Senate passes amended operating budget: $259M in spending reductions, full PFD

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JUNEAU, Alaska (KTUU) — By a vote of 19-1, the Alaska Senate voted overwhelmingly in favor of an amended budget after hours of debate early Wednesday evening. Sen. Jesse Kiehl, D-Juneau, was the sole 'no' vote.

Senate Finance co-chair Sen. Bert Stedman, R-Sitka, summarized the final Senate budget: $4.3 billion in unrestricted general fund spending for state and agency operations — a $259 million reduction in state spending.

The budget includes $1.9 billion to pay for a $3,000 PFD payout, but doesn't include a mechanism to pay for it.

That money would likely either come from the Constitutional Budget Reserve or the Earnings Reserve Account under the Senate plan.

However, a full dividend is still not assured to Alaskans as the House would also need to agree to the proposal.

The Department of Health and Social Services budget was slashed by more than $135 million, dropping the agency's budget below $1 billion for the first time since 2011.

Funding for the Alaska Marine Highway System would allow service to continue through the winter despite a $44 million cut.

The Department of Corrections budget sees an increase of $29.3 million, though Stedman said that budget would likely be reduced.

"We're going to have to work hard with the other body and the administration to get the Department of Corrections under control," Stedman said, characterizing DOC spending as "an ongoing challenge."

"I don't know for sure, but I think it's probably the biggest operating budget reduction in the history of the state. I'd have to go back and look at that, but it's significant, at least since I've been in here by far, so my hat is off to all the entire senate. We all worked collaboratively together to deliver this budget through the finance committee."

In a floor speech prior to the final vote, Sen. Bill Wielechowski, D-Anchorage, said the budget provides funding for education, school bond debt reimbursement, the University of Alaska, and inflation-proofing for the dividend, among other key items.

"I don't think I've voted for an operating budget in probably six years, and I didn't think there was any possible that I could vote for an operating budget when this process started," Wielechowski said, "but I'm not going to let the perfect get in the way of the good, and there's a lot of good in this budget."

Senate Minority Leader Tom Begich, D-Anchorage, thanked Senate President Cathy Giessel, R-Anchorage, for overseeing a fair and inclusive process with Senate Democrats.

"Together we are saying 'no' initially to what the governor proposed, but 'yes' to working together, building a budget that we hope the governor will support. Can't speak to that, that's up to him," Begich said. "What I can speak to is this process — what you have done, what we have done, what the co-chairs have done, so I want to thank everyone for that, and for that reason, I will be voting for this budget as well."

Editor's note: A previous version of this story listed an incorrect amount for funds to be paid out for the Permanent Fund Dividend.

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