Alaska Gov. Mike Dunleavy speaks during a news conference on Wednesday, May 12, 2021, in Juneau, Alaska, with a number of state legislators around him. Dunleavy discussed a proposed constitutional amendment dealing with the Alaska Permanent Fund and the Permanent Fund Dividend. (AP Photo/Becky Bohrer)

JUNEAU, Alaska (AP) — Alaska Gov. Mike Dunleavy on Wednesday outlined what he called a responsible budget proposal that doesn’t dip into savings, bolsters law enforcement and calls for direct payments of about $3,700 to residents amid an unsettled dispute with lawmakers over the future of the state’s dividend program.

The budget plan, a starting point for lawmakers, proposes a supplemental check of about $1,200 to residents, which would be on top of the $1,114 dividend check paid this fall. Dunleavy had wanted lawmakers to consider a supplemental dividend during the fourth special session of the year, which ended last month with little business being conducted and the issue withering.

His plan also calls for a dividend next year of about $2,500 as part of an approach lawmakers failed to reach agreement on earlier this year.

The proposal would increase by at least 10 the number of village public safety officers that could be hired, said James Cockrell, commissioner of the Department of Public Safety. It also calls for an increase in the number of troopers in communities and the modernization of the department’s aircraft fleet, he said.

Dunleavy, a Republican, said the budget focuses on the “primary functions of government,” such as public safety, transportation and education. He said the state’s “fiscals have improved dramatically” and that oil prices are doing well.

Prices, which were in the mid-$80-range per barrel in early November, were around $75 this week. Prices were around $50 a barrel this time last year.

Dunleavy, who faces reelection next year, faced backlash during his first year in office in 2019 over deep cuts he had proposed, with that anger fueling a recall effort that fizzled out earlier this year. Dunleavy said his actions then were a recognition of a deficit and that the new proposal recognizes Alaska’s current situation and efforts to “contain” the size of government and prioritize funding.

State Revenue Commissioner Lucinda Mahoney, in a letter accompanying a new revenue forecast Wednesday, cited the outlook for oil prices and production as behind higher revenue projections as compared to a forecast released in March.

House Speaker Louise Stutes, who leads the bipartisan coalition that controls the House, in a statement said her coalition supports a number of the priorities and projects Dunleavy outlined. But the proposal needs to be vetted, she said.

“It is important to remember that a slight rise in the price of oil, changes in the stock market and one-time funding from Washington do not fundamentally change Alaska’s fiscal reality,” said Stutes, a Republican. “We need to make the tough decisions on a fiscal plan in order to provide sustainability in budgeting” and the dividend.

The state, once heavily reliant on oil revenue, has come to depend on earnings from the oil-wealth permanent fund, traditionally used to pay dividends, to also help pay for government. The state is expected to draw about $3.4 billion from earnings for the upcoming fiscal year under a law that seeks to limit withdrawals.

The Legislature is set to reconvene next month. The House and Senate use the plans submitted by the governor as a starting point in crafting their own versions of a budget.

Jeff Turner, a Dunleavy spokesperson, said a plan for use of federal infrastructure funds would be out early next year.