The Legislature ended its special session June 13, passing an operating budget that will prevent a July 1 state government shutdown.
Legislators could not agree on the amount of the 2019 Permanent Fund Dividend or on funding for the state capital budget, which authorizes construction including federally-supported surface transportation and airport projects.
The state Department of Transportation and Public Facilities said failure to pass a funded capital budget won’t affect highways and airport work in the near term but if there is prolonged stalemate it will complicate getting new projects underway.
“If there isn’t a capital budget by the end of July, the department will be very concerned as the lack of match limits our ability to obligate federal funds before the end of the federal fiscal year at the end of the September,” DOTPF spokesperson Meadow Bailey said in an email.
The state must provide matching funds to be able to access federal money for highway and airport work. The capital budget also provides money for traditional state-funded construction and major maintenance.
In another major action, through the operating budget, the Legislature transferred $10.6 billion from the Permanent Fund’s earnings reserve to the protected principle of the Fund.
Although it doesn’t change the total for the Fund, which is still $60 billion including both the principle and the earnings reserve, this is the largest single deposit yet made by the Legislature to the corpus of the Fund, which cannot be spent under a 1976 amendment to the state Constitution.
The earnings reserve now holds $19 billion. After the transfer it will hold less than half that amount, or $8.4 billion.
Despite that accomplishment, lawmakers were unable to reach agreement on the PFD amount for this year or how it will be structured in the future.
Gov. Mike Dunleavy has called a second special session to begin July 8 in Wasilla but the Legislature is expected to adjourn and reconvene in Juneau, where the state capitol building has support facilities for public access through audio and video recording including the Gavel-to-Gavel broadcast and streaming service as well as security.
In a statement, Senate President Cathy Giessel noted the Legislature’s high points so far but said there is work still to be done:
“The Legislature has passed the smallest operating budget in more than a decade, made the largest single deposit into the Permanent Fund in history, and strengthened our criminal laws by repealing the replacing Senate Bill 91, but the peoples’ work is not finished,” Giessel said.
“We are committed to working with our colleagues in the House, and the governor, to fully fund a capital budget and reach agreement on the Permanent Fund Dividend,” she said.
The governor listed the 2018 PFB as the single item of business for the second special session but funding for the capital budget is expected to be added.
What has bogged down the capital budget is not the appropriations in the bill but a withdrawal from the state Constitutional Budget Reserve, or CBR, needed to fund the bill.
A CBR withdrawal needs a three-quarters vote in both the House and Senate, and while there are enough votes for this in the 20-member Senate there are not in the 40-member House.
Thirty votes are needed to reach three-quarters there and the House Majority, led by Democrats, cannot muster enough votes.
House Minority Republicans, whose votes are needed, say they won’t support the withdrawal until there is agreement on a $3,000 PFD.
Bills to fund the dividend at $3,000 have been defeated in both the House and Senate although the Senate vote was a dead split at 10-10, which defeats the measure.
Like the first special session that was called May 15, as lawmakers ended the regular session, the second special session can last 30 days, or until Aug. 8.