Latest news with #LegislativeFinanceDivision
Yahoo
12-04-2025
- Business
- Yahoo
Market volatility complicates work for lawmakers in Alaska, a state whose fortunes are tied to oil
JUNEAU, Alaska (AP) — After President Donald Trump returned to office, Alaska Republican Gov. Mike Dunleavy declared 'happy days are here again.' He likened Trump's friendly approach to energy development as 'Christmas every day" for a state whose fortunes rise or fall with oil. But the nearly three months since Trump's inauguration have been tumultuous, roiling Alaska's substantial federal workforce and raising questions about the reliability of federal funding. And his on-again, off-again tariffs, and a related drop in oil prices, have compounded the uncertainty for Alaska lawmakers, who each year must craft a state budget based on volatile oil prices. The legislative session is set to end in mid-May, well before Trump's recently announced pause on higher tariffs for many countries expires. The whiplash has worsened long-standing tension over how much money should go toward the yearly oil-wealth fund check most Alaska residents receive as opposed to education or other needs. Lawmakers have shown scant interest in raising taxes and have blown through billions in savings plugging recurring budget deficits dating back more than a decade. 'We're all in a pickle,' said House Speaker Bryce Edgmon, an independent who leads a coalition of Democrats, independents and two Republicans. Alaska is no stranger to the boom-bust cycle of oil. The government spends more freely on infrastructure and other projects when prices are high and shutters facilities or slashes costs when they are low. Lawmakers base spending off twice-a-year revenue outlooks pegged to oil price and production forecasts. A year ago, North Slope oil was around $90 a barrel. It settled in the low-to-mid-$70 range beginning last fall and hit as low as $65 this week before Trump announced the 90-day tariff pause. At current prices, each dollar change in oil equates to about $35 million to $40 million in state revenue, according to the nonpartisan Legislative Finance Division. The March revenue forecast was based on $68-a-barrel oil for the upcoming budget year, down $2 from a December forecast. Oil prices change frequently and plans by OPEC+ members to add more oil to the market could cause a price softening, said Dunleavy spokesperson Jeff Turner, who noted the governor is focused on Trump's executive order supporting increased oil and gas drilling, mining and logging in Alaska, and that it is "great to have an administration that supports Alaska's responsible resource development.' Some state political leaders hope Trump's threatened tariffs could prompt countries like Japan, South Korea and Taiwan to invest in or commit to buying gas from a proposed massive liquefied natural gas project in Alaska. The project, repeatedly touted by Trump, has struggled for years to gain traction amid cost concerns, competition from other projects and questions about its economic feasibility. Trump carried Alaska in November's election. Besides oil, Alaska relies heavily on earnings from its nest-egg oil-wealth investment fund. The fund's principal is protected, but its earnings can be spent. Lawmakers cap withdrawals based on a percentage of the fund's average market value over a five-year period. The yearly dividend paid to residents has traditionally come from earnings, but since lawmakers also began using earnings for state services in 2018, there has been friction over how much should go toward each. Dunleavy proposed a roughly $3,800 dividend per resident, which would cost $2.5 billion — two-thirds of this year's earnings withdrawal — and result in a deficit he suggested covering by tapping the state's diminished savings. That amount hews to a formula abandoned years ago by lawmakers as unaffordable. The proposal is a nonstarter with legislative leaders, who are hearing pleas for more funding for K-12 schools squeezed by years of inflation and energy and health care costs. Education advocates also want the state to tackle a maintenance backlog that they say has created unsafe learning environments for students, including mold and structural issues at some schools. Last year, residents received $1,702, a combined dividend and energy relief payment. The dividend the past five years has been as low as $992 in 2020 and as high as $3,284, another combined dividend and energy relief check. House Majority Leader Chuck Kopp, a Republican, said politicians should not be 'even stoking the fantasy' of a dividend as large as Dunleavy proposed. 'We cannot pay an unsustainable dividend, and that dividend distorts the fiscal reality that we're facing,' he said. 'Do we need new revenue, or do we need to get a handle on the size of the dividend we're paying and honestly figure out how we're going to prioritize that?' Some members of the bipartisan-led Senate have urged changes to oil taxes to raise revenue, but overall support has been limited.
The Hill
12-04-2025
- Business
- The Hill
Market volatility complicates work for lawmakers in Alaska, a state whose fortunes are tied to oil
JUNEAU, Alaska (AP) — After President Donald Trump returned to office, Alaska Republican Gov. Mike Dunleavy declared 'happy days are here again.' He likened Trump's friendly approach to energy development as 'Christmas every day' for a state whose fortunes rise or fall with oil. But the nearly three months since Trump's inauguration have been tumultuous, roiling Alaska's substantial federal workforce and raising questions about the reliability of federal funding. And his on-again, off-again tariffs, and a related drop in oil prices, have compounded the uncertainty for Alaska lawmakers, who each year must craft a state budget based on volatile oil prices. The legislative session is set to end in mid-May, well before Trump's recently announced pause on higher tariffs for many countries expires. The whiplash has worsened long-standing tension over how much money should go toward the yearly oil-wealth fund check most Alaska residents receive as opposed to education or other needs. Lawmakers have shown scant interest in raising taxes and have blown through billions in savings plugging recurring budget deficits dating back more than a decade. 'We're all in a pickle,' said House Speaker Bryce Edgmon, an independent who leads a coalition of Democrats, independents and two Republicans. Alaska is no stranger to the boom-bust cycle of oil. The government spends more freely on infrastructure and other projects when prices are high and shutters facilities or slashes costs when they are low. Lawmakers base spending off twice-a-year revenue outlooks pegged to oil price and production forecasts. A year ago, North Slope oil was around $90 a barrel. It settled in the low-to-mid-$70 range beginning last fall and hit as low as $65 this week before Trump announced the 90-day tariff pause. At current prices, each dollar change in oil equates to about $35 million to $40 million in state revenue, according to the nonpartisan Legislative Finance Division. The March revenue forecast was based on $68-a-barrel oil for the upcoming budget year, down $2 from a December forecast. Oil prices change frequently and plans by OPEC+ members to add more oil to the market could cause a price softening, said Dunleavy spokesperson Jeff Turner, who noted the governor is focused on Trump's executive order supporting increased oil and gas drilling, mining and logging in Alaska, and that it is 'great to have an administration that supports Alaska's responsible resource development.' Some state political leaders hope Trump's threatened tariffs could prompt countries like Japan, South Korea and Taiwan to invest in or commit to buying gas from a proposed massive liquefied natural gas project in Alaska. The project, repeatedly touted by Trump, has struggled for years to gain traction amid cost concerns, competition from other projects and questions about its economic feasibility. Trump carried Alaska in November's election. Besides oil, Alaska relies heavily on earnings from its nest-egg oil-wealth investment fund. The fund's principal is protected, but its earnings can be spent. Lawmakers cap withdrawals based on a percentage of the fund's average market value over a five-year period. The yearly dividend paid to residents has traditionally come from earnings, but since lawmakers also began using earnings for state services in 2018, there has been friction over how much should go toward each. Dunleavy proposed a roughly $3,800 dividend per resident, which would cost $2.5 billion — two-thirds of this year's earnings withdrawal — and result in a deficit he suggested covering by tapping the state's diminished savings. That amount hews to a formula abandoned years ago by lawmakers as unaffordable. The proposal is a nonstarter with legislative leaders, who are hearing pleas for more funding for K-12 schools squeezed by years of inflation and energy and health care costs. Education advocates also want the state to tackle a maintenance backlog that they say has created unsafe learning environments for students, including mold and structural issues at some schools. Last year, residents received $1,702, a combined dividend and energy relief payment. The dividend the past five years has been as low as $992 in 2020 and as high as $3,284, another combined dividend and energy relief check. House Majority Leader Chuck Kopp, a Republican, said politicians should not be 'even stoking the fantasy' of a dividend as large as Dunleavy proposed. 'We cannot pay an unsustainable dividend, and that dividend distorts the fiscal reality that we're facing,' he said. 'Do we need new revenue, or do we need to get a handle on the size of the dividend we're paying and honestly figure out how we're going to prioritize that?'
Associated Press
12-04-2025
- Business
- Associated Press
Market volatility complicates work for lawmakers in Alaska, a state whose fortunes are tied to oil
JUNEAU, Alaska (AP) — After President Donald Trump returned to office, Alaska Republican Gov. Mike Dunleavy declared 'happy days are here again.' He likened Trump's friendly approach to energy development as 'Christmas every day' for a state whose fortunes rise or fall with oil. But the nearly three months since Trump's inauguration have been tumultuous, roiling Alaska's substantial federal workforce and raising questions about the reliability of federal funding. And his on-again, off-again tariffs, and a related drop in oil prices, have compounded the uncertainty for Alaska lawmakers, who each year must craft a state budget based on volatile oil prices. The legislative session is set to end in mid-May, well before Trump's recently announced pause on higher tariffs for many countries expires. The whiplash has worsened long-standing tension over how much money should go toward the yearly oil-wealth fund check most Alaska residents receive as opposed to education or other needs. Lawmakers have shown scant interest in raising taxes and have blown through billions in savings plugging recurring budget deficits dating back more than a decade. 'We're all in a pickle,' said House Speaker Bryce Edgmon, an independent who leads a coalition of Democrats, independents and two Republicans. Alaska is no stranger to the boom-bust cycle of oil. The government spends more freely on infrastructure and other projects when prices are high and shutters facilities or slashes costs when they are low. Lawmakers base spending off twice-a-year revenue outlooks pegged to oil price and production forecasts. A year ago, North Slope oil was around $90 a barrel. It settled in the low-to-mid-$70 range beginning last fall and hit as low as $65 this week before Trump announced the 90-day tariff pause. At current prices, each dollar change in oil equates to about $35 million to $40 million in state revenue, according to the nonpartisan Legislative Finance Division. The March revenue forecast was based on $68-a-barrel oil for the upcoming budget year, down $2 from a December forecast. Oil prices change frequently and plans by OPEC+ members to add more oil to the market could cause a price softening, said Dunleavy spokesperson Jeff Turner, who noted the governor is focused on Trump's executive order supporting increased oil and gas drilling, mining and logging in Alaska, and that it is 'great to have an administration that supports Alaska's responsible resource development.' Some state political leaders hope Trump's threatened tariffs could prompt countries like Japan, South Korea and Taiwan to invest in or commit to buying gas from a proposed massive liquefied natural gas project in Alaska. The project, repeatedly touted by Trump, has struggled for years to gain traction amid cost concerns, competition from other projects and questions about its economic feasibility. Trump carried Alaska in November's election. Besides oil, Alaska relies heavily on earnings from its nest-egg oil-wealth investment fund. The fund's principal is protected, but its earnings can be spent. Lawmakers cap withdrawals based on a percentage of the fund's average market value over a five-year period. The yearly dividend paid to residents has traditionally come from earnings, but since lawmakers also began using earnings for state services in 2018, there has been friction over how much should go toward each. Dunleavy proposed a roughly $3,800 dividend per resident, which would cost $2.5 billion — two-thirds of this year's earnings withdrawal — and result in a deficit he suggested covering by tapping the state's diminished savings. That amount hews to a formula abandoned years ago by lawmakers as unaffordable. The proposal is a nonstarter with legislative leaders, who are hearing pleas for more funding for K-12 schools squeezed by years of inflation and energy and health care costs. Education advocates also want the state to tackle a maintenance backlog that they say has created unsafe learning environments for students, including mold and structural issues at some schools. Last year, residents received $1,702, a combined dividend and energy relief payment. The dividend the past five years has been as low as $992 in 2020 and as high as $3,284, another combined dividend and energy relief check. House Majority Leader Chuck Kopp, a Republican, said politicians should not be 'even stoking the fantasy' of a dividend as large as Dunleavy proposed. 'We cannot pay an unsustainable dividend, and that dividend distorts the fiscal reality that we're facing,' he said. 'Do we need new revenue, or do we need to get a handle on the size of the dividend we're paying and honestly figure out how we're going to prioritize that?' Some members of the bipartisan-led Senate have urged changes to oil taxes to raise revenue, but overall support has been limited.
Yahoo
29-03-2025
- Politics
- Yahoo
Anchorage lawmaker seeks to boost early education funding for 3-to-5-year-old Alaska students
Preschool children playing with colorful shapes (Getty Images) Alaska school districts that offer early childhood learning programs for children ages 3 to 5, such as programs to help children be ready for kindergarten, could see a state funding boost under new legislation currently being considered by the Alaska Senate. Senate Bill 93 would boost funding for school districts that are currently enrolled in early education programs under the Alaska Reads Act. The bill would increase per-student funding from half funding to the full amount for other students within the state's public education funding formula. The Alaska Reads Act program supports early literacy for pre-K through grade 3 with the aim of improving reading. 'The concept isn't new,' said Sen. Löki Tobin, D-Anchorage, the bill's sponsor, citing a body of research supporting improved lifelong learning outcomes following pre-K programs. 'For every dollar we invest in high quality early learning, we see a $32 return on investment in increased earning potential, higher graduation rates, higher engagement and post-secondary opportunities.' She explained with the outmigration of families and children from Alaska, funding early learning programs would encourage young student enrollment. 'Last year, the Legislative Finance Division indicated about 3,700 kids left our public education system in total,' she said. 'So what our hope is, is not only to provide districts with full funding to maintain their pre-elementary programs, but also to help balance out that outmigration with incoming students.' School districts can choose to offer prekindergarten in Alaska, and districts' enrollment in early learning programs under the Alaska Reads Act is also voluntary. Currently the participating districts are Anchorage, Skagway and Valdez. The Department of Education estimates the funding increase would cost roughly $7.6 million, already requested in Gov. Mike Dunleavy's budget proposal for next year, going towards funding the Alaska Reads Act, according to a fiscal note to the bill. State Education Commissioner Deena Bishop said that the governor's budget includes roughly $4.7 million to sustain funding for existing early education programs and $3 million to expand the number of districts with these programs. The Alaska Reads Act planned for annual increases in funding and programs, Bishop said in a text statement through a spokesperson. 'We look forward to all Alaska school districts who desire to serve their communities with pre-schools, can do so,' she said. 'The Alaska Reads Act was a transformational piece of legislation. The present bill builds on its success.' Tobin said the increased funding could also help alleviate child care costs for families. 'We know those pre-K kids are in their communities, their parents might be struggling to braid together support for child care, or for babysitting,' she said. 'And by not only providing stability for districts to offer these programs, we also are helping them in stabilizing their school population, and also helping families that are looking for child care options that are high quality and available.' The bill now is set to be heard in the Senate Finance Committee, where Tobin hopes lawmakers support the education investment. 'We know it's not going to have an impact on our budget. And we do know the fiscal notes of the Alaska Reads Act were adopted when the bill was passed in 2022, so it's not going to have a discernible impact on our current budget projections.' SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
05-03-2025
- Business
- Yahoo
Alaska Permanent Fund has good chance of failing to fund services and PFD in next decade, forecasts show
Mar. 5—JUNEAU — The Alaska Permanent Fund has a serious risk of failing to fund state services and the Permanent Fund dividend in the next decade, according to projections by the nonpartisan Legislative Finance Division. The Permanent Fund's board has long urged lawmakers to convert the fund's two-account structure into an endowment model to ensure its long-term sustainability. Legislators have started discussing amendments to the Alaska Constitution to follow the board's recommendations. Annual withdrawals would be capped at 5% of the Permanent Fund's overall value. But that figure could be subject to debate. The Legislature in 2018 approved Senate Bill 26, which established the current 5% draw limit in state statute. The measure allowed Permanent Fund earnings to start contributing to the state budget. Since then, the Permanent Fund has provided the bulk of state revenue for services and the PFD. But the fund has been stressed. According to modeling by the Legislative Finance Division, the Permanent Fund has an almost 50% chance in the next decade of failing to provide the annual draw for services and the dividend. "That's scary," said Jason Brune, chair of the Permanent Fund's board. Permanent Fund managers started the fiscal year in July with a roughly $600 million shortfall. Investment earnings have since helped bridge that gap, but Deven Mitchell, CEO of the Alaska Permanent Fund Corp., said that exposed a worrying trend. "That was the first time that had happened. So, it's the canary in the coal mine," he said Tuesday to the joint Legislative and Budget Audit Committee. Most of the $81 billion Permanent Fund is constitutionally protected. However, the fund's investment earnings are deposited into the $9.4 billion Earnings Reserve Account, which can be spent by a simple majority of legislators. For over 20 years, the Permanent Fund's board of trustees has called on lawmakers to establish a single-account structure and a 5% draw limit in the constitution. The board issued a 49-page resolution last year urging lawmakers to enact those reforms. Trustees warned that depleting the spendable portion of the Permanent Fund would "immediately result in a fiscal crisis" that would jeopardize the budget and the PFD. "We want to ensure that there's an ability to provide a payment to the state of Alaska each and every year. We don't want to have a 46% probability of failure," Mitchell said. Prior to the enactment of SB 26, Alexei Painter, director of the Legislative Finance Division, said the state had been running a $3 billion deficit each year for several years. This year, legislators are facing a $536 million deficit over two fiscal years based on status quo spending. Senators recently unveiled revenue measures, including oil tax hikes, as ways to potentially bridge that fiscal gap. "Oil is not paying the bills anymore," Anchorage Republican Sen. Cathy Giessel said Tuesday. Advocates say a single-account structure would act as a spending cap for lawmakers and ensure the long-term stability of the Permanent Fund. Additionally, it would avoid the need for an annual inflation-proofing appropriation — $1 billion this year — to preserve its real value. Anchorage independent Rep. Calvin Schrage introduced a constitutional amendment last month that followed the board's recommendations. He said the Permanent Fund provides a reliable source of revenue, and that it should be protected in the constitution. "There's a real risk that the Legislature could overdraw the fund. We've seen attempts to do that multiple times," he said. Lawmakers say there is a broad recognition that Permanent Fund reforms are needed. Anchorage Sen. James Kaufman, a member of the Senate's GOP minority, said the potential for a cash flow crunch is one of the state's "most ignored financial issues." Kaufman introduced his own constitutional amendment proposal for a single-account structure. The draw rate would be capped at 5.25%, but Kaufman said Monday that it could be amended. Sitka Republican Sen. Bert Stedman argued Tuesday that the 5% limit was already too high. He said that pushed the fund's managers into "more aggressive asset classes" to meet its statutory requirements. But the Legislative Finance Division cautioned that lowering the draw rate to 4.5% would see the deficit balloon by an additional $380 million. Members of the Senate majority are set to introduce their own Permanent Fund constitutional amendment proposal in the coming days, Giessel said Tuesday. A constitutional amendment requires support from two-thirds of lawmakers in the House and the Senate. Unlike regular bills, the governor cannot veto a constitutional amendment. Instead, it would then go for an up-or-down vote at the next statewide election. The Alaska Constitution was last amended in 2004.
