Legislature’s proposed budget fix spreads the pain of failure broadly. That’s the point.

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

The Legislature’s compromise-or-consequences budget proposal that would make about half of a proposed $1,100 dividend contingent on the approval of once-routine budgeting measures appears to have run into a roadblock today as the Senate scuttled its plan to vote on the measure and the House has, as of midday, yet to meet.

Gov. Mike Dunleavy, in an email blast encouraging legislators to vote against budget, called the proposal “coercive” and reiterated his demand for a roughly $2,300 to be paid with an overdraw from the Alaska Permanent Fund. 

A chief complaint is the negotiating team’s decision to tie so much—and specifically so much that’s dear to Dunleavy allies in the Mat-Su—to the three-quarter vote that’s needed to maintain the state’s budget. Without the votes, the dividend would be cut down to $525, nearly a dozen capital projects, including several school projects in the Mat-Su, and oil tax credits would go unfunded or underfunded. 

“We saw they were already funded; it was a fund source change aimed at twisting an arm,” House Minority Leader Cathy Tilton, R-Wasilla, complained to the Anchorage Daily News about the change. 

And while much of the focus today is on the dividend—with most behind-the-scenes negotiations reportedly focusing on a potential path to an even larger one—the dividend is just a part of today’s fight. At the heart of all the arm-twisting is the three-quarter vote needed to tap the Constitutional Budget Reserve and reverse the automatic sweep of several semi-dedicated funds into the account. 

Under the Alaska Constitution most funds left over at the end of the year are automatically swept into the Constitutional Budget Reserve to make up for past withdrawals. And that includes semi-dedicated funds that cover expenses for the state’s scholarship program as well as the state’s Power Cost Equalization program, which helps cover the costs of energy in high-cost communities. 

Traditionally, legislators have voted to put the money back immediately, keeping the programs running smoothly but conservative legislators have started to eye the spending as an unfair dedication of money—a little more than $1 billion—that could be spent elsewhere. Legislative leadership in both the House and Senate oppose the idea, but they don’t control the necessary 30 votes in the House and 15 in the Senate. 

“There is a significant group within the Legislature that wants to not support a reverse sweep,” Senate Finance Committee co-chair Sen. Bert Stedman told the Juneau Empire. “They want to liquidate PCE, and they’re playing rural basic energy against the dividend. … We need to move past that issue.”

In the past, far-right Republicans’ rejection of the three-quarter vote was largely felt by rural Alaskans. The current deal, which they oppose, would spread the pain of that failure more broadly. That’s the point. Not only would the dividend be cut in half but tens of millions of dollars designed for projects in the Mat-Su—everything from road repaving and road access to repairs to the Houston Middle School and the roof of the Palmer Veterans’ and Pioneers Home—would be halted. 

“From my view,” House Speaker Louise Stutes, the Kodiak Republican who saw the Alaska Marine Highway System gutted by Dunleavy and his allies, told the Anchorage Daily News. “What the conference committee did was level the playing field.” 

Why it matters: The Legislature is attempting to pull itself across the finish line of session, with the special session set to expire on Friday. The state faces a potential shutdown on July 1 if a budget isn’t passed by then. The Legislature could, of course, pass the budget without the CBR vote (as it did in Dunleavy’s first term) causing plenty of heartache and heartburn for the several months until they reach a solution. With Dunleavy calling on legislators to just defeat the budget altogether, the possibility of a shutdown has increased.


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