Lawmakers late Monday reached a compromise to avert a shutdown of Alaska’s government, but the deal fails to address the structural problems facing state government.
Lawmakers are expected to continue work on a long-term solution to those structural problems, caused by plunging oil prices. Without such a plan or an unexpected rebound in oil prices, the state will run out of savings as early as 2019, possibly leading the state into bankruptcy and ending the Alaska Permanent Fund Dividend program.
At 10:05 p.m. on Memorial Day, members of a joint House-Senate conference committee approved a roughly $4.6 billion compromise budget, a figure that includes both operating and capital construction funds. Roughly $3.2 billion of that budget would be funded the state’s Constitutional Budget Reserve savings account. Precise figures were not immediately available.
The state’s fiscal year begins July 1, and the entire Legislature must sign off on the budget before then in order to avoid a government shutdown.
“Everybody wishes it happened 40 days ago, but the calmer heads in the Legislature prevailed, I think,” said Rep. Les Gara, D-Anchorage and a member of the conference committee.
The figures presented Wednesday represent state “unrestricted general fund” (UGF) dollars, money that doesn’t come from earmarked funds or the federal government.
In the current fiscal year, the state is spending about $5.1 billion in UGF for operations. The governor proposed reducing that to about $4.5 billion, and preliminary figures show that lawmakers have settled on a figure just below the governor’s. The state’s expected capital construction budget will include another $100 million UGF.
Because using the Constitutional Budget Reserve requires three-quarters of the House and three-quarters of the Senate, the Democratic-led House minority had to approve any cuts.
Was there a sticking point?
“There was about four billion of them,” said Rep. Mark Neuman, R-Big Lake and co-chairman of the House Finance Committee.
“We knew it was going to be tough last year, and everybody said it was going to be tougher this year, and it was,” he said.
To get the support of the minority, Republican lawmakers had to reverse some of their planned cuts. The conference committee restored a scheduled $50 increase in the amount the state pays school districts per student. It restored $35 million in funding for the University of Alaska, leaving the university with almost the same figure the governor had requested ─ a $15 million drop from the current year.
The conference committee also restored funding for the Parents as Teachers program, pre-kindergarten, and Best Beginnings. Money was added back for senior benefits and disability benefits, as well as foster care programs.
“We didn’t get some of the cuts we would have liked to see, but the folks on the other side of the aisle didn’t get a lot of the things they wanted to see,” Gara said.
This is what our agreement is; now we’re going to have to talk to our caucus … and try to secure the necessary votes to get the three-quarter vote,” said House Minority Leader Chris Tuck, D-Anchorage.
Tuck predicted that the House could approve the budget by as early as 6 p.m. Tuesday.
That could come before a contractually obligated “pink slip” deadline that appeared to have pressured lawmakers into action Monday. Union-negotiated state employee contracts require at least 30 days’ notice of any layoffs. With a government shutdown on July 1, those notices would have to be mailed by 5 p.m. June 1.
“You don’t want those pink-slip notices going out,” said Sen. Pete Kelly, R-Fairbanks and co-chairman of the Senate Finance Committee.
Kelly and others said no one item made action possible on Memorial Day.
“I don’t know if it was anything specific; it was just a lot of give and take,” he said.
Kelly, Neuman and Rep. Dan Saddler, R-Eagle River, an attendee of Monday night’s meeting, each said they comprehend a great deal of frustration among the public about the slow pace of negotiations, but most Alaskans aren’t aware of the closed-door negotiations happening among legislators.
Neuman said he had been working since 7:30 a.m. Monday to make the 10 p.m. vote possible.
“This is the way it’s supposed to work,” Saddler said, explaining that the conference committee acts as a proxy for other members of the Legislature, and members must sometimes go lawmaker-by-lawmaker, office-by-office, to reach consensus.
Sen. Lyman Hoffman, D-Bethel and a member of the conference committee, cautioned that even though the Legislature seems to have reached a compromise for this year’s budget, its work is not over.
“I would impress upon the people of Alaska that there is work to be done and the major portion of our deficit continues even with the action that we are taking here today,” he said.
Sen. Anna MacKinnon, R-Eagle River and co-chairwoman of the Senate Finance Committee, agreed with his statement and said she believes lawmakers will stay in Juneau until they vote on a long-term fiscal plan.
“I am going to be here tomorrow. We are going to take up the governor’s bills, and we are going to advance them to the floor,” she said.
Contact Empire reporter James Brooks at james.k.brooks@juneauempire.com.
