The Alaska Legislature adjourned its regular session on Tuesday, one day earlier than expected, after passing a “maintenance level” state budget that contains a $1,000 Permanent Fund dividend. Legislators do not expect a special session this year.
“I would like to thank all of you for getting to this point: a day early, and before midnight. Pretty remarkable,” said Senate President Gary Stevens, R-Kodiak.
Legislators adjourned hours after overriding Gov. Mike Dunleavy’s veto of a major education bill. During the time in between, they passed a series of bills, including a ban on payday lending, changes to tax collection for Turo, and policies for prisoners’ use of tablet PCs, among others.
This year, the first of the two-year 34th Alaska State Legislature, 32 bills were passed by both the House and the Senate.
After the House ended its formal work for the year, legislative aides began celebrating with music and pizza, filling the Capitol’s fourth floor with singing and cheering.
A narrow House majority didn’t stumble
During the session, legislators contended with falling oil revenue. Legislators didn’t pass any tax increases, instead adopting significant budget cuts. The Alaska House navigated partisan divisions that left its majority coalition — 14 Democrats, 5 independents and 2 Republicans — with only a one-vote margin over a 19-person House Republican minority.
That coalition majority, and a similar one in the Senate, had to negotiate with a governor who has significantly different policy views from the coalitions.
Speaker of the House Bryce Edgmon, I-Dillingham, said the early adjournment is something to be proud of.
“I’m pretty pleased that we achieved it,” he said.
It was the first time since 2018 that the Legislature did not reach the constitutional limit of 121 days to complete the session, though the 2020 session was interrupted by a seven-week break due to the COVID-19 pandemic.
“In a year where the House was sharply divided in terms of numbers, oil prices sank, we did our best to work with the governor, who, at many times, was not seemingly here in the building, and we put it all together,” Edgmon said.
House Minority Leader Mia Costello, R-Anchorage, said her caucus wasn’t satisfied with the result.
“I think we’re disappointed that we didn’t address more issues related to energy and the challenges we have and the opportunities that we have with resource development and energy and dovetailing with the president and our congressional delegation,” she said. “So we wanted more legislation in that area. But as far as adjourning, it is what it is, and we’re just going to gear up for next year.”
Spending plan has limited increases
One of the Legislature’s final acts before adjournment was to pass the state’s operating budget for the fiscal year that starts July 1.
“You could say that both the operating and the capital budget, the two main budgets, were maintenance-level budgets,” Edgmon said.
The capital and operating budgets, including money for next fiscal year and changes to the current fiscal year, spend $6.2 billion, when looking only at general-purpose state spending. If federal funding and things like fees, college tuition and other money is included, the budget bills spend $16.3 billion.
General-purpose state spending is down significantly. The enacted budget bills from last spring totaled more than $6.5 billion.
Legislators started the budget-drafting process with the expectation that North Slope oil prices would average $68 per barrel in the next fiscal year.
By the end, that expectation had dropped to $64, and the federal government — which pays for about 40% of the combined budget bills — had begun cutting its contributions.
As revenue projections declined, legislators slashed programs from the budget, including things like new state troopers for the Matanuska-Susitna Borough.
A relative handful of budget increases made it through the process — money for mental health treatment in Anchorage, early childhood education programs, and child advocacy centers, which help the survivors of child sexual abuse.
Those increases — and all other parts of the budget — are subject to approval by the governor, who has the power to veto individual line items. Every year of his term, Dunleavy has vetoed significant amounts from the budget.
In the House, legislators failed to pass one part of the budget — a roughly $200 million draw from the state’s principal savings account, the Constitutional Budget Reserve, in order to pay for a deficit in the current fiscal year, which ends June 30.
Conditional language in the budget says that if the CBR vote fails, the state will instead take up to $100 million from the accounts of the state’s investment bank — the Alaska Industrial Development and Export Authority — and the state’s higher education investment fund.
The vote failed after members of the House Republican minority opposed it. Thirty votes are required to spend from the reserve.
“I wasn’t comfortable going into savings,” said Costello. “I felt like we could have done more work on the budget and involved our House Finance Committee team, which has a lot of experience, so I just wasn’t willing to give my CBR vote to go into savings.”
Costello said she feels that other members of the minority felt similarly.
Next year, legislators expect that they will need to spend heavily from the CBR in order to balance the budget.
In addition, legislators are expected to pass major policy bills, including a revival of the state’s pension program for public employees, and election reform bills.
“Hold on to your hat, Nellie, for next session, because it could be much more challenging, as we all know,” Edgmon said.