Foster Report

In this report I will give an update on the state operating budget. The House Finance Committee just passed it out of committee and it will now go to the House floor for amendments. After it passes out of the House, I will provide another more in-depth report. Then the budget will go to the Senate, and I expect the legislature to adjourn in mid-May.

This is my sixth year serving as the co-chair of the finance committee, and I am proud to report that we’ve done a number of things to protect and enhance rural Alaska. This includes the inclusion of an energy relief check to help pay for heating oil and gasoline, funding the rural electric assistance program (PCE), increasing village public safety officer (VPSO) funding, and giving a major boost to our schools.

$1,300 Energy Relief Check

I worked with my fellow rural legislators and majority coalition members to include in the budget a $1,300 energy relief check for every Alaskan. This was done one other time in 2008 when Governor Sarah Palin secured a $1,200 energy relief check.

The war in Ukraine has sent oil prices skyrocketing from $70 to $120 per barrel. While this means increased revenue to the state, it also means increased prices at the pump. This check is meant to help off-set the increasing cost of heating oil and gasoline. Everyone who is eligible for this year’s permanent fund dividend will automatically qualify.

Payment is expected to be at the same time as the October 2022 dividend distribution.

Permanent Fund Dividend

I introduced an amendment to pay a full statutory permanent fund dividend, which this year is estimated be $4,200 per Alaskan. I argued that inflation has caused prices to go up dramatically, and paying the full dividend is needed now more than ever. I also pointed out that cutting the PFD is a regressive tax because it takes more from lower income families. However, my amendment failed on a vote of four in support and seven opposed.

The dividend currently in the budget pays $1,250 per Alaskan. Last year the dividend was $1,100. Governor Dunleavy made payment of the full dividend one of his highest priorities, but he is now pursuing a compromise dividend that would pay out $2,500. Many of you in the district have told me that until a new dividend formula is put into statute, we must follow the law. We must pay the full statutory dividend and negotiating for anything less is simply a race to the bottom.

Rural electric assistance

The power cost equalization (PCE) program makes electricity more affordable in rural Alaska by subsidizing each household’s monthly bill. Households on average receive up to $2,000 per year in annual subsidies. Without this program rural Alaskans, some of whom are low-income earners or are on fixed incomes, would see sharp increases in their electric bills.

Last year the PCE fund was drained by legislators who don’t support rural Alaska having its own energy fund. This is despite nearly $2 billion going into urban energy projects. However, a court ruled that the money in the PCE fund —currently about $1 billion— should remain in the fund. The earnings that this fund spins off go toward funding the program. As a result, we were able to fully fund the PCE program in next year’s budget. Hopefully, this will put to rest the never-ending battles we see each year to eliminate the PCE fund.

Village Public Safety Officers

The VPSO program is consistently under fire with vetoes or attempts to decrease funding. I am always shocked by this because — whether legislators are on the right or the left — everyone is in agreement that public safety is a high priority. But oftentimes Alaskans in our smallest communities are not seen as deserving of the same level of public safety as others. This year I am pleased to say that both the administration and the House Finance Committee agreed to fund an additional 10 new positions.

Education

There is a bill making its way through the legislature to increase funding to our schools through a formula called the “base student allocation”, or BSA for short. The bill gives an automatic annual increase to school funding. Just in case the bill does not make it —hundreds of bills get introduced with few making it to the finish line —we included a contingency in our budget to pay the first-year increase of $57 million. We also forward funded education to the tune of $1.2 billion. This is not an increase in spending. It simply upfronts the payment of education in the following year. This gives schools budgeting stability. And we added $1.6 million for pre-kindergarten programs.

Please keep in mind that this is all subject to change. The budget must still get through the House, the Senate and then survive the Governor’s veto pen. In my next report I will provide an update on whether changes are made to the items above. I will also discuss good news relating to the internet in rural Alaska, capital appropriations for infrastructure projects, water and sewer funding, various budget line items and legislation.

If folks have questions or comments feel free to contact me by calling 800-478-3789 or emailing me at Rep.Neal.Foster@akleg.gov I hope everyone has a wonderful spring!