A budget debate has brought the state to within a week of the start of the new fiscal year and the risk that state agencies could close on July 1 if the governor and legislators cannot settle the dispute.
The battle between the governor and lawmakers is whether the budget adopted by the House and Senate last week is valid and can go into effect on July 1. Several legislative leaders generally say yes, it probably is OK, but the governor says no, he cannot sign the budget bill as approved.
Gov. Mike Dunleavy has taken a two-option approach to settling the issue.
He called the House and Senate back into another special session, which started Wednesday, to approve an effective-date provision that he says is needed for state spending to start on time with the new fiscal year.
Legislators could take action by the weekend or early next week to resolve the dispute with the governor, although that would require rounding up the required number of votes, along with compromises on related and unrelated issues that often clog up end-of-session politics.
Separately, the governor instructed his attorney general on Monday to go to court for an answer as to whether the effective-date provision is needed to start spending money.
House Republicans refused to approve the effective date for the budget last week citing, among other grievances, that the spending plan does not include a large enough Permanent Fund dividend for this fall. Without their votes, the provision failed as the Democratic-led majority caucus lacked the two-thirds supermajority required for the effective-date section of the bill.
The Senate managed to win enough votes to approve the provision before it adjourned last week.
Rather than go to court to find an answer, the governor should work to convince House Republicans to vote for the provision during this week’s special session, House Speaker Louise Stutes said in a prepared statement Tuesday.
Dunleavy spokesperson Corey Allen Young said the governor “does not intend to insert himself in the legislative process.”
Stutes said precedent shows the effective-date issue should not shut down the government. However, Cori Mills, a deputy attorney general, said previous legal opinions that have been cited involve circumstances that don’t exactly match the current situation.
Dunleavy last week called the budget “defective.”The state sent notices were to thousands of state workers warning of possible layoffs on July 1 if the issue is not resolved.
House Republicans, who said they have felt marginalized and want to be included in talks on what pieces should be considered as part of a long-term state fiscal plan, take responsibility for their votes, House Minority Leader Cathy Tilton said last Friday.
In addition to approving a budget, Dunleavy had called the special session that ended last week so that legislators could consider his proposal to put the dividend into the state constitution under a formula that would just about double the size of the annual check from the average of the past 10 years.
Lawmakers considered the governor’s proposal but took no action.
Many lawmakers said they would prefer a full-fledged debate on the dividend later this year alongside other pieces of a possible fiscal plan. Dunleavy has already called a special session for August on issues including new revenues. The state has used savings more than half of the past 30 years to cover the budget.
Separate from the dispute over the effective date of the budget, many lawmakers, in particular many in the House Republican minority — and the governor — are dissatisfied over the size of the dividend in the spending plan. They believe it should be larger.
The budget written by House and Senate leaders provided for an $1,100 PFD this year, but opponents of that amount withheld their votes for a budget provision that would have covered half of the dividend from other savings. Although they want an even larger payment to Alaskans, their votes against the funding provision left the dividend at $525.
In addition to reducing the dividend, the failure to gain a three-quarters majority in both chambers to draw on savings jeopardizes state funding for student college scholarships and subsidies for electricity costs in rural communities.
Senate leaders insisted work would continue toward trying to win the votes needed for at least an $1,100 dividend. Lawmakers could fund a larger PFD during the special session that started Wednesday, or do so when they meet again in August. The payments are processed at the end of September.
During last week’s budget debate, Sen. Natasha von Imhof, an Anchorage Republican, gave a fiery speech outlining potential fallout if a budget were not passed with the start of the new fiscal year looming July 1. She referred to the $1,100 dividend in the budget, adding that Alaskans also received federal aid checks over the past year to help ease the financial impacts of the pandemic.
A focus should be on reinvigorating the economy through year-round jobs, she said.
“But, no, here we are ... debating a dividend. The greed and the entitlement is astounding to me. I just don’t fathom it,”she said. “My father is at home dying of cancer, and I am here, listening to the biggest crock of crap I’ve ever heard.”
Sen. Bert Stedman, a Sitka Republican and one of the budget negotiators, said the proposed $1,100 dividend reflected what the state could afford without overdrawing the Permanent Fund and weakening the state’s main savings account for generations to come.
This story includes reporting by the Associated Press.
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