Alaska Legislature

What’s the ‘reverse sweep’ and why has it become an issue in Alaska’s budget deadlock?

The failure of an obscure annual budget vote called the reverse sweep threatens to cause statewide impacts even broader than the $444 million in operating budget vetoes approved by Gov. Mike Dunleavy. Here’s what you need to know.

• The state has dozens of savings accounts designed to fund specific programs.

• In 1990, voters approved a constitutional amendment that requires each of those accounts to be drained at the end of each fiscal year and deposited into the Constitutional Budget Reserve.

• The annual problem: The Legislature designs the state budget to use those savings accounts, and draining them would leave no money for the programs.

[Governor’s decision to redefine state funds may dim the lights of rural communities]

• The annual solution: A supermajority three-quarters vote in the Alaska House and the Alaska Senate known as the “reverse sweep.” If the reverse sweep passes, the constitutional amendment acts as designed at 11:59 p.m. June 30 (the end of the fiscal year), and at 12:01 a.m. July 1 (the start of the fiscal year), the money flows back out of the Constitutional Budget Reserve and into the programs’ accounts.

• This year, the Alaska House Republican minority refused to vote for any spending from the Constitutional Budget Reserve, including the reverse sweep.

• At the same time, Dunleavy’s Office of Management and Budget is redefining the list of programs subject to the constitutional sweep. Previously protected programs, such as scholarships for high school students, and the Power Cost Equalization program (which subsidizes rural power costs) may now be swept.

• The governor’s office has declined to provide a new list to legislators or the public, so no one actually knows the full effects yet.

• Despite that, programs have already been told to not make any new agreements or sign any new contracts. That means no money for scholarships, rural power subsidies, fuel spill cleanup or a variety of other programs.

• The House Republican minority has said it will not vote for the reverse sweep (and other spending from the Constitutional Budget Reserve) unless the rest of the Legislature approves a traditional Permanent Fund dividend, which this year would be worth $3,000.

• The rest of the Legislature is not willing to do that, because that dividend, combined with current levels of government spending, would require overdrawing from the Alaska Permanent Fund, reducing its value in the long term.

• And so the deadlock continues and the programs go unfunded.