Dunleavy’s solution to a ‘defective’ budget and looming shutdown? Surprise! It’s a $2,300 PFD.

Gov. Mike Dunleavy announces he will shut down government state government on July 1 if the Legislature does not appease his allies.

Legislators returned to Juneau today for the second special session of the year to resolve Gov. Mike Dunleavy’s manufactured budget crisis that he claims gives him no other choice but to shutdown the government on July 1.

At the heart of the problem is the House falling four votes short of the 27-member supermajority needed to make the budget effective on July 1. Though most legislators and legal observers believe government can continue to operate despite its failure, arguing that Dunleavy’s legal argument that was only publicized after the votes had taken place is baseless, few seem willing to leave the fate of government up to chance and are pushing to reach those votes.

With at least three of those four votes needing to come from the Dunleavy-aligned House Republican minority, Dunleavy and the minority have not made things easy or fast. Leading into today, they’ve largely danced around just what it’ll take to win over the necessary votes, offering largely meaningless nonsense about feeling included and heard in the budget process.

We got that answer in the latest version of the budget introduced by Gov. Mike Dunleavy: It’ll take a $2,300 PFD with a corresponding $1.5 billion overdraw on the Alaska Permanent Fund to avoid shutting down government.

The concept was already put to legislators, who ultimately voted it down largely out of concern that picking a fight over the divided when there’s not the votes to support overdrawing the Alaska Permanent Fund would lead to a government shutdown. Several pro-PFD Republicans and Democrats said at the time that they would like to see a larger dividend but that it wasn’t worth shutting down government over, a position reiterated by some today.

“I’d like to see a full dividend as much as anybody but shutting down government to get it is not the way to do it,” Sen. Bill Wielechowski, an Anchorage Democrat who voted against the budget for its lack of a dividend, said today during special order speeches. “Many of us disagree with what happened but, you know, that’s democracy. You fight it out and then you live with the result and you live to fight another day.”

Wielechowski and several other Democratic legislators gave speeches that outlined their opposition to the governor’s newfound legal thinking on the budget. Wielechowski noted that the Alaska Constitution must be considered in its entirety and that when taken with other elements of the constitution, budget bills don’t need effective dates altogether. Sen. Jesse Kiehl, D-Juneau, also noted that Dunleavy has used effective dates in several bills, including the one he’s put to the Legislature today. He said springing this on legislators, particularly when it appears to go against his own budgeting, will only bring pain on everyday Alaskans and state employees.

“To threaten one after the voting’s done is a blindside hit and it’s a blindside hit after the whistle. It doesn’t target legislators with whom the governor appears through his public statements to be very angry with,” he said. “No, it hits the people who work for him and the people we all represent. It’s a punch down.”

Sen. Jesse Kiehl gesticulates during the floor speeches, pointing out that the very thing Dunleavy claims makes the budget “defective” is included in many of his own budget proposals, including the one seeking a $2,300 PFD.

For their part, the House Republican minority shied away from directly saying that the cost of keeping government open is a $2,300 dividend. Some sought to soften the blow and deflect blame on the shutdown, with several objecting to one Democrat’s accusation that the whole thing was “pretext for a shutdown.” It’s not their fault that they voted against the effective date, they argued, it’s everyone else’s fault.

“I don’t think anybody in this room or anybody I know wants this to happen,” said Rep. Christopher Kurka, R-Wasilla, during special order speeches. “I think it’s maybe better to articulate it as a funding gap. It’s not being shutdown, it’s just being paused temporarily.”

It’s not even clear that the increased dividend in this budget would be enough as some legislators have linked their vote to the governor’s effort to add the dividend to the constitution, a measure that’s not currently before them.

Rep. Kurka explains how the shutdown is really government “just being paused temporarily” while Reps. Adam Wool and Andy Josephson (right) react in the background.

The mental gymnastics were all too much for many legislators, including Anchorage Democratic Rep. Andy Josephson who excoriated the Republicans for turning what had long been a procedural move into a point of leverage over the rest of the Legislature. He said that, yes, they can vote however they want, but they’ll need to live with the consequences of their action.

“This has never been done before. The effective date on something so critical as a budget has never been weaponized like this. The budget is the heart, the lungs and the brain of the state. That’s what it is,” he said. “I, for one, am not going to watch in perpetuity that sort of weaponization of a budget at this late stage. If people want to see an experiment and see what this all looks like, OK, you’ll be reading about this all throughout the national newspapers and national media, but you’ll first be hearing about it from Alaskans, just as you are. Check your emails. This is a totally unnecessary endeavor.”

The consequences of those actions, however, are not entirely clear. While former Gov. Bill Walker had sought to outline in precise detail the consequences of failure during the 2017 budget cycle, releasing a laundry list of affected agencies and state services in the beginning of June, Gov. Dunleavy’s administration has done no such thing. Instead, the governor waited until the minimum allowable time to notify employees that most would be laid off on July 1 and has yet to make determinations on what services may be affected.

A FAQ distributed to state employees earlier this week offered no guidance, but noted that anyone affected by the layoff would not receive back pay. It’s left many state agencies and state employees in uncertain waters. In 2017, the shutdown would have reached far and wide throughout state government, including but not limited to fisheries just as they hit their peak season, park rangers, unemployment claims, summer road construction, substance abuse treatment in the prisons and even the sale of cigarettes and pull tabs. The Alaska Permanent Fund Corporation announced it’s taking steps to prepare for the shutdown, which includes laying off fund managers and moving the fund into a passive management.

“This is the second time in 5 years we have had to take these steps,” said APFC CEO Angela Rodell in a statement. “The State depends on us more than ever, so this is a high-stakes game being played with serious impacts on the lives of every Alaskan, which could be felt for a long time to come. I encourage everyone to get back to the table so that we can continue to do our work uninterrupted and generate revenue for the State of Alaska.”

What’s next: The path ahead is unclear. Though the governor’s budget is somewhat similar to what has already been approved by the Legislature, it is essentially starting from square one. It will need to work through committee process, the floor amendment process (which alone took two days in the House spread over a week-and-a-half) and floor votes in both the House and Senate. Getting this done with less than eight days on the clock is, frankly, a near-impossible task. Producing reports and drafting new versions of the budget takes several days on its own, and that’s with everyone pulling together in the same direction. As one legislator told me, “It’s preposterous, completely preposterous.”

The House appears to be cuing up an alternative measure: A budget bill that would strictly be focused on approving the effective date on already-passed budget bill. That legislation is set to be heard in the House Finance Committee at 1:30 p.m. Thursday. The House could also return to action on the existing budget bill, which has yet to be sent to Gov. Dunleavy (who has already pledged to not sign it), and take a new vote on the measure. It would take 27 votes to do so, which is the same threshold for approving the effective date.

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