JUNEAU, Alaska — After months of at-times bitter entrenchment, Alaska legislators faced growing pressure to resolve their differences, with days left in the special session and the threat of a government shutdown looming.
Friday marks the end of the special session called by Gov. Bill Walker to address the budget and a plan for Alaska’s multibillion-dollar deficit. Deep philosophical divides stalled progress during the preceding four-month extended regular session.
With the start of the new fiscal year just over two weeks away, talks have turned to the budget and efforts to avoid a shutdown.
Senate Majority Leader Peter Micciche said Tuesday the Republican-led Senate is willing to back off some of its priorities, like a spending limit, to pass a budget. The impacts of a shutdown would be dramatic, coming during the fishing and tourism seasons, he said.
Government can be messy, with 60 lawmakers and the governor involved, the Soldotna Republican said. “And sometimes you get the best you can get,” he said.
Alaska, which has long relied on oil revenue, is in its fifth straight year of substantial budget deficits, despite four years of steady cuts, according to the Legislative Finance Division. It faces another multibillion-dollar gap for the budget year starting July 1.
The state has been using savings to cover costs amid low oil prices. Gov. Bill Walker has said that is not acceptable and pushed for a fiscal plan.
Given the legislative gridlock, he proposed a compromise that he said would leave a deficit of about $300 million. House majority leaders said it didn’t go far enough.
There is general agreement about using earnings from Alaska’s oil-wealth fund, the Alaska Permanent Fund, to help pay for government services. This is notable, since fund earnings traditionally have been used to pay Alaskans annual dividends and to protect the fund against inflation.
But the House majority coalition, composed largely of Democrats, earlier this year conditioned its support for use of earnings and a limit on the initial size of the dividend to passage of a broad-based tax and an overhaul of oil tax and credit policy.
The Senate rejected a House-approved income tax as unnecessary and potentially harmful when the state is in a recession.
And while the House and Senate agree Alaska can no longer afford cashable credits to encourage oil and gas development, they disagree on other oil tax provisions.
On Wednesday, the House approved an amendment to the capital budget that would pay Alaskans the full dividend they would ordinarily receive. The amendment was offered by Rep. Gabrielle LeDoux, one of three Republicans in the House majority coalition.
LeDoux said lawmakers could leave Juneau with just a budget and not a comprehensive fiscal plan. Without the amendment, she said Alaskans could face a reduced dividend. She said that’s unacceptable.
Walker last year slashed the amount of money available for dividends, citing the lack of a fiscal plan.
House debate on the capital budget extended into late afternoon. Whatever passes the House is subject to Senate approval.
Lawmakers have yet to resolve a separate state operating budget.
Steve St. Clair, a self-described citizen activist from Wasilla, said the state isn’t spending within its means, and more cuts are needed.
A shutdown would not be “the end of the world,” he said. Some agencies have said they expect to maintain some level of certain services to comply with health and safety mandates if there’s a shutdown.
“Maybe we need to shut down the government to see how little they actually do and how much we spend on a government that doesn’t do all that much,” he said.
Public education advocates Deena Mitchell and Alyse Galvin have argued against proposed Senate cuts to schools.
Galvin said it would be disappointing if lawmakers fail to agree on a plan that would provide schools a measure of certainty. She will not “pull out the champagne” if a shutdown is avoided and schools are fully funded but may breathe a sigh of relief, she said.
Mitchell said the political brinksmanship has been disheartening. “The whole game that they’re playing, threatening the shutdown so that then people are relieved that we don’t have a sustainable solution,” she said.