Alaska Senate Approves Austerity Budget Amid Fiscal Challenges
JUNEAU — The Alaska Senate passed a stringent operating budget for the upcoming fiscal year on February 26, 2024, as legislators prepare for final negotiations with the House. The state faces a daunting fiscal outlook, with a projected deficit exceeding $680 million over two years due to declining oil revenues.
In light of this, the Senate’s budget plan includes a $1,000 Permanent Fund dividend and a $172 million one-time boost for school funding, should a permanent increase fail to materialize this year. The spending plan received approval with a vote of 16-4. While Republican senators applauded the budget cuts, they pushed for a larger dividend.
Support for the budget came from all 14 members of the bipartisan Senate majority and two Republican minority senators, with four GOP members dissenting. Governor Mike Dunleavy’s earlier budget proposal suggested a $3,900 dividend, which would have resulted in a significant $2 billion deficit. Recognizing the pressing need for fiscal restraint, Dunleavy has since asked lawmakers to retract most of his proposed spending increases.
This budget aims to mitigate further financial turmoil, prioritizing cuts across various state agencies, including $25 million from the Department of Corrections and reductions in the Alaska Permanent Fund Corp. The Senate budget’s proposed dividend would be the smallest when adjusted for inflation, although it reallocates $264 million for other expenditures.
The Senate and House budgets differ notably; the House plan projects a $250 million deficit and proposes a $1,400 dividend. Senators anticipate a conference committee will address these discrepancies next week as the regular legislative session is set to conclude by May 21.
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