The special session is over, but legislators will be back in July to resolve PFD and capital budget funding

Something might be going on in there.The Alaska State Capitol building as photographed in 2010. (Photo by Kimberly Vardeman/Creative Commons)

The special session came to an end shortly before noon today when the Senate adjourned sine die. The House had adjourned earlier in the day.

Legislators will leave Juneau without reaching agreement on the size of the permanent fund dividend or funding for a vast majority of the capital budget, which could put nearly $1 billion of federal highway funding as well as funding for pieces of the new tough-on-crime bill in jeopardy.

After battling to an impasse on the dividend, the Legislature has formed a bicameral working group to come up with recommendations for a compromise on the dividend. Legislative leadership pledged to be back this summer to resolve the unresolved issues.

“We will be coming back this summer and I wanted to assure the public that we are going to absolutely provide a dividend this year,” said House Majority Leader Rep. Steve Thompson, R-Fairbanks, as the House floor got underway. “It will be responsible and sustainable.”

Legislators have been in session for 150 days straight and will get a short break.

Gov. Michael J. Dunleavy has already issued a proclamation for a second special session set to start on July 8 at 1 p.m. in Wasilla. His recommended location is the Wasilla Middle School, but the decision will ultimately be up to the Legislature.

The return date is a week after the start of the next fiscal year.

The capital budget

The proclamation only calls for legislation to pay a full $3,000 dividend, but legislators are also likely to take up work on the capital budget at that time. The Senate approved the capital budget passed by the House on Wednesday even though the legislation didn’t contain funding for a vast majority of it.

The House had reworked the budget so much of the funding would come out of the Constitutional Budget Reserve, which requires a supermajority vote to tap into. The minority House Republicans voted for the budget but ultimately refused to lend their votes to the CBR because they hadn’t got their way on a $3,000 PFD.

Sen. Natasha von Imhof, R-Anchorage, has called such a potential scenario a “shitshow” for the state that would punch more than $300 million in holes throughout the state’s budget. She was critical about the House decision to rework the budget, but acknowledged that it was in service of a larger PFD.

“There has been some question on why the other body may have switched the fund source to the CBR. I believe the logic behind setting the CBR as the source of funds for the capital budget was to make more room in the general fund to eventually pay a bigger dividend,” she said. “But if we can’t get a three-quarter vote to access the CBR funds by both bodies that is going to be a problem.”

She said that even though the budget had significant problems without the funding, there were still other pieces that didn’t rely on the Constitutional Budget Reserve that should go forward. She recommended that the Senate pass the budget, which it did on a 16-2 vote.

Issues like the missing money for the federal highway match must be resolved before late July, von Imhof said, or else the state risks missing out on the nearly $1 billion of highway funds altogether.

The PFD

Though the Legislature battled to a draw on the PFD, the bicameral working group is already underway with working on a potential compromise. The group held its second meeting before the floor sessions, which served as a scoping meeting for the committee’s work ahead.

Members were broken into teams tasked with exploring the financial cost, societal impacts and changes to the state’s long-term financial future of different payout levels. The groups consist of the following:

  • Shelley Hughes, R-Palmer, and Rep. Jonathan Kreiss-Tomkins, D-Sitka, are tasked with reviewing a $3,000 PFD
  • Adam Wool, D-Fairbanks, and Sen. Donny Olson, D-Golovin, are tasked with reviewing a $1,600 PFD
  • Bert Stedman, R-Sitka, and Rep. Kelly Merrick, R-Eagle River, are tasked with reviewing a “surplus dividend” that would consist of the anticipated surplus from the structured draw on the permanent fund after the budget, which is about $900.

The group has no deadline for its work and its recommendations will be non-binding.

What was particularly interesting about the meeting is a marked shift in tone from legislators who have been ardent supporters of a large cash payout to citizens. Though they still argue that the payout needs to go out according to the decades-old formula, they acknowledged there’s a need to rework the formula to save the state’s financial future.

Special session concerns

The Legislature has raised concerns about using the Wasilla Middle School as a location for the special session. Among a long list of concerns about the location is that Gov. Michael J. Dunleavy has carved the administrative parts of the building for his own office. That alone would be unusual, but the Legislature notes that it would also give Dunleavy access to security cameras throughout the building.

The Legislature has the option of finding an alternative location. It could also opt to hold committee meetings in a different location altogether or gavel out of the special session completely.

The Alaska Journal of Commerce reported on this issue, noting that while the Anchorage Legislative Information Office has the space for meetings it does not have the capacity to hold floor sessions.

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