Legislators wrestle with budget as clock ticks toward May 19 adjournment

The clock is ticking for state legislators in Juneau. There is two weeks left before a required adjournment May 19 and a closely divided state House has been unable to get an operating budget to the Senate.

Traditionally the House originates the budget, working off a draft from the governor, and sends it to the Senate.

Things are rocky in the 40-member House, which is split between Republicans and Democrats aligned with independents and two Republicans, one of them Rep. Louise Stutes, R-Kodiak, who is House Speaker.

There was a big push to get the budget, in House Bill 69, passed last weekend but the effort collapsed in disagreements on Sunday. The bill was sent back to the House Rules Committee to allow time for frayed tempers to mend.

By midweek that appeared to be happening. A bill sponsored by Stutes to create a new management structure for the state ferry system passed the House by a wide margin on Wednesday, with many Republicans in support.

That seemed to signal better feelings. Otherwise, angry Republicans in the House Minority would likely to have ditched a bill by the Speaker.

It isn’t known what the disagreements are about but the Permanent Fund Division, or PFD, is surely one of them. Last week a proposed budget amendment to fund a “full” dividend, which could be about $2,000, failed 20-20.

The House is readying another try at passing the budget that may come this weekend. Meanwhile, the state Senate isn’t waiting. The Senate Finance Committee introduced its own version of an operating budget Wednesday.

This Is mainly a procedural step, Finance cochair Sen. Bert Stedman, R-Sitka explained, to allow work to be done while the committee waits for the House to pass its bill.

What complicates the budget work is incorporating over $1 billion in federal American Rescue Plan, or ARPA, funds into the spending plan. The House proposes to combine part of the new federal money with state funds in its budget bill and leave the rest to be appropriated next year.

It isn’t clear what the Senate will do but the bets are that a similar partial-funding is likely. Many legislators suggest having a special session later in the year so that more time is available in developing an orderly spending plan. Federal instructions on how the money can be used isn’t expected until May 10. To try to rush decisions involving hundreds of millions of dollars in nine day, so that a budget can be passed May 9, as in invitation to poor choices, many lawmakers believe.

The Legislature can extend the session by 10 days if enough votes can be rounded up, but the better choice, many believe, might be to appropriate the bare-bones normal state budget with some of the new federal money included and then return later in the fall for a special session devoted to a plan for the federal money.

Those funds can be staged over three years. The money doesn’t have to be spent until the end of 2024.

Meanwhile, the Legislature is busy with bills. It isn’t clear how many will make it through by May 19, but several are at advanced stages.

A bill to boost the state’s fledgling industrial hemp industry, both in growing and manufacturing products from hemp, is well along in the process. Sen. Shelley Hughes, R-Mat-Su, has sponsored the Senate version, which is in the Senate Finance Committee.

A House bill, by Rep. Grier Hopkins, D-Fairbanks, passed out of the House Finance Committee this week and is now in the House Rules Committee awaiting scheduling House floor action.

The bill brings the state’s small pilot industrial hemp program into compliance with the 2018 federal Farm Bill, which set up new rules for hemp, for one thing clarifying that it is an agricultural product.

Hemp has many applications in products including clothing, biomass, animal feed and wellness products.

Another bill that is moving is a proposal by Gov. Mike Dunleavy to establish a special financing program for “sustainable” energy projects including renewable energy and home and business energy conservation projects.

The Alaska Industrial Development and Export Authority, the state development finance corporation, would coordinate the program, working with commercial banks and others to combine, or leverage, financing for mostly small energy projects.

In education, a bill to expand “Middle College” programs where high school students take University of Alaska courses is advancing in the House after passing the Senate. Sen. Gary Stevens, R-Kodiak, is prime sponsor.

Several Alaska school districts including Mat-Su schools offer these programs in partnerships with the university. High school students can gain substantial credits toward a four-year bachelor’s degree, a two-year associate degree, or professional certifications while they are in high school.