In a cliff-hanger, State House averts government shutdown by one vote margin

With a one-vote margin the state House passed a measure averting a state government shutdown this Thursday, July 1.

The vote was 28-10 for the House to approve an Effective Date Clause for the state budget, which is needed for House Bill 69, which had been agreed on earlier by both the House and Senate, to become effective at the start of the new fiscal year, July 1.

Gov. Mike Dunleavy must also sign the budget, which he is expected to do.

The spending plan includes a $525 Permanent Fund Dividend for 2021 because the House did not muster a three-quarters vote to fully fund the budget with money from the Costitutional Budget Reserve. The dividend amount could be revised upward to $1,200 if the Legislature agrees to a fiscal plan in the upcoming August special session.

Twenty-seven “yes” votes were needed, two-thirds of the 40-member state House. The 10 votes in opposition were members of the Republican House Minority who opposed the action because there was no binding agreement in place for a long-term fiscal plan and restructured Permanent Fund Dividend.

In place of that, the House agreed to a “Sense of the House” statement that committed House members to work toward recommendations for the fiscal plan and PDF in time for another special session set for August.

In the final vote 10 House Republicans including most of the Mat-Su delegation voted against the measure. However, the support of four members of the Republican Minority including Reps. James Kaufman, R-Anch.; Tom McKay, R-Anch.; Laddie Shaw, R-Anch. and Ken McCarty, R-Eagle River along with Rep. Sara Rasmusson, R-Anch., an independent Republican and not part of the House Minority caucus, provided decisive votes along with the House Minority Leader, Rep. Cathy Tilton, R-Wasilla.

The agreement to give the budget an effective date was worked out between House Speaker Louise Stutes, R-Kodiak, and the Minority Leader, Tilton.

Members of the new fiscal panel are expected to be appointed this week. Stutes said at least two meetings of the group will involve opportunities for public participation.

The House Majority and Minority will meanwhile appoint a bipartisan working group to develop recommendations for the fiscal plan, PFD restructuring, new revenues and new spending cuts in time for the August session, House Speaker Louise Stutes said.

House Majority Leader Rep. Chris Tuck, D-Anch., said that even though the “Sense of the House” agreement is nonbinding the Republican Minority still retains bargaining leverage because two other budget measures that require a three-quarters instead of two-thirds vote, are not agreed on.

These include approval of a withdrawal of funds from the Constitutional Budget Reserve to fully fund the budget and an action to reverse the “sweep” of special state funds into the state General Fund.

Although the budget still needs some funds from the CBR the state can function until that and the action to reverse the sweep can be done.

“With this afternoon’s vote on the effective date clause for the FY 22 operating budget, the Legislature now has an appropriation that can be effective on July 1,” Gov. Mike Dunleavy said in a statement.

“Once I receive the budget (formally from the Legisature) and review individual items, I will make a decision on possible line item vetoes and prepare the budget for implementation on July 1. This action will avert a government shutdown,” the governor said.

“We are pleased with the outcome. However, make no mistake, we have much work left to do,” Senate President Peter Micciche, R-Kenai, said in a statement.

“Very few in the Legislature are satisfied with the reduced PFD currently in the budget. We must work together to pass a durable solution to our state’s financial challenges: a protected PFD, solutions to the fiscal deficit and further reductions to government spending. A goal of many in the Senate also includes paying the remainder of the 50-50 PFD (bringing the dividend up to $1,200) once progress is delivered on a fiscal plan,” Micciche said.