the Department of Transportation and Public Facilities’ Central Region recruitment and hiring of highway staff to support winter snow removal, and aviation personnel

• $7.5 million for grants to childcare providers to increase access to services

• $15 million for in-home and personal care assistant services; and

• $3.7 million to the Council on Domestic Violence and Sexual Assault

While the state capital budget, SB 187, is still unfinished in the House Finance Committee but the process is well along.

Here are some of the Mat-Su items in the budget so far:

• Palmer emergency foods facility, for $15 million

• Mat-Su flood and erosion mitigation, for $2.5 million

• Local fisheries enhancement, Mat-Su, for $2.5 million

• Willow fire, emergency service station, for $700,000

• Wasilla water and wastewater upgrades, for $750,000

• Big Lake road rehabilitation, for $16.76 million

• Bogard Road reconstruction, for $727.600

• Montana Creek bridge, for $171,000

• West Susitna access road, to Susitna River, for $20.3 million

• UAA Mat-Su campus mechanical upgrades, for $1.19 million

• Palmer courthouse expansion, at $4.9 million

• Wasilla-Palmer city water interconnect, at 2 million

• Wasilla water, wastewater system upgrades, at $750,000