JUNEAU — The Alaska House debated its proposed state operating budget from Thursday morning into early Friday before passing it about 3 a.m., 24-14.
Passage came after a flashpoint over a Democratic amendment to revoke money for an appeal to Alaska Supreme Court of the Legislature's Medicaid expansion lawsuit.
House Speaker Mike Chenault, R-Nikiski, refused to allow debate or a vote on the Democrats' budget proposal to revoke the money, saying it was out of order because the lawsuit was "awaiting adjudication in court" — even though the case was dismissed last week by Anchorage Superior Court Judge Frank Pfiffner, and hasn't been appealed.
After partisan sniping over Chenault's ruling and what Rep. Scott Kawasaki, D-Fairbanks, described as "endless confusion," Chenault's colleagues in the Republican-led majority voted to uphold the ruling, 25-13. The vote was a procedural matter, requiring members of the Republican caucus to support their leaders' positions. Chenault only allowed a vote for or against his ruling; the underlying amendment to withdraw money for the lawsuit never reached a vote.
The chaos came as the House debated its proposed $3.8 billion operating budget for next year, which would slice about $283 million, or 7 percent, from last year's spending plans for the state's 14 departments, the Legislature, the governor's office, the court and university systems.
The Medicaid court-case fight erupted in the late afternoon when House Democrats, amid a blizzard of budget amendments voted down by the majority, proposed to strip $150,000 set aside by a legislative committee to appeal the lawsuit to the state Supreme Court.
Judge Pfiffner dismissed the case March 1. The Legislature had asked him to overturn Gov. Bill Walker's decision last summer to expand Medicaid without legislative approval, but Pfiffner said the law was on the governor's side.
GOP leaders say they want to bring the case to the state Supreme Court, which would require the $150,000 payment to a Washington, D.C., law firm. But they have yet to file an appeal.
There was still afternoon daylight outside the Capitol when Rep. Matt Claman, D-Anchorage, prepared to introduce an amendment to revoke the money, but Chenault called for a break in the action. Democratic and Republican House leaders huddled in front of Chenault's dais before the Democrats retreated to a public hallway to get an opinion from the Legislature's attorney, Doug Gardner, about whether the majority had grounds to block a vote on the amendment.
The Democrats' question appeared to center on whether their amendment was "germane," or relevant, to the budget debate.
Gardner told them over speakerphone what seemed obvious to many of them: "It's a budget bill. It's a budget amendment," he said. "You have presented a germane motion that presents an appropriation in an appropriation bill."
When lawmakers finally returned to the House chamber just before 8 p.m., Chenault moved the Medicaid amendment to the bottom of the pile, where it wasn't unearthed again until after 1 a.m.
When he finally got to it, the proposal was ruled out of order by Chenault, with his decision backed by Rep. Craig Johnson, R-Anchorage, a member of the leadership as chair of the House Rules Committee. He read a definition of "adjudication" from Black's Law Dictionary, which Johnson said describes the term as a legal process of determining a lawsuit.
A legal opinion written by staff to the majority's leadership and distributed to reporters stressed that the rules governing the amendment referred to a legal matter awaiting "adjudication," not "judgment."
"A lower court's judgment would be one step in an adjudication that would ultimately be decided by the highest court," said the opinion, which was written by Donald Bullock, an attorney who works for the majority.
Claman said there was "nothing pending" about the lawsuit, noting that the final words of Pfiffner's judgment are: "This case is dismissed."
"There is nothing to adjudicate," Claman said.
Claman also noted the Democrats' amendment was not an attempt to debate the merits of the case — only the money to pay for the appeal.
During a break before a vote on whether Chenault's ruling should stand, the debate deteriorated into bickering, with Republicans taking the position that a vote on the amendment could be interpreted as one Constitutional branch of government, the Legislature, telling another, the judiciary, how to rule.
"What about the Sturgeon case? You guys have been talking about that all session," Rep. Geran Tarr, D-Anchorage, asked some of her GOP colleagues, referring to a case pending before the U.S. Supreme Court.
"It's about what we do here influencing the judiciary," Johnson, sitting in the next row, told Rep. Les Gara, D-Anchorage.
"No," Gara said.
"Yeah," said Johnson.
After the vote, Democrats said Chenault had effectively stifled debate by using his raw power as speaker.
"The rules say what they say, but the reality is that once they have 21 votes they can ignore the rules," Gara said in an interview. "The rules are that this amendment is allowed because it's germane."
Budget poised for passage
Meanwhile, the House was poised to pass its spending plan for next year with new, sharp cuts to programs for health care and seniors, and for the state's university system, with spending levels for most other agencies remaining close to those proposed by Walker.
A final vote was still pending at 2:30 a.m., after the majority rejected all 24 amendments offered by House Democrats.
The two dozen Democratic amendments, submitted over the course of 12 hours, garnered zero majority votes. (Actually, Rep. Jim Colver, R-Hatcher Pass, voted for one accidentally, but a special motion was made so he could take the vote back.)
The proposed budget would slice spending by state agencies and the university system to $3.8 billion — about $600 million, or 13.5 percent, below what the state spent in its budget two years ago. That was before a collapse in oil prices drove a catastrophic crash in the state's unrestricted revenues, to a projected $1.8 billion for next year's budget from $5.4 billion in 2014.
That $1.8 billion of revenue is less than half of what's needed to pay for the House's spending plan.
During the rest of their session, lawmakers say they plan to grapple with proposals from Walker, and from some of their colleagues in the Legislature, to raise more money to pay for government from the $52 billion Permanent Fund, or from new and increased taxes.
The Senate also is set to pass its own version of the operating budget by early next week, which will have to be reconciled with the House proposal.
Lawmakers' work on the budget Thursday began at 10:30 a.m., with breaks for lunch and dinner.
By the wee hours of the morning, lawmakers were sustaining themselves with mixed nuts, baby carrots and soda, with one Republican leader resting his feet on a drawer extended from his desk.
It was a "heck of a first day" for Rep. Ivy Spohnholz, D-Anchorage, who was sworn in before the start of the floor session as the replacement for Rep. Max Gruenberg, the Anchorage Democrat who died in office last month.
Spohnholz summed up her experience in one word: "Wow." That was after she took the floor to speak in favor of several of the Democratic amendments to add money to the budget — and to take some away from a road project opposed by many of her district's residents.
The House's proposed cuts to state agencies go $180 million beyond the $100 million in reductions already proposed by Walker — reductions to areas like like heating assistance, public radio and state-paid defense lawyers.
Among the largest cuts newly proposed by the House is a $60 million reduction to the University of Alaska system. That's about 18 percent below the $335 million budget proposed by Walker, which was already $15 million less than the year before — though $25 million of the House cut would be replaced by money from a savings account called the Power Cost Equalization Endowment Fund.
Other new House cuts were $5.1 million, or 26 percent, to a program that makes cash payments to low- and moderate-income senior citizens; $500,000 or 31 percent, to state museums; $2 million to eliminate a pre-kindergarten grant program; and $300,000, or 22 percent, from the labor department program that publishes state economic and demographic information.
The Democrats' sheaf of amendments tried to restore cuts proposed both by their Republican counterparts, and by Walker — including money for the university system, the heating assistance program, the cash payments for senior citizens, pre-K, public radio and for state campaign finance regulators.
They also tried to strip $58 million from proposed megaprojects like the Knik Arm Bridge and the road through Anchorage's University Medical District.
"All I know is that we've taken principled stands on the things that we care about," said Rep. Scott Kawasaki, D-Fairbanks.
"We're not sending grandma out on an ice floe to die," said Rep. Dan Saddler, R-Eagle River, in downplaying the impact of the reduction in cash payments to seniors.
Budget documents produced by the Legislature show the total state budget — including items like debt service, deposits to savings accounts and retirement system payments — is $4.1 billion in unrestricted general funds, down from $5.1 billion last year.
But the accounting for those reductions has drawn sharp criticism by some lawmakers and observers, who say the House majority is using accounting tricks to conceal true state spending.
The House budget includes a retroactive $435 million deposit into a savings account earmarked for education, for example, that doesn't show up in the coming year's budget under unrestricted general fund spending.
The retroactive deposit allows lawmakers to put $145 million less into the savings account next year, which appears as an unrestricted general fund cut in legislative budget documents even though the same amount is being spent on education.
"These guys are going to go home and they're going to run on, 'We cut spending. We cut the budget.' No, they didn't," Brad Keithley, an oil and gas consultant who closely follows the budget process, said in a phone interview Thursday. "They used other funds to continue spending and to call them cuts. And so people are going to think, 'Oh we averted a crisis, we cut spending,' when, in fact, we just set ourselves up for next year facing the same thing."
When it comes to state agencies, House lawmakers are proposing steep cuts to the natural resources and health departments, as well as to the university. But when the cuts to those three areas aren't included, the reductions to the other dozen state agencies, as well as to the governor's office, the justice system and the Legislature's own budget, are 1.6 percent deeper than Walker's proposal.