Alaska opens 2024 session with debate about pay raises, education, and energy

Alaska lawmakers open a new legislative session Tuesday against the backdrop of an election year, with a docket that includes education funding, energy proposals and the ongoing quandary of how big to make the yearly dividend check paid to residents. They’re also beginning the session with a pay raise.

Here’s are some things to know:

EDUCATION

School officials have been pleading for a permanent increase in the K-12 per-student funding allocation. They say inflation has eaten away at their budgets, in some cases forcing program cuts or increased class sizes. They also say they’re struggling to hire teachers and fill other positions.

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Lawmakers last year approved a one-time, $175-million boost but Republican Gov. Mike Dunleavy vetoed half that sum.

Dunleavy, a former educator, did not propose an increase in the funding allocation as part of his budget plan released last month but said education is sure to be a prominent topic this session. He has expressed support for homeschooling and said he wants to replicate successes charter schools have had.

He also hopes a bill he introduced last year gets renewed attention. It calls for a three-year program that would pay full-time teachers bonuses as a way to retain them.

Tom Klaameyer, president of NEA-Alaska, a teachers’ union, said schools are in “crisis.” He said an increase in school funding and passage of legislation that would allow for pensions for public employees, including teachers, are pressing needs.

Nearly 20 years ago, the Legislature voted for the state to stop offering pensions in favor of 401k-style retirement plans in response to multibillion-dollar unfunded pension liabilities.

Senate President Gary Stevens, a Republican who leads a bipartisan Senate majority, said it’s time to revisit the pension issue. But he said lawmakers want to be careful in their analysis, to ensure that if they take action it does not lead to unexpected costs.

Republican House Speaker Cathy Tilton said members of her caucus are interested in whether changes could be made to the current defined contribution program that would make it more attractive for workers. She also expects a broader conversation around education.

THE DIVIDEND

For years, legislative leaders have cited the need to end the divisive fights over the size of the yearly check Alaskans receive from the earnings of the state’s nest-egg oil-wealth fund. And year after year, the issue persists.

Expectations appear low that this will change during a campaign year, when most legislative seats are up for election.

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The debate dates to 2016, when, amid low oil prices and deficits, then-Gov. Bill Walker vetoed roughly half the amount available for dividends. Before that, the amount of investment earnings allocated to dividends was based on a rolling average of the fund’s performance. Check sizes varied. They were $845.76 in 2005 and $2,072 a decade later, the last year the formula was used.

The checks since then have become a political football.

In 2018, lawmakers began using Alaska Permanent Fund earnings, long used to pay dividends, as a recurring source of revenue to help pay for government. They have stuck to caps on yearly withdrawals but failed to set a new formula for how the money should be split between dividends and government expenses, igniting fights that have snarled budget negotiations and distracted from other issues.

Dunleavy in 2021 proposed a constitutional amendment that was intended to be part of a broader fiscal plan that would dedicate half of what’s withdrawn from the fund to dividends. But it went nowhere.

He included in his latest budget proposal a check based on the formula last used in 2015, which is widely seen as unsustainable. Dunleavy successfully ran for governor in 2018 pushing for a dividend in line with the formula but he’s never gotten that through the Legislature. He was reelected to a four-year term in 2022.

His budget plan would spend $2.3 billion on dividends of about $3,400 a person and require about $990 million from depleted state savings to balance.

Last year’s dividend was $1,312, and Stevens said there will be efforts to pay a “reasonable” dividend this year. The Senate last year passed legislation calling for 75% of annual earnings’ withdrawals to go to government and 25% to dividends and making that a 50/50 split if the state generated at least $1.3 billion in new recurring revenues and hit a savings target. That approach faltered in the Republican-led House.

“Are we ever going to solve it?” Stevens said of the yearly debate. “Probably not. It’s always going to be a battle, and when we have a governor that insists on this gigantic dividend in his budget, we’ll always have that battle with the governor.”

ENERGY

Dunleavy said he expects discussion of energy issues, including updates to transmission lines in Alaska’s most populous Railbelt region. The natural gas supply relied on by south-central Alaska residents and Dunleavy’s proposal for underground storage of carbon dioxide also could get attention.

PAY RAISES

A salary increase hastily advanced last year by new appointees to the Alaska State Officers Compensation Commission — and accepted by lawmakers — will boost yearly salaries for legislators from $50,400 to $84,000. The governor, lieutenant governor and chief department heads also got raises that took effect July 1.

The legislative raises take effect at the start of the session. Half of lawmakers’ pay for January will be at the old rate and half at the new, which will equal about $80,000 this year, said Jessica Geary, executive director of the Legislative Affairs Agency.

All lawmakers, except the three who live in Juneau, also are entitled to a daily $307 allowance during session. Regular sessions last up to 121 days.

The salary commission has struggled with how to address legislative pay. The per diem lawmakers receive has come under scrutiny, particularly during years with drawn-out special sessions. Lawmakers have complained that without a salary increase, it is hard to attract younger people or those with families to run and serve in the Legislature.

Lawmakers last year rejected a commission proposal that called for increasing executive branch pay but did not address legislative pay. After that, two members resigned and three others were removed by Dunleavy. With little discussion, new appointees proposed the pay hike for lawmakers, in addition to the executive branch raises.