Alaska Senate approves $4.6 billion budget with two $1,000 dividends

JUNEAU — The Alaska Senate approved a $4.6 billion state budget Monday, voting after hours of back-and-forth debate to include two $1,000 Permanent Fund dividends.

The Senate’s plan, which must be reconciled with a competing budget plan by the Alaska House, calls for one of the dividends to be paid in the spring and the other in the fall.

House lawmakers rejected the Senate plan late Monday, forcing the creation of a six-member committee ordered to come up with a compromise.

Senators said they want to provide some economic aid to Alaskans as the coronavirus-driven recession spreads. A proposal for a $1,300 spring dividend failed 9-10, and senators also rejected a proposed $3,200 fall dividend.

The Senate’s spending plan covers the fiscal year that begins July 1, and in an unusual move, it includes both operating costs and construction projects.

Normally, the Legislature approves an operating budget and a separate capital budget that covers construction and renovation projects. This year, lawmakers have combined both bills in an attempt to adjourn the legislative session faster.

The Senate bill includes $30 million in extra funding for K-12 schools and $75 million to cover the medical costs of the coronavirus pandemic.

That’s much less than the $1 billion requested by Gov. Mike Dunleavy, but lawmakers have said they are reluctant to give the governor that much spending authority without having a better idea of what it will be used for.

Sen. Click Bishop, R-Fairbanks, said senators are drafting a coronavirus economic-aid bill, which is why they were reluctant to increase the Permanent Fund dividend.

Spending in the Senate’s version of the budget is up significantly from the budget approved last year by lawmakers, even after additional spending was retroactively added to last year’s spending plan.

This year’s two dividends would cost about $1.36 billion atop the $4.6 billion spent on services and construction, requiring the Legislature to violate a self-imposed cap on spending from the Permanent Fund’s earnings reserve.

Sen. Lora Reinbold, R-Eagle River, voted against the budget overall, saying lawmakers failed to sufficiently cut spending on services.

Conversely, Reinbold voted for a larger dividend and for the two-dividend plan opposed by other lawmakers.

Sen. Jesse Kiehl, D-Juneau, said extra spending on the dividend is inappropriate because it reduces the amount of the Permanent Fund, whose earnings will be needed in future years.

“We’ve got to help, but not at a generational cost,” he said.