Dunleavy says he supports budget that would send Alaskans $3,200, but vetoes could be coming

JUNEAU — Gov. Mike Dunleavy said Thursday that he would not immediately call a special legislative session, a day after the Legislature ended its work on a budget that would send Alaskans $3,200.

Dunleavy had hoped for a higher dividend payment of at least $3,700 amid a state revenue windfall that came after war in Ukraine boosted oil prices. But he said he would not push for a special session to increase the dividend since he sees the push as unlikely to pass due to “the nature of the makeup of the Legislature.”

“We don’t think it’s going to lend itself to that,” Dunleavy. “If we thought it would work, we would.”

Speaking to news media, Dunleavy said the budget is “ready to go” and “fully functional.” In past years, lawmakers have failed to meet that threshold, passing unfunded budgets or budgets without effective dates.

This year, Dunleavy said, “People can get on with their lives.”

But the governor said he is still considering vetoing some specific pieces within the budget. He has three weeks to delete items from the bill. He hadn’t made any decisions on cuts as of Thursday.

“We want to try to put as much money into savings,” Dunleavy said. “That’s why we’re going to take a few days with staff to got though the budget to see what additional savings can be had and the potential of reducing some of the items that were put forth.”

The budget passed by the Legislature does not include a significant year-over-year increase to operating costs when accounting for inflation. But it does include hundreds of millions of dollars in capital projects, with some of the largest sums going to port projects in Anchorage and Nome.

[Alaska Legislature passes budget compromise that could send $3,200 to Alaskans]

The budget passed by the Legislature, if signed into law, would put $700 million toward forward funding of K-12 education and leave $800 million in the Statutory Budget Reserve account by the end of the coming fiscal year, but only if oil prices remain close to the Department of Revenue’s most recent projection of $100 per barrel.

“We as a Legislature have recognized it’s time to start building our savings back up. We’ve spent seven year spending it,” House Speaker Louise Stutes, a Kodiak Republican, said Thursday, addressing reporters for the first time in several days.

The governor can also veto bills passed by the Legislature.

The House and Senate passed a total of 98 bills between 2021 and 2022, significantly more than the 68 passed by previous Legislature, whose work was truncated by the pandemic, but less than the 145 bills passed between 2017 and 2018.

The bills passed in the final hours of the session included some of the governor’s priorities — an education bill that would instate reading and early education programs and a domestic violence bill that would update the state’s sexual assault statutes. But one of the governor’s priorities, a measure that would have given land to Alaska Native military veterans, failed to make it across the finish line.

The Legislature adjourned just after midnight between Wednesday and Thursday without addressing one of the longstanding issues that has bogged down its budget talks for years: creating a fiscal plan that would update the way the dividend amount is calculated. The Senate had worked earlier in the session on a proposal that would have set aside for the annual dividend half of the 5% draw of the Permanent Fund’s overall value that lawmakers have designated for spending. But the bill failed to gain enough support to advance.

Dunleavy said that’s because some lawmakers don’t want a fiscal plan “that hems them in” and restricts state spending on services such as public education and projects such as road maintenance.

Legislative leaders, including Stutes and Senate President Peter Micciche, a Soldotna Republican, had a more upbeat outlook on the prospects of a long-term plan for the dividend.

“There is a lot of intent,” Stutes said. “I think there’s going to be some work done over the interim as well, so maybe when we come back, we’ll be closer to something that we can put on the table and actually debate.”

“You don’t have to have a special session to come together, to get a group of legislators together who are interested in a fiscal plan,” Stutes added.

But a special session could be needed later in the year for a different purpose — to appropriate federal infrastructure funding.

“I don’t think that there would be any consternation with the Legislature to come and do their job,” Stutes said.

However, most lawmakers appeared eager to leave Juneau. All but one of the 60 legislators face reelection this year. On Thursday, lawmakers were seen packing the contents of their offices into boxes; the usual suits and ties were replaced with jeans and T-shirts. Most of the building’s hallways, which just the day before were the scene of a frantic legislative process, were deserted.

The governor’s televised news conference on Thursday was the first held since the Senate passed a budget more than a week ago that included $5,500 in payments to Alaskans. That budget was ultimately voted down in the House, which last month had forwarded its own plan that included $2,600 in payments to Alaskans. The two chambers came together on a compromise during the final day of the session, but several lawmakers has heard that the governor was urging legislators to vote in favor of larger dividend payments through deals on their priority bills and budget items.

But Dunleavy was dismissive, saying that “the way you raise your eyebrow” can be interpreted as a sign of dealmaking in the state Capitol.

“What some people refer to as ‘deals’ — in many cases they are nothing more than discussions,” Dunleavy said. “If I were to make a deal … we would have a larger dividend.”

Stutes said she was not concerned about the specter of budget vetoes from the governor in retaliation to a House vote that narrowly shot down an additional $650 payment to Alaskans — which would have cost the state a total of $420 million.

“If there are in fact vetoes to be had, he’s going to have to look pretty hard to find them,” Stutes said.

Correction: An earlier version of this story incorrectly reported that lawmakers cannot actively campaign for office while they are in session. However, they may actively campaign during a legislative session in the 90 days preceding an election. The upcoming primary is scheduled August 16, in less than 90 days.