House rejects Senate's $1,000 PFD budget, sets up conference talks

The Alaska House of Representatives voted 36-0 Friday not to concur with the Senate's version of the state operating budget, moving the spending plan toward a conference committee to resolve a $477 million difference between the two chambers over the Permanent Fund Dividend and education funding.

The Senate also cut one-time education funding from $158.6 million to $29.1 million, a decrease of $129.5 million, with an additional contingent $111 million tied to the same revenue trigger.

Representative Andy Josephson explained the Senate amendments to the House. "Whereas the House appropriated a $1,500 permanent fund dividend, the Senate appropriates a $1,000 permanent fund dividend, a decrease of $318.4 million," he said.

Josephson, co-chair of the House Finance Committee, said the Senate version leaves $120 million in unrestricted general funds unspent before fiscal notes. "There are enough projected revenues for both House and Senate priorities," he said.

The Senate passed its operating budget Friday with a $1,150 dividend plus the $150 energy relief payment, according to Alaska News reporting. Senator Bert Stedman defended the Senate's approach to maintaining a fiscal cushion during that debate. "We are not too far apart, I don't think, from the House where we can get through conference and come to compromise. We have not changed our objectives of $73 a barrel, and we are holding, trying to hold everything within those bookends. Even though oil today is at $110 or some number north of that. We do not know what is coming this summer and into the fall. So this budget does not get enacted till July 1st," Stedman said.

Senator Bill Wielechowski explained the Senate's rationale for the lower dividend. "The reason Alaskans are not getting a larger PFD is really quite simple. For decades, oil funded 90% of our budget. It now funds 23%. We have no other source of revenue. That is as simple as it gets," he said.

The Senate removed several House priorities beyond education funding. It cut $17.5 million for the Alaska Heating Assistance Program, $15.4 million and $29 million in federal receipts to implement health-related recommendations, and $7.5 million for childcare workforce recruitment and retention. The Senate also removed $2.8 million to fully fund community regional jails, $4.5 million for recently unionized University of Alaska employees salary adjustments, $3.7 million and $4.3 million in federal receipts to maintain the Division of Public Assistance virtual contact center, $2.2 million for Alaska Gasline Development Corporation operating costs, $2.6 million to restore funding for highways and aviation support, $2 million for University of Alaska public safety and mental health support, $1.5 million to increase funding for adult day services, $1.8 million to meet Head Start grant match requirements, $1 million for food banks and pantries, $1 million for a geographic pay differential study, and $800,000 for emergency disaster grants and utility disruption.

The Senate increased some items the House had not funded as heavily. It added $50 million to Community Assistance, $20 million more than the House, plus $30 million to recapitalize the fund for a full distribution in fiscal year 2028. The Senate added $10 million to recapitalize the Disaster Relief Fund, bringing that fund to $48 million, and $5.7 million to the Fire Suppression Fund, raising it to $60.6 million.

House Majority Leader Dan Saddler moved to concur with the Senate changes but recommended members vote no, a procedural step to send the budget to conference committee. The House also rejected the Senate's mental health budget 10-26.

The Senate version of the mental health budget decreased operating expenditures by $4.6 million in general fund mental health appropriations. The Senate removed $4.3 million for behavioral health grants and $500,000 to maintain the crisis call center. The Senate added $5.2 million in AHFC dividends to increase funding for the AHFC Homeless Assistance Program capital item, bringing that item to $10.2 million in all funds.

"I ask you to vote no on concurrence so we can resolve these differences in conference committee, which I think we can do speedily," Josephson said.

Speaker Bryce Edgmon said he would appoint members to a conference committee to meet with Senate representatives to consider both the operating budget and the mental health budget if the Senate fails to recede from its amendments. The Legislature faces a May 20 deadline to pass a budget.

Alaska News previously reported that the House passed its operating budget with a $1,500 dividend on April 14 on party lines. The Senate Finance Committee reduced the dividend to $1,000 in early May to avoid a deficit, adding the potential $150 energy relief payment contingent on higher-than-forecast oil revenues.