Senator Kiehl Urges Realism Ahead of Governor’s Budget Proposal

JUNEAU, Alaska — As the state prepares for another challenging budget season, State Sen. Jesse Kiehl, a Democrat from Juneau, is advocating for a realistic approach in Governor Mike Dunleavy‘s upcoming spending plan. During a luncheon with the Juneau Chamber of Commerce on October 6, Kiehl highlighted the difficult financial decisions legislators will face in the new session starting in January.

The governor is set to unveil his budget proposal for fiscal year 2027 next month, following last year’s controversial plan that offered a $3,900 permanent fund dividend (PFD) to eligible Alaskans. However, projections show the state’s current $2.9 billion Constitutional Budget Reserve could be burdened with $12 billion in debt by 2035 if current spending patterns continue.

Kiehl expressed disappointment that last year’s budget lacked realistic figures and predicted that the new proposal may not differ significantly. “I choose optimism. We live in Alaska, so I’m hoping we’ve got a ptarmigan that’s gonna change its feathers for the winter,” Kiehl said, referencing the need for adaptability.

He emphasized the urgency of a serious fiscal plan, warning that without it, the state’s payout program could be threatened. “It’ll be the end of the Permanent Fund dividend check,” he stated if a viable budget is not established.

The PFD was created in 1976 to invest a share of oil revenues for future generations, providing annual payouts to residents since 1982. The Permanent Fund is now the state’s primary revenue source, with a 2017 ruling allowing lawmakers to withdraw 5% of its earnings for government funding.

Kiehl warned that declining oil prices could exacerbate the state’s budget challenges. Currently, oil prices are projected at around $63 per barrel, down from earlier forecasts of $68. He explained, “If we continue down the road we’ve been on, with no new revenues…the math doesn’t work.”

To ensure the future of the PFD, Kiehl advocates for legislative reform on the distribution formula and a potential constitutional amendment to guard against overdrawing the fund. “It’s a major part of our economy,” he said, reinforcing its significance to Alaska’s financial health.