Alaska Governor Mike Dunleavy, a Republican, announced a budget plan on Thursday that aims to address the state's $990 million deficit and provide residents with an oil-wealth dividend of approximately $3,400 next year. The proposal utilizes a formula for the dividend that lawmakers have largely abandoned, drawing criticism and debate. However, Dunleavy argued that education would be the priority for discussion in the upcoming legislative session, despite the plan not including an increase in per-student K-12 school funding.

As a former educator himself, Dunleavy urged lawmakers to consider his previous proposal from last session, which suggested offering bonuses to teachers as a means to attract and retain talent. The Governor also criticized the federal government and environmental groups that have challenged oil, mining, and other development projects in Alaska. He claimed that these challenges have left the state with limited options, such as making budget cuts, imposing taxes on residents and businesses, or reducing the size of the yearly dividend.

Alaska currently does not have a state sales tax or personal income tax, and for years, lawmakers have acknowledged the need for a fiscal plan to break away from the state's reliance on oil revenues and its associated boom-bust cycles. A crucial aspect of this fiscal plan is determining the amount of the yearly dividend. Until 2015, the dividend was calculated based on a formula that many lawmakers now perceive as unsustainable and unaffordable. In 2016, former Governor Bill Walker vetoed a significant portion of the dividend amid budget deficits. The state Supreme Court subsequently ruled that the dividend program must compete for annual funding like any other state program.

Since then, the size of the dividend has been determined by the votes garnered to pass the budget, often overshadowing other issues. This year's dividend amounted to $1,312, costing approximately $880 million. Dunleavy's proposed dividend for next year aligns with the formula last used in 2015, estimating a cost of about $2.3 billion to distribute checks of around $3,400 to each resident, according to the Governor's budget office. Dunleavy justified his proposal by emphasizing the impact of inflation on Alaskans' purchasing power, stating that maintaining a high dividend would help them cover essential expenses such as groceries and fuel.

It is important to note that the budget proposal is just the starting point, and both the House and Senate will have the opportunity to develop their own versions of the budget. Typically, these versions are reconciled through negotiations near the end of the legislative session. The 40-member House is led by a Republican majority, while the 20-member Senate is controlled by a bipartisan majority. Senate Finance Committee Co-chair, Bert Stedman, a Republican from Sitka, expressed the importance of maintaining a balanced budget without depleting the state's reserves while addressing the needs of different communities.

In addition to the oil-wealth dividend and education funding, the budget plan includes provisions for the upcoming fiscal year, starting on July 1, as well as supplemental items for the current year. One of these provisions involves allocating funds for additional staff to address a backlog in food stamp benefits processing. However, some education leaders expressed disappointment that the budget proposal did not incorporate an increase in the school funding formula.

Jharrett Bryantt, superintendent of the Anchorage School District, highlighted the challenges faced by Alaska districts in attracting and retaining teachers and classroom support staff due to wages and benefits that are unable to compete with those offered in the Lower 48 states. Bryantt emphasized that these conditions directly impact student outcomes and result in larger class sizes. The superintendent revealed that the Anchorage School District has numerous open positions that remain unfilled due to how potential educators perceive the current professional conditions in Alaska.

As the budget process moves forward, it is expected that lawmakers, interest groups, and residents will engage in further discussions and debates to determine the best course of action for addressing the state's deficit, funding education adequately, and ensuring a fair distribution of oil revenues to Alaskan residents.