This year’s Permanent Fund Dividend will be exactly $1,000 — the lowest adjusted for inflation since the annual payouts began in 1982, under the compromise state budget for next year approved by a legislative conference committee on Sunday.
The committee of three House and three Senate members approved the $1,000 PFD passed in the Senate’s draft budget, rather than the estimated $1,400 in the House version, by a 4-2 vote, with members of the bipartisan majority caucuses in favor and the Republicans in the minority caucuses opposed.
The reduced amount was part of hundreds of millions of dollars in cuts the Senate made compared to the House budget in an effort to craft a spending plan for the fiscal year starting July 1 without a deficit, despite projected revenue being less than expected due to low oil prices. Oil prices were expected to be $70 a barrel in last December’s forecast, but lawmakers say that price could now be $64 or less.
The $12 billion spending plan essentially flat funds many state agencies, which means that when adjusted for inflation they will have less money. Among the notable exceptions Sunday was $13.7 million added back for behavioral health programs at the request of Sen. James Kaufman (R-Anchorage) who said it will offer essential assistance with the high level of homelessness in that city.
A surplus of about $55 million — assuming an average level of uncertain costs such as emergency firefighting and other responses — is projected if oil prices average the currently predicted level of $68 a barrel, according to legislative finance documents. It will balance if oil prices drop to $64 a barrel.
The Legislature has also passed a $700 increase in the $5,960 Base Student Allocation for public schools, which Gov. Mike Dunleavy is expected to veto by Monday. The bill passed with enough votes to override the veto, but the governor has stated he will use his line item veto to nix at least some of the increase from the budget when he signs it unless legislators approve specific educational policy goals of his.
Conference committee members effectively split the difference on two intent language provisions regarding use of Medicaid funds for elective abortions (in the Senate’s version, but not the House) and gender-affirming treatment (in the House’s version, but not the Senate). The gender provision was removed while the abortion restriction — which has been in place for many years — was retained.
The compromise budget must be approved by the House and Senate before the Legislature’s adjournment deadline Wednesday night.
The amount of this year’s PFD matches the initial dividend of $1,000 in 1982 — which adjusted for inflation today would be about $3,300.
Last year’s PFD was $1,702, including a regular dividend of $1,403.83 and one-time energy relief payment of $298.17. Dunleavy and some legislative Republicans backed a so-called “full” PFD of about $3,800 this year. But most lawmakers said that was unrealistic since it would result in a roughly $1.5 billion deficit that would drain more than half of the state’s $2.8 billion Constitutional Budget Reserve — and many are expecting economic circumstances to be even worse next year.
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
