Operating budget passes State House; Senate approves state capital budget, mostly for construction

The Senate, which must also vote on the operating budget, disputes the claim of an $80 million surplus and says its calculations show a $276 million deficit. The differences will ultimately be worked out in a House-Senate conference committee.

The operating budget bills are House Bills 268 and 270, which so far totals $12.3 billion from all funding sources, and which covers operations for state agencies and programs as well as the state’s mental health programs.

Meanwhile, the Senate is expected to approve a state capital budget on Friday, sending it to the House. The capital budget is in Senate Bill 187 and includes state-managed construction as well ss one-time programs as distinct from continuing programs that are typically in the operating budget.

The proposed capital budget totals $3.94 billion from all fund sources, but most of that, $3.2 billion, is federal “pass-through” money for programs administered by the state, such as the big surface transportation programs mainly for highways and airports.

Senators are also working on their own version of an operating budget and the differences between that and what passed the House last week will be negotiated in the conference committee. A major difference to be resolved is on a $2,273 Permanent Fund Dividend, or PFD, proposed in the House bill, which senators say cannot be afforded. The Senate has yet to put a number to what it thinks is an affordable PFD, but it is likely to be close to the $1,312 dividend paid in 2023. A lower dividend will likely ease much of the $276 million deficit senators claim to be in the House budget.

There are things in the House operating budget that are widely supported and likely to be agreed by the Senate, however. One is a one-time appropriation of $175 million for school districts that is equivalent to a $680-per-student boost in the state’s Basic Student Allocation, or BSA, a formula that guides state funding for schools.

The BSA is a hotly-contested issue, with education groups pushing for a permanent increase to the formula, not just one-year funding which can be done through the budget. Last year a similar amount was approved in one-time funding but half of it was vetoed by Gov. Mike Dunleavy.

The budget also contains additional funding for career and technical education initiatives, Head Start, and the Alaska READS act, a new state program to boost reading skills in lower elementary grades that educators say is underfunded.  School bond debt reimbursement, which are state funds that support municipal debt for school construction, is also fully funded at $44.9 million.

The House operating budget also includes investments in crime investigation and domestic violence prevention, including $3.5 million for 10 additional VPSO positions in rural communities.

House leaders defended their work on the spending plan for operations. "This budget prioritizes public safety, education, a strong permanent fund dividend, essential services to all Alaskans, and provides support for Alaska’s most vulnerable populations,” said Finance Co-Chair Rep. DeLena Johnson (R-Palmer). 

“It’s a collaborative product with input from all members, as well as the many testimonies, letters, emails, and phone calls from constituents across Alaska. I am proud of work of the work we’ve done and look forward to continuing our dialogue with Alaskans as the budget moves to the other body,” she said.

Speaker Cathy Tilton said: "I commend the efforts of our caucus to exercise the constitutional obligation of passing a responsible budget. This budget reflects our ongoing commitment to address the diverse needs of Alaskans which offers greater opportunity and prosperity for our residents.”