Senate continues to hold budget in an effort to mount pressure on the House to agree to smaller dividend

JUNEAU — The Alaska Senate on Monday considered changes to its spending plan, but stopped short of sending the bill to the House, engineering a tight timeline that would give the House just one day to make a decision: either agree to the Senate plan or send the Legislature into a special session.

As has happened every year since 2016, lawmakers have struggled to agree on the size of the Permanent Fund dividend, and with just over 48 hours to go until the end of the session, the two chambers appeared just as divided on the issue as they had been for months.

The bipartisan majority in the Senate has favored a $1,300 dividend that would allow the state to balance its budget without drawing from savings, while the Republican-dominated House majority has called for a $2,700 dividend that would require a draw of around $800 million from the state’s already-depleted savings account.

The House’s budget, which was passed to the Senate for consideration last month, relies on a draw from the $2.2 billion Constitutional Budget Reserve — an action that requires a two-thirds vote in both bodies. With two days to go, neither chamber had agreement from enough members to reach that threshold.

Rather than passing their spending plan to the House earlier in the session, Senate majority leaders have elected to stall the process until the last possible day. Senate Finance Co-Chair Bert Stedman, a Sitka Republican, said Monday that the Senate is still “trying to work out an arrangement with the House.”

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Traditionally, the Senate would pass a budget to the House with enough time for them to consider the plan and decide whether or not to accept it. The House has not accepted a Senate budget bill in more than 40 years — longer than some legislators have been alive. But this year, the Senate has waited to send their proposal for so long that there is no time for the traditional conference committee, where members from both bodies typically meet to iron out the differences.

Instead, the Senate has attempted to hold closed-door negotiations with the House to find ways to appease House members sufficiently that they will agree to the Senate bill, without drawing from savings. But those negotiations, even as they continued Monday, did not appear to yield any progress, with House members showing no increased interest in agreeing to the plan.

“We’re talking and we continue to talk. They have some unrealistic expectations on the dividend,” said Senate President Gary Stevens, a Kodiak Republican. “It’s really an odd thing right now. We keep talking about this and we can’t seem to make any progress.”

A peace offering from the Senate in the form of a budget provision that would increase the dividend size if oil prices sufficiently rose — growing the state’s coffers — did not appear to sway the House holdouts.

During budget deliberations Monday, a proposed amendment to the Senate budget that would have increased the Senate’s proposed dividend to match the House’s figure failed in a 5-15 vote, with only two majority members joining the three Senate minority members in supporting the larger dividend figure.

The bipartisan Senate majority rejected more than 20 amendments brought by the conservative Republicans in the minority. By the end of an hours-long floor session, its budget had remained largely unchanged, and still included a $1,300 dividend per eligible Alaskan.

Majority members indicated their plan was to continue hearing amendments on Tuesday before voting on passing the bill to the House, just one day before the end of the session. If the House does not vote to accept the Senate’s plan, Gov. Mike Dunleavy will likely be forced to call a special session for lawmakers to continue budget deliberations.

That session could begin immediately, or in early June. But even if lawmakers enter a special session, the fundamental disagreement between the chambers is unlikely to change, nor are the state’s revenue projections.

“I don’t see that we’re in any better position 30 days from now,” Stevens said.

The Legislature must pass a budget before the end of the fiscal year on June 30, or the state would experience its first-ever shutdown — with unknown consequences for public-sector employees and critical state services. The Senate signaled their recognition that this is a possibility in crafting their spending plan, when they included a $40 million appropriation to cover the fallout of a potential shutdown.