The Alaska Senate today voted unanimously for the smallest operating budget in 15 years, resulting in a $600 million surplus.
The budget provides $4.4 billion in unrestricted general funds for agency and statewide operations – a reduction of $190 million over last year – and transfers $10.5 billion from the Permanent Fund’s earnings reserve account into the fund’s constitutionally protected principal.
“This budget delivers real reductions, keeps Alaskans safe and protects the Permanent Fund for our descendants,” said Senator Bert Stedman, R-Sitka, co-chair of the Senate Finance Committee. “Today we made the largest ever transfer to the Permanent Fund’s constitutionally protected principal in history. Within 15 years, we can expect the fund’s principal to be about $100 billion.”
$19 billion of Alaska’s $65.3 billion Permanent Fund currently sits in an earnings reserve account that can be spent by the Legislature with a simple majority vote. To protect these funds, the Legislature’s proposed budget moves over $10.5 billion from the earnings reserve into the constitutionally protected corpus, which cannot be accessed without amending the state’s constitution. This does not affect the ability of the fund to pay dividends.
“The people of Alaska sent us here to make the hard decisions for the long-term benefit of all Alaskans,” said Senator Natasha von Imhof, R-Anchorage, co-chair of the Senate Finance Committee. “Today locked away more than $10 billion into the Permanent Fund’s principal, taking more than half the earnings off the table, forcing all state spending to be in line with our annual revenues and protecting our savings accounts for emergencies.”
The Legislature’s proposed budget is the smallest since fiscal year 2005, adjusted for inflation and population.
“This budget is good for Alaska’s families and businesses,” said Senate President Cathy Giessel, R-Anchorage. “Government spending has been reversed by 15 years – that’s a significant achievement, one that we can all be proud of.”
House Bill 39 passed the Senate 20-0 and the House 22-15, for a combined vote of 42-15. The bill is now on its way to Governor Mike Dunleavy’s desk for his signature.