Legislators at budget impasse; Governor calls special session

With the Legislature deadlocked on the state budget Gov. Mike Dunleavy called lawmakers into a special session that will begin Thursday, May 18. The House and Senate adjourned Wednesday of the 121st day of the 2023 regular session after failing to reach an agreement.

“Unfortunately, the House and Senate could not agree on an operating and capital budget and other important pieces of legislation. The people of Alaska need stability to ensure that necessary state services are funded,” Dunleavy said in a statement late Wednesday.

“As a result, I’m calling a special session so the House and Senate can continue working together to arrive at a base operating budget that will provide for state government and essential services. I have faith in the Legislature that an operating budget can be completed and passed in short order,” the governor said.

When the governor calls a special session he lists the topics to be considered and this one will be limited to the budget for Fiscal Year 2024, which begins July 1.

Special sessions can last only 30 days, which means this one will adjourn June 18. The timing is tight because the governor must have a budget approved by the Legislature by June 20. Without an approved budget the state cannot legally function beyond June 30.

After days of delay the Senate passed its budget bills to the House Wednesday afternoon, May 17, and then adjourned. The House chose not to take up the Senate’s budget for a vote, and also adjourned later that evening.

At about 9 p.m. the governo issued the call for the special session so that lawmakers will continue working. The special session call was expected but there were hopes a last-minute agreement might be forged.

Sen. Bert Stedman, R-Sitka, the Senate Finance cochair, said informal negotiations with House continued through Wednesday and that several changes were made in the Senate’s budget to accommodate House leaders.

Senate President Gary Stevens, R-Kodiak, said he is proud of the budget crafted by the Senate. It is a balanced budget, “that prevents us from having to go into our savings (the Constitutional Budget Reserve); it prevents pink slips going out, a massive $175 million payment for K-12 education and the biggest PFD we can afford,” Steven said.

The final total for the Senate’s budget is $218 million above what the governor proposed in December in his budget plan, Stevens said. The one-time increase in school funding is $175 million of the $218 million, he said.

Stedman said the Senate budget leaves a $110 million surplus, assuming and oil price of $73 per barrel.”

If prices rise above that the extra revenue would be split between an extra dividend and money going to the Constitutional Budget Reserve.

One of the casualties of the budget standoff was a large increase in the Base Student Allocation, or BSA, for schools, which would have been ongoing funding that school districts could count on when doing things like raising teachers’ salaries; more money for pupil transportation, or school bus operations, was a part of that bill as well as funds to increase internet speeds in rural schools.

If there is any good news in this it is that Senate Bill 140, which contains all three funding elements, has passed one body, the Senate, and is now in the House Rules Committee, an advanced position in that body.

That will at least give education advocates a head start on the proposals in the 2024 legislative session.