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Dear Friends and Neighbors,
This is Day 117 of the 121 day session.
I am sending more frequent newsletters to keep you up-to-date and informed about work being done.
Education:
Senate Bill 52 increases the Base Student Allocation (BSA) by $680/student, bringing it from $5,960 to $6,640. The cost of this increase is $174.8 million.
Removed from SB 52 are subsequent year increases of $348 (FY2025) and for inflation adjustment (FY2026 and forward).
Already in the Budget, the Senate proposes a one-time (outside the BSA) $680/student funding.
SB 52 passed the Senate by a vote of 16-3. It now goes to the House, who will not address the bill until next year.
HB 39, FY 2024 Senate Budget – Combined Operating & Capital
Total revenue available this year: $6,264.3 billion. The expenditures are built on an expectation of $73/barrel oil revenue in the coming year.
The Senate has proposed a reasonable, responsible and (most importantly) balanced budget. As a result, the Senate Budget retains our better bond rating.
The Senate Majority has been solidly opposed to spending from savings (the Constitutional Budget Reserve) or breeching the spending cap of the Percent of Market Value of the Permanent Fund.
After Operating and Capital total appropriations of $6.132 billion, there is a surplus of $132 million. There are costs for legislation passed which are estimated to be about $34 million, whittling the surplus down to $97.9 million.
The end point surplus is about $63.7 million for the combined Operating & Capital Budgets.
The Operating and Capital Budgets are combined this year. There is a “waterfall” provision of steps that would occur if oil prices exceeded $73/barrel:
Between $73-83/barrel price - $636 million would go into the CBR (building it to ~$3 billion)
Between $83-105/barrel price - $1.763 billion split evenly going to a FY25 energy relief payment, and half to the CBR
Above $105/barrel price – added revenue goes to the CBR
What’s in the Operating Budget? Education funding, child care, the Dividend, a path to pay back funds used from the CBR if revenue exceeds expectations. Cost of the $1300 individual Dividend = $881.5 million
What’s in the Capital Budget? Statewide deferred maintenance, energy programs, road projects; maximizes use of federal dollars. No personal district project funding.
What new Revenue measures? Nothing has been completed.
The Senate has proposed:
SB 114 - Change to the S-Corporation taxation ($100-200 million/year), Change to deduction structures on oil ($200-300 million/year)
SB 122 - Establish Digital Business Corporate Income Tax ($70-90 million/year)
SB 48 – Carbon Offset Program
SB 49 – Carbon Sequestration and Storage Program
Dividend Solution
EVERY $1000 in DIVIDEND = COST of $650 MILLION.
Senate Bill 107 has long-proposed a 25/75 split of the Percent of Market Value (POMV) from the Earnings Reserve of the Permanent Fund.
The POMV is the spending cap in place to prevent a spending spree by Legislators of the earnings.
The 25/75 split would cost about $880 million from the ~$3.5 billion POMV.
A 50/50 split Dividend would cost about $1.7 billion (about $2700 individual dividend).
Senate Bill 107 provides for this 25/75 split in FY 25 but allows for future increase in the split.
If, in FY 27, the Legislature has secured $1.3 billion in new, annual recurring revenue and has saved $3.5 billion in the CBR, the Dividend split could move to 50/50 of POMV.
If these thresholds are not met, the Dividend is set at 25/75 going forward.
This timeframe covers 3 Legislatures and 2 Governors.
CAUTION: The Permanent Fund Corporation has warned the Legislature that the future is potentially not very rosy. Markets are down, earnings are down (meaning available funds in POMV) and more of the assets are unrealized. If the Corporation was called upon to release more funds that are in realized earnings, they would be obligated to sell assets at bargain prices.
Elections Law
Senate Bill 138 provides:
· Ranked Choice Voting results released more timely
· Allows voters to register within 30 days of election and other voting timelines for 30 days
· Clarifies residency requirements
· Voter designation of language preference
· Clarifies updating of voter files
· Clarifies observer requirements
· Requires postage-paid absentee ballot envelopes
· Repeals witness signature on absentee ballot
Items in this Newsletter:
· Senate Bill 52 Raising the BSA
· Senate Floor Sessions
· Repealing the 80th Percentile Press Release
· Current Topics, Economy, Health Care, Energy
· Alaska History
· Oil and Permanent Fund Resources
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