- Associated Press - Friday, December 14, 2018

JUNEAU, Alaska (AP) - Gov. Mike Dunleavy’s initial budget draft includes a full payout from Alaska’s oil-wealth fund for residents next year, but not money Alaskans missed out on during the three years checks were capped.

His revenue commissioner, however, indicated that Dunleavy still plans to pursue the back payments.

The budget draft released Friday - ahead of a statutory deadline - was described as a starting point that works off the budget document Gov. Bill Walker’s administration pulled together before Walker left office Dec. 3.

But Dunleavy’s draft relies on a more conservative oil price. And with the full dividend payout, Dunleavy’s budget office said the draft would leave a projected $1.6-billion gap. Walker didn’t include a full dividend.

During the campaign, Dunleavy said he supported paying residents a full Alaska Permanent Fund Dividend and money they missed out on when payouts were reduced starting in 2016 amid a budget deficit.

Revenue Commissioner Bruce Tangeman said separate legislation may be needed to handle the issue of back payments. He said Dunleavy has been clear that it is a big issue and one that he will pursue.

By one budget estimate, a full dividend and back payments could cost $4.3 billion. Dunleavy has said the state can afford to pay those using permanent fund earnings.

During the campaign, Republican Dunleavy also said he wanted to reduce spending and limit the growth of government.

His budget director, Donna Arduin, said all areas of state spending will be up for scrutiny.

“The state must learn to live within its means and we get there by making the tough spending choices,” she said in a release.

Dunleavy is expected to make further changes to the budget that his office says will prioritize services and programs “that really matter to Alaskans.”

Sen. Bill Wielechowski, an Anchorage Democrat, called the current proposed budget “significantly unbalanced.”

“I have no idea what his plan is to balance it,” Wielechowski said.

For years, Alaska relied heavily on oil revenues to help fund state government. But prices went into freefall in 2014, the year Walker took office, exacerbating the deficit. Lawmakers used savings to fill the hole as low prices persisted.

Earlier this year, following sessions of gridlock, lawmakers decided to begin using permanent fund earnings to help pay for the budget. That created tension, because dividends are also paid using fund earnings.

Legislators also passed a bill calling for limited withdrawals from earnings that, for the coming fiscal year, would yield $2.9 billion. However, critics of the bill have said the rules it lays out could be ignored.

That legislation did not resolve how the money would be divvied between government and dividends. Dunleavy’s draft budget would earmark an estimated $1.9 billion of that withdrawal for dividends.

The Walker administration said the budget they were leaving behind would balance at an average North Slope oil price of $75 a barrel, which matched the Department of Revenue’s preliminary estimate for prices for the coming fiscal year. But Sheldon Fisher, Walker’s revenue commissioner, also cited the volatility in prices and delayed issuing a detailed revenue forecast earlier this month to give the department time to review what was happening with oil markets.

Oil prices, for a brief period this fall, topped $80 a barrel. The price, as of Thursday, was roughly $62 a barrel.

Tangeman said he thought the $75 a barrel estimate was not realistic. The forecast released Friday estimated oil prices for the coming fiscal year at $64 a barrel. Tangeman said that is in line with a forecast released by the department earlier this year.

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