A House and Senate conference committee on Tuesday worked out a compromise to a supplemental spending bill that totals more than $1 billion - $940 million of which would come from the state's general fund.
Most of the general fund spending - about $854 million - would be put into a newly created education fund, with nearly half that money coming from surplus oil revenue.
The spending bill is meant to cover additional and unexpected costs to various state agencies for this fiscal year, which ends June 30, but it also includes funding for several new programs, such as the education fund and $28 million in preparatory work for a gas pipeline from the North Slope.
Of that, $7 million would come from Alaska Permanent Fund earnings, which Democrats vigorously opposed.
The committee's recommendation now goes to both the House and Senate for approval.
"I think it's one of the more significant things this session," said Senate Finance Co-Chairman Gary Wilken, R-Fairbanks.
Senate Minority Leader Johnny Ellis, D-Anchorage, said he is not comfortable with the idea of putting an $854 million public education account into a fast-track supplemental spending bill.
"I have a philosophical problem, I guess, with trying to create too much," Ellis said.
A main point of contention in the different versions of the spending bill was how municipalities could use $6.5 million in energy assistance grants. The Senate had inserted the condition that the grants, which range from $22,396 to $67,187, depending on population, could only be used for the purchase of fuel.
The House later added utilities and insurance as allowable expenditures, which Wilken opposed.
"It changed the intent of the appropriation from fuel costs to revenue sharing," Wilken said.
In Tuesday's conference, the Senate version was approved by the committee in a 4-2 vote.
Another change in the compromise bill includes completely cutting a $6.2 million request from the Department of Health and Social Services for increased operating costs for behavioral Medicaid services. That request was kept in the Senate version but cut from the House, and included $2.7 million in general fund spending.