Gov. Mike Dunleavy address the public at Wasilla Middle School Friday morning regarding the second special session slated to start July 8 at WMS.

The Legislature ended its first special session last Thursday, June 13, and things are gearing up for a second special session, which was expected.

That’s set to begin July 8 in Wasilla, Gov. Mike Dunleavy’s home turf. A lot of legislators are balking at that, citing the lack of facilities at Wasilla Middle School, the site proposed by the governor.

What may happen is a convening of the session in Wasilla with just presiding officers, the Speaker of the House and President of the Senate and a few legislators on hand, and a quick adjournment to reconvene in Juneau, where the state capitol building has support facilities for recording and security.

But no one can be certain what will really happen. The Mat-Su legislative delegation, which totals nine, along with the likely support of lawmakers from Eagle River, could swing the Legislature’s decision to stay in Wasilla and just tough out the lack of facilities.

At least some in Anchorage like the idea of Wasilla because they can stay at home and commute daily to do legislative business. Hotel rooms in Juneau are scarce, and costly, in July, the peak of the tourist season.

Before the first special session adjourned the Legislature did pass an operating budget that will prevent a July 1 state government shutdown. The governor is expected to veto parts of the operating budget but he will likely approve other parts.

Lawmakers could not agree on the amount of the 2019 Permanent Fund Dividend – $3,000 or something less – or on funding for the state capital budget, which authorizes construction including federally-supported surface transportation and airport projects.

The budget itself, in Senate Bill 19, was passed by both the House and Senate but the funding was not approved after House Republicans held out for a $3,000 PFD as a condition for their support, which is needed.

The state Department of Transportation and Public Facilities said failure to pass a funded capital budget won’t immediately affect highways and airport work, but if there is no approval by the end of July it will complicate getting new projects underway.

“If there isn’t a capital budget by the end of July, the department will be very concerned as the lack of match limits our ability to obligate federal funds before the end of the federal fiscal year at the end of the September,” DOTPF spokesperson Meadow Bailey said in an email.

The state must provide matching funds to be able to access federal money for highway and airport work. The capital budget also provides money for traditional state-funded construction and major maintenance.

In another major action, through the operating budget, the Legislature transferred $10.6 billion from the Permanent Fund’s earnings reserve to the protected principle of the Fund.

Although it doesn’t change the total for the Fund, which is still $60 billion, including both the principle and the earnings reserve, this is the largest single deposit yet made by the Legislature to the corpus of the Fund, which cannot be spent under a 1976 amendment to the state constitution.

The earnings reserve now holds $19 billion, although the pending transfer of funds to support the FY 2020 state budget will reduce it. After the transfer earnings reserve will hold about half that amount, approximately $9 billion.

In a statement, Senate President Cathy Giessel noted the Legislature’s high points so far but said there is work still to be done:

“The Legislature has passed the smallest operating budget in more than a decade, made the largest single deposit into the Permanent Fund in history, and strengthened our criminal laws by repealing the replacing Senate Bill 91, but the peoples’ work is not finished,” Giessel said.

“We are committed to working with our colleagues in the House, and the governor, to fully fund a capital budget and reach agreement on the Permanent Fund Dividend,” she said.

The governor listed the 2018 PFD as the single item of business for the second special session, but funding for the capital budget is expected to be added.

What has bogged down the capital budget is not the appropriations in the bill but a withdrawal from the state Constitutional Budget Reserve, or CBR, needed to fund the bill.

A CBR withdrawal needs a three-quarters vote in both the House and Senate, and while there are enough votes for this in the 20-member Senate there are not in the 40-member House.

Thirty votes are needed to reach three-quarters there and the House Majority, led by Democrats, cannot muster enough votes.

House Minority Republicans, whose votes are needed, say they won’t support the withdrawal until there is agreement on a $3,000 PFD.

Bills to fund the dividend at $3,000 have been defeated in both the House and Senate although the Senate vote was a dead split at 10-10, which defeats the measure.

Like the first special session that was called May 15, as lawmakers ended the regular session, the second special session can last 30 days, or until August 8.

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