Expecting an influx of oil money, Alaska lawmakers say they’re interested in saving for later

JUNEAU — High oil prices have Alaska revenue officials expecting hundreds of millions of dollars in new revenue, but the experience of a seven-year slump in prices has state lawmakers preparing to save.

”This is the perfect opportunity to put some money away for a rainy day again. We are in full support of that,” said House Speaker Louise Stutes, R-Kodiak, speaking on behalf of the coalition in charge of the House.

This week, the Alaska House Finance Committee will begin crafting a proposal for the state’s operating budget in the fiscal year that starts July 1. It’s one of the first steps in the state’s annual budget process.

In preliminary conversations, coalition members said they’re interested in saving some of the influx, even if it means reducing the Permanent Fund dividend below levels requested by Gov. Mike Dunleavy.

“I personally would rather not be like drunken sailors and give a big fat PFD, like, ‘Woohoo, we can do this now,’ because I just don’t think it’s good policy,” said Rep. Adam Wool, D-Fairbanks.

Rep. DeLena Johnson, R-Palmer, said that kind of thinking is a mistake. She’s a member of the House’s Republican minority and sits on the finance committee. The dividend is an obligation of the state, she said.

“We need to pay our obligations, and we always should have been paying our obligation to the people,” she said.

“Are we gonna say, ‘Oh, we gotta save everything for a rainy day?’ Well, last I checked, it’s raining,” she said, referring to rising consumer prices.

In December, the governor proposed spending about $1.7 billion on the Permanent Fund dividend, enough for a payment of $2,564 per recipient in 2022, his administration estimated.

Legislative budgeters have estimated that a baseline operating budget for the coming fiscal year is $4.6 billion. That figure doesn’t include the state’s annual capital budget (which pays for construction or renovation projects) or any additions that lawmakers may make.

The Alaska Department of Revenue will release a new state revenue forecast in March, and lawmakers will use that to set the budget. A preliminary forecast, based on global oil markets as of Feb. 13, estimated that the state will receive $6.9 billion in the coming fiscal year.

Subcommittee work done through Friday reveals few increases in the state’s operating budget when compared to a draft proposal by Dunleavy’s administration in December.

“It seems like everything’s been relatively flat,” said Rep. Sara Rasmussen, R-Anchorage and a member of the finance committee.

Where changes have been proposed, they have been relatively small or involve spending that wouldn’t recur.

For example, school districts have asked legislators for more money. The subcommittee in charge of the budget for the Department of Education and Early Development recommended $50 million in one-time bonus funding for K-12 schools.

A proposal to permanently increase the state’s school-funding formula is advancing in separate legislation but is still at a preliminary step.

“I think what what we’re shooting for is a balanced approach, where there’s gonna be a larger dividend than people have seen in some time, there’s going to be some growth in government that is responsible, there’s going to be some new savings,” said Rep. Andy Josephson, D-Anchorage.

Rep. Neal Foster, D-Nome and co-chairman of the House Finance Committee, said the tentative budget schedule calls for the finance committee to introduce its version of the budget on Thursday, take public testimony on Friday and over the weekend, consider amendments in committee during the following week, then hold a debate among the full House.

“I’m hoping that we don’t get too much into wanting to spend and maybe put more towards savings,” Foster said.

“I think there’s consensus for that in both the House and Senate,” he said. “The question is going to be, how much?”

Correction: The first version of this article incorrectly reported the start of the state fiscal year. It is July 1, not June 1.