Tentative budget, dividend agreement in flux as state government shutdown looms

The exterior of the Alaska State Capitol in Juneau, Alaska.
The exterior of the Alaska State Capitol in Juneau, Alaska.(KTUU)
Updated: Jun. 15, 2021 at 3:37 PM AKDT
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JUNEAU, Alaska (KTUU) - A tentative budget and Permanent Fund dividend agreement hammered out on Sunday is in flux as legislative leaders hold negotiations behind closed doors.

The Alaska Legislature needs to pass an operating budget before July 1, the start of the next fiscal year, or there will be a state government shutdown.

Anchorage Democratic Rep. Chris Tuck said the goal for the House of Representatives is to pass a final version of the operating budget on Tuesday. Discussions are ongoing to see if a simple majority vote of 21 House members can be achieved to do that, he added.

The Senate delayed debating the current budget and dividend agreement on Tuesday until Wednesday morning, while legislators negotiate.

If an operating budget does not pass before close of business on Thursday, over 14,000 state employees will receive layoff notices warning them of the looming shutdown.

“We’re going to pass a budget before that deadline,” said Sen. Tom Begich, D-Anchorage, the Senate minority leader.

Other parts of the current fiscal agreement are much more contentious.

The size of the 2021 Permanent Fund dividend is contingent on a successful three-quarter vote of both the House and the Senate. If that vote fails, an estimated $1,100 dividend would be cut in half for Alaska residents.

Tied in with that three-quarter vote is the “reverse sweep,” an annual procedural vote that keeps dozens of state accounts full. At risk is a fund that reduces power bills in rural Alaska and another that provides scholarships for Alaskan college students.

“The three-quarter vote is very much still up in the air,” Tuck said Tuesday afternoon after stepping out from negotiations in the House speaker’s chambers.

The goal is to pass that measure before Friday, the end of the 30-day special session, he added.

Various projects in the Matanuska-Susitna Borough would also not be funded if 30 members in the House and 15 in the Senate do not agree to meet the three-quarter vote threshold.

Rep. Kevin McCabe, R-Big Lake, said he feels targeted as the representative for District 8. Houston Middle School would not get a new campus if that vote fails and the West Susitna Access project would also not be funded.

“I think it needs to change, somehow,” McCabe said about the current budget agreement. “How we do that all depends on the politics of the last minute of the session.”

Republican Gov. Mike Dunleavy sat down with legislative leaders on Tuesday morning. Begich said Dunleavy’s message was that he wouldn’t interfere with the budget process and that he hoped differences could be resolved between the House and Senate majority and minority caucuses.

An email blast sent out at Tuesday from the governor’s office raised some eyebrows. It urged Alaskans to contact their legislators and tell them to vote against “this coercive budget.”

A spokesperson for the governor’s office said Dunleavy had not authorized that message being sent out.

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