News from the Alaska State Legislature, the Office of Majority Office
For Immediate Release: June 22, 2017
Legislature Approves Budget Compromise
JUNEAU – The Alaska Legislature today delivered a reduced budget that averts a government shutdown while protecting the Permanent Fund and future years’ dividends.
The budget further reflects a core Senate Majority priority of reducing state spending and protects Alaskans from an income tax.
“The Senate Majority did not achieve everything on its agenda, but both sides compromised for the good of Alaska,” said Senate President Pete Kelly, R-Fairbanks. “The Senate and House worked together to deliver a reduced budget in time to avoid the high costs of a government shutdown. This budget makes necessary reductions in agency operations and protects the Permanent Fund and future dividends. We listened to Alaskans.”
After more than five months in session, the Legislature hit an impasse on how to resolve the state’s ongoing deficit. Concerned with the private and public sector consequences of a looming government shutdown on July 1, Senate leaders last week asked Gov. Bill Walker to narrow lawmakers’ focus to the operating budget. Six days of intense negotiations resulted in a fully funded fiscal year 2018 operating budget that will keep Alaska open for business.
The budget draws an estimated $2.4 billion from the Constitutional Budget Reserve (CBR). By keeping as much money as possible in the higher-earning Permanent Fund Earnings Reserve Account (ERA), the state will earn interest that in turn grows the Permanent Fund – saving the state an estimated $300 to $700 million, depending on the fund’s earnings. This structure also protects the Permanent Fund and future year dividends.
The FY 2018 operating budget represents $179 million less in undesignated general fund spending compared to FY 2017, and includes a $75 million reduction in agency operations. The budget fully funds K-12 education for FY 2018, and ensures each eligible Alaskan will receive a $1,100 Permanent Fund Dividend this fall. A long-term dividend amount is expected to be determined through future passage of Senate Bill 26.
The Senate Majority supports legislation eliminating cash credits for oil companies, and achieved intent language in the budget providing companies advance notice the state does not intend to pay credits for work done after Jan. 1, 2018. The compromise budget includes $57 million for credits already earned.
For more information, contact Senate Majority Press Secretary Daniel McDonald at (907) 465-4066.