James Brooks

On AG advice, Elections Division rejects recall petition

The Alaska Division of Elections on Nov. 4 declined to certify a petition to recall Gov. Michael J. Dunleavy from office, citing a legal opinion by the state attorney general. Proponents say they will challenge the rejection in court. The opinion, issued Nov. 4 by Alaska Attorney General Kevin Clarkson, says petitioners gathered enough signatures, paid the appropriate fees and did the “technical” work correctly, but that the four allegations against the governor “fail to meet any of the listed grounds for recall — neglect of duty, incompetence, or lack of fitness.” “The recall application failed to make these showings. The grounds of incompetence and lack of fitness, as a matter of law, were not applicable here,” Clarkson said in a written statement. Recall campaign manager Claire Pywell said backers intend to file an appeal Nov. 5 in Anchorage Superior Court. “Without question, the recall application submitted to the Division of Elections meets the standard under Alaska law,” said recall attorney and former attorney general Jahna Lindemuth in a written statement. “This rejection is without basis, and we will now turn to the courts for a remedy. We do so with confidence that we will receive fair treatment and we will prevail.” Dunleavy is on a trade mission to Japan this week, but deputy communications director Jeff Turner provided a statement by email. “Today’s opinion by the attorney general appears to be well reasoned. As I have always said, the allegations by the recall group are not legitimate reasons to overturn the outcome of the statewide election held barely a year ago,” the governor said. Recall supporters gathered more than 49,000 signatures in little over a month because of discontent with the governor’s decision to veto more than $400 million from the state operating budget. About half those vetoes were subsequently reversed. Even with 23 signature pages rejected for a technical error, recall backers had more than the 28,501 signatures needed to submit the petition to the Alaska Division of Elections for consideration. If the recall petition is upheld in court, backers would need to collect 71,252 verified signatures to trigger a special election. If the governor is recalled in that election, Lt. Gov. Kevin Meyer would become governor. Recall supporters listed four reasons for removing Dunleavy: • He failed to appoint a judge under the schedule required by state law; • He used state money and resources to make “partisan statements about political opponents and supporters”; • He committed a mistake with a budget veto; • And he violated the state constitution’s separation of powers with specific line-item budget vetoes. The legal opinion issued addresses each of those four allegations in turn. It attributes the budget veto mistake to a “scrivener’s error,” not an action by the governor, and says the Alaska Constitution permits the governor to delete “sums of money in any appropriation bill at his discretion.” On the allegation that the governor used state money and resources for partisan ends, the legal opinion says the recall petition doesn’t make a strong enough case. “Without more facts, it is impossible to determine whether the advertisements or mailers were intended for partisan purposes and whether the language was partisan,” the opinion states. Under the rules governing recall petitions, a recall statement cannot exceed 200 words. On the first reason for the recall, that the governor failed to appoint a judge to a vacancy within 45 days as required by law, the opinion says that because the position was still filled at the time of the replacement, with a departure still pending, it didn’t qualify as a vacancy. In addition, “because the forty-five day timeframe is merely procedural rather than substantive, the mere failure to comply with it does not amount to neglect of duty,” the opinion states. A footnote says the 45-day timeline is “considered more of a guideline than a mandate” and compares it to the often-ignored state law limiting sessions of the Alaska Legislature to 90 days. “Legislators cannot be subject to a recall application for the mere failure to adjourn in ninety days, just as the governor cannot be subject to a recall application for the failure to meet the forty-five day timeline for appointment of a judge, especially where no judicial seat was left vacant,” the opinion asserts. Maria Bahr, an assistant attorney general with the Alaska Department of Law, said she did not know who worked on the opinion, but it was provided to the attorney general. Division of Elections director Gail Fenumiai said she received the legal opinion Nov. 4 and had two draft decisions ready to go, depending upon the advice of the Department of Law. When the attorney general advised rejecting the petition, she followed suit. “I base all of my decisions using the advice of the Department of Law,” she said. Asked whether she had ever acted against that advice, she said no. In 1992, the only other time the Alaska Division of Elections has considered a recall petition against a sitting governor, the Department of Law hired independent counsel to avoid the appearance of a conflict of interest. In that case, Division of Elections director Charlot Thickstun approved a recall petition against then-Gov. Wally Hickel and Lt. Gov. Jack Coghill despite the advice of independent legal counsel Hal Brown, a former state attorney general. Thickstun said at the time that it was “patently inappropriate” to have the attorney general, “who is appointed by and serves at the pleasure of the governor,” appoint the independent counsel. After Thickstun approved the recall, the state sued itself: Attorney General Charlie Cole sought to have Thickstun’s decision overturned by the court system. “You cannot run a democratic government with the director of elections … setting off on a one-way frolic of her own,” he said at the time. Cole dropped the issue after others filed suit. Five cases were levied against the Division of Elections before a judge in Fairbanks ruled in 1993 that Thickstun was partially correct and the recall could continue. By then, backers had abandoned their cause, and both Hickel and Coghill finished their terms of office.

Dunleavy takes another crack at District M, taps Revak

Gov. Michael J. Dunleavy has appointed Anchorage Republican Rep. Josh Revak to an Alaska Senate seat left vacant by the August death of Chris Birch. The seat is key to the state’s ongoing debate over the Permanent Fund dividend, and the struggle to fill it has generated a historic amount of friction among Republicans. The governor announced the appointment Sept. 27. Revak’s appointment is subject to confirmation by the Alaska Senate’s 12 Republicans, and in a written statement, Senate President Cathy Giessel, R-Anchorage, said Republicans are determining a time to meet and consider the appointment. “It would be an honor to serve with them if they choose to confirm me,” Revak said by phone from Washington, D.C., where he was attending a reunion of his military unit. On Sept. 20, Senate Republicans failed to confirm the governor’s first choice for the vacancy, Rep. Laddie Shaw. It was the first time in state history that sitting Republicans declined to confirm a candidate nominated by local Republicans and picked by a Republican governor. The 6-6 vote on Shaw’s nomination, one vote shy of confirmation, was due to Senate Republicans’ ongoing disagreement over the Alaska Permanent Fund dividend. The six who voted no on Shaw either offered no comment when asked about Revak’s appointment or did answer their cellphones Friday. Shaw had voted in favor of a payment using the traditional formula in state law. Half of the Senate’s Republicans (and an 11-9 majority of the Senate overall) voted in favor of a smaller amount. One of the votes in favor of the smaller amount came from Birch. If he is replaced by a senator in favor of the traditional dividend formula, it would deadlock the Senate 10-10 unless another lawmaker changes his or her vote. Revak voted for a traditional dividend in the House this year. “I have a voting record on the dividend, but I haven’t spoken about it with the Senate,” he said when asked about the vote. Dunleavy also supports a traditional dividend payment. Speaking to reporters about Revak’s prospects for confirmation, the governor said, “We’re hopeful, just like we were with Laddie Shaw.” Like Shaw, Revak represents one half of the South Anchorage district Birch was elected to represent. Like Shaw, Revak is a military veteran and was first elected to the House last year. “He’s well-qualified, and we think he will make a good senator,” Dunleavy said of Revak. Shaw and House Minority Leader Lance Pruitt, R-Anchorage, offered their support for Revak in a written statement. “There is absolutely no good reason on this Earth that he should not be confirmed for this seat, and I look forward to calling him ‘My Senator,’” Shaw wrote. Revak was not one of the three candidates suggested to the governor by local party officials. Governors are not required to follow the wishes of local officials but traditionally have done so. Dunleavy press secretary Matt Shuckerow said by phone that because Revak has already been elected to the House after an endorsement by local officials, he has their support. “The governor feels that Josh Revak has won in the district, is a sitting representative, has been elected in the district and has been supported in the district, so in his eyes, it makes him one of the more qualified candidates out there,” Shuckerow said. Revak has previously worked as a staffer for U.S. Rep. Don Young, R-Alaska, and U.S. Sen. Dan Sullivan, R-Alaska, and both lawmakers offered him their congratulations Sept. 27. Revak said he learned Sept. 26 that Dunleavy would be appointing him to the seat. “This was very much a shock to me,” he said. “I didn’t realize I was being vetted for this. I was just sort of going about my daily life here and yesterday got a call from the governor’s office. “The governor called me and said, ‘Josh, I would like to appoint you to go through the process to fill the vacant Senate seat, and would you accept?’” Revak said. He said the governor did not ask about the dividend. On Sept. 27, he took time out from a bus tour of Mount Vernon, President George Washington’s traditional home, to watch the governor announce the pick. He said he has since spoken briefly with Giessel to offer her respect as Senate president and “let her know that I’m very much looking forward to sitting down with the senators.” If senators reject Revak, Dunleavy must name a replacement within 10 days of the rejection.

PFD continues to divide the GOP

On Sept. 19, Alaska Senate Republicans left a closed-door meeting in Anchorage and walked past Rep. Laddie Shaw, R-Anchorage, without a word. Shaw eventually got the news: Those Republicans had deadlocked 6-6, failing to confirm his appointment to a vacant Senate seat. The next day, the Alaska Republican Party’s central committee started a meeting in Fairbanks. Shaw was greeted by applause. The Republicans who had voted against him — and some Republican members of the House — were confronted by a resolution of disapproval. That measure failed narrowly. One year before the 2020 primary election, Alaska’s Republican Party is deeply divided on the issue of the Permanent Fund dividend, and that divide has effects that cover every Alaskan. Democrats are also split on the dividend, but they have a fraction of the power that Republicans do statewide. Last year, Alaskans sent 23 Republicans to the House of Representatives and 13 Republicans to the Senate, more than enough to secure majorities in each body and provide support for the agenda of Gov. Michael J. Dunleavy. But differences over the payment of this year’s Permanent Fund dividend prevented the creation of a pure Republican majority. The House is governed by a coalition that includes Democrats and independents. In the Senate, Republicans have named a Democrat their majority leader, and there are persistent speculation that it, too, could be governed by a coalition by the time the next Legislature convenes in January. “There’s no doubt that conversation has percolated up because of this impasse,” said Sen. John Coghill, R-North Pole, one of six senators who voted against Shaw’s confirmation. “I didn’t support (Shaw) because of the long-term economy of Alaska and how the PFD plays into it,” he said. Between 1982 and 2016, the state relied on a formula in state law to determine the amount of the Permanent Fund dividend. Starting in 2016, and every year since, the dividend has been set by legislative or gubernatorial fiat. In 2018, lawmakers agreed to cap the amount of money that can be taken from the Permanent Fund each year. That money might be spent on dividends or government services. This year, Coghill and a majority of legislators voted for a “surplus” dividend — an amount set determined by the amount of money left over after cutting the budget. Paying more, he said, would require violating the spending cap and overspending from the Permanent Fund, even though it contains enough money to do so. In the Senate, the vote for the surplus dividend was 11-9. In the House, Shaw voted with the minority in opposition. “I couldn’t support him because the Senate is so close on those issues, in my view, it would’ve been not a good thing for Alaska generally, and it certainly didn’t fit with the way the previous senator in the seat had it,” Coghill said. “It has become very clear that the position of either putting (the dividend) in the constitution or paying it out regardless of your ability to pay has become the main theme of many Republicans, and I don’t buy into that theme,” he said. Five other Republican senators — Senate President Cathy Giessel of Anchorage, Click Bishop of Fairbanks, Natasha von Imhof of Anchorage, Bert Stedman of Sitka and Gary Stevens of Kodiak — also voted against Shaw’s confirmation, but Coghill said he could only speak about his own reasons for voting no. Coghill said he does not believe the Senate is headed toward a coalition at this time. “That’s always a possibility, but guys like me are reluctant to split up the Republicans,” he said. Away from the Legislature, some rank-and-file Republicans have grown dissatisfied with the dividend positions staked out by Coghill, some of his Senate colleagues, and like-minded Republicans in the House. “We still get along, but I would say it is divisive,” said Carol Carman, a retired teacher and the Republican Party chairwoman of House District 9, which stretches from Valdez to Delta Junction. Before last week’s central committee meeting, Carman authored two motions. One was to censure Rep. Chuck Kopp, R-Anchorage, and Rep. Jennifer Johnston, R-Anchorage, for their role in creating a coalition House majority. The other was to partially censure the six no-voting senators and others in the House who failed to vote for the traditional dividend or support the governor’s proposed budget, among other matters. The second was presented by another person. Both motions failed, though the second failed in a closer vote than the first. State Republican Party Chairman Glenn Clary opposed censuring Kopp and Johnston, saying by phone that he believes such a decision should be up to district officials, not the state. That’s a change from prior practice. In 2016, under a prior chairman, the party pulled support from three Republicans who had joined the coalition. In this case, district officials opposed the censure, contributing to its defeat. Earlier this year, Rep. Gary Knopp, R-Kenai, who joined the bipartisan coalition, was censured by the party after district officials suggested it. “I’m doing my best to unify the party so we can move forward,” he said. Though Republicans are divided, he believes the situation in the state is improving rather than worsening. “What we need to do is repair relationships between all three bodies,” he said of House, Senate and the governor’s office. Carman agreed that should be the priority. “The only way we can back our governor and back the legislators who are backing our governor is to all unite,” she said.

Vetoes final with PFD session to come

Gov. Michael J. Dunleavy said he plans to continue to push for a Permanent Fund dividend calculated using the formula in state law. He also wants to keep cutting state spending, he said. “My plan is to continue to work at reducing this deficit as much as we possibly can, as soon as we possibly can,” Dunleavy said during a conference call with reporters Aug. 20, the day after he announced his final decisions on the state operating budget for the fiscal year that started July 1. Despite Dunleavy’s decision Aug. 19 to reverse a list of his prior vetoes, the governor said his budget plan moving forward remains the same: Cut state spending. “I’d like to get this issue of the deficit settled sooner rather than later,” Dunleavy said. The budget signed by Dunleavy this week formally has a surplus of $145.7 million, according to the state Office of Management and Budget. That takes into account a dividend reduced from the traditional formula and the draining of about $300 million from the state’s savings accounts: the Constitutional Budget Reserve and Statutory Budget Reserve. The traditional formula calls for a dividend of about $3,000 — costing around $1.94 billion total. The budget crafted by legislators and signed into law by Dunleavy calls for spending about $1 billion on the dividend, or about $1,600 per person. If the traditional formula is used to pay the dividend, there’s a deficit. If it isn’t, the deficit goes away. ‘There may need to be two checks’ In interviews on conservative talk radio shows earlier Aug. 20, the governor confirmed his intention to call the Alaska Legislature into a special session this fall to pursue a supplemental dividend payment above the amount already approved. He said he believes the upcoming 2020 election will put pressure on legislators, a majority of whom have refused to approve a $3,000 dividend. “There are a number of folks who don’t want to have an incomplete dividend hung around their necks,” Dunleavy told radio host Dan Fagan. Speaking to talk show host Michael Dukes, the governor said, “I believe in talking to some of the legislators that having the sole focus on the PFD will — not using a pun here, Michael — will return dividends.” On the radio and during the call with reporters, the governor said he intends to change his communications strategy and reach out directly to voters, in part because he is unhappy with news reports. Dunleavy announced his budget decisions Aug. 19 in a pre-recorded video, and he told reporters that the announcement was a “direct appeal to the people,” and his office will continue to do that. When it comes to the dividend, he told Dukes, he hopes the strategy switch will help convince legislators to change their minds on the dividend. “I am hoping the people of Alaska get agitated. I am hoping the people of Alaska really get on the phones and really start sending letters to their legislators,” Dunleavy said. Anne Weske, director of the Permanent Fund Dividend Division, previously said that any PFD payment in October must be finalized by the end of August. Given that, any additional payment would come later. “There may need to be two checks, one after another,” Dunleavy told Fagan. The Legislature and governor disagree about the dividend in large part because paying a traditional dividend — at current levels of state spending — requires violating a spending cap approved last year. Going above that cap increases the risk that the Permanent Fund will lose value, according to analyses by the Alaska Permanent Fund Corp. Some legislators have proposed a possible compromise: a change in the traditional payout formula in exchange for a one-time boost this year. Dunleavy said during the call with reporters that if people want to discuss “a potential statute change and constitutional amendment, we can have that discussion, but first and foremost we need to complete this incomplete dividend.” ‘The right thing to do at this time’ For months, state lawmakers have wrestled with the PFD and spending on services. The Legislature first cut $76 million from the state operating budget, according to figures from the Legislative Finance Division. Dunleavy then vetoed more than $400 million from that budget. The Legislature responded by passing a bill that added back most of that money. On Aug. 19, Dunleavy cut more than $200 million of those add-backs before signing the bill. Again, away went funding for Medicaid, the state court system and school bond debt, among cuts to other programs and agencies. Dunleavy agreed to restore other funding, but the majority of the cuts remained. Asked during the call about his reasons for cutting some programs and not others, Dunleavy said based on input from Alaskans and how late in the fiscal year final budget decisions were made “led us to conclude that adding money back into some of these areas would be the right thing to do at this time,” he said. “Our plan is, as we move forward in building a budget for the following year, is to engage a number of these organizations and groups early on this fall and have the discussion as to how they can assist by working together with us to lower the state’s footprint with regard to these programs and these services,” Dunleavy said. Dunleavy said that would also give groups more time to seek additional funding from other sources. Next year, the goal is to end the legislative session in 90 days, he said. That way, he said, “everyone has plenty of time to adjust to whatever budget realities will come out of this session.” What will this year’s PFD be? Though the governor and legislators have repeatedly mentioned a “$1,600 dividend,” this year’s payout has actually been estimated at $1,580, according to figures provided by Department of Revenue Commissioner Bruce Tangeman. That’s because the Legislature appropriated (and the governor approved) a set total amount for dividend payments, and that amount will be divided by the number of applicants. Legislators had estimated a slightly smaller number of applicants, leading the Legislative Finance Division to estimate a $1,597 payout on July 27. This is the first year since 2015 that the state budget does not set a specific amount for the dividend.

Legislature sends capital budget, $1,600 PFD and spending bills to gov

JUNEAU — The Alaska Legislature has approved legislation fixing the state’s four immediate fiscal problems, and now the final decision is up to Gov. Michael J. Dunleavy. On July 29, lawmakers passed two pieces of legislation that address this year’s Permanent Fund dividend, the governor’s operating budget vetoes, the capital budget and reverse sweep. • House Bill 2001 sets this year’s dividend at $1,600 per person and reverses all but $23.29 million of the $444 million in vetoes Dunleavy made to the state’s operating budget in June. The remaining vetoes include $20 million from the University of Alaska and travel reductions to many state agencies and departments. • Senate Bill 2002 funds the state’s capital budget with money from the Constitutional Budget Reserve and includes the “reverse sweep,” a procedural matter that prevents 54 state savings accounts from being automatically drained into the budget reserve. It also contains permission for the Legislature to spend $250 million from the Constitutional Budget Reserve on as-yet-undefined projects, such as wildfire fighting. The Legislature would be required to specify the spending at a future date. Legislation is not sent to the governor’s desk immediately when it passes the Legislature. Legislative drafters, lawyers and clerks first examine the bill before transmitting it to the governor. In addition, the leaders of the House and Senate have the final word on when a bill is transmitted, and they can hold on to legislation (though not indefinitely) before sending it to the governor. It remains unclear when the bills will be transmitted. “The Senate has every intent of getting the capital budget to the governor’s office as soon as possible,” Senate President Cathy Giessel, R-Anchorage, said by text message. “The money for roads, and funding for our UA scholars less than a month from classes starting, is too important, and will not be held up.” A spokesman for Speaker of the House Bryce Edgmon, I-Dillingham, was unable to answer questions before the end of the day on July 30. The current special session adjourns Aug. 6. According to the Alaska Constitution, if the Legislature is not in session, the governor has 20 days (Sundays excluded) to sign a bill, veto it, or allow it to become law without his signature, once it is transmitted to him. In a July 29 phone call with reporters, the governor said of the capital budget bill and reverse sweep that “we’re glad for that, and we’re glad because … it helps Alaskans.” The governor was less positive about the legislation setting the PFD amount and reversing many of his budget vetoes. In the same call, he referred to the bill as a “disappointment because the PFD was now taxed by almost 50 percent for every man, woman and child.” The governor has consistently maintained his view that the state’s budget should be balanced by cutting services and not raising taxes or reducing the dividend. In February, he introduced a proposal to do so in one year. He now believes that proposal should be implemented over two years. Even if the governor were to re-veto all of the budget items he vetoed in June, the state would not have a balanced budget if a full dividend were paid this year. The governor has said he will propose additional cuts next year.

Legislative leadership rejects Dunleavy’s call to Wasilla

JUNEAU — Two weeks before an anticipated special session in Wasilla, the leaders of the Alaska Legislature say they are rejecting Gov. Michael J. Dunleavy’s plans in favor of meetings in Juneau and Anchorage. In an emailed announcement June 24, Speaker of the House Bryce Edgmon, I-Dillingham, and Senate President Cathy Giessel, R-Anchorage, said, “The Alaska Legislature announced today it will convene in Juneau on July 8th for the 2nd special session, with the majority of meetings to be held in Anchorage.” While lawmakers lack the votes to change the special session agenda or timing laid out by the governor in a June 13 proclamation, the leaders of the House and Senate believe they can change the location away from Wasilla Middle School. The legality of such a decision is a significant question. “Really, a lot of this is gray area. It hasn’t been tested,” Edgmon said by phone. Article II, Section 9 of the state constitution says, “Special sessions may be called by the governor or by vote of two-thirds of the legislators.” State law implementing that section says in part, “The legislature may call itself into special session if two-thirds of the membership responds in the affirmative to a poll conducted by the presiding officer of each house.” Currently, fewer than 40 of the Legislature’s 60 members support a change to the governor’s agenda. All 15 members of the Alaska House Republican minority support it, as do at least six of the 10 members of the Senate who voted in favor of a traditional Permanent Fund dividend this year. State law also says the governor can designate a location for the special session. The constitution does not grant the governor that power, and Edgmon said the doctrine of separation of powers trumps state law in this case. “The Legislature is exercising its right to the location,” Edgmon said by phone. “Although we are one vote short of the 40-vote threshold to call ourselves into our own special session agenda, the majority of legislators in both bodies considers it our right to determine the location and venue best equipped to conduct business on the Governor’s special session call, while providing the most access to as many Alaskans possible,” Edgmon and Giessel said in their joint statement. The decision to keep the agenda and timing but not the location is making the governor and some lawmakers unhappy. “I feel like the Legislative leadership is pulling an end run to try to move the venue when they don’t have the votes,” said Rep. Colleen Sullivan-Leonard, R-Wasilla and co-chairwoman of the Legislature’s nine-member Matanuska-Susitna delegation. Hours before the statement from Edgmon and Giessel, the delegation had issued a press release welcoming the Legislature to the region. “I think we probably need an independent legal opinion on this. To arbitrarily challenge the governor … I don’t know legally they can do that,” Sullivan-Leonard said. In the Senate, Senate Majority Leader Mia Costello, R-Anchorage, is among the lawmakers in favor of a Wasilla session. She echoed Sullivan-Leonard’s concerns about legality and added, “Frankly, we have a trust problem with the public already, and I think we should follow the law.” The governor came within a step of calling the House and Senate leadership criminal. “The Senate President and Speaker of the House admit they lack the votes to change the venue or call a special session of their own, yet they are committed to thwarting the law and the voice of the Alaskan people. This is all part of why Alaskans have lost trust in their lawmakers. How can we with a straight face expect people to follow the law when the legislative leadership ignores, breaks, and skirts the law at every turn?” he wrote in a prepared statement. The issue of the Permanent Fund dividend is the sole item on the special session agenda envisioned by the governor and the session envisioned by the House and Senate leaders. The governor supports a dividend paid using the traditional formula in state law. The Legislature’s leaders — despite dissent from many of their members — do not. According to revenue projections for the fiscal year that begins July 1, the state does not have enough revenue to pay both a traditional dividend and spending at levels proposed by the Legislature. (The governor may cut the budget via the veto process, and a final decision is pending.) With tax increases off the table and sufficient budget vetoes unlikely, that means lawmakers and the governor must spend from savings in order to pay the traditional dividend. A majority of the House is opposed to spending from savings for the traditional dividend, as is half the Senate. The governor supports it, however, and he chose Wasilla, a hotbed of support for the traditional dividend.

Dunleavy launches ‘massive’ plan to cut state spending

JUNEAU — Alaska Gov. Mike Dunleavy on Wednesday unveiled his proposal to balance the state’s budget without new taxes and without a reduction to the Permanent Fund dividend. “This budget is going to impact all Alaskans. It’s too massive not to,” the governor said in a televised news conference from Juneau. The state released a trove of documents detailing his proposal on the state Office of Management and Budget’s website Wednesday morning. Initial figures released by OMB show the governor is proposing to spend $9.1 billion in the fiscal year that starts July 1. That figure does not include the Permanent Fund dividend. If the governor’s $1.9 billion in dividend spending is included, overall spending is near $11 billion. Last year’s budget, not including the dividend, was $10.9 billion, according to OMB figures. The dividend last year cost $1 billion. The governor had said he would cut the budget by $1.6 billion, but based on dividend-included figures, spending in his plan will be down less than that because of the boost to the dividend. Health care and K-12 education, the largest components of the state’s budget, are cut under the proposal. The Department of Education is cut from $1.66 billion to $1.34 billion under the governor’s plan. The Department of Health and Social Services is cut from $3.25 billion this year to $2.47 billion, according to figures from the Office of Management and Budget. One of the biggest duties of Health and Social Services is overseeing the federal-state Medicaid program, which provides health care to more than 210,000 Alaskans, according to the latest figures from the state. Of those, almost 48,000 are covered by Medicaid expansion by an executive order signed by former Gov. Bill Walker. Dunleavy will not reverse that order at this time, he said Wednesday, but the state will work with the federal Centers for Medicaid Services to adjust benefits, he and Arduin said. Medicaid spending, which stands at $2.27 billion, will be cut by $714 million, according to OMB figures. About one-third of that cut is state money; the remainder consists of federal dollars the state will forego, according to OMB’s analysis. State support for the University of Alaska is cut 45 percent, from $327 million to $193 million, but the university is granted the authority to raise additional money through tuition, grants or other sources to make up the difference if it can. Arduin said about 625 full-time state jobs would be cut under the budget, and if part-time positions are included, that figure is above 700. Those figures do not include cuts at the University of Alaska. The governor’s proposal must be vetted and approved by the Alaska House and the Alaska Senate before it becomes official. That process is expected to take several months, and the timeline may be lengthened by the House’s ongoing inability to elect a leader, a prerequisite to officially consider legislation. “We know this is just the beginning. This is the beginning of the journey for this budget,” Dunleavy said. Groups and agencies affected by the budget cuts are expected to spend Wednesday and the next few days examining the governor’s proposal to see how it would affect them.  

Dunleavy plans to release amended budget in January

JUNEAU — Gov. Michael J. Dunleavy’s full vision for Alaska’s budget will wait until January. In an interview with reporters before the start of the holiday open house Dec. 11 at the Governor’s Mansion in Juneau, Alaska’s new governor said he will use a modified version of former Gov. Bill Walker’s budget in order to meet a legal deadline. State law requires the governor to publicly release a budget proposal by Dec. 15 each year. “We’re going to roll it out probably on the 14th,” Dunleavy said. “It’s going to have some slight changes from what the governor (Walker) did because we need a little more time to actually put our stamp on it and spend some time working through the details with the different departments.” Dunleavy said the document coming this week will be amended “in January.” Office of Management and Budget Deputy Director Laura Cramer confirmed Dunleavy’s schedule as accurate. The governor said Alaskans should expect his budget will follow his campaign promises. “Public safety is job No. 1, making sure we have a balanced budget, putting our resources to work so we can get people back to work, and paying a full dividend,” he said. When it comes to a “full dividend,” Dunleavy confirmed that he means a dividend paid on the statutory formula and the repayment of portions of the dividend vetoed by Walker and cut by prior sessions of the Alaska Legislature. That proposal is expected to cost about $4 billion. Earlier in the day, Alaska Permanent Fund Corporation executive director Angela Rodell told the Daily News that she is planning for a $2.9 billion draw from the Permanent Fund next fiscal year. That amount was set by the Alaska Legislature last year as part of a plan for sustainable spending from the fund. “Everything about this administration is going to be about making things sustainable over the long term,” Dunleavy said, but Permanent Fund trustees have repeatedly warned about the dangers of withdrawing more money from the fund than called for under a “rules-based” approach. Earlier this year, they approved a resolution asking elected officials to keep within the rules, the better to allow investment officers to reduce risks to the state’s investments. Even staying within those rules carries some risks. In 2017, an independent analysis found that the fund stands a 50-50 chance of losing value and a significant chance of losing all of its investment earnings, which are held in an account unprotected by the Alaska Constitution. Speaking on other matters Dec. 11, Dunleavy said he will leave Alaska Dec. 12 for Washington, D.C. and meetings with President Donald Trump, the Secretary of the Department of Transportation, officials of the Federal Emergency Management Agency and other federal representatives regarding recovery efforts following the Nov. 30 Southcentral earthquake. “We’re still in the process of plugging in a few more appointments,” Dunleavy said of his itinerary. He said he has not yet named a new commissioner for the Department of Military and Veterans Affairs and is “still working over that particular appointment.”

Stability amid new adminstration at Permanent Fund Corp.

JUNEAU — New Alaska Gov. Michael J. Dunleavy has made sweeping changes to the management of state agencies since taking office Dec. 3, but in the first meeting of the Alaska Permanent Fund Board of Trustees since his term began, stability was the word of the day. “Stability is going to be critical,” said new Department of Revenue Commissioner Bruce Tangeman, who, along with Natural Resources Commissioner Corri Feige, took his seat as a corporation trustee Dec. 11 in Juneau at the start of the corporation’s regular quarterly meeting. Tangeman said that when it comes to the Dunleavy administration and the Permanent Fund Corp., “there’s no grand plan coming out of the gate.” No one at the corporation, whose headquarters is in Juneau, received resignation requests sent to more than 800 state employees by the new administration, and CEO Angela Rodell remains at the helm as she was under the Walker administration. The corporation also was not included in the administrative order issued by the governor last week. That order broadened the powers of the Office of Management and Budget, allowing it to absorb the budgetary machinery within various state agencies. During his campaign for governor, Dunleavy pledged to “pay Alaskans back the money owed to them after three years of dividend cuts.” Doing so would cost $3,733 per dividend recipient. Multiplied by the 593,000 recipients mentioned by interim dividend division director Anne Weske in October, the cost is $2.2 billion. Dunleavy also pledged to use the traditional dividend formula enshrined in state law, then put it into the Alaska Constitution. That formula would result in a dividend of just more than $3,000 in 2019, for a total of $1.8 billion. The $4 billion price tag for Dunleavy’s dividend plan would rise if there are more recipients. In an interview after his election win, the governor said he would look to the Permanent Fund — and specifically the reserve account that contains its investment earnings — to pay for the idea. That will require spending above and beyond the sustainable plan approved by Alaska legislators last year. According to figures presented Dec. 11 to the corporation’s board of trustees, the corporation will make $2.93 billion available to lawmakers for appropriation in the next fiscal year, which starts July 1. Rodell told the Daily News that so far, the corporation has not changed its expectations and is not planning to make more money available. We “need to see bills and legislation” before changing investments, she said. Earlier this year, the corporation’s board of trustees renewed their request for Alaska’s elected officials to abide by a “sustainable, rules-based approach” for spending from the Permanent Fund. Trustees have also requested the Legislature continue to provide inflation-proofing payments to the fund. In 2017, the Fund’s performance suffered when lawmakers briefly considered using the Permanent Fund to balance the state’s deficit and avoid a more politically difficult maneuver to spend money from the Constitutional Budget Reserve. The prospect of needing to come up with billions of dollars for the state treasury caused fund managers to pull money from longer-term investments into more liquid ones, hurting returns. Chief Investment Officer Marcus Frampton told trustees Dec. 11 that since lawmakers passed their sustainable-draw plan, the fund has been providing the state treasury with money on an installment basis rather than a lump multibillion-dollar sum at the start of the fiscal year. That allows the Permanent Fund to hold on to investments longer than it might otherwise, increasing earnings. “If you can keep an extra $100 million in the fund for nine months, it’s worth it,” Board of Trustees chairman Craig Richards said. The state treasury department has also allowed the Permanent Fund to vary its payments based on the needs of the treasury. When oil prices are higher than expected, it has delayed asking the Fund for money the Legislature appropriated. That allows fund managers to hold on to investments slightly longer. “If there were huge volatilities in the amounts, that could be really challenging to manage. I think that’s worth Revenue keeping in mind,” Frampton said.

Walker unveils budget; Dunleavy names budget director

Gov. Bill Walker unveiled the first “balanced budget” draft of his four-year term Nov. 26, but it will be up to Gov.-elect Mike Dunleavy to decide whether to implement it. Walker didn’t release exact numbers, but according to figures presented to the Anchorage Chamber of Commerce and in a spreadsheet released to the Anchorage Daily News, his budget appears to increase state spending by about $330 million for the fiscal year that begins July 1. That money would partially come from oil: The state is forecasting oil prices to average $76 per barrel during the current fiscal year, which ends June 30, and $75 per barrel next fiscal year. “Through over a billion dollars in cuts and the restructuring of the Permanent Fund and a little bit of relief on oil price, this year’s budget is a balanced budget, and that’s what we’ll be handing off in a week,” Pat Pitney, Walker’s director of the Office of Management and Budget, told Chamber members. It’s unclear how much, or if any, of the plan will be taken up by Dunleavy, who takes office Dec. 3. Under state law, the sitting governor is responsible for sending a budget proposal to the Legislature by Dec. 15. “Typically, they don’t stay the same, and that’s certainly appropriate,” Walker said. Walker isn’t the first governor to publicly unveil a budget before leaving office. Frank Murkowski did it in 2006. Incoming Gov. Sarah Palin promised to cut that proposal by $150 million, only to eventually sign an operating budget that increased spending and was the second-largest in state history at that point. Walker himself received a transition budget from departing Gov. Sean Parnell, who is now an adviser to Dunleavy. The governor’s budget proposal is always raw material for the legislative meat grinder. State lawmakers have their say on the budget and can take it in radically different directions from what was proposed by the governor. Walker’s announcement, given that Dunleavy will have his own opinions, amounts to a first draft of a first draft. And that’s before the real world enters the picture. When lawmakers ended their legislative session this year, they approved a budget of $11.2 billion. At the time, the Alaska Department of Revenue estimated that North Slope oil prices would average $63 per barrel and that production would average 526,600 barrels per day between July 1, 2018 and June 30, 2019. At those prices and production levels, the state was expected to have a deficit of about $693 million. So far, production has been only slightly below that estimate. Prices have been much higher, even with the recent dip. Through the end of last week, they’ve averaged $75.46 per barrel, more than enough to erase the deficit. “We will now expect a surplus,” said Sheldon Fisher, Alaska’s commissioner of Revenue, to the Chamber crowd. Walker is proposing to spend $230 million of that surplus on deferred maintenance projects across the state. He called it an effort to generate construction jobs and said that when combined with matching funds, it could generate as much as a billion dollars in economic activity. Other spending increases would go toward public education and public safety. In addition to oil, Walker and his advisers talked about the importance of Senate Bill 26, the Permanent Fund plan approved by the Legislature. That plan, signed into law earlier this year, calls for a regular transfer of money from the Permanent Fund’s investment earnings to the state’s accounts. That transfer can be divided between state services and a dividend however lawmakers wish. This year’s transfer was $2.7 billion. Next year’s will be $2.9 billion, thanks to the rising value of the fund. Walker is proposing an $1,800 Permanent Fund dividend, which would cost $1.17 billion. Dunleavy proposed a larger amount while campaigning for governor. “That will be a decision that the Legislature will have to make and the administration will have to make going forward,” Fisher said. Dunleavy taps consultant as budget director Donna Arduin is a little bit jet-lagged, but she’s ready to work. On Nov. 26, Arduin, president of the financial consulting firm Arduin, Laffer & Moore Econometrics, was one of four officials named by Gov.-elect Mike Dunleavy for his new cabinet. Arduin will serve as the director of the Office of Management and Budget. The other three appointments: • Jonathan Quick, chief of staff to Kenai Peninsula Borough Mayor Charlie Pierce, as commissioner of the Department of Administration. • Adam Crum, executive vice president of Northern Industrial Training, as commissioner of the Department of Health and Social Services. • Jason Brune, Cook Inlet Region Inc.’s senior director of land and resources, as commissioner of the Department of Environmental Conservation. The four follow the appointment of John MacKinnon as commissioner of the Department of Transportation and Public Facilities, Corri Feige for the Department of Natural Resources and Tamika Ledbetter for the Department of Labor and Workforce Development. As Arduin’s name was announced by press release, she was settling into a transition office six floors below the Juneau headquarters of the Office of Management and Budget. “I’ve done this many times before in other states. It’s what I’m passionate about,” she said of budget work. Arduin was living in northern Michigan when she got the call from Dunleavy, she said, and she was fewer than 48 hours removed from her arrival when the governor-elect announced her appointment. Arduin has a reputation as a budget fixer for Republican governors. She was deputy director of the budget for Michigan Gov. John Engler in the early 1990s, then joined New York Gov. George Pataki in 1995. Florida Gov. Jeb Bush named her his budget director after he won election in 1998. She moved across the country in 2003, becoming budget director for Gov. Arnold Schwarzenegger, but left that job after 11 months of shepherding the celebrity governor’s then-new administration. In 2005, she joined Arthur Laffer, an adviser to President Ronald Reagan, and created Arduin, Laffer & Moore Econometrics. Laffer is known as the father of supply-side economics. As a consultant, she has advised Republicans across the country, including Florida’s Rick Scott and Marco Rubio. In her various roles, she has favored libertarian and Republican approaches to fiscal policy, including broad tax and spending cuts. Her approach has garnered critics. In California, legislators were outraged by proposals to cut social services, and in Florida, the Sarasota Herald-Tribune published a detailed story in 2014 focused on controversial work performed by her firm. Talking Nov. 26, Arduin said she has worked all over the country, but Alaska has an advantage in that it is a relatively new state, and it is easier to change things. “Alaska has some unique opportunities to build some things anew,” she said. She said she is familiar with states that have drastic fluctuations in revenue, thanks to her experience with California’s income tax system. She said she wants to change the state’s “structural deficit” and provide fiscal stability. Summed up, that goal is straightforward: “Have predictability for dividends and those who rely on state money every year,” she said.

Deal struck on capital budget

The Legislature is headed back to Juneau. Don’t expect lawmakers to stay long. On July 27, the Legislature will convene what is expected to be a one-day special session to pass the state’s capital construction budget. “We have conducted a straw poll, and the 27th is the day,” Senate Majority Leader Peter Micciche said by phone Thursday. The capital budget funds road construction and building projects across Alaska, and most of its funding will come from the federal government, but it — like the state’s multibillion-dollar operating budget — was caught in the political divide between the Democrat-led House Majority and the predominantly Republican Senate Majority. An agreement between those two sides has now been reached. The Legislature failed to pass the capital construction budget before the July 1 start of the state fiscal year, and that failure has begun to have consequences. For example, the Alaska Department of Transportation has long planned a $40 million effort to rebuild nine miles of the Haines Highway. The project was supposed to go out to bid in late July, but with no capital budget, it hasn’t. Aurah Landau, a spokeswoman for the DOT’s Southcoast Region, said that if the Legislature delays the capital budget until July 27, the project will be delayed. Other projects have also been affected, according to a list provided by DOT. Those include the effort to replace the ferry Tustumena, and projects to renovate roads and bridges from Ketchikan to Fairbanks. During this year’s regular legislative session, the House passed one version of the capital budget; the Senate passed another Informal negotiations between the House Majority and Senate Majority have reached the harvest phase, and lawmakers will take formal action next week. “We wouldn’t risk coming down if we didn’t feel like there was a comfortable agreement,” House Minority Leader Charisse Millett, R-Anchorage, said by phone. She said her caucus was preparing to arrive in Juneau by the evening of July 26, ready to start work the next day. Under the Alaska Constitution, the approval of two-thirds of the Legislature is necessary to call a special session. Gov. Bill Walker could also call a special session, but he is required to give 30 days’ notice beforehand. If lawmakers call themselves into action, they can act more quickly. Micciche said allowing informal negotiations outside of session will allow lawmakers to conclude their work quickly next week. Unlike during the first and second special sessions this year, lawmakers will not be collecting per diem payments while waiting for a small group of negotiators to finish their work. “I think it’s a better operating philosophy, instead of being in special session, to do the one-dayer or two-dayer,” Micciche said. I think when we get to the end of the regular sessions, these remaining conference committee-type issues —it doesn’t require the entire Legislature waiting in Juneau doing technical sessions.” Details of the compromise capital budget have not been officially released, but legislators familiar with the compromise said it does not include a boost to the Permanent Fund Dividend. Members of the House suggested including money in the capital budget to raise the dividend to $2,200 per person, but that idea was rejected by the Senate. The agreement will also decide the future of funding for several Alaska megaprojects, including Juneau Access and the Knik Arm Bridge. Gov. Bill Walker has said the state will not advance Juneau Access, but funding for the road north out of Juneau has not yet been recommitted to other projects. According to an outline of the deal obtained by the Alaska Journal of Commerce, the capital budget will look a lot like the version that passed out of the House Finance Committee in mid-June. It is likely that half of the money remaining for the Juneau Access project will be reappropriated to other projects in the Lynn Canal area, as well as to fund a new school for Kivalina — a court-mandated project. Similarly, half of the remaining funds for the Knik Arm crossing are to be divided amongst the Kivalina school, state ferry maintenance and other highway projects, according to the draft budget deal. There is $5 million in state funds for the Knik Arm crossing and $47 million in Juneau Access funds available to be moved to other projects, according to DOT. The plan would use about $122 million from the Statutory Budget Reserve Fund, which has $288 million left in it. The agreement is also expected to determine how much money the state will spend on cashable tax credits to oil and gas explorers and small producing companies. It would add $20 million to the $57 million approved for oil and gas tax credit payments in the operating budget, bringing the total between the two to the statutory calculation of about $77 million, according to the outline. Last week the Legislature passed a bill immediately ending cash outlays for the credits, but the state still owes almost $1 billion in already-outstanding subsidy claims. Additionally, the deal would not pull any of the roughly $100 million the Alaska Gasline Development Corp. has to advance gasline projects. An amendment quietly added to the Senate’s capital budget — largely a political statement — would’ve pulled $50 million from AGDC for other state expenses. House Finance Co-chair Paul Seaton, R-Homer, said in May when the move was made that the AGDC money would be duplicative, as the programs it would’ve supported were already funded in early versions of the operating budget. Seaton also said his caucus did not want to pull the rug out from under the administration’s pursuit of the Alaska LNG Project by taking back the previously appropriated money. Contact reporter James Brooks at [email protected] Journal reporter Elwood Brehmer contributed to this report. He can be reached at [email protected]

Legislature averts shutdown, but more work remains

The morning after the Alaska Legislature averted a statewide shutdown, you could find more tourists than legislators in the Capitol. Though the Legislature’s second special session continues, work has all but stopped as lawmakers seek to decompress after months of budgetary debate and discussion. “I think that one thing that all of us in the Capitol can agree on is this has probably been the single most contentious legislative session that most of us have experienced,” Speaker of the House Bryce Edgmon said Thursday night. “I think we have more work to do. I think both sides understand that,” said Senate Majority Leader Peter Micciche, R-Soldotna, shortly afterward. “I think the Legislature needs to take some time off, cool down, come back together and work out solutions to the remaining issues that have to be dealt with this year.” Those issues include a capital construction budget and the state’s multibillion-dollar deficit. Despite five months of work, the Legislature passed no bill that addressed that deficit. Read the rest of the story here at JuneauEmpire.com.

Alaska Legislature averts shutdown with nine days to spare

With nine days to spare, the Alaska Legislature has averted a statewide government shutdown. At 1:04 p.m. Thursday afternoon, a joint House-Senate conference committee approved a compromise budget that funds state government past July 1 using savings from Alaska’s Constitutional Budget Reserve. The Senate voted 16-1 just before 9 p.m. to approve the deal, and the House followed suit, 31-8, just after 10 p.m. “This is very much a compromise budget, and that’s what we’ve been down here working on,” said Rep. Paul Seaton, R-Homer and House chairman of the conference committee. “No one got what they fully wanted. We had to concede; they had to concede, and we came up with this compromise package,” said Sen. Lyman Hoffman, D-Bethel and Senate chairman of the conference committee. Every vote against the budget was cast by a Republican who said they wanted to see greater budget cuts. “We just can’t keep spending money like this,” said Rep. Tammie Wilson, R-North Pole. “At some point, we have to cut back just like private business has done.” Even though the conference committee spent more than a month negotiating Thursday’s compromise, there was anxiety down to the final hours about whether enough members of the House Republican Minority would support the deal, which pays for the budget using the state’s Constitutional Budget Reserve. A three-quarters vote of the House and a three-quarters vote of the Senate is required to use that reserve, and the Coalition House Majority has only 22 members. In the end, even with Rep. Steve Thompson, R-Fairbanks, excused absent, nine members of the minority voted for the deal and the spending from the CBR. “I’m not going to try to destroy the budget to score political points,” said Rep. Dan Saddler, R-Eagle River. Gov. Bill Walker also must approve any compromise; he could veto it if he deems it incomplete. In a brief statement Thursday, he indicated that was unlikely to happen. “I am pleased the conference committee has compromised on an operating budget, which means we are one step closer to averting a shutdown of government services. Now, it is time to compromise on a fiscal plan,” Walker said in a brief prepared statement. Read the rest of the story here at JuneauEmpire.com.

Budget deal imminent

The Alaska Legislature is close to a deal to avert a statewide government shutdown, legislative leaders say, and an agreement could come as quickly as Thursday. “I think we, the Senate, should be done tomorrow. If it hits the floor, we’ll be done tomorrow,” said Senate President Pete Kelly, R-Fairbanks, in a Wednesday interview with the Empire. “I think tomorrow will be a good day. I’m anticipating we’ll be out of there by the weekend. I think we’re that close,” said House Minority Leader Charisse Millett, R-Anchorage, on the same day. In a brief hallway conversation, Speaker of the House Bryce Edgmon said he agrees with what Kelly said. Edgmon, busy in meetings and negotiations all day ─ members of the Senate Majority were seeing entering and leaving his office ─ did not have time for a more detailed conversation. “I couldn’t say we have an agreement between leadership yet. That just hasn’t happened,” Kelly said early Wednesday afternoon, but one appeared imminent. “I think you never know until you see a vote,” said Rep. Les Gara, D-Anchorage. “I would say that it seems like people are working with each other well.” The Legislature must approve a state operating budget before July 1, the start of the state’s fiscal year, to avoid a shutdown of state services. Read the rest of this story here at JuneauEmpire.com.

S&P puts Alaska back on credit watch negative

JUNEAU — A stopgap budget deal in the Alaska Legislature would avert a statewide shutdown, but it would still have consequences, a national credit rating firm warned June 20. In a new report, Andrew Little of S&P Global Ratings wrote, “If Alaska uses a significant amount of its reserves again and remains structurally imbalanced, we would likely lower (its) rating.” S&P is one of America’s “big three” institutional credit rating agencies. Just like your personal credit score, a higher rating means lower borrowing costs. Governments with better credit ratings are perceived to be at lower risk of default or delayed payments. In return, they tend to pay lower interest rates. In a prepared statement, Speaker of the House Bryce Edgmon said the Alaska Legislature “must do more than just pass the FY18 budget this year. We need new and more diversified revenues for Alaska.” The coalition House Majority led by Edgmon has continued to push for a long-term fix for Alaska’s $2.7 billion annual deficit, even as a government shutdown looms. The predominantly Republican Senate Majority, meanwhile, has said the Legislature’s priority should be a stopgap budget that uses savings to fund state services for one year. Members of the majority now say Alaska’s deficit is a problem for later. S&P’s report suggests it favors the House’s angle, if not its exact plan, for solving the deficit. “As noted in our prior reports, without structural fiscal reform in the 2017 legislative session, we would likely lower the state debt ratings,” Little wrote. As late as December 2015, Alaska had top marks from all three credit rating agencies. In January 2016, citing declining oil revenue and the lack of a fiscal plan, S&P lowered Alaska’s rating one notch. Moody’s Investment Services followed suit in February 2016, and Fitch Ratings in June 2016. Moody’s doubled down with a second downgrade in July 2016, but the other two rating agencies have not yet followed suit. According to a January 2017 presentation by S&P, 15 states have a AAA bond rating. Thirteen have an AA+ rating (the second-highest), and 13 have an AA rating (third-highest). Illinois has the lowest bond rating of any state, six steps below AAA. Gabriel Petek, the person in charge of S&P’s state ratings, wrote in an April column published by the Congressional newspaper The Hill that “U.S. states have entered a new era characterized by chronic budget stress.” Alaska isn’t alone in facing a credit rating crunch: Since January 2016, S&P has issued 11 state credit rating downgrades and just two upgrades, Petek wrote.

Alaska remains on course for statewide shutdown; second special session begins

After its first special session ended in failure, the Alaska Legislature is still searching for a way to avert a July 1 statewide government shutdown. On Monday, lawmakers are poised to renew debates on how to bridge a political gap between the coalition House Majority and the Republican-led Senate Majority. Gov. Bill Walker called both the House and Senate into special session on Friday, but after brief floor sessions, each body adjourned until Monday. Speaking to reporters Friday afternoon, Walker said he is confident that the Legislature can avert an economically catastrophic shutdown. For better or worse, however, the issue is largely out of his hands. Under the Alaska Constitution, the Legislature is the body that approves the state’s budget, and it’s the Legislature that must reach an agreement. “The worst thing we could do is have government shut down … and have even greater uncertainty out there than we have today,” Walker said. Walker does have the power to set the agenda for the special session, and his to-do list includes just one item: a state operating budget. Read the rest of this story here at JuneauEmpire.com.  

House ends special session with failed ‘Hail Mary’ on budget

It was a mic-drop moment on a trampoline. In a surprise Thursday night move, the Alaska House of Representatives attempted to avert a statewide government shutdown by forcing the Alaska Senate and Gov. Bill Walker to accept a take-it-or-leave-it deal. The Senate left it, and Alaska’s state government is now two weeks from shutting down. “Tonight was not an ideal end to the session,” said Speaker of the House Bryce Edgmon, D-Dillingham, shortly after the House adjourned. In a series of caucus-line votes, the coalition majority that runs the House inserted a version of the state operating budget, funded primarily with savings from the earnings reserve of the Alaska Permanent Fund, into the state’s capital construction budget. The House approved that combined budget and adjourned a special session called by Walker. With the House having left the special session, the Senate must accept the House’s version of things or reject it and end the special session with no deal. While the Senate took no official action Thursday night, Senate President Pete Kelly has left little doubt. In a statement, he said the Senate Majority is “deeply disappointed in the House Majority’s actions tonight.” In a series of caucus-line votes, the coalition majority that runs the House inserted a version of the state operating budget, funded primarily with savings from the earnings reserve of the Alaska Permanent Fund, into the state’s capital construction budget. The House approved that combined budget and adjourned a special session called by Walker. With the House having left the special session, the Senate must accept the House’s version of things or reject it and end the special session with no deal. While the Senate took no official action Thursday night, Senate President Pete Kelly has left little doubt. In a statement, he said the Senate Majority is “deeply disappointed in the House Majority’s actions tonight.” Find the rest of the story here at JuneauEmpire.com.  

Alaska lawmakers make small move toward averting government shutdown

JUNEAU — The Alaska Legislature will not call for the outsourcing of DMV licensing and administrative services to a private company. The decision came Tuesday as lawmakers took a small step forward in their effort to avoid a statewide government shutdown in the first week of July. Three Representatives and three Senators met in a brief conference committee to agree upon the budgets for the Alaska Department of Administration and the Alaska Department of Commerce, Community and Economic Development. The House and Senate have each approved different versions of the state’s operating budget for the coming fiscal year (which starts July 1), and the conference committee has been tasked with ironing out the differences. If the committee fails to complete its mission by July 1, state government will shut down. Separate negotiations are ongoing to determine how the state will pay for the budget being considered by the conference committee. “Two agencies have now been agreed upon completely,” said Rep. Paul Seaton, R-Homer and the House chairman of the conference committee. Senate President Pete Kelly called Tuesday’s action something that “could’ve been done back in April,” but said it’s something necessary if lawmakers have any chance of averting a shutdown. The most significant decisions Tuesday came in the budget for the Department of Administration, where conferees agreed to cut $442,600 from the department’s travel budget, reducing it to 2015 levels. The Senate had proposed the cut, citing the availability of teleconferencing. Conferees also agreed to remove a call for the state to “outsource administrative and licensing services to private sector business partners to the extent practicable.” That request had been made by the Senate. In the Department of Commerce, lawmakers approved a $50,000 grant to the Medallion Foundation, which aids aviation safety, and agreed to divert $15,000 in vehicle rental tax receipts to a seasonal position at the Tok Visitor Center on the Alaska Highway. Speaking during the meeting, Seaton said other departments’ budgets will come up quickly. “Expect that later this week. I do expect that we will meet again later this week,” he said. Once conferees agree on a compromise budget, it still must be approved by the House and Senate, and lawmakers must find a way to pay for it. • Contact reporter James Brooks at [email protected] or call 419-7732.

Walker pleads with Legislature for compromise

JUNEAU — A day after the Alaska House Majority rejected his compromise bid to avert a statewide government shutdown, Gov. Bill Walker said he still hopes that shutdown can be averted. “My message to legislators: If you can’t find further compromise in what I have presented, please, please develop your own compromise,” he pleaded during a June 6 press conference with the Capitol press corps. June 7 is the 21st day of a 30-day special session called by Walker to give the Legislature time to avert a statewide shutdown by agreeing upon a budget and a way to pay for that budget. The state’s fiscal year starts July 1. If lawmakers can’t reach a deal before that date, state services will all but end on Monday, July 3. Read the rest of the story at JuneauEmpire.com       • Contact reporter James Brooks at [email protected] or call 419-7732.    

House majority rejects Gov's fiscal compromise

In a bid to avoid a state-spanning government shutdown, Gov. Bill Walker on Monday proposed a compromise to bring the Alaska Senate and Alaska House together. Walker’s compromise was promptly rejected by the coalition majority that runs the House. That leaves the state on course for a July 3 shutdown that would paralyze state services and commercial salmon fisheries at the peak of the season. In an evening press conference, Speaker of the House Bryce Edgmon, D-Dillingham, said the governor is on the wrong track with a proposal that would slash the state deficit from about $2.7 billion per year to about $300 million per year. He said the House Majority is continuing to champion a strategy that eliminates the entire deficit within three years. Unless the deficit is entirely eliminated, Edgmon said, Alaskans will continue to worry about how it will be balanced and what will need to be cut to make the budget balance. Find the rest of the story at JuneauEmpire.com.

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