Alaska House votes to avert government shutdown, send budget to Gov. Dunleavy

JUNEAU — The Alaska House of Representatives has approved a state budget that will avert a government shutdown, and Gov. Mike Dunleavy said he will sign it.

In a 28-10 vote on Monday, the House approved the “effective date clause,” which allows the budget to take effect July 1, the start of the state’s fiscal year.

“Once I receive the budget, and review individual items, I will make a decision on possible line item vetoes and prepare the budget for implementation on July 1,” Dunleavy said in a brief written statement. “This action will avert a government shutdown.”

The vote ended almost two weeks of uncertainty caused when House Republicans voted against the clause.

Other legislators urged Dunleavy to sign the budget without the start date, but Dunleavy said doing so would be unconstitutional. The Alaska Department of Law said that without the clause, Alaska would have no budget until September. That would have caused a government shutdown starting July 1. Thousands of state workers would have been laid off, many state services would have been suspended and many state-paid contractors would have been forced to stop work.

“We’ve got a lot of Alaskans that are probably jumping for joy about now thinking that their paychecks are going to continue on coming,” said Speaker of the House Louise Stutes, R-Kodiak.

The House and Senate adjourned an ongoing special session immediately after the House approved the effective date clause.

That clause required two-thirds of the House and two-thirds of the Senate to agree. Fully funding the budget as written requires three-quarters of the 40-member House and three-quarters of the 20-member Senate. Neither the House nor Senate have passed the budget by the needed margin.

As a result, the Permanent Fund dividend in the budget is cut to $525, and there will not be enough money for programs that subsidize the cost of rural home electricity and pay college scholarships to Alaska high school students. Some construction projects in the Matanuska-Susitna Borough are also defunded.

But lawmakers believe those issues will be resolved later this summer or in the fall, during an upcoming special session of the Legislature. Dunleavy could intensify the need for a fix by vetoing affected items.

Those problems have been secondary to the prospect of a total government shutdown.

“We’ve been so focused on not shutting down this state that I haven’t taken that next step,” Stutes said.

Failed leverage led Alaska to the brink of a shutdown

Alaska’s House of Representatives is divided between an 18-member Republican minority and a 21-member majority coalition that includes Democrats, Republicans and independents. Rep. Sara Rasmussen, R-Anchorage, is not a member of either group.

For weeks, members of the minority have asked for action on a long-term state fiscal plan. The specific requests have varied. Kenai Republican Rep. Ron Gillham asked for a lengthy list of things including changes to the state’s constitutional spending cap and “a 15% cut across the board from all departments.”

One of his requests — and one repeated by many minority Republicans — is a constitutional amendment proposed by Dunleavy. That amendment would increase the dividend to about $2,350 per person if approved by voters next year.

But the proposal has been opposed by legislators in the House and Senate who say it is unaffordable without major new taxes. The Dunleavy administration’s projections call for $500 million in new taxes or spending cuts, plus spending from the Permanent Fund beyond a limit set by the Legislature in 2018.

Republicans sought to use the vote on the effective date — and the vote on fully funding the budget — as levers to move the majority, but neither side was willing to budge.

That led the state to the brink of a shutdown.

Members of the majority suggested Dunleavy could sign the budget without the effective date clause, but the governor said he believes that would be an unconstitutional act.

Attorney General Treg Taylor has sued a legislative agency in an attempt to force a legal decision on the matter.

Taylor said Monday that he intends to continue with the lawsuit. Courtroom arguments are scheduled for Tuesday, with an initial verdict afterward.

In addition to the legal maneuvering, the House majority and minority had been talking behind closed doors for days about a deal to end the deadlock in the House.

The details of that deal were revealed Monday: The House and Senate will create a “bicameral nonpartisan working group” that will try to create a comprehensive state fiscal plan before the Legislature’s next special session. The Republican minority will appoint its own members to the working group, as will the House’s coalition majority, the Senate’s Republican majority and the Senate’s Democratic minority.

Miscommunications cause a tense final day

After a weekend of offers and counteroffers, Stutes and Tilton had one final meeting about the deal Monday morning. Because of miscommunications, Stutes said she left that meeting thinking the minority was unwilling to make a deal. Tilton said she believed negotiations were continuing and that a tentative schedule was in place.

“There was definitely some communication challenges there,” Tilton said.

Despite believing there was no deal, Stutes called for a vote anyway.

”I felt it was time that people knew where they stood, whether there was an effective date or there wasn’t,” Stutes said.

Three votes, each requiring approval from 27 House members, were necessary.

After two of the three votes, members of the minority asked for a break in order to vote on a “sense of the House,” a nonbinding statement that called for the creation of the budget working group.

The House took an extended break to finalize the wording of that document, allow legislators to read it, then vote upon it.

”It was a very, very heated discussion on how we were going to move forward,” Tilton said.

After legislators approved the creation of the working group, they voted to avert the shutdown.

Republican Reps. James Kaufman of Anchorage, Ken McCarty of Eagle River, Tom McKay of Anchorage, Laddie Shaw of Anchorage and Cathy Tilton of Wasilla switched and voted in favor of the effective date clause and against the shutdown.

Also voting yes was Rep. Sara Rasmussen, R-Anchorage, who was absent from the first vote and is not a member of either the majority or minority. All members of the majority voted in favor of the clause.

Voting no were Republican Reps. Ben Carpenter of Nikiski; Mike Cronk of Tok; David Eastman of Wasilla; Ron Gillham of Kenai; DeLena Johnson of Palmer; Christopher Kurka of Wasilla; Kevin McCabe of Big Lake; Mike Prax of North Pole; George Rauscher of Sutton; and Sarah Vance of Homer.

Excused absent from the votes were Reps. Tiffany Zulkosky, D-Bethel, and David Nelson, R-Anchorage. Nelson said he was at National Guard training that had been postponed from April. Zulkosky did not respond to a text message asking why she was absent.

Tilton said she isn’t completely satisfied with the outcome, though she voted against the shutdown. Members of the minority disagree with the idea of funding the dividend and some Mat-Su construction projects from special accounts, and that didn’t change in the final budget.

They also didn’t get a firm commitment on fiscal action in the next special session.

Two years ago, the House and Senate created a similar working group to advise the Legislature on the future of the Permanent Fund. That group’s recommendations were never implemented.

”That is a cause for concern,” Tilton said, “and especially — I think our members have said it on record — what does it take to make change happen?”