Alaska's budget balances this year on high oil and a reduced dividend

Alaska's budget for this fiscal year balances with a projected $106 million surplus, according to the Legislative Finance Division's September newsletter. It does so for two reasons that may not last: oil is running well above forecast, and the Legislature set the Permanent Fund dividend far below the statutory formula.

The oil side is the bigger one this year. Alaska North Slope crude has been trading $18 to $20 a barrel above the Department of Revenue's spring forecast for fiscal 2027, which runs through June. At that difference, the state takes in roughly $860 million to $960 million more than it planned on. But futures prices for fiscal 2028 through 2036 sit only 60 cents to $1 a barrel above forecast, worth $22 million to $29 million a year. This year's windfall is this year's.

The dividend side is structural. The state draws about $4 billion a year from the Permanent Fund under its percent-of-market-value rule. The Legislature decides how to split that between dividends and government. This year it set the dividend at $1,000, plus a separate $200 energy relief payment, and directed the rest to the general fund. Had it paid the dividend the 1982 statutory formula calls for, the general fund would have received roughly $1.2 billion less, and the budget would not balance.

Those two facts come from charts published this week by Alaskans for Sustainable Budgets, a fiscal policy group led by Brad Keithley that argues reducing the dividend amounts to a tax on Alaskans and favors paying the full statutory dividend with a broad-based tax to make up the difference. The group's charts label the diverted dividend money as a "PFD tax." The state does not use that term.

Its spending figures track the Legislative Finance draft summary: about $5.6 billion in operating spending and $355 million in capital, against roughly $6.05 billion in revenue as the group counts it. The Department of Revenue's own spring forecast puts unrestricted general fund revenue for fiscal 2027 at $6.7 billion, a figure that counts the full Permanent Fund draw rather than only the share directed to the general fund. That forecast was $510 million higher than the fall estimate before it.

Gov. Mike Dunleavy signed the fiscal 2027 budget June 26. The Legislative Finance Division's official fiscal summary is due later this fall.