Alaska budget stalled with special session all but inevitable

JUNEAU — A final budget deal appeared unlikely before the end of the legislative session as Alaska House and Senate leadership met behind closed doors in an attempt to break the logjam Saturday — four days before the session is set to end.

The biggest impediment to passing an operating budget is, again, the size of the Permanent Fund dividend, which has been part of the annual budget-making process since 2017. The House approved a budget in April with a $2,700 dividend that was projected to create an $800 million deficit. The Senate, meanwhile, has moved ahead with a $1,300 dividend and a spending plan that does not require drawing from savings.

The House and Senate typically pass different versions of the operating budget, and then appoint a joint conference committee to reconcile those differences, so a single budget bill can pass through both legislative chambers. The House last approved the Senate’s budget without a conference committee — which is known as concurrence — in 1982.

This year, the Senate has given the House no option but concurrence to avoid a special session, by refusing to pass their spending plan until time ran out for a conference committee. House Republicans have bristled at the idea of concurrence, believing that would reduce their input in the Legislature’s final budget bill.

“Concurrence hasn’t happened since I was born,” said Rep. Will Stapp, R-Fairbanks, who sits on the House Finance Committee. “I’d look at a concurrence as an abdication of my fiduciary obligation.”

The Senate combined the operating budget with the capital budget Thursday into a single omnibus bill. The Senate Finance Committee advanced the combined budget bill to the floor Saturday morning without debate, after adopting several amendments that Sitka Republican Sen. Bert Stedman said were meant to appease House members. Stedman said the plan was for the Senate to debate budget amendments on the chamber floor Monday.

With less than a week left until the end of the regular session, the bipartisan Senate majority said there was simply not enough time for a conference committee to meet. Instead, closed-door negotiations have been held between House and Senate leadership with the intention of crafting a budget deal the House can approve.

[Listen to the latest episode of the ADN Politics podcast:]

Members of Senate and House leadership met in the speaker’s chambers for an hour Saturday afternoon. But the Senate’s concessions — adding some funding for House-supported projects — were not enough to sway frustrated House members. House Republican-led leadership bristled at that approach.

Palmer Republican Rep. DeLena Johnson, who manages the House’s operating budget, said in a press availability after the meeting that the Senate holding both budget bills invariably created a power imbalance between the legislative chambers during negotiations.

“It’s certainly not a conference committee. It’s them bringing us what they think we might want to see without our input,” said Rep. Craig Johnson, R-Anchorage. He said the House majority still wanted a conference committee to meet, which could likely only happen if lawmakers ran out the clock and Gov. Mike Dunleavy called a special session.

Members of the bipartisan Senate majority have not budged on their top priority of avoiding a draw from state savings, which have been depleted after years of deficit spending. Senate President Gary Stevens, R-Kodiak, said that he has asked for a compromise dividend figure from the House, which would require a smaller draw from savings, but one has not been forthcoming.

“I have said to them, ‘Give me a plan. Make a proposal. Tell me something. What do you want?’” Stevens said in a brief interview Saturday.

House Speaker Cathy Tilton, R-Wasilla, said that the House majority had offered some “finance solutions to the budget challenges,” but she did not elaborate on what those were.

Increasing public school funding has been a top priority for the Senate majority after years of flat funding. The Senate has wanted to permanently increase the Base Student Allocation — the per-pupil funding formula — by $680 at a cost of $175 million per year. The House has supported the same school funding increase, but only for the fiscal year that begins July 1.

Stevens said House members have proposed reducing the school funding boost in order to increase the size of the dividend. He said that would be a difficult sell for the Senate.

“I’d find it hard to tell the public, ‘OK, we’re going to cut education funding to give you a bigger dividend,’” he said.

While waiting to hear for the leadership meeting to end, lawmakers waited in the Capitol hallways to hear if any decisions had been made. Fairbanks Republican Rep. Frank Tomaszewski, a member of the finance committee, was frustrated by the Senate’s take-it-or-leave-it approach with the budget.

“I think it’s disrespectful to the House. We’re not a 40-member advisory committee,” he said.

Drawing from the Constitutional Budget Reserve — the state’s $2 billion main savings account — requires a three-quarters approval vote of both the House and Senate. The 16-member Democrat-dominated House minority blocked the vote to draw from savings in April when it was required to fund the one-time education boost.

Anchorage independent Rep. Calvin Schrage, the House minority leader, has said the minority caucus is staunchly opposed to using savings to pay for the budget. Schrage said the minority has not been involved in the budget negotiations, and that it has largely been “radio silence” from House and Senate leadership.

A budget must be signed before July 1, the start of the next fiscal year, or Alaska would be set to have its first-ever state government shutdown. The legislative session must end by midnight Wednesday, meaning a special session to approve a budget is virtually inevitable — unless a sudden breakthrough occurs.

“We’re still chugging along. We’re still talking — that’s important,” Stedman said.

“We do have to continue to work with them,” Tilton said about negotiations with the Senate. “There is another session ahead of us. So we’re trying to work through the differences.”