House passes budget, leaving potential gap from federal relief rules

A man stands up from jis desk speaking into the microphone
Rep. Neal Foster, D-Nome, offers his closing argument for the operating budget bill, which passed moments later, 23-16, on May 10, 2021, in the Capitol. (Andrew Kitchenman/KTOO and Alaska Public Media)

The Alaska House of Representatives passed the state’s operating budget bill on Monday

The budget includes most of what Gov. Mike Dunleavy proposed for state agencies. But it doesn’t include funding for permanent fund dividends

Members of the mostly Democratic House majority caucus said they expect to fund PFDs in a separate bill. 

Nome Democratic Rep. Neal Foster said he’s comfortable working out any remaining budget issues with senators. 

“This is largely a flat budget compared to last year,” he said. “It seeks to protect and enhance some important public services like transportation, like education. And at the same time, we’ve taken advantage of the American Rescue Plan funds that are coming to the state. That’ll help Alaskans deal with this global pandemic.”

The 23 to 16 vote to approve the budget came the same day news from the federal government raised a new potential budget problem. 

It appears Alaska will receive roughly $200 million less in COVID-19 relief this year than House members planned. That’s because it appears Alaska will be among states to have half of their American Rescue Plan Act money withheld for a year. 

A draft of long-awaited federal guidance on how states can spend the money was released Monday. 

Big Lake Republican Rep. Kevin McCabe voted no on the budget, citing the inclusion of the federal money as one reason. He said it’s unsound, and the Legislature should have followed more of the administration’s recommendations. 

“Structurally, this budget has a number of problems, in addition to the sort of emotional amendments for some projects that we have added to it,” he said.

Nikiski Republican Rep. Ben Carpenter also voted no.

“I think we missed an opportunity to address our savings,” he said. “We missed an opportunity to use the federal dollars to help us with making those structural changes. We missed the opportunity to help reduce our budget.”

But Anchorage Democratic Rep. Geran Tarr said the minority caucus offered few amendments that would have significantly reduced spending. 

“I think we’re responding to the public’s demand for the services they value,” she said. “And we’re trying to do the best we can.”

The House amended the budget bill to say the state’s Medicaid program wouldn’t pay for abortions. The Alaska Supreme Court has ruled similar laws unconstitutional in the past, because they violate the Alaska Constitution’s equal protection clause.

The House spent most of the day debating more than 30 other proposed budget amendments. Including two earlier days of debate, the House passed 18 amendments and turned down 38. 

The largest change that passed added $3.5 million to fund public assistance workers. Dunleavy’s administration anticipates eliminating the positions due to a shift to online applications for public benefits. But that shift may not happen in time to save the money in the next year.  

Other amendments that passed say state government should not keep any data that can be used in facial recognition software or provide driver’s license information to foreign-owned corporations or governments, but that intent language is not binding.

The House also voted to pass the Alaska Mental Health Trust budget in a separate bill.

The vote is just one step before the budget is finalized. It now goes to the Senate, where the Finance Committee is working on a somewhat different version of the budget bill. 

The two chambers usually work out their differences in a conference committee. 

Neither chamber has passed a capital budget to fund roads and other projects. 

The legislative session is scheduled to end on May 19.