Sen. Bert Stedman, R-Sitka, spoke to the Empire on Monday, June 14, 2021, about the final budget proposal for the state which he helped craft. Some lawmakers said they felt bullied by the budget’s contents. (Peter Segall / Juneau Empire)

Sen. Bert Stedman, R-Sitka, spoke to the Empire on Monday, June 14, 2021, about the final budget proposal for the state which he helped craft. Some lawmakers said they felt bullied by the budget’s contents. (Peter Segall / Juneau Empire)

Lawmakers decry ‘bully tactics’ in budget proposal

PFD still at the center of division

The proposed budget released by a legislative committee Sunday got strong pushback from lawmakers, throwing into question whether there are enough votes for it to pass.

The proposal allocates a Permanent Fund Dividend of $1,100 but splits the funding sources for the payment so that two votes are required for the full amount.

One of those fund sources is the Constitutional Budget Reserve of the Alaska Permanent Fund which requires a three-quarter vote in both bodies to access, or 15 Senators and 30 Representatives. Neither body has a caucus that can muster enough votes and reaching the high threshold typically involves negotiations.

[Lawmakers reach tentative deal on budget, dividend]

Alaska uses an accounting mechanism known as “the sweep,” which at the end of each fiscal year empties certain state accounts into the CBR. Without the three-quarter vote to reverse the sweep, several critical state programs, such as the Power Cost Equalization and the Alaska Performance Scholarship, will remain unfunded. In that scenario, the PFD amount would also drop down to $525.

The budget bill passed by the Senate included a PFD of $2,300, following a formula currently being advocated by the governor. But that amount would require an overdraw on the Earnings Reserve Account of the Permanent Fund, which several lawmakers of both parties strongly oppose.

Many Republican lawmakers and the governor have stepped away from a demand the dividend be paid according to a statutory formula, and offered the $2,300 amount as a compromise. Lawmakers opposed to overdrawing the ERA had already proposed a dividend of roughly $1,000 in an earlier version of the budget.

Not long after the committee’s proposal was released lawmakers from both parties took to social media to condemn the tactics. On Facebook, Rep. Garan Tarr, D-Anchorage, called the move “manipulation” and said it was disappointing lawmakers had not consulted with the Republican minority in the House.

“Since the House Republican Minority has been working closely with (Gov. Mike Dunleavy) all session I won’t be surprised at all if they do not give the three-quarter vote, leaving the piddly $500 PFD, and then (Dunleavy) will veto it to try and force the legislature to actually do our job and address this in the August Special Session.”

Dunleavy himself voiced his disappointed, saying in a Twitter post, “once again the PFD is a political football subject to the whims of politicians. This is further proof we need to protect the PFD within AK’s constitution.”

Big Lake Republican Rep. Kevin McCabe, posted an image to Facebook Monday reading “Bring. It. On” with a background of skulls.

House Minority Leader Cathy Tilton, R-Wasilla, said on social media she would not capitulate to bully tactics, and that the committee report was ignoring the wishes of one of the fastest growing regions of the state.

“I have no desire or intent to shut down state government, but I also have no desire or intent to let other regions of the State hold us hostage,” Tilton said, adding that she and other Republican lawmakers were willing to negotiate.

Sen. Bert Stedman, R-Sitka, co-chair of the Senate Finance Committee and one of the members of the conference committee, said the committee funded the state’s capital budget almost exactly as requested by the governor and had allocated as much for the dividend as possible after doing so.

But Stedman said there were members of the Legislature that wanted to end the PCE program, which was something he and several other lawmakers refused to support.

“There is a significant group within the Legislature that wants to not support a reverse sweep,” Stedman said Monday in an interview with the Empire. “They want to liquidate PCE, and they’re playing rural basic energy against the dividend.”

Stedman said Alaska’s other regions such as the Railbelt have received billions in subsidies for their power, much of which comes from physical assets like dams, which can’t be easily removed. Ending the PCE program was not just bad policy, he said, but could lead the state into litigation.

“We need to move past that issue,” Stedman said of ending the PCE program.

Once lawmakers pass the budget, it must be signed by the governor who can veto certain items as he did two years ago. The governor’s office previously told the Empire if the budget is passed by June 18, the administration will be able to sign the document before automatic layoff notices are sent to state employees.

Both bodies are scheduled to meet at 10 a.m. Tuesday but have until the official end of the special session on Friday to pass a budget. If lawmakers don’t pass a budget, several state programs will remain unfunded until they do, either in the second special session scheduled for August or an entirely new special session.

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

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