The Alaska House passed a budget deal early Saturday morning with bipartisan support, moving the Legislature a step closer to a final spending package that averts a partial government shutdown July 1 and the Monday mailing of layoff warnings to 10,000 state employees.
But a big hurdle still loomed in the form of the Senate, which still must sign off on the $5 billion plan and whose leaders eyed the deal with skepticism as it emerged Friday.
The House adjourned its floor session in downtown Anchorage just after 12:30 a.m. Saturday as patrons at the Gaslight Lounge across the street spilled out onto the sidewalk.
"I'm so relieved that it's at this point," Rep. Cathy Munoz, R-Juneau, said in an interview afterward. "Now it's in the hands of the Senate."
The deal came in the form of two key House votes on a compromise budget plan that eluded the Republican-led majority and the Democratic minority for more than a month after the scheduled conclusion of their 90-day session. A special session began in Juneau before lawmakers officially relocated to Anchorage this month.
The Republican-led majorities in the House and Senate last month agreed on a package that sliced hundreds of millions of dollars in spending, as the state tries to close a multibillion-dollar budget gap stemming from a crash in oil prices.
But the House Democratic caucus withheld its support, saying cuts in areas like education and state worker pay raises were too steep, and that the Republican majorities hadn't included Democratic priorities like expansion of the public Medicaid health-care program or a $200 million reduction in the cap on tax credits granted to oil companies.
That held up a deal and has raised fears of a government shutdown because Democratic support was necessary for the House to clear a three-quarters voting threshold required to access billions of dollars in a state savings account.
Saturday morning's Democratic support for a deal ended up coming at a price of about $30 million in additional spending, or less than 1 percent of the overall budget.
The Democrats rejected an initial offer from the majority earlier this week that included about $17 million in additional spending to restore a planned cut in the state's per-student education funding formula. It also included a commitment to pay for scheduled raises for state workers, though that would be matched by $30 million in unspecified new cuts that the administration of Gov. Bill Walker says would likely lead to layoffs.
The Democrats early Saturday approved a second offer from the Republicans that came with another $15 million for Democratic priorities. Those included $2 million for the state's ferry service, $5 million for the university system, $3 million for a program that makes cash payments to low- and moderate-income senior citizens, $2.5 million for social workers, and $2 million in grants for pre-kindergarten.
The deal did not, however, include other Democratic demands like restoring additional cuts proposed to education funding, and it also left out language providing for Medicaid expansion. That drew the ire of at least one ally of the Democrats, Kevin McGee, a vice president at the pro-Medicaid expansion Anchorage branch of the NAACP.
"Any deal without Medicaid expansion is no deal," McGee wrote in a tweet early Saturday directed at the Democratic caucus. "You blinked."
Anchorage Rep. Chris Tuck, the Democratic leader, said the deal wasn't enough given the leverage his caucus had, though he added that it included some pieces that were important to his members.
Tuck ultimately voted against the final budget package, which still received support from some Democrats and passed 32-8.
"We got pushed against a deadline," Tuck said in an interview afterward. "We wanted to make sure pink slips didn't get out."
Tuck said his caucus also wanted to keep the Republican-led majority from pursuing an alternative budget plan that could have passed without Democratic support but relied on a fiscal maneuver involving a transfer of money between two accounts of the Alaska Permanent Fund.
House Speaker Mike Chenault, R-Nikiski, said Saturday morning's deal represented "the best agreement the House could come up with after long negotiations."
"I guess it's not meant to be easy," he added, referring to the provision in the Alaska Constitution that requires the three-quarters majority vote to tap the state savings account.
Now, Chenault said: "We'll wait on the Senate."
The Republican-led Senate majority pushed for the steepest cuts during the Legislature's budget process, and it was unclear how its members would greet the House package and its added spending.
Senate President Kevin Meyer, R-Anchorage, said Friday afternoon that House Democrats were unlikely to get a better deal than the one they were presented with earlier in the week, which left out the additional $15 million in the House's final budget.
Meyer hadn't made any commitment to support the House's compromise and wasn't part of the negotiations that led to it, though he indicated its outline was "relatively acceptable" to him personally, Tuck said.
In a phone interview Friday night before the House vote, Sen. John Coghill, R-North Pole, was skeptical of the general contours of the deal, though he said he hadn't seen its specifics.
"A couple things that the Senate's not interested in," Coghill added, are "spending more money" and funding the pay raises for state workers.
"We'll have to see what actually comes of that language," said Coghill, the Senate majority leader. "And if they pass it over to us, we'll have to take it seriously."
In anticipation of Senate objections to the deal, the House budget doesn't actually include all the money from the state savings account that's required to pay for the full package.
Democrats insisted on leaving out nearly all of that money, so another vote to tap the savings account will be required in the House once the Senate passes a final version of the budget, Tuck said.
That vote would also require a three-quarters supermajority and Democratic support. Tuck said the provision was needed in case the Senate made changes to the legislation.
"This is an insurance policy," he said.
The Senate was scheduled to meet at 9 a.m. Saturday.
The House's budget bill is expected to head first to the Senate's finance committee before returning to the full Senate floor. If the Republican majority signs off on the deal, it could get a floor vote in the Senate no earlier than Sunday, Tuck said.