The House passed the budget on Tuesday night but fell short of the votes needed to keep part of the state’s finances in order. Today, the Senate failed to pass the budget altogether on its first go around—dramatically increasing the chances of a state shutdown come July 1—but ultimately passed it on the second try.
In a remarkable turn, two of the Senate’s Republican leaders—Sens. Shelley Hughes and Mia Costello—turned on the budget deal that their own caucus’ budget negotiators had reached. They claimed that the budget negotiations that have taken up most of the last three weeks could simply be restarted and completed in a matter of days in order to achieve a larger dividend. The special session is set to expire on Friday.
The defection of the Senate Majority Leader and Senate Majority Whip on the budget is unheard of in the Legislature, and it was met with harsh criticism from the Republicans and Democrats who said pushing the state towards a shutdown was irresponsible no matter the goal.
“Am I willing to push us to a government shutdown to increase government spending?” asked Sen. Josh Revak, R-Anchorage. “Is that a responsible thing to do? It’s not responsible for me.”
Sen. David Wilson, R-Wasilla, said he was unhappy with the size of the dividend and parts of the budget, but said he was unwilling to trash it and start over. He said they were wrong to claim that the budget could swiftly be changed when the underlying differences haven’t changed and also criticized legislators who were acting as if the outcome of the budget—a $1,100 PFD with strings attached—was a surprise.
“A lot of us after the budget was passed got on the plane and left. They didn’t stay and follow the process. There’s no excuse to not know when the budget was going to end or where we were going to be. That’s our own responsibility. It’s time for legislators to take responsibiltiy for the matter of the process,” he said. “I have not heard anyone magically say, ‘I’m going to move off my position and change.’ The votes are where they are.”
Minority Leader Tom Begich, D-Anchorage, excoriated the Senate’s leadership for balking at the budget. He said he and fellow minority Democrats have had several opportunities to weigh in on the process. Why hadn’t they?
“What came with you having the majority to decide the agenda takes with it the responsibility to pass a budget,” he said. “I haven’t expressed this level of anger in the past, but I’m expressing it now. I encourage the members of your leadership team in joining me in voting for this budget because it needs to pass. Not just for the good of this body, or the good of this state, but for the good of every citizen of this state. We create a problem for all of us if we don’t resolve this today.”
At the core of their argument is the size of the dividend. The budget calls for a $1,100 PFD with about half of it relying on the supermajority vote needed to maintain several semi-dedicated accounts that fund programs like rural power cost equalization and student scholarships. The vote had already failed in the House, effectively drawing the dividend down to $525 but the Senate’s budgeters noted that it could be restored to $1,100 level if the votes were achieved later in the year, perhaps as part of a broader resolution to the state’s finances. A special session is planned for August while dividends typically go out in October.
It wasn’t, however, a winning argument with the diehard pro-PFD senators and the CBR vote also failed in the Senate. Sen. Roger Holland, an Anchorage Republican who made a show of wearing a dumpster fire pin to reflect his thoughts on the budget, argued that the efforts to protect the Alaska Permanent Fund for future generations overlooks the needs of the current generation. Others argued that the fund has done well enough that it’s fine to skim a little off the top for dividends.
Defenders of the current budget plan said it’s fiscal fantasy to pay a large PFD without a way to pay for it and that there’s simply not the money to make everything work anymore. They said a larger solution, perhaps one that includes a larger dividend and a method to pay for it, should be part of the discussion later this year, but it should not stand in the way of keeping the state’s fiscal house in order.
The harshest criticism came from Anchorage Republican Sen. Natasha von Imhof, who’s called for minimal dividends in order to maintain Alaska’s tax-free status. She said the fight over the dividend overlooks the federal relief money and real efforts to drive Alaska’s economy.
“There’s been a lot of cash going out to people this year. This is the year we should be focusing on reinvigorating our economy. … But no, here we are, her I am, here we all, away from our families, debating a dividend. The greed and entitlement is astounding to me. I just don’t fathom it,” she said. “My father is home dying of cancer and I’m here listening to the biggest crock of crap I’ve ever heard. I’m so sick of it. Get a grip, people. Vote for this budget.”
The final vote was 11-6.
Sens. Begich, Bishop, Gray-Jackson, Hoffman, Kiehl, Micciche, Revak, Stedman, Stevens, von Imhof and Wilson voted for the budget.
Sens. Costello, Holland, Hughes, Kawasaki, Myers and Reinbold voted against it.
The impacts of the CBR failure
Both the House and Senate have failed to muster the supermajorities needed to maintain several semi-dedicated accounts that paid for rural energy relief and scholarships to name a few. While the failure to reach that vote has typically been felt most by the 85,000 Alaskans living in rural and remote communities who relied on that, this year’s budget tied several urban projects to the vote. Sen. Bert Stedman, the Sitka Republican who served as one of the six negotiators on the budget, said it’s an intentional effort because there are some who are eyeing those funds as a cushion to push off tough decisions on the budget.
“The 85,000 poorest alaskans are going to get kicked in the butt and put on the street when it comes to energy,” he said, noting that the high number of Mat-Su projects tied to the vote wasn’t a mistake. “Where’s the desire to liquidate Power Cost Equalization? In that general area. When PCE goes down, everyone has skin in the game.”
The specific impacts of the failed vote are laid out below: