A portion of Alaska’s recently approved state budget could be transformed into a cash flow for residents of the state.
The law is known as”a “waterfall measure” by lawmakers The bill requires a cash payment that could be up to $500 for people who are eligible in 2024, which is on top of the Permanent Fund dividend.
Introduced in the Senate Finance Committee by members Senate Finance Committee and modified upon the request of state legislators in the House Section of 79 in the state budget states in the event that the state makes more money than anticipated from July 1, 2023 between June 30, 2024 and July 1, 2023 Some of the revenue is to be used to pay “a single energy-related relief payment that is an element of the Permanent Fund dividend.”
According to estimates made available to legislators this week the state budget would be balanced when North Slope crude oil averages $73 a barrel, as forecast from Alaska Department of Revenue. Alaska Department of Revenue this spring.
If oil hits the average price of $83 per barrel the proceeds from the bonus will be deposited in the state’s Constitutional Budget Reserve, its principal savings account. The remainder would cover the $500 added of the dividend.
The increase could be funded incrementally also — at $78 for a barrel, the dividend for 2024 will be approximately $250 higher.
Conor Bell, an analyst for Conor Bell, an analyst with the Legislative Finance Division, said the thresholds have some restrictions. The division is a nonpartisan source of budgeting for the Legislature.
The reality is that there’s “all kinds of uncertainties” in the oil revenue projections, Bell said. The projections are based upon certain assumptions regarding oil production and not just the price and other things such as lease expenses (which are taken out of taxes).
“Ultimately the question of whether there’s a waterfall depends on the amount of revenue actually collected,” Bell said.
As of April 11th as of April 11, April 11, U.S. Energy Information Administration estimated oil prices at $85 per barrel for this year. The price will rise to $81 next year.
However, the most recent forecast that was released on May 9, is considerably less: $79 in 2023 and $74 by 2024.
At these prices it would be very no change in the this year’s dividend.
Yet this provision of the waterfall is having an impact. Many lawmakers in the State House who wanted an increase in the Permanent Fund dividend this year mentioned the waterfall provision as a motive to vote in favor of the budget for this year.
“What has changed with regard to the dividend has certainly been an element of the discussions that were held prior to the vote,” said Rep. DeLena Johnson, R-Palmer, on Thursday, just hours after the House approved the budget.
“Would we would have liked it to be more? Sure,” she said. “But it’s true that there are times when you only meet somewhere in mid-air.”
The story was originally published in Alaska Beacon and is republished here with permission.
