Alaska’s state government now expects to raise $3.6 billion more this year and next than it expected to back in December, according to the annual spring revenue forecast released Tuesday.
Gov. Mike Dunleavy urged the Legislature to send some of the money to Alaskans in the form of permanent fund dividends. He said the forecast is “great news for Alaska.”
“We’re just asking the Legislature to talk to their constituents about the pain they’re feeling right now, and the ability to help alleviate that pain through at least a $3,700 PFD,” he said.
That amount is based on a combination of half of this year’s draw from the permanent fund, equal to roughly $2,500 dividends, and an additional roughly $1,200 dividend to make up the difference between last year’s PFD and what Dunleavy had proposed.
The spring update to the revenue forecast was driven up by the recent high price of oil.
The Department of Revenue projects oil will average $91.68 per barrel this year and $101 per barrel next year. Those numbers are substantially higher than the forecast in December of $75.72 per barrel this year and $71 per barrel next year.
The forecast for total state revenue over the next nine years increased by $8.6 billion.
The PFD amounts that Dunleavy is asking for are the same numbers he proposed in December. Dunleavy said the state should save the projected $3.4 billion surplus from the higher forecast. He said his proposal for now is to place the money in the Constitutional Budget Reserve. This account is down to roughly $1.5 billion.
“Last year and the year before, the discussion was, ‘Well, what are you going to cut? What are you going to take away?'” he said. “We don’t have to cut anything or take away anything this year.”
Revenue Commissioner Lucinda Mahoney issued a note of caution about the forecast. She wrote in a letter to Dunleavy that the forecast comes during a period of uncertainty. She also said that the forecast represents one plausible scenario within a range of potential outcomes.
Ketchikan independent Rep. Dan Ortiz said the price of oil may not remain as high as forecast. He caucuses with the mostly Democratic House majority.
“It certainly does make life easier in the Legislature, easier on the administration, in an environment where we have more revenue to deal with rather than less,” he said. “So, you know, it was a welcome forecast. However, I do think it was a little bit optimistic.”
Ortiz said that given the forecast, he would support increasing the amount of public education funding the state provides for each student.
House majority caucus leaders said they would support $1.2 billion funding public education for the both the next year and the year after that in the budget. Last week, the House Finance Committee also proposed $394 million to restore funding to the Higher Education Investment Fund, which provides money for university scholarships and grants, as well as for medical education in the state.