Work on the operating budget ground to a halt on Wednesday following a last-minute change pushed by the Republican-led House Majority that makes the one-time school funding the chamber approved earlier in the week conditional.
The change effectively requires members of the House Minority Coalition, who’ve prioritized higher school funding this session, to vote to access the state’s Constitutional Budget Reserve to cover the roughly $600 million deficit in the budget being advanced by the House if they want to see the $175 million funded. Members of the Coalition said the change caught them off guard, prompting what was one of the more heated and bitter days in recent legislative memory.
Fifteen of the 16 members of the Minority caucus staged a walkout on Wednesday that stalled work on the budget for several hours, only to return armed with motions and maneuvering that would further snarl business and draw attention to the issue.
“We are holding our kids hostage. We are singling out children,” said Rep. Jennie Armstrong, D-Anchorage, during the fight over the maneuvering. “This was a bait-and-switch, scorched-earth tactic.”
The Minority Coalition argued the change does nothing to solve the uncertainty facing Alaska’s schools, ensuring that funding remains a political football this year and next while leaving the state’s underlying financial situation in a worse-off position.
Members of the Republican-led House Majority responded that there was nothing untoward about the maneuver, pointing to other proposals from the House Minority that would have tied part of the PFD to a constitutional budget reserve vote and argued that making some spending conditional on a successful CBR vote has been a common budgeting tactic.
While that may be true, it’s hard to overlook the fact the state has been flying without the safety net of a CBR vote for several years because many of the GOP legislators who are now in the House Majority refused to sign off on one, resulting in plenty of stomach burn over shutdowns and the sweep that saw funds like the Power Cost Equalization Endowment and the scholarship-funding Higher Education Investment Fund liquidated.
The state’s fast-track supplemental budget even included a CBR vote for the current year because lower-than-expected oil prices combined with the GOP’s refusal to vote for the CBR meant the state would likely run out of money before July 1 of this year.
As tempers flared on Wednesday afternoon, the House abruptly adjourned and returned to work with generally cooler heads on Thursday morning.
Some members of the House Minority Coalition apologized for escalating the rhetoric the day before but stood by their position that tying school funding to one of the most difficult votes they’ll be taking this year is unfair to everyone involved.
Following a series of speeches, the House voted along caucus lines to approve the change to make the school funding conditional.
Why it has come to this
At the core of the issue is the state’s ongoing budget deficit.
At some point in the process, the Legislature will have to figure out how to close that deficit, whether it be with immediate new revenues (which is politically unlikely and logistically near-impossible), cuts much larger than the $70,000 here and there that the Majority achieved in cutting a handful of vacant positions or spending from savings.
The Majority has opted for the latter solution, targeting the Constitutional Budget Reserve to cover the budget gaps in what House Finance Committee co-Chair Rep. DeLena Johnson, R-Palmer, has conceded is just a “band-aid” as they work on a bigger fiscal plan. That requires a three-quarter vote of each chamber, which means they need to get the House Minority on board, and so far, the Minority has opposed the vote. Instead, they’ve argued they could balance the budget and increase education funding if they cut the state’s largest single expenditure: The PFD.
That’s not something the Republican-led Majority is particularly interested in after they already retreated from their long-held position of a full dividend according to the long-ignored statute to a dividend funded with 50% of the spendable revenue from the Alaska Permanent Fund’s investment income. So, they went from a $3,500 payout to a $2,700 payout. The Minority’s proposal would be closer to about $1,300.
That fiscal plan would, presumably, be the fix to all the problems mentioned above. Throughout the budget process, Republicans lamented having to vote against things like child care, education, food safety, senior care and the prosecution of sex abusers because of the state of the state’s budget.
The problem is that progress on those measures hasn’t exactly come quickly, and the proposed changes don’t exactly move the dial. House Ways and Means Committee Chair Rep. Ben Carpenter has proposed a 2% sales tax with almost no exemptions—which would result in another outsized hit on rural Alaska—while simultaneously presenting a significant cut to the state’s corporate income tax rate that would eat about half the revenue from the sales tax.
Not precisely comforting if you’re banking on a fiscal plan finally putting to rest the long-running fight to adequately fund the social programs for those in the most need.
A much more significant proposal to overhaul the state’s oil tax system in the Senate would raise an estimated $1.3 billion, more than enough to pay out a large dividend and cover a healthy increase to schools. Other legislators have suggested an income tax would also be more effective at raising revenue in an equitable manner. Neither is likely to garner much support in the GOP-led, industry-friendly House.
In a “Hey, Mom, I really do want to play guitar” as you brush off the dust of a long-untouched Fender Squier Stratocaster in the corner kind of moment, though, Majority members made a show of packing into the House Ways and Means Committee following the House floor session on Wednesday night.
Work on a fiscal plan continues.
Stay tuned.
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.
