What’s next for the legislature after narrowly avoiding a shutdown?

The Alaska Capitol. (Photo by Heather Bryant/KTOO)

The Legislature avoided a state government shutdown by passing an operating budget on Thursday, eight days before the deadline. But they haven’t addressed the capital budget, or other important issues facing the state’s future.

To discuss this, Alaska Public Media’s Lori Townsend spoke with Andrew Kitchenman of Alaska Public Media and KTOO.

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TOWNSEND: What paved the way for the budget?

KITCHENMAN: Well, throughout the year, pressure was growing on both the House and Senate majorities to avoid a shutdown. This is really getting pretty intense in the last couple of weeks. And that’s not just for the effect on government workers, but for the impact on private sector jobs like commercial fishing. So the House and the Senate showed a willingness to give ground. The Senate agreed to a budget including a smaller cut than what it had passed. This budget also includes a $9 million increase for school funding, rather than the $65 million cut that the Senate had passed. The House agreed to drop a nearly $2 billion payment to fund schools in the future. But no one wanted a shutdown. And workers could breath a sigh of relief today when the state officially rescinded their layoff notices.

TOWNSEND: And what about the Permanent Fund Dividend?

KITCHENMAN: PFDs are going to be $1,100 in October. That’s $100 more than last year. But they’re only half of what residents would receive under a formula set by state law. So it’s the first time the Legislature hasn’t fully funded PFDs since the reduction last year came from a veto from Gov. Walker. House Speaker Bryce Edgmon says more PFD could be added in the capital budget, but even if the Senate agreed to that, which is a big if, Gov. Bill Walker could veto the money like he did last year.

TOWNSEND: Andrew, there’s some major items the legislature hasn’t passed.

KITCHENMAN: That’s right Lori. This year has seen the fewest bills passed of any year since statehood. Gov. Walker didn’t include anything but the budget in his call for the second special session last week. So the Legislature hasn’t agreed on a plan to balance future state budgets. I spoke with longtime budget expert Gunnar Knapp about where things stand.

KNAPP: “The good news is, the state government’s not going to shut down. The bad news is, it’s barely a dent in, you know, facing up to the continuing problem we have with our, you know, the imbalance between the spending and its revenues.”

KITCHENMAN: The Senate majority insists the state doesn’t need new taxes. The House majority says they won’t draw from Permanent Fund earnings without taxes, such as more taxes on the oil and gas industry, or a broad-based tax like an income or payroll tax.

TOWNSEND: What else did not happen?

KITCHENMAN: Well, there’s no capital budget. The state faces an informal deadline of the end of September in order to benefit from federal funding.

TOWNSEND: Okay. So what’s next for the Legislature, Andrew?

KITCHENMAN: Walker added a bill making changes to oil and gas taxes to the special session agenda late last night. Lawmakers and aides say informal talks could ha[[en outside of Juneau in the coming days to decide how to handle the Governor’s request to consider the bill. But the two sides are far apart on the oil tax bill. And it’s also not clear if Walker will add the capital budget to the agenda. Here’s what House Speaker Bryce Edgmon has to say about where things stand.

EDGMON: “At this point, I think the Legislature is going to stand down for some time, work with the governor, and we have more work to do on the capital budget. And I think the governor may at some point later on want the Legislature to address fiscal measures.”

KITCHENMAN: We may know early next week about whether the Legislature plans to do anything more during the special session which ends on July 15th, or whether it will wait for Walker to call another special session later on this year.