The Alaska Legislature’s quest to pass a viable state budget before the end of the legislative session in mid-May isn’t getting any easier.

“Ladies and gentlemen, we’re all in a pickle,” House Speaker Bryce Edgmon, I-Dillingham, told reporters on Tuesday.

At this point in a normal year, Edgmon said, House lawmakers would be on the verge of passing their version of the state’s operating budget, marking the lower chamber’s preferred level of spending on state agencies, public schools and the Permanent Fund dividend. Last year’s budget passed the House on April 11.

But this is not a normal year. Low oil prices are fueling large deficits, meaning tough budget decisions are ahead. With a razor-thin 21-19 majority for the chamber’s Democrat-heavy bipartisan coalition, House lawmakers are struggling to come to an agreement that meets their constitutional obligation to pass a balanced budget.

Nowhere is that struggle clearer than in the state operating budget, which House Finance Committee members voted out of committee last week. The $13.5 billion appropriations bill contains $2.5 billion for dividends, enough for a roughly $3,800 PFD, in line with Gov. Mike Dunleavy’s budget proposal and a formula in state law that has not been used since the mid-2010s. The budget also includes a so-called “unallocated cut” of nearly $80 million, an unusual step that would give the governor the freedom to make substantial cuts on his own. Legislative attorneys warn the step could be unconstitutional.

Altogether, it adds up to a $1.9 billion deficit. And that’s before accounting for recent volatility in the markets for crude oil, equities and bonds, which further threatens the state’s financial stability.

“It is a crisis. We cannot pay an unsustainable dividend,” said Chuck Kopp, R-Anchorage, the House majority leader.

The state has approximately $2.8 billion in its main rainy-day fund, the Constitutional Budget Reserve.

Large dividend figure is largely a mirage — but a persistent one

Members of both the coalition majority and Republican minority have called the $3,800 figure unrealistic in a year when roughly status quo spending would leave a $677 million deficit between the current fiscal year ending in June and the next year beginning in July. That figure, spotlighted by Senate budgeters, includes a roughly $1,400 dividend and a long-term extension of this year’s $175 million boost to education funding.

But House lawmakers have so far failed to come to an agreement on a more realistic dividend.

Majority lawmakers, including members of House leadership, have called repeatedly for reducing the PFD to $1,000 in an effort to balance the budget while boosting funding for public schools. But so far, they haven’t mustered the votes to pass, or even advance, a budget that reflects that stated preference.

During the marathon budget-writing process, two majority-aligned members of the House Finance Committee — Rep. Neal Foster, D-Nome, and Rep. Nellie Unangiq Jimmie, D-Toksook Bay — voted with all of the House Finance Committee’s minority Republicans to reject a proposal that would have reduced the PFD to $1,000.

Foster and Jimmie were not available for interviews Wednesday afternoon, but Foster has in the past said PFD reductions amount to a tax that falls disproportionately on the poorest Alaskans.

The House’s chief budgeter, House Finance Committee Co-Chair Andy Josephson, D-Anchorage, said he’s sympathetic, but the dire fiscal picture is forcing lawmakers’ hands.

“We don’t yet live in a world where the Alaska people, writ large — although we heard different messages in Anchorage — are ready for themselves to invest in their state government, so here we are,” he said. “I’m not saying that people who want the PFD in its entirety aren’t speaking to a set of values. We just have a significant math problem.”

House leaders turn to minority and governor for help

With members of his own caucus apparently unconvinced, Edgmon on Tuesday pleaded with his Republican counterparts for help.

“We need the help of the minority caucus. We also need the help of the governor to come forward and to put all these pieces together,” Edgmon said.

Reducing the PFD would only go so far when it comes to balancing the budget, though. Even with a $1,000 PFD, the nonpartisan Legislative Finance Division estimates a $169 million deficit for the next fiscal year — if a House-passed $1,000-per-student funding boost, a key campaign issue for the Democrat-dominated majority, is included.

“That’s just not possible,” said Rep. DeLena Johnson, R-Palmer and the senior Republican on the Finance Committee, said.

House minority Republicans say they’d like to see some additions to the governor’s budget rolled back, though those would not close the gap. Johnson said she anticipated cuts to both the PFD and the House’s $275 million education bill that’s now in the hands of the Senate.

“We’re looking at really having to cut things back, and [that’s] probably going to include having to discuss both of those two very, very, very difficult things,” Johnson said.

‘Maybe we can get to yes’ on Senate tax bills

Even reducing the education funding boost to a status quo level, $175 million, same as schools got this fiscal year in one-time funding, would not close the remaining gap.

Funding for Alaska’s schools remains a question mark. Here’s where things stand

Another option for balancing the budget is raising state revenue. Members of the bipartisan Senate majority have suggested expansions of corporate income taxes and reductions to oil and gas tax credits.

“I hope they pass,” said Senate President Gary Stevens, R-Kodiak. “I’d like to see us have reasonable education funding and a reasonable dividend, and not have to slash everything, as we would if we don’t have those revenues.”

Stevens also suggested that the Legislature may not have a choice when it comes to determining the appropriate school funding level.

“I suspect that the legislature may pass a $1,000 [school funding increase],” he said. “I have no doubts, from having spoken to the governor, that he will veto that.”

Stevens said he expected efforts to overcome a veto with a two-thirds majority vote would be “dead on arrival.”

Josephson, the Finance Committee co-chair, suggested the House may agree to Senate-proposed reforms that would capture corporate income taxes for large S corporations in the oil and gas industry — namely, BP successor Hilcorp, which is not subject to typical state corporate income taxes — and companies that do business in the state via the internet.

“Maybe we can get to yes,” Josephson said.

But the House majority’s one-vote margin may make that difficult. Kopp, the majority leader, said he opposes the Senate’s revenue measures.

“Not this year,” he said last month.

Stevens, though, reiterated Wednesday that he continues to oppose spending from savings for the coming year’s budget, despite recently acknowledging a withdrawal will likely be necessary to close the budget gap in what remains of the current fiscal year.

If the House fails to pass a budget, the Senate could push forward with its own budget bill, cramming the Legislature’s typically separate operating, capital and supplemental spending bills into a single budget document colloquially referred to as a “turducken.”

Despite the political headwinds and mounting time pressure, Edgmon says he remains optimistic lawmakers will settle on a budget before the constitutional end of the legislative session on May 21. Edgmon estimated that the House would have to pass a budget next week to remain on track.

“We still have time,” he said. “We don’t have a lot of time.”

Correction: An earlier version of this story misspelled Toksook Bay.

If countries want to keep the Trump administration from imposing tariffs on their exports to the United States, Treasury Secretary Scott Bessent suggests they invest in Alaska’s proposed Liquified Natural Gas project.

Bessent spoke Wednesday outside the White House, after President Trump announced he would pause reciprocal tariffs for 90 days to allow countries to negotiate. A reporter asked Bessent what it would take for a country to block the imposition of tariffs beyond three months.

That’s when Bessent raised the Alaska project as a possible deal-maker.

“These are trade negotiations, but if countries want to come and offer other things — so I talked about yesterday that we are thinking about a big LNG project in Alaska, that South Korea, Japan (and) Taiwan are interested in financing and taking a substantial portion of the off-take,” Bessent said.

A country’s investment and purchase of Alaska’s natural gas would help reduce its trade imbalance with the United States, he said.

The State of Alaska has tried for years to secure investment in the project, particularly from potential customers in Asia. Cost remains a high hurdle. It would take an estimated $44 billion or more to build an 800-mile pipeline from the North Slope to the Kenai Peninsula, with a processing plant at the north end and a liquefaction plant at the terminus. From there, LNG tankers would take the fuel across the Pacific.

Countries might have more incentive to invest in Alaska LNG with the threat of tariffs hanging over them. But Trump’s tariff announcements have caused global economic shocks, which could hinder investment in big projects.

JUNEAU — The Alaska House’s budget is stuck, with disagreements on the size of the Permanent Fund dividend, school funding and the size of the budget itself.

The House Finance Committee last week advanced its draft budget with a statutory PFD and a $1.9 billion deficit. The spending plan was set to be debated on the House floor this week. But leadership of the Democrat-dominated House majority say they will not send an unbalanced budget to the Senate.

“I’m really reaching out to the minority. Let’s negotiate,” said House Speaker Bryce Edgmon, a Dillingham independent, at a Tuesday media conference. “Let’s talk about some things that we can do to make ends meet in a way that doesn’t eviscerate basic services.”

Legislators are facing a $680 million deficit over two fiscal years based on status quo spending. That assumes lawmakers approve a roughly $1,400 dividend and a $174 million school funding boost.

However, some members of the Legislature have supported a larger school funding increase: over $250 million per year to pay for a $1,000 boost to the $5,960 Base Student Allocation, the state’s per-student funding formula. Advocates have said that is desperately needed for a public school system in crisis.

To pay for that, some lawmakers have supported a smaller, $1,000 dividend to free up state revenue.

The nonpartisan Legislative Finance Division has estimated that with a $1,000 BSA boost and a $1,000 dividend, the House’s budget for the next fiscal year would still be roughly $167 million in deficit.

Anchorage Democratic Rep. Andy Josephson, a co-chair of the House Finance Committee, said Tuesday that the House majority was committed to the $1,000 BSA boost.

“We heard from scores of Anchorage citizens about the importance of that, and we have their back,” he said, referring to a packed town hall meeting over the weekend. “Come hell or high water. We’re going to stand for that principle,” he said.

Alaska Republican Gov. Mike Dunleavy in December proposed a budget with a statutory dividend following the 1982 statutory formula. If approved, eligible Alaskans would receive a roughly $3,900 dividend this year. But a statutory PFD would also lead to a roughly $1.9 billion deficit.

The House’s draft budget currently contains a statutory PFD at a cost of $2.5 billion — by far the largest outlay in the spending plan.

The last time the Legislature approved a statutory PFD was 2016. Since then, legislators have determined the size of the dividend through the budget-making process.

The House majority has a one-seat margin, which effectively gives each member a veto over the budget. The caucus is split on the dividend, meaning Republican minority members will likely be needed to help pass the budget, and to draw from savings to fill the current fiscal year’s shortfall.

”We’re all in a pickle,” Edgmon said Tuesday. “It’s not just the House majority. It’s the House minority, it’s the governor, it’s the Senate majority, it’s the Senate minority. We all own the situation in front of us.”

The House’s budget process has been marked by acrimony and finger-pointing between the majority and the all-Republican minority. Leadership of both caucuses have not articulated clear plans for how they want to balance the budget.

Anchorage GOP Rep. Mia Costello, the House minority leader, suggested at a separate Tuesday media conference that the minority has been largely shut out from budget debates.

“We are willing to be a part of the conversation, and we want to move forward, and we’re not often given that opportunity,” she said.

Anchorage Republican Rep. Chuck Kopp, the House majority leader, countered that the minority needs to come to the table.

“We need a House minority that’s willing to step up, take some very hard votes and agree that you can’t duck the question on the size of the dividend. It’s like rearranging the deck chairs on the Titanic when you’re going down,” he said.

The Senate majority has introduced revenue measures to bridge the state’s deficit, including by raising oil taxes. But those measures appear to face long odds of passing through the narrowly divided House.

Adding to the fiscal uncertainty for lawmakers: Congress has signaled it could make deep cuts to programs such as Medicaid. Additionally, President Donald Trump’s announcement of sweeping tariffs on U.S. trading partners has sent the Permanent Fund and oil prices sliding, which could balloon the state’s deficit further.

Lawmakers have few good options to reduce the deficit and balance the budget.

Fairbanks GOP Rep. Will Stapp, a minority member, said Tuesday that both the statutory PFD and the $1,000 BSA boost would need to be reduced. Palmer Republican Rep. DeLena Johnson suggested recent budget additions should be pulled back.

But, when pressed on Tuesday, House majority and minority members did not offer specifics about how to reduce the deficit beyond generalities about budget cuts and working together.

Typically, the House takes the lead on the annual operating budget, which funds state agencies and programs, and the Senate takes the lead on the capital budget, which funds infrastructure and maintenance projects. The spending plans are then exchanged and legislators finish work on the other chamber’s budgets.

The House and Senate had planned on exchanging budget bills on April 11. But that is being delayed with the House at a standstill.

Josephson, who manages the House’s operating budget, said Tuesday that the majority caucus anticipated the budget being on the House floor next week. That is typically the final step before legislation advances to the Senate for its consideration.

Dunleavy has been all but absent this year from the state Capitol and legislative debates. Edgmon urged the governor’s office and his Senate and House colleagues to work together.

“We’ll get through this, but if you leave us to our own designs, we are going to be stuck in this morass that unfortunately is going to carry forward into what none of us want — that’s a special session,” he said.