For the third straight year, state employees are being warned about a looming government shutdown and the potential for mass layoffs.
Lawmakers in Juneau appear to be at an impasse on the budget. They’re halfway through a 31-day special session and are cutting it close to their deadline to negotiate a budget for the state.
If they don’t have it figured out before July 1, thousands of state employees will be laid off and state business will grind to a halt.
Gov. Bill Walker’s administration sent out 18,000 notices on Thursday, warning state employees that they could be laid off if lawmakers don’t come to a compromise.
Kate Sheehan, who heads the state’s division of personnel and labor relations, said there are critical positions that the state can’t function without, so some people are still going to have to go to work.
“But the decision as to who will actually report to work if there is a shutdown has not yet been made,” Sheehan said.
In 2015, the state sent notices to some employees that they could be laid off. The legislature had a budget plan, but it wasn’t fully funded.
Then, in 2016, the state printed thousands of letters, but didn’t send them after lawmakers reached a compromise.
“So, like I said, it’s a little bit unprecedented where we are now, without having a budget at all,” Sheehan said.
And because there’s never been a shutdown in Alaska, Sheehan said her department is getting a legal opinion on who can come back to work and who can’t.
Among the thousands of state employees who got notices today, is the team of people who manage the state’s Permanent Fund Corporation.
The fund has been at the center of the budget debate this year. Lawmakers have been trying to figure out how to fill a $2.5 billion hole in next year’s budget that opened after oil prices crashed.
“There doesn’t seem to be any debate about whether or not the Permanent Fund should be used,” Permanent Fund Corporation CEO Angela Rodell said. “It’s more about how much of the Permanent Fund should be used.”
Rodell said the funds investments could be automated.
“… in other words, you just put on the money and let the computer decide the asset allocation, and there’s a standard passive index fund,” Rodell said.
But that could have a real impact on how much money it brings in. Rodell said employees at the corporation have added an additional $4.1 billion to what the fund has brought in over the last five years.
“So I am hopeful and I am confident that the legislature will reach an agreement prior to July 1, but I do, I do worry,” Rodell said. “I do worry about what the potential cost of inaction or slow action yields.”
Walker put out a statement on Thursday saying that mass layoffs could affect both the public and private sectors of the economy as people who process everything from fishing permits to driver’s licenses and record home sales would be forced to stop working.
Walker said lawmakers in the House and the Senate have asked for one more day to reach a solution.
Correction: An earlier version of this story listed the length of the special session as 30 days. Special sessions are 30 days, not 31. Regular Sessions are 121 days not 120.
Rashah McChesney is a photojournalist turned radio journalist who has been telling stories in Alaska since 2012. Before joining Alaska's Energy Desk, she worked at Kenai's Peninsula Clarion and the Juneau bureau of the Associated Press. She is a graduate of Iowa State University's Greenlee Journalism School and has worked in public television, newspapers and now radio, all in the quest to become the Swiss Army knife of storytellers.
