With a government shutdown looming July 1 and layoff notices to 10,000 state employees set to be mailed Monday, the Alaska Legislature remained locked in inaction Sunday.
The Alaska Senate refused to sign off on a bipartisan budget offer handed them the day before by the House, then failed to debate its own substitute version of the budget.
A dejected stream of lawmakers left the Legislature's Anchorage office building Sunday evening after the Senate adjourned its floor session about 7:30 p.m. On the floor was the substitute budget package moved by the Senate Finance Committee earlier in the day -- a version of the budget stripped of the House's compromise components.
Sen. Bill Wielechowski, D-Anchorage, called the situation a "mess." But that was even as he and other legislators said that there had been private discussions between the House Democratic minority and the Senate's Republican majority that could still lead to a budget deal Monday.
"The negotiation needs to happen right now, and actually, it is happening right now," Wielechowski said in an interview after the Senate adjourned. "They're pretty close."
Earlier Sunday, though, the Republican leaders of the Senate Finance Committee formally rejected the House's compromise offer, with the senators saying they wanted to set up a special House-Senate budget conference committee to negotiate over the roughly $30 million in House Republican concessions to their Democratic counterparts.
That move would likely mean a more drawn-out negotiation process that House lawmakers had hoped to avoid, given that the Legislature has already dragged its scheduled 90-day session through 132 days. But the House Democratic leader and a key Republican senator both said Sunday evening that they thought the creation of the conference committee could be averted through an informal deal.
"I'm still optimistic. I know that sounds crazy," Rep. Chris Tuck, D-Anchorage, the minority leader, said in an interview after the Senate left for the night. "But the fact that the door is still open and that they did not push anything through tonight makes me more optimistic than I was at 9 o'clock this morning."
The deal passed by the Republican-led House early Saturday morning came with a bipartisan, 32-8 vote, along with a 38-2 vote to tap a state savings account holding billions of dollars, the Constitutional Budget Reserve.
The package totaled roughly $5.2 billion with $4 billion for state agencies and about $30 million in previously proposed reductions -- less than 1 percent -- added back at the minority Democrats' request.
The deal included restoring a proposed cut of about $16.5 million to Alaska's per-student education funding formula, plus $15 million more for other Democratic priorities like the state's university and ferry systems.
The package also restored $30 million in pay raises for state workers -- some of which were previously agreed to in contracts -- though the money for the raises would be balanced by an unspecified $30 million reduction that would likely lead to layoffs.
The Republican-led Senate Finance Committee on Sunday replaced that deal with their own budget that essentially eliminates all the concessions to Democrats, though they did replace the per-student education money with a one-time grant. That's a move that's opposed by education advocates, who say it creates uncertainty for school districts that rely on the annually recurring per-student funding as a baseline.
Committee co-chair Sen. Pete Kelly, R-Fairbanks, said at a hearing that he wanted to use the House-Senate budget conference committee to negotiate the concessions. He and other Republican senators on the committee said they would have a tough time supporting the concessions to House Democrats with the state facing a multibillion dollar budget deficit stemming from a crash in oil prices.
An agreement is needed between the Senate's Republican-led super-majority and the two different caucuses in the House for each chamber to clear a three-quarters voting threshold that's required to tap the billions of dollars in the Constitutional Budget Reserve.
"The budget that we received from the House -- we have at least read in the newspaper that it's a compromise that will get us a three-quarter vote. But it is a compromise that may jeopardize a three-quarter vote in the Senate," Sen. Anna MacKinnon, R-Eagle River, the other committee co-hair, said during the hearing. "What our chairman has proposed for us to do is to take us all to the bargaining table in the conference committee. So what you see us doing is establishing the goals."
House members, who took more than five weeks to come to their compromise, greeted the Senate's move with resignation. Presented with a copy of the Senate's substitute budget during the finance committee hearing, one Republican representative flipped through it and uttered a single, four-letter expletive.
"We're essentially back to where we were in day 89, day 90, day 91," said another representative, Anchorage Republican Charisse Millett, the majority leader. "I feel like the goalposts are constantly moving for the Senate majority and the House minority -- and the House majority is trying to referee."
But by the end of the day, leaders in the House Democratic and Senate Republican caucuses said they'd been making progress in private discussions.
Kelly said it was possible that if a compromise could be reached, the budget bill now on the Senate floor could be sent back to his committee for changes that would get the approval of his caucus, plus the House minority and majority.
"It would be a deal," he said. "It could be that you can pack something together really quickly in the morning."
It was not immediately clear late Sunday what the components of that compromise would be, however, with lawmakers declining to reveal the details of their discussions.
After adjourning Sunday evening, the Senate scheduled a floor session for Monday at 10 a.m. The House, meanwhile, planned to reconvene at 2 p.m. Monday.
Among the unhappy observers was Gov. Bill Walker, who issued his own statement Sunday. "I am very disappointed about the legislative impasse and gravely concerned about its impact on Alaskans."
And Jim Duncan, the executive director of the state's largest public employee union, said in an interview that the process was causing "a lot of unnecessary unrest and concern among state employees -- it just didn't have to happen."