With support lacking, Legislature puts off budget vote

  • Sen. Bill Wielechowski, D-Anchorage, talks about a budget amendment on May 18 with fellow senators. Neither the House nor Senate took up the proposed conference committee budget hashed out over the weekend on June 15 just three days before the special session ends. (Photo/James Brooks/Anchorage Daily News)

The fight over how much money Alaskans’ government owes them is inching ever-closer to giving them no government at all.

House and Senate leaders further delayed action on the state operating budget June 15.

The Senate held a technical floor session but did not address the budget bill while the House floor session for the day had not been held as of this writing late June 15.

By not acting promptly on the budget after the conference committee finalized the compromise version over the weekend — as has been done in recent similar situations and would allow the special session to adjourn — is an indication that some members are firmer in their position for the state to pay Permanent Fund dividends at least equivalent to Gov. Mike Dunleavy’s “50-50” plan.

The conference committee’s budget funds PFDs of approximately $1,100 per person by pulling $371 million from the General Fund, scraping $320 million from the bottom of the Statutory Budget Reserve, and skimming $48 million off of the roughly $1 billion Constitutional Budget Reserve, according to Legislative Finance Division documents.

The conference committee via language in the budget also tied lawmakers’ vote to spend from the CBR, which requires a three-quarters majority in each body, to school debt reimbursement and oil and gas tax credit payments, as well as the size of the PFD and a host of capital projects backed by the administration.

If legislators do not approve the CBR draw the PFD would drop to approximately $525 per person, or about what the state could pay and maintain close to a balanced budget.

It also moves $4 billion from the Permanent Fund’s Earnings Reserve Account, which holds spendable income, to the corpus of the fund that lawmakers are constitutionally barred from spending.

The overall value of the Fund between the corpus and Earnings Reserve is currently about $81 billion.

Senate Finance co-chair and conference member Sen. Bert Stedman, R-Sitka, consistently is one of the most influential lawmaker in regards to the budget and for years has been firm in his opposition to spending from the fund beyond the 5 percent annual draw approved in 2018, as the Senate’s budget would have to do to pay dividends of roughly $2,300.

House and Senate negotiators finished their work on the budget June 13 after weeks of slow progress.

Legislators have until June 18 to approve a budget before the special session called last month by Dunleavy ends. Another special session would quickly ensue if legislators can’t agree on the budget, which is close to the administration’s proposal for roughly flat spending this year outside of the PFD, but they are also inside of two weeks to the hard budget deadline of June 30 to avoid a government shutdown and all that would entail.

With the fraying of the Legislature’s caucuses that has come from years of battles over the PFD it’s unclear how the fiscal year 2022 budget vote will fall.

The governor called the Legislature back to first to finish the budget but also to hash out an agreement over his proposal to split the roughly $3 billion annual draw from the Permanent Fund evenly between the dividend appropriation and government services and etch it into the Alaska Constitution.

While a handful of committee hearings have been held to vet the governor’s plan, legislative leaders have said they expect to take up the big Permanent Fund issues, and possible taxes to fill the rest of the several hundred million-dollar budget gap, in the August special session Dunleavy also called.

The governor insisted one way or another the future of the PFD, at least as it pertains to lawmakers, would be settled this year.

A public vote on any constitutional amendments would likely happen in the next general election in 2022.

Elwood Brehmer can be reached at [email protected].

Updated: 
06/16/2021 - 9:41am