Legislature approves budget with funding shortfall; Walker calls special session

JUNEAU -- Unable to pass a budget it could pay for, the Alaska Legislature on Monday evening decided to adjourn and go home. Minutes later, Gov. Bill Walker issued a proclamation calling lawmakers back into special session Tuesday to pass a "fully funded" budget.

The special session also calls for consideration of Medicaid reform and expansion and Erin's Law, a sex abuse prevention bill.

One key Medicaid expansion opponent, Sen. Pete Kelly, R-Fairbanks, called the special session "a tactical mistake by a governor who hasn't quite figured out this building yet."

By a vote of 26-12 Monday afternoon, the House of Representatives adopted a budget -- but really needed 30 votes in the 40 member body. That's because while it can pass a budget with a majority vote, it needed a three-quarters majority vote to draw money from the $10 billion Constitutional Budget Reserve with which to balance the budget.

House Speaker Mike Chenault, R-Nikiski, blamed Democrats for failing to fund state government.

"In the negotiations, they wanted too much," and Democrats' multiple demands would have driven up state spending, he said.

Democrats said they offered cuts, refused by Republicans, that would have resulted in the same size budget as the Republicans passed.


But instead of obtaining Democratic votes by negotiations, the House decided to pass a budget that was not funded and then adjourn.

"I can't support this unbalanced budget -- I can't support it because it's fake," said Rep. Scott Kawasaki, D-Fairbanks.

Passing an unbalanced budget may have Alaska following the federal government in a game of chicken, in which each side in the budget battle hopes the other side will get blamed if a crisis emerges over paying for government -- or if state government actually runs out of money and has to shut down.

To balance the state's budget in a year when oil revenues saw unprecedented declines, Alaska would need to dip into its Constitutional Budget Reserve.

House Minority Leader Chris Tuck, D-Anchorage, accused Republicans of using a "fiscal crisis as an excuse to jeopardize academic opportunities for our children through this fake budget."

"A 'no' vote means you are willing to shut down government," said Steve Thompson, R-Fairbanks, co-chair of the budget-writing House Finance Committee.

Democrats disputed that, saying they were willing to provide the votes had the budget addressed their priorities.

"There are many ways to take this puzzle and put the pieces together, and this is not the right way," said Rep. Andy Josephson, D-Anchorage.

In the Senate, President Kevin Meyer, R-Anchorage, said they approved a budget.

"We have a fully funded budget with a three-quarter vote," Meyer said.

Meyer's Senate majority coalition contains three-quarters, or 15 members, of the 20-member body.

Gov. Walker criticized the unfunded budget, saying it would cause the state to run out of money and was $3 billion short of what the state needs.

"A partially funded budget that runs out of money mid-year does not provide for the health of Alaskans, and creates uncertainty for businesses, school districts and families," Walker said as he called the Legislature back into session.

Democrats have focused their criticisms on inadequate education funding and the failure of the Legislature to vote on expanding Medicaid to some 40,000 Alaskans who lack health insurance. The expansion would be paid for mainly by the federal government as part of its health-care initiative.

The state has enough money in various accounts in the general fund to keep paying bills in the fiscal year beginning July 1, but it is not clear how long that can go on. That might result in a government shutdown, or it might mean another legislative session in the summer

House Majority Leader Charisse Millett, R-Anchorage, also told Democrats it was their fault if the government did in fact shut down.

"If you don't vote for this budget you are right, you are shutting down government in a few weeks or a few months," she said.


At a recent Senate Finance Committee hearing, Deputy Revenue Commissioner Jerry Burnett was unable to provide much clarity on the situation.

"You can pay bills until you can't pay bills any more," he said.