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Gov. Mike Dunleavy says he can’t sign a ‘defective budget’ as layoff notices sent to state employees

Some legislators say that threatening a shutdown is a stalling tactic to push for a larger PFD
Gov. Mike Dunleavy.
Gov. Mike Dunleavy.(Sean Maguire/KTUU)
Published: Jun. 17, 2021 at 2:51 PM AKDT|Updated: Jun. 17, 2021 at 6:06 PM AKDT
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JUNEAU, Alaska (KTUU) - Gov. Mike Dunleavy has said that he can’t sign a “defective budget” passed by the Alaska Legislature and is calling on legislators to fix it so that it represents the interests of a majority of Alaskans. Some legislators are saying that threatening a state government shutdown is a stalling tactic by the governor to push for a larger Permanent Fund dividend.

Layoff notices were sent out to thousands of state employees on Thursday afternoon, one of which was forwarded to Alaska’s News Source. They warn of a looming and unprecedented state government shutdown that would begin on July 1 unless an operating budget is signed by the governor before then.

The incomplete budget was narrowly passed by the Legislature on Wednesday that included a roughly $525 Permanent Fund dividend. However, the Legislature failed to pass a crucial three-quarter vote, which means dozens of state accounts are set to be emptied on July 1.

Gov. Mike Dunleavy to discuss the state budget

Watch Live: Gov. Mike Dunleavy is discussing the state budget. The Legislature narrowly passed an incomplete budget this week that includes a Permanent Fund dividend of roughly $525. Read more: https://bit.ly/3q58dEC

Posted by Alaska's News Source on Thursday, June 17, 2021

The budget that passed also lacked language providing an effective date of July 1, the start of the next fiscal year. The procedural vote failed in the House of Representatives and the governor said he is unable to sign the budget because of that.

If that vote is not successful before the end of the special session at midnight on Friday, Dunleavy said he will call legislators back into another special session starting next Wednesday to fix the budget.

Some legislators concerned about overdrawing the Permanent Fund don’t agree with the Dunleavy administration’s interpretation of the effective date clause issue and say threatening a state government shutdown is a tactic to push for a larger dividend.

Sen. Jesse Kiehl, D-Juneau, was outraged on behalf of thousands of state government workers who received pink slips on Thursday afternoon.

“There are a lot of Alaskans who work really hard to deliver the services that other Alaskans need,” he said. “They don’t deserve this, they don’t deserve this for one second.”

The governor signaled there are policy changes that should take place within the budget before he would sign it, saying it needs to represent a majority of Alaskans, but he didn’t detail what those changes should be.

“So, it’s an opportunity to bring all of the visions and all of the voices together to come up with an Alaskan bill that works for all Alaskans,” Dunleavy said on Thursday afternoon.

Speaking in the morning after coming from a closed-door meeting with the governor, Rep. Cathy Tilton, R-Wasilla, said Dunleavy has been pushing for a “realistic” dividend. The governor has advocated for a new 50-50 plan for the Permanent Fund that would pay out a roughly $2,350 dividend in 2021, but he has not described how that should be paid for.

Editor’s note: This article has been updated to include additional information.

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