Special session about to end as House gavels out and Senate expects to follow Monday

JUNEAU — The Alaska House on Friday quit this year's second special session without holding a hearing, filling what will likely be its final floor debate of 2016 with protests and a personal attack.

The Senate is expected to follow suit and adjourn Monday, brushing off warnings from Gov. Bill Walker and an organized campaign of business leaders about the consequences of inaction on the state's budget crisis.

"Staying here for another 30 days is not going to resolve the revenue issue before us," House Speaker Mike Chenault, R-Nikiski, said in a rare speech from the floor. "We have discussed ad nauseam all the different proposals and I cannot see any significant changes within the time allotted for the special session."

Lawmakers will depart Juneau with a $3.2 billion deficit that relies on savings to pay for 70 cents of each dollar of government spending this year. The state's primary savings account, the Constitutional Budget Reserve, is projected to be emptied in about two years, potentially forcing lawmakers to spend money from the Permanent Fund's earnings account that pays residents' dividends.

"Alaska's indeed in a fiscal crisis," said Rep. Wes Keller, R-Wasilla. "It's epic, it's huge, and we're all in awe and in shock of it."

Budget reductions approved this year by the Legislature and Gov. Bill Walker cut more than $1 billion in state spending, and 7.5 percent from state agencies.

But lawmakers failed to pass the one bill that Walker, financial experts and even some of its legislative opponents acknowledge is most needed to fix the state's budget crisis: a proposal to restructure the $54 billion Permanent Fund to help pay for government expenses.


The measure passed the Senate but died in the House Finance Committee last month. Lawmakers in both chambers also rejected a suite of tax measures proposed by Walker, with none of them advancing to the floor for votes during a 90-day regular session, a one-month extension and a pair of special sessions.

"By doing nothing this year, the House sets us on an even more challenging journey to a sustainable fiscal future," Walker said in a prepared statement Friday.

[Alaska lawmakers plot escape from Juneau as Gov. Walker expects to wait until November for budget reform]

Lawmakers also did not take votes during the special session on overriding Walker's line-item vetoes of money for education, oil tax credits and half of residents' Permanent Fund dividends — reductions Walker said he made to preserve state savings after his deficit-reduction legislation was rejected.

An invitation by the House to take the override votes in a joint floor session Friday — the last day allowed under the Constitution — was rejected by the Senate.

Republican House members instead spent their Friday floor session criticizing Walker's plans and repeating their months-old arguments about the need for further government downsizing before they'll support taxes or dividend reductions.

Anchorage Republican Rep. Craig Johnson, who's running for a state Senate seat, accused Walker of having "stolen" $1,000 from "every man, woman and child in Alaska" through his dividend veto.

Anchorage Democratic Rep. Les Gara, meanwhile, used his floor speech to criticize the mining and oil industries for fighting tax increases and called the situation a "complete mess."

One of a handful of observers, schools advocate Alyse Galvin, left the House chamber before lawmakers adjourned. She said she didn't want to listen to what she called "re-election speeches."

"We're in three different towns pointing fingers at everybody else," said Galvin, referring to the Senate's decision to hold hearings this week in Wasilla and Anchorage while the House remained in Juneau. "We just wanted them to get their job done with a long-term plan. And they didn't."

She added: "I blame everybody for this."

The Senate remains officially convened in the special session after holding a "technical session" Friday with only a few members in attendance — but enough to keep the session alive.

Senators have committee hearings scheduled in Anchorage next week. On Thursday, Senate President Kevin Meyer, R-Anchorage, gave no indication they would be canceled.

But on Friday, he said the Senate would likely adjourn instead on Monday.

"If the motivation's not there from the House, then it's probably best not to spend any more money on per diem and flying us back and forth," Meyer said. "We're only six months away now from a regular session, and I don't see anything that has to be done right now, that can't wait now until January."

After Friday's adjournment, House leaders issued a press statement suggesting that it was Walker's responsibility to drum up the necessary votes to pass the legislation needed to fix the budget crisis — not the Legislature's.

"Should the governor come up with 21 House votes and 11 votes from the other body, then our meeting in special session may be fruitful," Chenault was quoted as saying.


Meyer and Sen. Anna MacKinnon, R-Eagle River and co-chair of the Senate Finance Committee, said they were contemplating a new idea that could be more productive than the Legislature's attempts to find consensus on Walker's proposals.

MacKinnon said she was thinking about trying to convene some type of legislative working group within the next two months that could include members of both the Republican-led majorities and Democratic minorities in the House and Senate.

The group, MacKinnon said, could "narrow the focus of the Legislature down on particular pieces of legislation that could impact the fiscal situation," then be considered at another special session.

Walker's package of reforms, MacKinnon said, was too many pieces at once, which she described as "shiny objects in the water" that "create these factions that are in opposition to one of the pieces."

"Everyone's trying to leverage everything," she said.

In response, Grace Jang, the governor's spokeswoman, said only one of the tax measures proposed by Walker was actually new — the income tax. The rest were all increases to existing taxes, she said.

"Nonetheless, Gov. Walker has long said he welcomes all ideas for a sustainable fiscal plan. If this group has solutions to make the numbers add up to solve our $4 billion deficit, the administration is eager to hear them," Jang said.

Minority Democrats pointed out that they made proposals similar to those suggested by MacKinnon at the beginning of this year's legislative session that were dismissed by Republican majority members. MacKinnon acknowledged that such proposals were made.


One Democratic idea was to create a Ways and Means Committee to review revenue measures; another was to eliminate the distinctions between the Democratic minorities and urban Republican and Bush Democratic majorities and form a "caucus of the whole," effectively a unity government.

"We should have done it at the beginning of session," Sen. Dennis Egan, D-Juneau, said in a phone interview.

Asked why the Senate majority hadn't begun working with Democrats on deficit-reduction measures earlier in the year, MacKinnon responded that it had.

The Senate, she said, worked on bipartisan measures from the start of this year's legislative session, citing Medicaid and criminal justice reform bills that could save the state more than $100 million annually.

Those reform measures weren't finished until after the end of the regular session, MacKinnon added.

Egan said lawmakers could have worked on the revenue measures simultaneously. As to the argument that there wasn't time, he added, "I don't buy that at all."

After making an impassioned plea for action in a Thursday news conference, Walker was largely silent Friday as House lawmakers took turns criticizing his budget reform proposals. After two special sessions that failed to produce agreement on any of his deficit-reduction measures, he said Thursday that his legislation would likely have to wait until the outcome of the November elections.

In his statement released at the end of the day, Walker warned that the dividend would disappear within four years without adoption of reforms that include a restructuring of the Permanent Fund, with the deficit forcing additional cuts to "critical services."

But he didn't announce his next move. Instead, he said simply, "I will do everything I can to keep Alaska on a path to prosperity."

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