Alaska creeps closer to July 1 government shutdown as state budget remains unresolved

JUNEAU — The Alaska Legislature will not finish work on the state’s annual budget before the end of next week, and debates could continue until mid-June, leading lawmakers said this week.

If a budget isn’t approved by the Legislature and Gov. Mike Dunleavy by July 1, state government will shut down.

The effects of a shutdown could be widespread: The closure of the Alaska Permanent Fund Corporation, no ferry service, no pull-tab or cigarette sales, trouble for the management of Alaska’s billion-dollar salmon fisheries, and more, according to an analysis conducted for a similar shutdown scare four years ago.

Legislators and a spokesman for the governor said a shutdown isn’t likely, but a lack of urgency has been apparent in the state Capitol. House and Senate need to combine two different budget proposals into a single compromise proposal before sending it to the governor, but several negotiators left Juneau last weekend and are again scheduled to leave town over the Memorial Day weekend.

They won’t meet again publicly until Tuesday, said Rep. Neal Foster, D-Nome and chairman of the committee in charge of crafting a compromise.

Sen. Bert Stedman, R-Sitka, is the lead negotiator for the Senate and said technical problems have slowed the process, as has the sheer size of this year’s budget bill, an inch-thick 150-page document that includes more than $15 billion in line items.

But other lawmakers accused senators — and Stedman in particular — of deliberately slowing the process in order to sway votes toward a smaller Permanent Fund dividend.

“I feel like this session is total frustration,” said Rep. Steve Thompson, R-Fairbanks, in a speech on the House floor.

“The problem is not here. It’s not with us. We made it very clear we wanted to work,” he told his House colleagues. “We should’ve been done with this process long ago.”

Stedman and Senate President Peter Micciche, R-Soldotna, denied that the slow pace is due to disputes over the dividend, but both acknowledged that the dividend is the largest remaining issue.

The Senate voted 12-8 in favor of a dividend estimated to be about $2,300, but two senators who voted in favor of that amount said they did so only to keep budget talks going.

The House’s coalition majority prefers a smaller dividend, one that would not require the Legislature to break a spending cap approved in 2018.

In the final compromise, budget negotiators could end up picking any figure between the Senate’s amount and zero.

“I don’t think to get a compromise on the dividend and earnings overdraw is going to be very easy,” Stedman said.

Two years ago, legislators didn’t approve a budget until June 10, and in that case, the dividend was left for a second special session.

The deadline will become more urgent starting Tuesday, when thousands of state employees could be notified of the situation. Union contracts require advance notice of layoffs.

In 2019, Dunleavy sent out an email alert in late May, about two weeks before the Legislature approved the budget. In 2015 and 2017, the state sent more formal written notices.

Corey Young, a spokesman for the governor, said the administration isn’t planning a formal notice unless the Legislature fails to approve a budget before the current special session ends June 18.

He said the administration has asked individual departments to inform staff of what to expect.