Alaska Legislature called into special session after House adjourns without final budget vote

JUNEAU — The Alaska Legislature is set to start a special session Thursday morning after failing to reach agreement on the state budget by the midnight deadline Wednesday that marked the end of the annual regular session.

The House adjourned at 9 p.m. without taking a vote on a budget, three hours after the Senate sent over a take-it-or-leave-it spending plan.

The decision by the Republican-dominated House majority led Gov. Mike Dunleavy to call a 30-day special session to continue budget talks. That session is set to begin at 10 a.m.

“I feel like it was an appropriate thing to allow members the opportunity to have the time to take a look at that budget,” said House Speaker Cathy Tilton, R-Wasilla.

All but one member of the majority voted to adjourn without first taking up discussion of the Senate’s version of the budget bill, which had been amended hours earlier to include what Senate members said were House priorities. The vote to adjourn passed in a 22-18 split, with Rep. Jesse Sumner, R-Wasilla, the only majority member joining all members of the mostly Democratic House minority in voting to continue discussions.

“We still had business pending,” Sumner said by text message after the House adjourned. “I don’t think it’s responsible to adjourn without a budget or at least appointing a conference committee.”

Legislative rules dictate that any budget bill must sit on lawmakers’ desks for 24 hours. The Senate majority had decided to wait until the final hours of the session to pass their spending bill, claiming that the House could waive the 24-hour requirement if they chose to accept the Senate’s spending plan.

But it takes a two-thirds majority to waive a House rule, and enough members of the caucus were fundamentally opposed to the budget and to the deviation from traditional rules that they were willing to send the Legislature into a special session to continue budget talks.

Rep. Craig Johnson, R-Anchorage, called the Senate’s approach to budget negotiations “more of a hostage situation.” Senate President Gary Stevens, R-Kodiak, said he believed the budget was reasonable, and that there had simply not been enough time to hold a traditional conference committee — where members of both legislative chambers meet and negotiate a final budget bill.

“I do believe that next year will be different, and our intention is to certainly try to work with a calendar, try to make sure that we go through the conference committee process,” he said.

The Senate passed its spending proposal Wednesday just after 6 p.m. and adjourned, giving the House two options: agree, or force a special session. The House met shortly before 8 p.m., after marathon caucus meetings and closed-door discussions that lasted most of the day.

The final day of the session began without the usual frenetic energy that accompanies the end of the Legislature’s work. Nearly deserted hallways and closed-door negotiations replaced the typical stream of staffers running from one chamber to the other.

The Senate amended its budget before passing it to include what Senate leadership members said were takeaways from negotiations convened by the governor on Tuesday night that included both House and Senate majority members.

Both sides said that a deal had not been reached Tuesday, but the draft compromise agreement was brought back to their respective caucuses to see if there was enough support to approve the draft plan.

Changes made at the last minute to the Senate’s budget would have provided for an additional payment next year on top of the dividend of up to $500 per Alaskan if the price per barrel of oil exceeds $73 over the fiscal year that starts July 1, leading to more state revenue than currently anticipated.

The changes also included cuts requested by the House to child care and home care funding totaling $15 million, and additional capital projects worth over $30 million for renewable energy projects, the University of Alaska and trail projects, among other items.

Dunleavy was absent from the Capitol on Wednesday, and has not spoken publicly about the budget or resolving the state’s long-term structural deficit since he held a media availability in late April, when he spoke about his still-unseen sales tax proposal.

Spokesman Jeff Turner said Wednesday evening that the governor had departed for a charity bear hunting trip.

The main disagreement between the House and Senate majorities has been, again, on the size of the Permanent Fund dividend. The Senate budget has a $1,300-per-Alaskan dividend. The House’s plan contained a $2,700 dividend — which would have required a draw of $800 million from savings. Despite the draft agreement for the House to accept the Senate’s $1,300 dividend, House Republican leadership said after Wednesday’s floor session had ended that the size of this year’s PFD has likely still not been resolved.

“Do we agree that it’s settled on? Probably not. The way we pay for it is an issue,” Johnson said. “Are we happy with it? Absolutely not. Is it their number? Absolutely.”

The special session is likely to begin Thursday exactly where the regular session left off. The House will have to vote on whether to accept the Senate’s budget. If members vote to accept it, the special session can adjourn. If not, the House and Senate will appoint members to a conference committee that will begin the process of finding a middle ground between the House and Senate demands. If they do not agree by June 30, the state could enter its first ever government shutdown.

Sen. Bill Wielechowski, D-Anchorage, a veteran of countless special sessions, said that if the House did not concur with the Senate’s budget Thursday, it could be weeks before there is resolution.

“In my experience, once you go into special session, they don’t tend to end quickly, they tend to go pretty close to 30 days,” he said.

Democrats and independents in the 16-member House minority had expressed openness to accepting the Senate’s spending plan, meaning that at least five majority members would have to vote in favor of the budget in order to reach the threshold needed to avoid a lengthy special session and the threat of a government shutdown that comes with it.

The last time lawmakers entered a special session to finalize the state budget was in 2021, when they agreed on a spending plan two days before a government shutdown would have begun. The 30-day session came at a cost of over $700,000.

The end of the regular session means that any legislation considered by lawmakers during the session aside from the budget can no longer be taken up or voted on until next year. That means that a permanent increase for education funding — a top priority for the Senate majority and House minority — will have to wait another year. The budget passed by the Senate includes nearly $175 million in one-time funding for schools, but that funding would go away next year unless lawmakers can agree to pass it again.

Other priorities also dissipated in the final-days focus on the dividend, including last-minute efforts to pass a law that would have required some violent offenders to be involuntarily committed in psychiatric facilities, and a law that would have allowed subscription-style agreements between medical providers and patients. Those bills could be debated again in the next regular legislative session, set to begin in January.