Senate Republicans pitch GDP-based spending cap, executive budget rewrite and Permanent Fund consolidation

Juneau — Senate Republicans on the minority caucus said Tuesday they will push a three-part fiscal package intended to smooth Alaska’s boom‑and‑bust budgeting and make long‑term management more predictable.

Senator James Kaufman, the lead sponsor, described a GDP‑based spending cap (SB 36 and SJR 4), a rewrite of the Executive Budget Act (SB 37), and a constitutional resolution to consolidate Permanent Fund accounting (SJR 5). Kaufman said the measures are designed to “create more stability by controlling how we… spend and then how we manage,” calling the cap the “diet plan” and the budget act rewrite the “exercise plan.”

Kaufman said the spending cap would use a five‑year trailing average of statewide GDP to smooth revenue and spending swings. The package as described in the press conference sets a proposed constitutional cap at 15% and a statutory limit at 12% of the identified base; Kaufman said the bandwidth between the two would be available for capital projects. "This is not designed as a...cut disguised as [a cap]. It's really a control mechanism to try and get us into a better spending and better management habit," he said.

On the Executive Budget Act rewrite (SB 37), Kaufman said governors would submit four‑year strategic operating plans updated every two years so annual funding decisions could be judged against measurable performance goals. "If a governor comes in, he says, 'I want to be the education governor,' and then you would be able to look in the respective plans," Kaufman said, describing a framework that ties budgeting to multi‑year strategy.

Kaufman also outlined a constitutional resolution (SJR 5) to consolidate Permanent Fund accounts and to permit a percentage‑of‑market (POMV) draw from a consolidated fund rather than the current partition between principal and an earnings reserve. He said current law reflects an older interest‑earning model and that the fund is now managed for total return; SJR 5 would, he said, align the constitutional structure with contemporary investment practice and reduce artificial cash‑flow constraints on spending.

Senator Schauer, who opened the conference, walked through updated fiscal figures the caucus used to frame the proposals: a government amended budget of $4,600,000,000; statewide expenses of $416,000,000; capital at $294,000,000; an estimated fiscal 2026 deficit of $347,000,000 and a projected total near $5,650,000,000. He added a projected PFD draw under consideration of $949,000,000, yielding a combined need of about $6,600,000,000 against revenues the caucus cited as roughly $6,200,000,000 — “about $408,000,000 short.” Schauer said that, depending on education spending discussions and other variables, that gap could vary.

Kaufman and others framed the package as a way to protect capital spending and workforce retention in the event of a large future revenue influx, such as a gas‑line project. "If we do get a gas line...a cap such as this could help level out our spending and give us a better ratio of capital project spending to operation spending," Kaufman said.

The proposals are introductions at this stage: Kaufman said the constitutional and statutory percentages are subject to committee debate and amendment, and he anticipated both resolution and bill work in committees. The press conference did not include formal votes or committee actions; lawmakers urged public and legislative discussion before any final language is adopted.

Kaufman and other caucus members also couched the package as a complement to other proposals being discussed in the building — including possible tax measures and changes to the Permanent Fund Dividend — and said caps or strengthened management should precede any major new revenue measures.