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Senate Finance Introduces Operating and Capital Budget Substitutes
Budgets Balance with Approximately $90 Million in Surplus Without a Constitutional Budget Reserve Draw
JUNEAU – The Senate Finance Committee introduced a committee substitute for the state's operating budget this afternoon. The new committee substitute provides a permanent fund dividend consistent with a 75/25 percent of market value (POMV) split of the annual earnings, translating to an approximate $1,304 dividend. The committee substitute also increases the funds going to K-12 education by $174.9 million, or roughly equivalent to a $680 per student increase.
"This is a responsible budget that considers the services Alaskans expect while living within our revenue projections," said Senator Bert Stedman, R-Sitka, Operating Budget Chair of the Senate Finance Committee. "The constitution mandates us to deliver to the governor a balanced budget. Within the confines of the spring revenue forecast and not dipping into our perilously low reserves, we balance the budget with the potential opportunity of revisiting it next January to deal with further maintenance and capital needs.”
The operating budget is balanced based on the spring forecast revenue projections of an average of $73 per barrel of oil in fiscal year 2024. The combined operating and capital budgets leave an approximate $90 million surplus, which represents about a $1 shift in the average price of oil. Next year, the legislature can adjust funding based on actual revenue, rather than projected.
The current projection for the Constitutional Budget Reserve Fund (CBR) balance for the start of fiscal year 2024 is $2.4 billion. If additional revenues are generated that exceed the spring revenue forecast, the committee substitute appropriates the first billion dollars to the CBR. After the CBR deposit, if revenue comes in even higher, then up to $1.1 billion will be deposited into the Public Education Fund to forward fund education.
In addition, yesterday, the Senate Finance Committee introduced a new committee substitute for the capital budget, Senate Bill 41, which prioritizes $30 million for major school maintenance and $32 million for the University of Alaska's capital needs. While constructing the capital budget, the Senate Finance Committee took into consideration four goals: 1) Capture as many federal funds and provide grant writers for communities the ability to secure federal grants, 2) establish food security and resource preservation, 3) strengthen state-wide energy programs, and 4) address our deferred maintenance needs.
"We have limited resources to work with, making this capital budget one of the smallest we have seen in a long time. But we have focused on putting in money for major maintenance for schools and the university system to prioritize our existing structures," said Senator Lyman Hoffman, D-Bethel, Capital Budget Chair of the Senate Finance Committee. “We’ve chosen not to do any individual district projects, but are concentrating on shoring up statewide existing infrastructure.”
The Senate Finance Committee will continue to work out any details necessary before sending the final Senate version of the operating budget to the full body next week. You can view today's Senate Finance Committee hearing on the new committee substitute on Gavel Alaska.
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