By Tim Bradner
The state House and Senate approved bills Monday to resolve contentious state budget issues, but Gov. Mike Dunleavy is expected to veto parts of at least one measure. Meanwhile, University of Alaska students, faculty and community leaders are on tinder hooks about where Dunleavy will come down on slashing the UA budget. The governor had proposed a 41 percent reduction in one year but has since backed off, saying he will allow it to be done in two years.
University officials say that isn’t enough time to do an intelligent reorganization.
Meanwhile, the drama in Juneau rolls on. If Dunleavy does exercise his veto authority again, it’s unlikely the Legislature will be able to muster 40 out of 60 votes to call itself into into special session, and the current special session ends in a few days anyway, which effectively makes a veto override almost impossible. Whatever Dunleavy decides this time will likely stick unless they are so outrageous the Legislature will overcome its exhaustion and call itself into session later this summer or fall.
The Permanent Fund Dividend is still a sticking point in things, however. Dunleavy could veto the $1,600 PFD in the bill now passed by the House and Senate and demand his favored $3,000 but he risks getting no dividend at all if the Legislature, which is still in session, doesn’t play along. Only the Legislature can approve an appropriation, which is what the PFD requires. This is a kind of nuclear option the Legislature has.
The House approved the lower amount when it passed House Bill 2001, which also restored funds for about 80 percent of Dunleavy’s vetoes. The Senate Finance Committee had upped the PFD to $3,000 but the amount was lowered again by an amendment on the Senate floor. The bill then passed the Senate. As of Tuesday it was awaiting transmittal to the governor, although that will happen.
Senate Bill 2002, the state capital budget, was also approved by the House after passing the Senate earlier and was also awaiting transmittal to the governor on Tuesday. In a critical vote, 32 House members approved, in the Senate bill, the funding the capital budget with money from the Constitutional Budget Reserve, a state fund that requires three-fourths of the Legislature. That includes 15 of 20 senators and 30 of the 40 members of the state House. The Senate had passed the capital budget with the necessary 15 votes to access the CBR funds but the House Republican Minority had withheld support, preventing the 30-vote threshold to not be met.
The lack of the House votes needed for the funding had stymied passage of the capital budget until Monday, a problem that jeopardized state funds to match major federal transportation money as well as appropriations for important new legislation like anti-crime bills passed by the Legislature this year. Over successive floor votes in the House in recent days the margin narrowed with more Republican Minority members joining the Democrat-led Majority until finally there was enough Monday approve the construction funding. On Monday, Reps. Dave Talerico, R-Healy and DeLena Johnson, R-Palmer, cast deciding votes, splitting off from other House Republicans in the Mat-Su delegation.
SB 2002 also reversed a “sweep” of money in several special funds set aside in recent years to fund special programs like rural Power Cost Equalization, a program that supports residential electricity rates in small communities along with funds established to support scholarships and a vaccine program to guard against disease outbreaks. The governor had proposed funding the programs out of the state general fund.
Dunleavy was supportive of the capital budget action. “While months overdue, today’s action represents an important step in the Legislature bringing this gridlock to an end,” said Dunleavy.
“My team and I will be thoroughly reviewing the details of this bill, but believe it represents significant progress in moving Alaska forward, particularly for items like the Alaska Performance Scholarship, WWAMI, PCE, and efforts to capture more than $1 billion in federal transportation and infrastructure dollars – critical to keeping our economy growing and our communities moving,” the governor said in a statement.
“Somewhat lost in the political theater, this package also provides critical funding to implement HB 49, legislation that provides Alaska the tools and resources to improve public safety. While sentencing is one important aspect in addressing Alaska’s public safety crisis, supporting our law enforcement agencies with the resources they need to do their job is a cornerstone of this administration. While I intend to sign SB2002, I will exercise my line-item veto authority where necessary,” Dunleavy said,
House Speaker Bryce Edgmon said the lower PFD was necessary so there would be enough money to pay for essential public services. “Alaskans spoke loudly in favor of striking a balance between the Permanent Fund Dividend and essential programs and services that were vetoed by the governor,” Edgmon said. “With broad bipartisan support, lawmakers today finalized a plan which embraces the fact that we need to right-size government through difficult cuts but also acknowledges that we cannot cut our way to prosperity,” he said. In the end, two-thirds of the 40 House members, Republicans and Democrats, voted for SB 2002, Edgmon said.
Senate leaders said the compromise restores funding to programs affecting the life, health and safety of Alaskans.
“This agreement keeps Alaska moving forward while also paying out the largest dividend we can afford,” said Sen. Natasha von Imhof, R-Anchorage, co-chair of the Senate Finance Committee. “A law enacted last year caps spending from the Permanent Fund at a sustainable rate. Without reforming the decade’s old dividend formula, lawmakers could not find agreement (this year) on a dividend larger than $1,600, von Imhof said.
The other co-chair of the Senate Finance Committee, Sen. Bert Stedman, R-Sitka, said, “Our predecessors had the vision to protect Alaska’s oil wealth for the future, and we must do the same. The Permanent Fund is not for us to squander (by overdrawing beyond a sustainable rate). We must do everything in our power to protect it for future generations.”
“While months overdue, today’s action represents an important step in the Legislature bringing this gridlock to an end,” said Governor Dunleavy. “My team and I will be thoroughly reviewing the details of this bill, but believe it represents significant progress in moving Alaska forward, particularly for items like the Alaska Performance Scholarship, WWAMI, PCE, and efforts to capture more than $1 billion in federal transportation and infrastructure dollars – critical to keeping our economy growing and our communities moving. Somewhat lost in the political theater, this package also provides critical funding to implement HB 49, legislation that provides Alaska the tools and resources to improve public safety. While sentencing is one important aspect in addressing Alaska’s public safety crisis, supporting our law enforcement agencies with the resources they need to do their job is a cornerstone of this administration. While I intend to sign SB2002, I will exercise my line-item veto authority where necessary.”
The governor was critical of the House bill and the lower PFD, however.
“Taking the PFD is the first in a series of taxes that will continue to prop up government and spend beyond our means. Unfortunately, a number of legislators continue to drive a false narrative – a choice between a full PFD or essential operations of government. The reality is, only those intent on using the Earnings Reserve as a government revenue source believe the PFD and the budget should be connected. The government shouldn’t be taxing your PFD, it should be spending less.”
“The add-backs to spending (in the House bill) – to the tune of $400 million – are yet another attempt to blow up the size of government. I stand by the decisions made on June 28th and the focus we’ve made on providing a sustainable budget and sustainable systems. These reductions are not meant to harm Alaska or Alaskans, but to turn the corner and make the necessary changes in order to put Alaska on a sustainable path forward. While we will consider a limited number of additions to the budget, we consider the vast majority of the FY20 budget final.”