As budget debate draws out, a deadline for state layoff notices approaches

Gov. Mike Dunleavy delivering his first State of the State address to the Alaska Legislature on Jan. 22, 2019. He’s flanked by Senate President Cathy Giessel, R-Anchorage, and House Finance Co-Chair Neal Foster, D-Nome, who was then serving as temporary House speaker. Dunleavy, the Senate and the House all have different proposals for permanent fund dividends, which could prove to be a problem as the June 3 deadline to notify state workers of potential layoffs approaches. (Video still from Gavel Alaska)

Alaska legislators are hoping to avoid layoff notices for state workers before a June 3 deadline. But it’s not clear that they’ll be able to resolve differences over Alaska Permanent Fund dividends by that date — or in time to avoid a state government shutdown on July 1.

The Legislature is more than a week into a special session to resolve differences over the budget and other issues. The House of Representatives agreed to changes to a major crime bill, and the Senate is set to consider these changes next week. But progress has been slow on PFDs.

Both House Speaker Bryce Edgmon, a Dillingham Independent, and Senate President Cathy Giessel, an Anchorage Republican, want to avoid layoffs.

Giessel said legislative leaders are talking with Gov. Mike Dunleavy about the dividend.

“We are still in discussions with the governor trying to reach a conclusion to that,” she said. “It is not our intention that any teachers, troopers or truck drivers get pink slips this year. There’s no reason for it. We need to reach agreement with the governor, and that’s what we’re endeavoring to do.”

Dunleavy spokesperson Matt Shuckerow said the governor hopes to have the budget resolved in time, and the governor’s office is focused on getting a budget in place. As for details about how layoff notices would be handled, Shuckerow said that “that’s not information that’s publicly out there” at this point.

Gov. Mike Dunleavy’s Press Secretary Matt Shuckerow answers reporters’ questions after a briefing in the governor’s cabinet room in the Capitol in Juneau on March 21, 2019. (Photo by Skip Gray/360 North)

Teachers and other school employees also don’t know if they will face layoffs, but the cause of their layoffs would be somewhat different than it would be for state workers.

The Legislature and Dunleavy’s administration disagree about whether education funding for next year, included in a law passed last year, is valid. Alaska Attorney General Kevin Clarkson issued an opinion that the Legislature couldn’t fund schools a year ahead of time, considering that the state government didn’t have the cash on hand when the law was enacted.

Edgmon said school employees shouldn’t be worried about receiving layoff notices. That’s because he feels the funding for two years in one bill is a well-established practice.

“Well, they absolutely shouldn’t be,” Edgmon said. “The Legislature appropriated the money for (fiscal year) ’19 and (fiscal year) ’20, and we stand firmly behind the fact that that money was appropriated in a manner that the Legislature has been doing for many years.”

Shuckerow noted that it’s school districts’ responsibility to issue layoff notices to employees. But it’s not clear who would inform districts of their responsibility to issue notices when the Legislature and administration disagree about whether school funding has already been passed.

The school funding issue may be resolved in court, since both sides are relying on contrasting legal interpretations.

There are also different positions on PFDs.

House majority caucus leaders have said they support a dividend of roughly $1,600, which was the amount last year and would require a roughly $250 million draw from state savings accounts like the Constitutional Budget Reserve.

The Senate included in its version of the budget a dividend of roughly $3,000 under the formula established in state law in 1982. But the Senate budget doesn’t say how it would pay for about $1.2 billion of the budget.

Dunleavy has said he would veto a budget that didn’t include the full statutory dividend of $3,000. He proposed $1.6 billion in cuts and tax transfers from municipalities.

But lawmakers have proposed much lower cuts and haven’t advanced the tax transfer bills. Members in both chambers have expressed concern about the long-term effects of drawing more from permanent fund earnings to pay for dividends than was laid out in a law passed last year.

Rep. David Eastman, R-Wasilla, speaks during a House floor session, March 11, 2019. (Photo by Skip Gray/360 North)

There’s a new House Finance Committee proposal for a full dividend this year, but it would also change state law to have lower dividends in the future. The proposal was opposed by nearly all Alaskans who provided public testimony on Thursday morning.

David Hurn of Wasilla was among the opponents to reducing the dividends.

“I’m sick of your socialist propaganda surrounding the PFD,” Hurn told committee members. “It’s not yours.”

Wasilla Republican Rep. David Eastman has introduced a separate measure, House Bill 1002, focused solely on paying the full dividend this year. Most of those who mentioned the bill in public testimony supported it.

The committee continued to take public testimony Thursday night.

Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at

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