JUNEAU — Alaska lawmakers appear increasingly likely to conclude their days-old special session Friday and leave Juneau without taking action on any of Gov. Bill Walker's deficit-reduction proposals.
"They want to wait," a dejected, hoarse-voiced Walker said in an interview Wednesday in his Juneau office. "They want to wait for another session at some point — at an undetermined point in the future."
Walker said he was ready to refer to the Legislature's behavior as a "crisis" — a term he's hesitated to use in the past.
But now, the only actions under real consideration by lawmakers appear to be ones that would increase, not decrease, the size of the state's $3.2 billion budget deficit.
House Speaker Mike Chenault, R-Nikiski, sent a letter Wednesday to Senate President Kevin Meyer, R-Anchorage, asking for a joint session at noon Friday so lawmakers could vote on overriding Walker's $1.3 billion in line-item vetoes that include education funding, oil company subsidies and Permanent Fund dividend checks.
The special session, which convened on Monday, is not expected to last past the end of the week. One Anchorage lawmaker Wednesday was making reservations for a hotel room in Tok on Saturday for the drive home.
"We sine die Friday," said Fairbanks Democratic Rep. David Guttenberg, referring to the formal motion to adjourn, when asked what he expected out of the remainder of the special session. "The bills haven't changed. Nobody's opinion has changed," he added. "People who are locked in are locked in."
Asked about the Legislature's potential to adjourn at the end of the week, House Speaker Mike Chenault, R-Nikiski, responded: "That's an option."
"If we don't see a path forward, do we want to sit down here for another month and cost the citizens of the state?" Chenault asked. "There's not a lot of appetite for that."
Walker has been pressing his budget-reform crusade since December. That's when he first introduced his deficit-reduction package to balance the budget by 2018, using a mix of cuts, new taxes and tax increases, and a restructured Permanent Fund that would pay out smaller dividends but provide state revenue.
After a 121-day regular session and a four-week special session, lawmakers passed just one of Walker's nine deficit-reduction proposals — a measure reducing cash subsidies for the state's oil producers.
By the end of the special session last month, sharp legislative and industry opposition had forced Walker to whittle down the rest of his package to its biggest piece — the Permanent Fund legislation, Senate Bill 128.
The Senate passed the legislation in a 14-5 vote, but the House Finance Committee later rejected it in its own 6-5 vote. Some Democratic members said they wouldn't agree to dividend reductions without stronger oil taxes or measures like Walker's progressive income tax, while several Republicans said their constituents wanted more cuts to state spending.
Walker said Wednesday that he thought he'd addressed those objections with his vetoes, which included $430 million in oil company subsidies, $70 million for schools and the state university system, and $40 million in agency spending.
But interviews Wednesday suggested that House Finance Committee members' opposition to the Permanent Fund changes in SB 128 had only hardened.
Rep. Dan Saddler, R-Eagle River, pointed out that Walker's veto of the oil subsidies would only postpone the payments until next year, or later. And Saddler said he wanted other "systematic changes" in government, like cuts to school spending or changes to the state's system of annual and biennial raises for public employees.
"The reduction has been nowhere near what he has said on the record is needed," Saddler said. Walker, he added, "has not met my conditions."
Guttenberg, meanwhile, had justified his vote in the finance committee against Walker's Permanent Fund legislation last month by pointing to the oil-company subsidies that the governor subsequently vetoed.
Now, in an interview Wednesday, Guttenberg said he still wouldn't vote for Walker's bill without additional reductions to another type of tax credits that oil companies can use to reduce the taxes they owe the state.
And, Guttenberg said, he's skeptical of a financial plan that relies solely on reductions to the Permanent Fund, which would hit residents equally regardless of income, while not including progressive elements, like an income tax modeled on federal taxes that would take a larger percentage of money from well-off Alaskans.
The stances taken by Guttenberg and Saddler defy arguments made by Walker and budget experts that it's all but impossible to balance the budget without diverting some of the earnings of the $54 billion Permanent Fund.
Lawmakers would have to reduce the state's agency operating budget by more than 80 percent to close the $3.2 billion deficit through cuts alone; Walker's proposed income and industry taxes are projected to raise a combined $350 million.
Guttenberg seemed to recognize that reality, saying: "There's nobody in this building who doesn't think we need to restructure the Permanent Fund."
He characterized Republicans unwilling to compromise from their cuts-only approach as "an irrational group of people who have an ideology that refuses to see the reality of the situation."
But he also acknowledged that he's been standing on his own "populist message," like presidential candidates Bernie Sanders and Donald Trump.
"In the history of this process, people always lose and industry always wins," said Guttenberg, who's running unopposed in this year's election. "I have an opportunity to say everybody needs to be at the table, the bigs, the industry."
Whether to acquiesce to a deficit-reduction plan that relies solely on Permanent Fund earnings, he added, is an argument he has with himself every night.
But after a messy Wednesday full of political attacks and social-media sniping, the prospects that any of Walker's bills would pass during the special session appeared farther away than ever.
The day started with a statement to the press from Walker, whose growing alarm over lawmakers' inaction drove him to issue a six-page report outlining what his office called the "dire consequences facing Alaskans as a result of the Legislature's failure to pass a sustainable fiscal plan."
Without action, the report said, schools funding would be sliced by two-thirds. Ferry service and road maintenance would cease for some areas, and most prisons would be closed, with inmates released early or sent out of state.
In his press statement, Walker said he'd ask every legislator and every legislative candidate to choose between one of three deficit reduction plans: his own, one that relies solely on Permanent Fund earnings, or the "No Action Plan," which he abbreviated as NAP.
"They just don't seem to want to vote on anything," Walker said in an interview.
He contrasted lawmakers' lack of urgency with a new report by the Legislature's budget analyst, David Teal, that refers to Alaska's budget problem as "the gravest fiscal crisis in state history."
"This is the guy who's not an advocate. He's a numbers guy," Walker said. "I mean, he works for the Legislature. This isn't us."
Through his Twitter account, Walker also accused lawmakers of playing "games" by scheduling two afternoon hearings simultaneously, making it impossible for key administration officials to appear at both.
He added: "I've done all I can do, between this session and the last session."
"I've got nothing left," he said.
GOP lawmakers, and the Alaska Republican Party, responded in kind. At a testy hearing on Walker's Permanent Fund legislation in Wasilla, Sen. Bill Stoltze, R-Chugiak, opened by offering cheese and crackers to the audience, then added: "The administration will be presenting, so be careful what you put in your stomach."
The state GOP, meanwhile, responded to Walker's morning press statement by asking if the governor had violated state ethics rules barring the use of state assets for partisan political purposes.
"This governor's ethical boundaries are fuzzy at best," the party's vice chair, Rick Whitbeck, was quoted as saying in a prepared statement. "But it looks like his policies are so bad that he has to resort to political threats and strong-arming to try to get his way."
Walker scoffed at that suggestion in an interview, but by the end of the day, he'd released a prepared statement that said he regretted "any misunderstanding" stemming from his announcement of his plans to ask legislative candidates to pick a deficit-reduction plan.
With progress appearing increasingly unlikely during the remainder of the special session, lawmakers and observers were already pondering how to break through the Legislature's gridlock later. Anchorage Democratic Rep. Chris Tuck, the House minority leader, said he'd been talking with members of the Republican-led House majority about setting up bipartisan panels to work on budget issues before the next legislative session starts in January.
"We've got a lot of learning still left to do," he said.
An unorthodox idea came from Cliff Groh, the attorney and budget advocate who's been working with a public policy group, Alaska Common Ground, to educate residents about the state's financial crisis — a crisis Groh described as a "slow motion train wreck."
Groh's idea: what he called a "partial cashout" of the Permanent Fund. A lump sum payment, divided up among Alaskans, could come at the same time the fund is converted to a different structure that would somehow support government services, he said.
An "out-of-the-box" approach like that could move lawmakers away from their current stalemate, which Groh compared to trench warfare in World War I.
"But it's not guaranteed to end in four years," he said. "It's going to be long, bloody, and more and more painful."