Sen. Cathy Geissel

It was one of the most tense state legislative votes in years. After a week of jockeying, and despite heavy pressure from Gov. Mike Dunleavy and the Alaska Republican Party, the state Senate rejected 10-10 a large Permanent Fund Dividend for 2019.

A split vote defeats a proposal, so the appropriation is dead, for now.

The effect of the decision, if it ultimately stands, is to make several hundred million dollars available to support services like schools and public safety instead of being paid out in higher PFDs.

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Key votes among Anchorage legislators for the lower PFD were Democrats Elvi Gray-Jackson and Tom Begich. Anchorage Republican senators Natasha von Imhof, Chris Birch and Cathy Giessel, who is also Senate President, also voted ‘no’ on the higher amount.

Sen. Mia Costello of Anchorage and Lora Reinbold of Eagle River, both Republicans, voted for the higher amount, as did Sen. Bill Wielechowski, a Democrat.

The matter isn’t settled, however. While the House will support the Senate in rejecting the higher dividend, how much the PFD will be still has to be worked out. Bets are that it will be about $1,500, or half the larger amount.

Gov. Mike Dunleavy, who campaigned with promises of a large dividend, still has cards to play. The Legislature also passed a state operating and capital budget this week at amounts much higher than the governor wanted.

There was also no provision in the budget for the PFD; the earlier vote was on a special appropriations bill, which is now dead.

Dunleavy could use his veto authority to axe big parts of the budget in an ongoing joust with legislators on the PFD. Dunleavy can reduce the budget through his veto but he cannot add spending, including spending for the PFD — only the Legislature can do that.

The Legislature has been meeting in special session after adjourning its regular session May 15, the required date, without passing an operations or capital budget, or approving a PFD. The special session ends this Saturday, June 15.

What happens next on the budget and PFD is up to Dunleavy. The governor will almost surely call for another special session.

He has proposed Wasilla Middle School as a site, but legislators are balking over operational problems and security issues.

Other actions by the Legislature are still pending, such as a large appropriation of funds from the Permanent Fund’s earnings reserve, where money can be appropriated, to the Fund itself, which is protected

As passed, the unrestricted general fund part of the operating budget totaled $4.63 billon, down $145.3 million from the current budget of $4.77 billion according to information from the Legislative Finance Division.

The governor had sought much deeper spending cuts and may yet use his veto to get them. It takes 45 votes among 60 members of the House and Senate to override budget vetoes and obtaining those 15 will be difficult, particularly because the Mat-Su region, the governor’s home turf and where he is most popular, has nine members in its House and Senate delegation.

In specific operating budget items, there were no big changes compared with what had come out of the House and Senate in earlier budget actions.

The governor’s deep budget cuts were mostly rejected although the Department of Health and Social Services was trimmed $92 million most in the Medicaid program. The department itself proposed the reduction based on plans for reorganization.

The Department of Transportation and Public Facilities was cut $40.1 million, a figure taken from the Senate version of the budget. Dunleavy had proposed a much deeper DOTPF reduction that would require state ferries be tied up for the winter.

As passed, the budget would allow a very limited winter ferry schedule, which was a priority for Sen. Bert Stedman, R-Sitka, whose southern Southeast district has coastal communities very dependent on the state marine highway.

The Legislature increased education spending by a small amount, $1.8 million, to a total of $1.35 billion. This is a “forward funded” budget for FY 2021, the school funding for FY 2020 having been passed last year by the Legislature.

Other state agencies saw small increases including the state departments of Natural Resources and Environmental Conservation.

Legislators had still to act Monday on the state capital budget, which had passed the 20-member Senate but remained in the House Finance Committee pending a final vote by the full 40-member House.

Few, if any, changes are expected in the version of SB 19 that passed the Senate. Sections of the capital budget that approve federal funding for state transportation and airport projects, and the required state matches that go with them, were approved as expected.

The federally-supported federal surface transportation program totaled $690 million. The airport improvement program, for the 200-odd state-operated airports and not including the Anchorage and Fairbanks international airports, totaled $208.7 million.

Ninety percent of funds for both the surface transportation and airport programs are federal, but the state must provide a 10 percent match.

Similarly, the village safe water and wastewater infrastructure program was funded with $64.82 million, all but $12 million federal.

Funds were also appropriated for deferred maintenance in the capital budget in three appropriations including $10 million for University of Alaska buildings, which would be in addition to what deferred maintenance the university funds in its own budget.

Another $4.5 million was appropriated through the Department of Administration for maintenance, renovation, repair and new equipment in state-owned buildings. However, $47.6 million was funded for deferred maintenance for state facilities through the governor’s office, with administration most likely coordinated in the Office of Management of the Budget.

Deferred maintenance is a critical need with the total backlog of needed work approaching $2 billion, over half of that at the University of Alaska.

Among other items funded is $7.42 million for tourism promotion by the Alaska Travel Industry Association, a visitor industry trade group; $3.1 million for a replacement Alaska Railroad dock in Seward; $7.4 million in grants for major maintenance projects in schools; $900,000 for critical minerals and geological mapping for energy; $2.5 million for continued planning for the Arctic Strategic Transportation and Resources program, a North Slope surface transportation initiative; $2.5 million for planning on a new South Denali visitor’s center, and $5 million for Alaska Housing Finance Corp. weatherization programs.


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