House budget restores two offices in Wrangell

The Alaska House passed a version of the state operating budget Monday that would bring back the Department Fish and Game and Office of Children's Services to Wrangell, but the spending plan still needs Senate approval and the governor's signature before the two jobs could be restored.

Wrangell lost its children's service caseworker several years ago to budget cuts. The commercial fisheries office closed last year.

The Legislature tried last year to fund both positions, but Gov. Mike Dunleavy vetoed the appropriations. His spokesman said the fisheries managed out of the Wrangell office could instead be handled out of the larger Petersburg office "with no adverse impact on the fisheries."

The city offered to help cover the cost of reopening the children's service office in Wrangell in last year's state budget, but the Dunleavy administration turned down the offer.

The governor also declined to add the two jobs back to the budget he submitted to the Legislature this winter. The funding was added in the House Finance Committee by Ketchikan Rep. Dan Ortiz, who also represents Wrangell.

The House bill covers state spending for the fiscal year that starts July 1, with few changes of any significance from this year's budget. However, the measure does not appropriate money for this fall's Permanent Fund dividend. That decision could in come time for the May 19 adjournment deadline after negotiations with the Senate, or legislators could decide to separately deal with the dividend in an extended or special session.

Setting the amount of this year's PFD has become even more contentious than in past years as the state has mostly drained its traditionally more accessible savings account and the only option left for a large divided would be to withdraw more money from the Permanent Fund than allowed by law.

Legislative leaders have said a Permanent Fund dividend will be paid, though the amount is unresolved.

The budget is now before the Senate, and any differences between House and Senate versions would be settled by negotiators as part of a conference committee.

The House measure covers the operating budget for state agencies and public services. A separate budget bill for public works projects - new construction and maintenance - is expected from the Senate this week.

The budget process is playing out later than usual this year: Often the House, which traditionally makes the first run at reworking the governor's budget proposal, passes its version of the spending plan in March. But it took the closely divided 40-member House a month to organize after the session started in January. The bipartisan coalition in control of the House has the bare minimum needed for a majority, 21 members, which has slowed down the process.

Another delaying factor has been the more than $1 billion that Alaska will receive under the latest federal pandemic relief package. Federal guidance on use of those funds was released Monday, with legislators and the governor studying the rules to learn how - and how not - the state can spend the money, including plugging holes in the budget.

Dunleavy had proposed an initial spending plan for all of the $1 billion. The House version of the budget proposed spending 70% in the fiscal year that starts July 1. Both proposals came before the guidelines were issued and appear contrary to federal plans to send Alaska about $500 million this year and $500 million more next year.

Senate leaders have had different ideas for the relief aid, spending maybe just half this year, and Rep. Neal Foster, co-chair of the House Finance Committee, said he is comfortable taking the matter to a House-Senate conference committee.

Lawmakers last year largely ceded decision-making on a prior pandemic-related federal aid package to Dunleavy, and legislative leaders have said they want a greater say in how the dollars are spent this time around.

If the Legislature is unable to decide on a spending plan for the pandemic aid by the May 19 adjournment deadline, they could vote to extend their work or the governor could call them into special session. That could be separate or in addition to a special session on the PFD, if lawmakers are unable to settle that spending item by May 19.

Dunleavy spokesmen Turner said by email there were "ongoing discussions" with lawmakers about how to pass the budget by May 19, and whether a special session would be needed to "resolve the ongoing debate about the future of the Alaska Permanent Fund" and the dividend.

Dunleavy has proposed a series of constitutional amendments, setting a new formula for the dividend, prohibiting any new taxes without voter approval, and a spending limit. He has supported paying a dividend in line with a decades-old calculation until the formula is changed.

Under the 1980s' formula, this fall's PFD would exceed $3,000, but that formula was last used in 2015 amid an unrelenting state budget deficit.

In 2018, lawmakers began using Permanent Fund earnings, typically used to pay only dividends, to also help pay for public services, creating tension that has yet to be resolved.

The dividend in past sessions has overshadowed other issues. Coming into this session, a number of lawmakers considered the dividend a key issue that needed to be addressed.

Focus on that issue earlier on this year was derailed by the federal relief money and the lateness with which the House organized, said Senate President Peter Micciche, of Soldotna.

"I have not in any way lost hope that we can get together on a sustainable future path for the Permanent Fund dividend," Micciche said. Whether that happens before May 19 "is my only area of doubt at this point," he said. "It has to be done this year. "

House Speaker Louise Stutes, of Kodiak, said one topic of conversation with Dunleavy has been a possible special session to deal with the dividend. But she said nothing has been finalized.