House Speaker Rep. Louise Stutes, R-Kodiak, left, and House Finance Committee co-chair Rep. Neal Foster, D-Nome, speak with reporters at the Alaska State Capitol on Thursday, May 20, 2021. The Alaska State Legislature worked until past midnight Wednesday on the state's budget bill which will now be negotiated in committee. (Peter Segall / Juneau Empire)

Budget bill goes to committee for deliberation

Senators, Representatives to negotiate next week

The Alaska Senate passed a budget bill Wednesday night, 40 seconds before midnight, the end of the Legislature’s regular session. The budget was largely in line with what was proposed by Gov. Mike Dunleavy late last year, said Senate President Peter Micciche, R-Soldotna, except for the $2,300 Permanent Fund Dividend approved by the Senate.

The budget will be sent to a bicameral conference committee which will negotiate changes in the bill that then must be approved by both bodies. Micciche said he hopes the process is finished before the end of the month.

In a meeting with reporters Thursday morning Micciche said he was pleased with the previous day’s outcome, and said despite conflicts early in the day senators came together to pass the budget 17-3. Sens. Donny Olson, D-Golovin; Scott Kawasaki, D-Fairbanks; and Lora Reinbold, R-Eagle River, voted against the budget.

Senators passed the budget but the House of Representatives voted against concurrence, meaning the budget now goes to a bicameral conference committee. Each body will select representatives for the committee which will negotiate changes in the bill. Changes must then be approved by a vote of two-thirds of each body.

House Speaker Louise Stutes, R-Kodiak, and House Finance Committee co-chair Rep. Neal Foster, D-Nome, told reporters Thursday morning caucus meetings would happen later in the day and discussions on representatives for the committee after that.

“We’ve been working well with the minority,” Stutes said. “(Rep. Cathy Tilton, R-Wasilla)” has indicated the minority is anxious to work with both bodies to come up with a sustainable solution.”

Foster said it generally takes at least two days for staff to find the differences in the versions of the bills but he hoped the committee could begin over the weekend. Stutes, Foster and Micciche all declined to speculate what in the budget might change in negotiations but there were disagreements in the Senate over the size of the PFD.

In fact, the Senate was scheduled for 10:30 a.m. Wednesday but didn’t get to the budget until after 5 p.m. after divisions in the Republican majority kept lawmakers in caucus almost all day. Micciche said Thursday he began the previous day not knowing if there were enough votes for even a simple majority, but after significant negotiation senators were able to vote overwhelmingly in favor of the bill.

“The Senate came across as a team, more than the budget. I’m proud we came through with 17 (votes),” Micciche said.

But before the Senate reached 17 votes for the budget, there were several amendment votes on various amounts for the PFD. The House’s version of the budget didn’t include a PFD appropriation, and on Tuesday the Senate Finance Committee added a $1,000 PFD to the budget.

[Senate votes for $2,300 PFD, but the amount could change]

For years several lawmakers, including Gov. Mike Dunleavy, have been adamant about allocating a dividend based on a formula in state law but last week the governor said at a press conference he was willing to back away from that demand. Dunleavy was flanked by a number of Republican lawmakers at that conference, some of whom had previously been strong advocates of the statutory PFD. But support PFD spending doesn’t fall along party lines and Sen. Bill Wielechowski, D-Anchorage, submitted an amendment Wednesday for a statutory dividend of $3,400.

That amendment failed 10-10, not enough to pass.

Senators voted 12-8 for a $2,300 PFD, or 50% of the maximum statutory percent of market value draw from the Alaska Permanent Fund, but that’s still more than is allowed under state law. Republican Sens. Click Bishop, Fairbanks, Bert Stedman, Sitka; Gary Stevens, Kodiak; Natasha von Imhof, Anchorage and Josh Revak, Anchorage and Democratic Sens. Lyman Hoffman, Bethel, Jesse Kiehl, Juneau, and Donny Olson, Golovin, all voted against the amendment.

The law limiting how much the state is able to draw from the Earnings Reserve Account of the Permanent Fund can be waived, but lawmakers of all stripes are opposed to overdrawing that account, citing negative impacts on future earnings. Micciche refused to speculate Thursday if the PFD amount would come down in conference committee but noted the change in attitudes toward the statutory formula was significant.

The governor called two special sessions for lawmakers to address the state’s structural deficit, one beginning Thursday morning and lasting for 30 days. Another 30-day session is called for Aug. 2, and Micciche was emphatic lawmakers were not yet ready to address the deficit issue.

Dunleavy has proposed three constitutional amendments he says will help set the state on a better fiscal path, but the specifics of those amendments are likely to change in the Legislature. Furthermore, any constitutional amendments must be approved by a vote of the people.

Micciche told reporters Thursday he was encouraged by the administration’s willingness to work on the issue but said he was concerned Dunleavy’s plan required new revenues but didn’t propose any.

“The administration recognizes 50-50 causes a hole,” Micciche said. “I don’t want it to seem like magic dust I want to see a bill number.”

There’s support for new revenue measures like broad-based taxes, Micciche said, but it would take time to figure out any kind of proposal. Lawmakers should return to their home districts and consult with constituents while conducting committee work remotely, he said, as to be more prepared for the August session.

“Most of the work will occur at the (Finance Committee) table,” Micciche said. “When we arrive in August we will be arriving to vote.”

House leadership made similar statements Thursday morning.

“We’re taking it one day at a time, we all are working towards having a sustainable plan moving forward,” Stutes said of work during the special session. However, Stutes did note that several lawmakers had already taken their leave.

It might be good for lawmakers to take a bit of a breather, Foster said, and most of the initial work on the amendments will be done by finance committees. It was possible, he said, that lawmakers take a week or more to go home and then return for the final week of the May session but said there were still a lot of unkowns.

“Everything is happening so fast,” Foster said.

• Contact reporter Peter Segall at psegall@juneauempire.com. Follow him on Twitter at @SegallJnuEmpire.

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