Alaska’s House passes a budget and adjourns, leaving the Senate to take it — or await another special session

JUNEAU — The Alaska House made a take-it-or-leave-it budget offer Thursday evening to the state Senate, approving a modified operating budget that tilts toward House priorities along with an expanded Permanent Fund dividend before gaveling out of the special session.

The move, on what would be the second-to-last day of the special session, appears to be more of a restatement of the largely Democratic House majority coalition's priorities than a negotiated agreement with the Republican-led Senate to avert a government shutdown July 1.

The new House budget contains some concessions, accepting $8 million of the Senate's proposed $22 million cut to the state university system along with a $15 million Senate cut to the Medicaid health-care program for the poor and disabled.

But it doubles the Senate's proposed Permanent Fund dividend — allowing for payments of more than $2,000 a person — and grants full funding for schools, rejecting a Senate bid to cut 6 percent, said Homer Rep. Paul Seaton, co-chair of the House Finance Committee and one of three Republican members of House leadership.

Instead of a deal, the House proposal could signal an early conclusion to the current special session — which was scheduled to finish Friday — and their opening offer for the next one.

There was no indication late Thursday that Senate leaders had signed off on the new House plan. In a prepared statement, Senate President Pete Kelly, R-Fairbanks, indicated displeasure and disappointment with the House's move.

Kelly said the Senate majority "will not support this budget that jeopardizes the financial future of our state."

And Gov. Bill Walker said he was "surprised" by the House action, which he criticized.

"They did not get the job done for Alaska," Walker said in a prepared statement. "A compromise is required to protect Alaskans and put the state on a stable fiscal path."

If the Senate turns down the House-approved spending plan, lawmakers would have to open a second special session to pass an operating budget and avert a government shutdown July 1. A shutdown would shutter all but the most essential state services.

"One body is trying to make the other body eat their will," said Ashley Reed, a lobbyist.

The House left the floor Thursday evening after an acrimonious debate over an unusual series of motions and votes that had the effect of using an amendment to stuff a multibillion-dollar, 89-page operating budget into a much smaller capital budget proposal. The vote came after a long day of negotiations between House and Senate leaders that Seaton called productive, though he added: "Time has run out."

House leaders limited each member's arguments on the amendment to two minutes, granted only brief breaks requested by the minority, and placed a "call" on the chamber, barring lawmakers from leaving the floor except for bathroom breaks. Almost every vote taken accounted for the full 40 members of the House.

The moves provoked howls of protest from the Republican minority, with members saying they were "stunned," "flabbergasted" and "in shock." Anchorage GOP Rep. Lance Pruitt compared House Speaker Bryce Edgmon, D-Dillingham, to Russian President Vladimir Putin and Zimbabwe dictator Robert Mugabe, while Eagle River Republican Rep. Dan Saddler referenced Franklin D. Roosevelt's description of the Pearl Harbor attack: "a day that will live in infamy."

"This is an absolute travesty," Saddler said.

[What the heck is going on down there?! From our reporter in Juneau, here's a Q&A on the Legislature and the looming shutdown]

By inflating the PFD to more than $2,000, the full House package appears to vaporize the majority's plan to eliminate the state's $2.5 billion deficit, which would have allowed for a $1,150 dividend. But majority leaders said their deficit-reduction plan also included an income tax and oil tax increase that the Senate rejected.

House majority members said they were justified in passing a spending plan with many of their priorities — with the extra dividend money and full funding for schools — because the Senate majority had refused to entertain their tax proposals to fully balance the state budget.

In the Senate's rejection of a graduated income tax that would affect the state's richest residents more than its poorest, the House found the proposal to just use the Permanent Fund to be mean-spirited to low-income residents, for whom a dividend is a much larger percentage of income.

Rep. Zach Fansler, D-Bethel, said he "wasn't going to balance the budget on the backs of rural Alaska."