Alaska News

Negotiations to continue as Alaska Senate rejects budget deal

Alaska Senate leaders on Sunday formally rejected a compromise budget offer handed to them the day before by the House, with the senators saying they wanted to negotiate a different deal.

The move comes with the state poised to mail notices to 10,000 public employees Monday warning them that they'll be laid off as part of a government shutdown July 1 unless there's a budget deal, which is still pending more than 40 days after the scheduled end of the Legislature's 90-day session.

In a bipartisan vote, the Republican-led House early Saturday passed a $5 billion budget package with about $30 million -- less than 1 percent -- in concessions to the Democratic minority.

The deal included restoring a proposed cut of about $16.5 million to Alaska's per-student funding formula, plus another $15 million for other Democratic priorities like the state's university and ferry systems.

The package also restored $30 million in pay raises for state workers -- some of which were previously agreed to in contracts -- though the money for the raises would be balanced by an unspecified $30 million reduction that would likely lead to layoffs.

The Republican-led Senate Finance Committee on Sunday replaced that deal with their own budget that eliminates all the concessions to Democrats, though they did replace the per-student education money with a one-time grant.

Committee co-chair Sen. Pete Kelly, R-Fairbanks, said he wanted to use a special House-Senate budget conference committee to negotiate over the concessions. That process would be unlikely to conclude before Monday, the other committee co-chair, Sen. Anna MacKinnon, R-Eagle River, said in an interview.

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An agreement is needed between the Senate's Republican-led majority and the two different caucuses in the House for each chamber to clear a three-quarters voting threshold that's constitutionally required to tap billions of dollars in a state savings account.

"The budget that we received from the House -- we have at least read in the newspaper that it's a compromise that will get us a three-quarter vote. But it is a compromise that may jeopardize a three-quarter vote in the Senate," MacKinnon said during the hearing. "What our chairman has proposed us to do is to take us all to the bargaining table in the conference committee. So what you see us doing is establishing the goals."

House members, who took more than seven weeks to come to their compromise, greeted the Senate's move with resignation. Presented with a copy of the Senate's substitute budget during the finance committee hearing, one Republican representative flipped through it and uttered a single, four-letter expletive.

"We're essentially back to where we were in day 89, day 90, day 91," said another representative, Anchorage Republican Rep. Charisse Millett, the majority leader. "I feel like the goalposts are constantly moving for the Senate majority and the House minority -- and the House majority is trying to referee."

All the concessions in the House compromise budget would be up for discussion in the conference committee, MacKinnon said. But Kelly, at least, remained staunchly opposed to the raises for state employees, saying they were inappropriate with the state facing a multibillion dollar budget deficit stemming from a crash in oil prices.

"You're not going to put that in this budget because there are very, very, very few of us that would say when you have an $8 billion deficit tsunami coming at you that you should be giving pay raises to people," Kelly said during the hearing. "It just doesn't make sense."

MacKinnon said the Senate's goal was to set education as its highest priority. But education advocates who watched the hearing said afterwards that they were livid with the committee's proposal to replace the $16.5 million in annually recurring per-student funding with a one-time grant.

"Oh my gosh -- my blood is boiling," said Alyse Galvin, an organizer with the advocacy group Great Alaska Schools.

"The districts count on the money being in statute," she added.

Galvin called the committee's move "nefarious," saying it proposed to shift education money around "so that the public may think it looks like they're supporting education."

The full Senate was scheduled to hold a floor session at 4 p.m. Sunday to consider the committee's budget proposal.

The House was scheduled to meet at 5 p.m., with the House-Senate budget conference committee expected to be appointed before the end of the day.

Nathaniel Herz

Anchorage-based independent journalist Nathaniel Herz has been a reporter in Alaska for nearly a decade, with stints at the Anchorage Daily News and Alaska Public Media. Read his newsletter, Northern Journal, at natherz.substack.com

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