The House finally passed the operating budget today, just two weeks after it was first brought to the floor and a day after the Legislature crossed the 90-day session limit set by voters in 2006.
It’s been many, many years since the Legislature paid much mind to the 90-day session limit because the 121-day session in the Alaska Constitution gets the final say, but it still marks one of the latest times the House has passed the operating budget, which typically happens around the second week of March.
With a late arrival on the House floor, a particularly contentious amendment process that spurred a walkout and a week of quiet negotiations with the Senate and governor, the Legislature will have just a month left in the regular session to steer the budget through the rest of the legislative process.
As it stands, the budget bill is roughly in line with what was proposed by Gov. Mike Dunleavy but with two big-ticket changes. It pays out a smaller dividend according to a 50-50 split of the spendable revenue from the Alaska Permanent Fund, which will be about $2,700, and it also provides a $175 million one-time increase to school funding… kind of.
That second part generated one of the more dramatic days in recent legislative history.
The $175 million for schools was initially proposed with no strings attached before the Republican-led House Majority reversed course and tied the money to a successful vote to spend from state savings. The bipartisan House Minority caucus walked off the floor in protest of the maneuver, arguing that leveraging the school funding—which still falls short of the need of most districts and isn’t guaranteed beyond this year—to enable a draw on the state’s savings account is irresponsible.
Those same arguments, though with a much lower overall temperature, were repeated on the House floor today as legislators debated the budget bill with many legislators recalling what they heard from the constituents who sent them to Juneau.
“What I heard was that families wanted a stable education plan,” said Fairbanks Democratic Rep. Maxine Dibert. “I rise in opposition because this one-time payment is not looking into the future, it’s not looking 10 years down the road. That’s what we need.”
Others argued that the budget was leaving many needs unmet in the state, particularly around child care, elderly care, education and food security. Needs, they argued, that could be met without a deficit if only the House settled on a smaller number for the dividend. Others argued the budget isn’t particularly promising to young Alaskans.
“Flat-funding does not mean vesting in Alaska,” said Rep. Genevieve Mina, D-Anchorage. “Alaska is in a crisis when we see so many people leaving today, when we’re hearing so much cynicism from our constituents and our voters. It’s simply not enough to flat-fund government. I want to invest in Alaska. I don’t think this budget spends too much, it spends far too little when we are talking about bringing in more opportunities for Alaskans to stay in this state and to work and to build a life here.”
The House Republicans need at least some votes of the Democrats if they hope to crack into the Constitutional Budget Reserve for the money to cover the roughly $600 million deficit in the legislation. That requires a three-quarter vote of each chamber. They didn’t get any.
Both the budget vote and the CBR vote were 23-17, which was enough to pass the budget but not enough to pass the budget reserve vote. That means the budget will now head to the Senate without a clear way to fund it. That leaves the budget, the dividend, education spending and the state of the state’s savings in flux.
Republicans in the Majority defended their votes on the budget—both for the budget itself and the vote to spend more than $600 million out of savings—as a prudent and private sector-focused move. Rep. Ben Carpenter, R-Nikiski, argued that the budget needs to prioritize economic growth and paying out large cash dividends to Alaskans is one of the best ways to do that.
“Yes, some of it’s wasted,” Carpenter conceded, “but we’ve got plenty of money that’s wasted in government every day.”
Others lamented that being in the majority after several years in the majority was hard and that saying “no” to many otherwise worthwhile areas was hard, but said that passing this one-time budget this year will make it easier for them to think about potentially considering additional steps to maybe address the state’s financial picture in the future years, hopefully.
“It’s hard being in the majority, too,” said Rep. Sarah Vance, R-Homer. “A one-year budget is never a solution, but it can be a step. … This is the first step in getting there.”
Several Democrats and independents called out the House Majority for empty talk.
The leading source of new revenue proposed by a member of the House Majority is Rep. Carpenter’s legislation that would implement a sales tax but would see much of that revenue vanish in a simultaneous cut to corporate income tax rates.
Rep. Cliff Groh, D-Anchorage, called the proposal a “corporate giveaway” which got him a warning from House Speaker Cathy Tilton, R-Wasilla, during his speech against the bill.
Rep. Andy Josephson, D-Anchorage, also called out the Republicans for refusing to put any meaningful political capital behind new revenue or other plans to address the state’s financial situation. He said there was a lot of talk about fiscal plans and talk about having conversations about fiscal plans, but little of it has actually advanced the state toward a solution.
“At some point, you’ve gotta get in the water. You just can’t talk about swimming, you’ve gotta get wet,” he said. “At some point, you’ve gotta bring bills to the floor. We’ve gotta have a conversation. … Don’t be bashful.”
While the Majority’s leading revenue proposal is the sales tax/corporate tax cut, the House Minority has proposed several sources of new revenue like an income tax, reworked oil taxes, higher oil property taxes and other revisions to the PFD formula.
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Twitter.
