June 19

By Becky Bohrer

The Alaska House passed a state budget late Tuesday but failed to garner sufficient support for a roughly $1,100 dividend for residents this year, which was the higher of two potential payouts under the package.

Dividends typically have been paid using earnings from the state’s oil-wealth fund, the Alaska Permanent Fund. But the budget agreement that advanced from a six-member conference committee on Sunday cobbled together money for dividends from various sources, including the constitutional budget reserve fund that requires three-fourths support in each the House and Senate to tap. That so-called three-quarter vote failed Tuesday night in the House, where 30 votes were needed. The vote was 24-15.

The Legislative Finance Division has said a failure to reach the three-quarter vote threshold would mean $525 dividend checks this year. The last time the check was in the $500 range was in 1986.

House Minority Leader Cathy Tilton, a Wasilla Republican, said the conference committee made fund-source choices that were not necessary. The budget proposal tied strings to funding for programs beside the dividend, including oil and gas tax credits and some infrastructure projects, making them subject to the three-quarter vote.

Rep. Ben Carpenter, a Nikiski Republican, called the approach risky and said that was the choice of the crafters of the budget proposal, not his choice.

But Rep. Ivy Spohnholz, an Anchorage Democrat, said House members did have choices, including whether to support an $1,100 dividend and to keep pots of money from being swept into the constitutional budget reserve.

Under the state constitution, funds taken from constitutional budget reserve, which lawmakers have relied on for years to fill budget gaps, are to be repaid. The budget plan included language that has been used in prior budget cycles meant to prevent a long list of accounts used for such things as student scholarships and rural electric costs from being swept into the reserve fund. The three-quarter vote also was needed to do this.

The House convened around 7:30 p.m., 9 1/2 hours after it was originally set to meet, following a day marked by closed-door meetings between lawmakers as they evaluated options for securing votes and completing their work ahead of a Friday special session deadline.

House Majority Leader Chris Tuck told reporters before the floor session that a failed vote would mean lawmakers would need to keep negotiating.

The Senate was expected to take up the budget Wednesday. The House also adjourned until Wednesday.

In 2018, lawmakers began using permanent fund earnings, long used to pay dividends, to help cover government expenses, and sought to limit withdrawal amounts for dividends and government costs. The withdrawal limit for the fiscal year starting July 1 is about $3.1 billion.

One of the big debates surrounding the budget was whether to exceed that limit. The director of the Legislative Finance Division has said the withdrawal limit would be adhered to under the budget plan.

The budget plan also would move $4 billion from spendable permanent fund earnings to the fund’s constitutionally protected principal. Such transfers aren’t subject to the withdrawal limit.

There was an estimated $11.3 billion in uncommitted funds in the permanent fund’s earnings reserve as of April 30, according to the Alaska Permanent Fund Corp.