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Senate leaders flag $1.5 billion deficit risk if Permanent Fund dividend is paid in full
Summary
Senate finance leaders warned the governor's proposed operating budget and a full Permanent Fund dividend would create an "over $1,500,000,000 deficit," and said revenue measures will be a top priority this session while several budget risks remain unaddressed.
Anchorage — Senate finance leadership said Friday the governor's proposed operating budget and a full Permanent Fund dividend would produce a sizable shortfall and put revenue measures at the center of the coming session.
"If we did have a full dividend, we would have over $1,500,000,000 deficit," Senator Hoffman said while summarizing the governor's proposal and the legislative forecast. Hoffman noted the fall oil-price forecast used in the governor's budget dropped from about $65 a barrel last year to roughly $62 a barrel this year, a change that complicates the outlook.
Hoffman listed several potential budget hits that are not fully addressed in the governor's proposal: the pending disparity test that could cost about $71,000,000; underfunded Medicaid projections estimated at $47,000,000; and a roughly $38,000,000 match for retirement-related obligations. "We used to have a substantial amount of money in the constitutional budget reserve account in excess of $20,000,000,000," he said, and cautioned the Legislature must avoid one‑time spending that erodes long‑term stability.
President Stevens said leadership has been working with the House and that a joint session to consider an override of last year's vetoed online tax bill was deferred at the governor's request and is now scheduled for Thursday at 9 a.m. "We had thought that we'd do it today, but it's best that we take the time to make sure that the governor's request is complied with," Stevens said.
Senators described revenue measures as the caucus' top priority. Hoffman said the Senate will examine options for recurring revenues rather than relying on one‑time draws and urged careful consideration of how any dividend recommendation would affect the operating budget.
What happens next: leadership expects more detail when the governor delivers a public fiscal presentation on Thursday evening. The finance committee and the full Senate will continue to debate dividend size and any revenue proposals this session.
