The state Senate has overwhelmingly approved an $11.5 billion budget that keeps the $3,000 Permanent Fund dividend recommended last week by the Senate Finance Committee.

Wednesday's floor vote to pass the budget was 19-1.

The budget features federal funds, the full dividend and moving $12 billion from the Permanent Fund’s earnings account to the principle where it cannot be touched under the state’s constitution.

It’s still not the final word.

The House must decide whether it will accept the changes made to House Bill 39. If it doesn’t, they will be taken up by a special committee made up of the House and Senate Finance Committee co-chairs and a member of the minority from each chamber.

Senate Finance co-chair Sen. Natasha von Imhof, R-Anchorage, said that the state cannot afford a $3,000 dividend. She supported an amendment to reduce the dividend to $1,200.

That amendment, proposed by Sen. Chris Birch, R-Anchorage, failed 17-3.

Von Imhof and fellow co-chair Sen. Bert Stedman, R-Sitka, stressed that lawmakers will still have to figure out how to pay for the $3,000 dividend which means finding another $1.2 billion.

Getting there could require dipping into the constitutional budget reserve account or the Permanent Fund’s earnings, the co-chairs said.

“I worry that when our state becomes an ATM for the people our state services will be at risk,” von Imhof said in closing remarks on the budget. “Our savings for emergencies are at risk. Our credit rating is at risk."

Von Imhof said she was in favor of moving the budget through the legislative process despite her opposition to the dividend amount. 

“When the hard-working people of Alaska are asked to pay an income tax only to see their hard earned cash deposited into the checking account of their neighbor," she said. "I am not sure how long our state as we know it will last.”

For much of the day, the Senate debated amendments to the spending plan, which was adopted from a version the House approved last month.

Most amendments were proposed by the Democratic-led minority and failed across caucus lines, but still generated spirited debate.

Amendments ranged from restoring Medicaid payments to repealing oil tax credits to adding funds for Alaska Marine Highway System winter service.

The Senate did agree to add an extra $800,000 for senior benefits, in response to cuts last month by the state Department of Health and Social Services.

On Thursday, the Senate is expected to debate a bill that would restructure the formula used to determine the dividend.

Senate Bill 103, sponsored by the Senate Finance Committee, picks up where SB 26 left off last year. Under last year’s bill, later signed into law by Gov. Bill Walker, the Legislature takes a pre-determined draw from the Permanent Fund’s earnings.

Under SB 103, half would be spent on the dividend and the remaining half would be used for state services such as public safety and education.

If passed, the new formula would go into effect next year.

Von Imhof called it a “50-50 bill.”

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