Bruised feelings and fiscal trouble leave Alaska on the verge of another budget deadlock

Gary Stevens
Senate President Gary Stevens, R-Kodiak, listens to Senate Rules Chairman Bill Wielechowski, D-Anchorage, and Senate Majority Leader Cathy Giessel, R-Anchorage, during a floor session on Thursday, May 11, 2023. (Photo by James Brooks/Alaska Beacon)

The Alaska Senate is scheduled to begin debate Monday on a take-it-or-leave-it spending plan that represents the state Legislature’s last chance to finish its work by the end of the 121-day regular session.

“There is still time for us to continue to work with the other body as we continue to negotiate our way out of the session,” said Sen. Bert Stedman, R-Sitka and co-chairman of the Senate Finance Committee.

If the Senate advances the $6.2 billion budget as planned, the state House will be forced into a straight up-or-down vote on Wednesday, the last day of the regular session under the time limit in the state constitution. 

A ‘yes’ vote by the House may avoid the need for an immediate extended session, but that’s not certain. Procedural hurdles could disrupt even a successful vote.

Voting ‘no’ guarantees a special session called by Gov. Mike Dunleavy or — less likely — a 10-day extension of the regular session. 

Even if lawmakers finish work on Wednesday, Dunleavy has indicated that he may call them back into special session later this year for work on a long-term plan to bring state spending and revenue into balance.

For the moment, however, the focus is on the budget that pays for services in the 12 months that begin July 1. 

Every year since 2016, the annual legislative session has ended in an argument over the proper size of the Permanent Fund dividend, and this year is no different.

That wasn’t an inevitable outcome.

At the start of this legislative session, the Senate began work under a new bipartisan majority that includes 17 of 20 state senators. The House began work under a new, predominantly Republican, coalition majority, and almost half of the House’s 40 members are new this year.

Those changes offered some hope that the session’s outcome would be as different as the people in the building.

That hope was small, and a diminished oil price estimate in March snuffed it out. 

The estimate was released just before the state House approved a draft budget that contains a Permanent Fund dividend of $2,700 per recipient. At a total cost of $1.7 billion, it’s the largest single item in the House proposal.

It’s also unaffordable under the new price estimate — at present levels of spending and taxation — without spending from savings.

Critically, the House failed to meet the supermajority hurdle needed to spend from the Constitutional Budget Reserve, the state’s principal savings account. 

That meant the budget advanced to the Senate with a large deficit, an incomplete result by the standards of the Alaska Constitution, which requires a balanced budget.

Senators responded by cutting the House’s proposed dividend in half, an act that balanced the budget bill but drew the ire of the House.

Normally, senators would advance their proposal anyway, and the disagreement on the dividend and a series of smaller items would result in the creation of a committee charged with writing a compromise.

That didn’t happen. The budget remained in the Senate Finance Committee for almost a month, irritating members of the House.

“We feel like we’re being cut out of the process,” Speaker of the House Cathy Tilton, R-Wasilla, said Saturday.

In April, the Senate circulated a draft schedule that promised action in early May, but that draft was disregarded within weeks, as was a Senate promise to not roll all of the state’s budget bills into a single document, nicknamed the “turducken”.

When asked at the start of this month why the finance committee was holding on to the budget, Stedman replied, “flexibility.”

If so, it’s the kind of flexibility exhibited by a fishing rod in the hands of someone fighting a king salmon. Stedman has a years-old reputation as an expert in legislative maneuvering, and the Senate’s actions disgruntled members of the House majority.

“I’m not happy about a turducken budget. From a procedural point of view, both bodies are supposed to have a say on the budget,” said Rep. Will Stapp, R-Fairbanks and a member of the House Finance Committee.

In a typical year, the House writes the first draft of the state’s operating budget and the Senate writes the first draft of the state’s capital budget, which pays for construction and renovation projects. The two budget bills then trade sides, ensuring that neither House nor Senate have the upper hand in negotiations.

Sen. Lyman Hoffman, D-Bethel and the senator in charge of the capital budget, said it hasn’t been transmitted because House lawmakers didn’t provide a list of projects they want included.

That’s not how the process is supposed to work, House lawmakers said. 

While it’s traditional for the House and Senate to reserve a dollar figure in the capital budget, it’s not typical for the House to provide an exact list of projects, Tilton said.

“The goalposts kept changing,” she said.

Rep. DeLena Johnson, R-Palmer and co-chair of the House Finance Committee, said the Senate’s demands created an unequal playing field.

“I would say having a discussion with someone that says, ‘These are ours (projects), and what would you like?’ That’s an imbalance of power right there,” she said.

“I think it’s disrespectful to the House. We are not a 40-member advisory committee,” said Rep. Frank Tomaszewski, R-Fairbanks and a member of the House Finance Committee.

Simultaneously, members of the Senate Finance Committee say they are unwilling to vote in favor of spending from savings, and that makes the House’s proposal untenable, even as a negotiating position in conference committee.

“Primarily, the issue is the dividend. They are demanding a dividend we cannot afford,” said Senate President Gary Stevens, R-Kodiak.

Stedman noted Saturday that senators have added elements of the House proposal to their own budget, but Rep. Craig Johnson, R-Anchorage, said those additions were chosen by the senators, not members of the House, and they haven’t resolved the disagreement.

That impasse, combined with the limited time left in the session, leaves just one option: the up or down vote on Wednesday.

Tilton and House Minority Leader Calvin Schrage, I-Anchorage, have said they expect the vote to fail, setting up a special session.

Others aren’t so sure.

“It’s too early to tell, even though it’s late,” said Rep. Dan Ortiz, I-Ketchikan and a minority-caucus member of the finance committee.

Tilton, meanwhile, is looking ahead to what happens after Wednesday.

“We are committed to trying to work things out,” she said. “There is another session ahead of us.”

Alaska Beacon is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Alaska Beacon maintains editorial independence. Contact Editor Andrew Kitchenman for questions: Follow Alaska Beacon on Facebook and Twitter.

Alaska Beacon is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Alaska Beacon maintains editorial independence. Contact Editor Andrew Kitchenman for questions: Follow Alaska Beacon on Facebook and X.

Previous articleAlaska News Nightly: Friday, May 12, 2023
Next articleWhat you need to know about the debt ceiling as the deadline looms