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Six in Alaska House majority say no to tapping Permanent Fund earnings

Six members of the Republican-led House majority caucus have rebelled against a plan proposed by their leader to use the Alaska Permanent Fund to balance the state's budget, and say they would vote against it.

Four Republicans and two Democrats sent House Speaker Mike Chenault, R-Nikiski, a letter urging him to negotiate with the House Democratic minority on a budget deal instead of pursuing an alternative plan that wouldn't require the minority's approval.

Chenault is currently mired in three-way budget negotiations between his own caucus, the Republican majority in the Senate, and the Democratic minority in the House.

A deal between them is needed to fund state government and services before the start of Alaska's next fiscal year July 1. But the three groups have been fighting for a month over how deeply to cut Alaska's budget with the state facing a multibillion-dollar budget deficit following a crash in the price of oil.

The House Democratic minority's support is needed to clear a three-quarters constitutional vote threshold required for the Legislature to tap billions of dollars in a state savings account, the Constitutional Budget Reserve. But Republicans have resisted the Democrats' demands, which include the restoration of a cut to the state's per-student education funding formula and expansion of the public Medicaid health care program to make about 40,000 Alaskans newly eligible.

Signing the letter to Chenault were Reps. Bryce Edgmon, D-Dillingham; Neal Foster, D-Nome; Jim Colver, R-Palmer; Louise Stutes, R-Kodiak; Gabrielle LeDoux, R-Anchorage; and Paul Seaton, R-Homer.

The letter said they were worried about a complicated, alternative Republican plan that would allow them to access the savings in the reserve account with a simple majority -- meaning they wouldn't need House Democrats' support. The plan involves transferring money out of a separate Alaska Permanent Fund account that's used to pay residents' annual dividend checks.

A copy of the letter, dated Wednesday, was obtained Thursday by Alaska Dispatch News.

"On behalf of our constituents, we feel compelled to express to you our serious misgivings regarding a plan to transfer funds from the Permanent Fund Earnings Reserve as part of a mechanism to fund the Fiscal Year 2016 operating budget," the legislators wrote.

The majority caucus only contains 26 members, so the six lawmakers could prevent a budget bill from passing that relies on a Permanent Fund transfer.

The letter suggests Chenault may have to moderate his negotiating stance against some of the Democrats' demands, though it's not clear how it will impact the position of Senate Republicans, who have pushed for the deepest cuts during the budget process.

In an interview Thursday, Edgmon said other legislators have questions and similar concerns to the ones expressed by the six who signed the letter.

"It was a true reflection of our feelings on the issue," Edgmon said. "I think it's a straightforward opinion -- we've signed the letter and we stand behind it."

The letter says there hasn't been enough time to analyze the effect of the potential transfer from the Permanent Fund on Alaskans' annual dividend checks -- and it also says the transfer could affect the state's ability to finance construction of a natural gas pipeline from the North Slope.

Voters should get to weigh in on "major actions having to do with the Permanent Fund, such as this," the letter says.

Chenault downplayed the significance of the letter in an interview Thursday, saying that there hadn't been any discussion about members like the letter-writers breaking away from his caucus.

"All it says is that I have some caucus members that are concerned about an option that's laid out there, and they want more information in order to make a decision on it," he said.

While the writers represent the more moderate faction of Chenault's caucus, he added: "I've got 'em on both sides."

"I've got others that want to go in and rip the budget out -- and take a whole bunch more out," he said.

Chenault said his job is "crafting a compromise" that his caucus, the House Democratic minority, and the Senate Republican majority can tolerate.

Members of each caucus typically pledge to support their leaders on procedural issues and budget votes. Voting against the budget earlier this year led the House Republican majority to expel Rep. Lora Reinbold, R-Eagle River.

The six representatives, in their letter, told Chenault that they did not consider using the Permanent Fund to be a "procedural" issue requiring a lock-step, bloc vote under caucus rules. Instead, they said the move would be a major shift in policy and they didn't intend to vote for it.

They urged Chenault to continue to negotiate with House Minority Leader Chris Tuck, D-Anchorage, on an agreement to reach the three-quarters vote required to take money from the Constitutional Budget Reserve.

Tuck said in an interview that he'd heard about the letter, but hadn't read it.

The letter, he said, means "there are members on both sides that want to come out with an operating budget that meets the spectrum of Alaskans."

"People are now willing to soften up and have a bipartisan budget we can all agree on," he said.

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