Legislature passes state budget before adjourning

Alaska House of Representatives members wait during a break a few minutes before ending the legislative session at 1:30 a.m. Sunday. The Legislature passed its operating and capital budgets on Saturday. (Photo by Andrew Kitchenman/KTOO)

The Alaska Legislature ended its session in the early hours of Sunday morning. It agreed to the next state budget.

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There would be $5.4 billion spent on the part of the operating budget the Legislature focuses on. It’s $433 million higher than the current budget.

Most of the increase is for a boost to the permanent fund dividend. It would be $1,600 this year.

The budget draws from Alaska Permament Fund earnings to pay for government services for the first time.

Bethel Democratic Sen. Lyman Hoffman, who caucuses with the majority, said it’s an important step.

“I believe that it’s historic that we are using what many refer to as the rainy day account for the first time,” Hoffman said.

The budget also includes a $942 million transfer from permanent fund earnings to the fund’s principal. That money is intended to keep up with inflation. It’s the first such transfer in three years.

The Legislature also passed the capital budget. It includes $20 million in funds for the Port of Anchorage. It would increase public school funding by $20 million, as well as $6 million for pre-kindergarten. It would fund an enhanced statewide 9-1-1 system. And it would cover most of a shortfall in Medicaid funding for the next seven weeks.  Some health care providers would have to wait until July to be paid.

Nome Democratic Rep. Neal Foster said lawmakers made concessions to reach the agreement.

“I realize that we may not get everyone’s vote for this budget, but we’ve been able to get enough support to get it this far,” Foster said shortly before the House passed the capital budget. “The capital budget is the product of compromise and it’s the result of folks who want the best for the state.”

Gov. Bill Walker held a 2:30 a.m. press availability Sunday, after lawmakers adjourned. He said the permanent fund draw represents progress.

“It gives predictability,” Walker said. “It protects the dividend going forward. It protects the permanent fund. And it closed 80 percent of the fiscal gap. We went from a $3.7 billion hole to a $700 million hole. Boy, that’s a significant, significant step. Is it done? No, it’s not.”

The remaining budget gap would draw from another piggy bank, the Constitutional Budget Reserve. The size of the draw depends on the price of oil.

The Legislature passed other major bills on Friday and Saturday. They include legislation to sell bonds for oil and gas tax credits. And a bill banning smoking from workplaces statewide.

Other passed measures include a bill to overhaul the state’s workers’ compensation system.

Another bill affects legislative ethics. It would prohibit lawmakers from raising money from foreign donors. It would prevent lawmakers from collecting per diem to cover their expenses if they don’t pass a budget by the 121st day of legislative sessions. The bill would pre-empt an initiative that’s scheduled to appear on the November ballot.

Gov. Walker must decide whether to sign the bills before they become laws.

The House adopted the operating budget, House Bill 286, by a 21-19 vote on Saturday, with Anchorage Republican Rep. Gabrielle LeDoux joining the minority caucus in voting no. The Senate adopted it in a 15-4 vote. Anchorage Democrats Tom Begich and Bill Wielechowski; Palmer Republican Shelley Hughes; and Wasilla Republican Mike Shower voted against it, and Sitka Republican Bert Stedman was absent.

The House passed the capital budget, Senate Bill 142, by a 27-13 vote, with five minority-caucus Republicans joining the majority in voting for it. They were Chris Birch, Chuck Kopp and Charisse Millett of Anchorage, DeLena Johnson of Palmer, and Steve Thompson of Fairbanks. The Senate voted 17-2 to concur with the changes the House made. Hughes and Shower were the only noes.