JUNEAU – With about two weeks remaining in the 2021 fiscal year, the Alaska Legislature today passed a compromise budget deal, ensuring adequate funding for constitutionally mandated services, protecting billions in the Permanent Fund’s corpus, and providing critical relief to local communities and small businesses affected by the COVID-19 pandemic.
The budgets maintain a six-year trend of flat spending. House Bill 69 authorizes $4.5 billion in state unrestricted general funds for upcoming fiscal year 2022 operating expenses and $348 million for the capital budget, which leverages $1.8 billion in federal funds for roads, bridges, and other infrastructure.
For the second year in a row, legislators voted to transfer $4 billion from the Permanent Fund’s earnings reserve account to the fund’s constitutionally protected principal, which cannot be accessed without voter approval. The combined $8 billion transfer to the Permanent Fund’s principal represents 10 percent of the fund’s total value.
In the bill, funding for student scholarships, construction projects, and half the Permanent Fund dividend draws from the Constitutional Budget Reserve Fund (CBR), which requires a supermajority three-quarter vote from the House and Senate to access. With neither house able to achieve that threshold, half the funding for Permanent Fund dividends – $739 million – is inaccessible, reducing the $1,100 PFD down to $525.
In its version of the budget, the Senate approved a dividend of approximately $2,300 that amounted to 50 percent of the legal draw limit on the Permanent Fund. The $1,100 PFD represents a compromise between the two houses and among ideologically divided members. With dividends traditionally paid out in October, lawmakers still have time to reconvene and reach a compromise.
“I can assure Alaskans that this is not the end,” said Senate President Peter Micciche, R-Soldotna. “As we return to our districts and continue the discussion with Alaskans over our collective future, I remain optimistic that the Legislature will unite around a 50-50 PFD, a long-term, sustainable fiscal plan, and pay the remainder of the 50-50 dividend this year. Without a permanent solution to the dividend, we will find ourselves in this situation year after year – allowing the dark cloud of uncertainty to linger over our state’s economy and diverting us from addressing the many social ills plaguing our state.”
“For the sixth year in a row we’ve held operating expenses flat, and passed another historic transfer to Permanent Fund’s protected principal,” said Senator Bert Stedman, R-Southeast Islands, co-chairman of the Senate Finance Committee. “It’s only thanks to the wisdom and generosity of past generations that today we have an $80 billion Permanent Fund. I am proud of my colleagues for exercising that same foresight for the benefit of our kids, grandkids, and Alaskans not yet born.”
“As our economy continues down the road to full recovery, this capital budget will provide a shot in the arm with critical infrastructure projects and high-paying jobs for Alaskans,” said Senator Click Bishop, R-Fairbanks, co-chairman of the Senate Finance Committee.
The bill is now on its way to Governor Mike Dunleavy’s desk to be signed into law.
Alaska Senate Majority