As “fun” as the Senate’s debate over the dividend were on Tuesday, it got the Legislature no closer to passing a budget and averting a government shutdown.
Senate Bill 1002 had been designed to separate the politically charged dividend from the operating budget, which has not seen any new progress since mid-May even though negotiations on the spending bill are nearly complete.
The budget hasn’t moved because of internal division in the Senate over the dividend. The Senate mustered 10 votes to up the dividend to $3,000 but needed 11 to pass the bill. The 11th vote would be Sen. Mike Shower, a Wasilla Republican who had an excused absence because he had to return to work as a FedEx pilot, but it’s not entirely clear whether his return later this week will change things.
With the uncertainty and dividend-driven division still strong in Juneau, House Speaker Bryce Edgmon, I-Dillingham, said it’s time to pass the budget.
“Today’s vote in the Senate perfectly illustrates why an operating budget has not yet been enacted: debate over the amount of this year’s Permanent Fund Dividend is consuming the Legislature,” he said in a prepared statement. “This is why we believe the Legislature should first pass a responsible budget to provide students, elders, and business leaders certainty in the critical services they rely on. Then we can focus on the many important questions surrounding the future of the Permanent Fund.”
Edgmon has argued in favor of setting aside the dividend for a separate battle, which would likely take the shape of a second special session in a new location. Gov. Michael J. Dunleavy has promised to keep the pressure up on the Legislature for a $3,000 dividend, his key campaign promise, and has threatened vetoes and special sessions if anything less than that is sent over.
It’s unclear what he’d do if a budget without a dividend was sent to his desk.
During a Facebook town hall last week, the governor said the following when asked whether he’d veto a PFD-less budget: “We are adamant that the laws be followed pertaining to the permanent fund, and we’ll keep insisting upon that.”
Failure to sign a budget into law by July 1, the start of the next fiscal year, would force a state government shutdown resulting in furloughs or costly layoffs for thousands of state employees as well as disruptions in services in everything from Alaska’s fisheries to parks and road maintenance.
The lack of a budget will begin to cause problems as early as next week for health care providers—from big hospitals to small providers—that take Medicaid. The state quietly announced last week that its Medicaid program is running out of money and without an infusion of cash will cut off payments to all providers for the final three weeks of June.
The passage of a budget also would potentially put distance between the state’s operating budget and a PFD-driven veto. Dunleavy has frequently threatened the Legislature with vetoes, a power that he could bring down on the budget regardless of the size of a PFD. By passing a budget ahead of the PFD, it would give the Legislature an opportunity to potentially override the PFD while giving legislators a clearer picture of the state’s financial picture.
Much of the opposition to a supersized dividend is its impact on the outlook of the state’s finances.
‘We have time’
While the House has generally been settled on both the operating budget and a dividend—set at $1,6000—and is ready to get on with things, the Senate doesn’t appear to be in the same hurry.
Sen. Bert Stedman, the Sitka Republican who co-chairs the Senate Finance Committee and authored Senate Bill 1002, told reporters after the vote that he thought the Senate could still reach a deal in the remaining days of the special session.
“We have discussion amongst ourselves. We have almost two weeks, a week and a half. We have time,” Stedman said, according to the Juneau Empire. “It won’t be a unanimous decision.”
The session is set to expire on June 14. Gov. Dunleavy said he would begin the process of notifying state employees of potential layoffs if the Legislature hasn’t passed a budget by then.