Senate approves $5,500 payout in spending sprees

Adapted from The Midnight Sun Memo, a newsletter project from your humble editor Midnight Sun. For anyone who has asked how to keep up to date via email or how to support the work we’ve been doing here, we finally have an answer in this nifty newsletter… which comes with two free editions a week and extras for subscribers (although, as you might have learned by following this blog, timing cannot be fully guaranteed). Register now!

We heard the refrain throughout the session: We have the money this year!

A combination of high investment returns driven by the pandemic and a windfall in oil tax revenue from Russia’s war on Ukraine has seen the projection as state coffers swell to levels we haven’t seen in nearly a decade. This has been accompanied by a push, especially from the die-hard pro-PFD crowd, to spend big on the dividends they have built their political careers on. Never mind the warnings that oil prices and investment are notoriously volatile and that a wrong turn on either would wipe out the state’s surplus and whatever buffer remains.

That’s all to say, the Senate’s operating budget began Monday with projections that it would send hundreds of millions of dollars in savings and save money to eventually fund K-12 education. year. By the end of the day, all of that savings and goodwill for the next year of public education was all but wiped out to pay for a $4,200 PFD plus a $1,300 energy rebate, which that brings the total payment expected toward this year’s election to a whopping $5,500.

Sen. Mike Shower, R-Wasilla, passed the amendment for the higher dividend — raising the dividend from the $2,600 figure he was already sitting on — arguing that the higher number would give the Senate room to negotiation with the House. He and others have argued that Alaskans need the cash more than ever, saying direct cash payouts are the most effective way to stimulate the economy. The general theme, however, is that the state is teeming with money with no end in sight. When critics pointed out that the House could go along with the changes and lock the state in on the spending, Shower replied “So what?”

Sen. Bert Stedman, R-Sitka, argued for a more conservative approach to the budget, arguing that the state could pay out a $2,600 dividend — far larger than in recent years — while putting in money aside in savings and education. He warned that the budget the Senate had agreed to was only balanced if oil remained north of $101 a barrel for the coming fiscal year with little recourse if things went wrong.

“It appears that the net position of this amendment (to pay the PFD of $4,200) would leave approximately $700 million in the statutory budget reserve at $101 a barrel of oil. It’s maybe a $7 oil change, a $6 oil change and we have no margin for error, nothing. It’s zero. We don’t have an alternate language, we don’t have the ability to access the constitutional budget reserve,” he said. “It pretty much takes away all the cash we have and, again, it’s on $101 a barrel of oil. We can’t take that.

Sen. Tom Begich, D-Anchorage, said while he supports the dividend, he cannot support it at the expense of education and the future of the state.

“Any thought that we were going to fund education is going to disappear because we’ve wiped out that resource. It’s really about saying, ‘We have the money today, let’s spend it,'” he said. “Just because we have money on the table doesn’t mean we have to spend it.”

As if to point out that he was still a fiscal conservative, Senator Shower followed his amendment to pay for a full PFD with several piecemeal amendments that would have cut $500,000 here and $1 million there. Not only were his proposed cuts ridiculously small compared to the enormity of the dividend payout, but their targets were eye-opening. His amendments would have slashed a program to maximize food stamps for senior citizens, cut funding for a job training center, removed funding to account for health care for longshoremen – the people who ground ferryboats. State – all after a dismal few years of the pandemic and eliminated public funding for fisheries studies in the Bristol Bay Area. For the most part, Shower has targeted his cuts at people and groups outside his region. Cuts for you, not for me. Its biggest cut would have eliminated $60 million in additional K-12 funding that serves as a safety net in case separate legislation to increase the funding formula for the first time in years fails to achieve this. the finish line. Another would have eliminated advance funding for K-12.

“Public safety is important to all of us when something is going on,” Shower said, “education is important to people who have kids. A lot of people don’t have kids.”

On the other side of the spectrum, Sen. Bill Wielechowski — an Anchorage Democrat who has been a staunch dividend supporter, including taking a case to the Alaska Supreme Court about it — has pledged that the dividend a larger one could simply be accommodated by eliminating petroleum tax credit payments and overhauling the state’s petroleum tax structure through separate legislation.

His amendment to eliminate $60 million in oil tax credits also failed without debate.

Instead, the Senate only seemed to have eyes for additional spending after it approved the dividend and the energy rebate. Despite Shower’s assertion that the cuts would be easy, most of his colleagues who supported the dividend pushed amendments calling for additional spending. Senator Mia Costello proposed several amendments in an attempt to bring money home for community projects, all of which failed. However, the legislator has have the votes to approve nearly $600,000 to replace diving boards in Anchorage-area high schools, arguing that anyone could use them. Shower, who said the state should cut spending now that it is paying out the dividend, supported the diving board amendment.

The Senate is set to proceed with the budget today, which is expected to include amendments to provide additional funding to Port of Alaska in Anchorage and Port MacKenzie in the Mat-Su. Once the budget work is complete, the budget will be presented to the House for a vote of approval. If the House rejects the Senate version, the bill will go to a conference committee where the differences will be settled.

Other notable changes:

  • The Senate rejected an amendment allowing the state to take over the Clean Water Act allowing 404 primacy. It was met with strong opposition, with opponents noting that the $5 million and 28 new employees probably weren’t even close enough. to replace federal regulators, whose staff is 21 more than this proposal. The benefit was also unclear, as the state would still be required to meet federal permit requirements for sewage discharge, but some naysayers noted that it was all likely aimed at giving Pebble another shot. Mine. It failed on an 11N-8Y vote.
  • They approved an amendment that would provide $1.5 million to the community of Selawik to keep their firefighting equipment warm during the winter. This is a clear need after the community saw four people die in a house fire when the community’s equipment was frozen. It was approved without objection.
  • Alaska Long Trail funding lives. There was an attempt to kill the project and funnel the money to Fairbanks for a new law enforcement training facility, which ultimately failed.
  • The Senate also tabled an anti-abortion amendment that mirrored what was produced by the House – which would have meant it was locked for the final budget – on a 10-8 votes.

Follow the thread: The Senate begins budget amendments.