The legislature is preparing to vote on the capital and operating budgets Wednesday. But how the state will pay for the spending plans remains uncertain. And there’s much work left to do. So legislators expect Gov. Bill Walker to call them back into a special session.
It’s not clear if the House minority caucus – with 12 Democrats and an independent – will vote to close a more than $3 billion budget deficit with funds from the Constitutional Budget Reserve.
The House minority has made a CBR vote dependent on passing deep cuts to oil and gas tax credits. But the Senate scaled back cuts made by the House.
House Minority Leader Chris Tuck, R-Anchorage, said the Senate’s changes could prevent a budget agreement.
“What came out of the Senate today is something I don’t think that our minority members are going to want to accept – and that’s a huge part of our budget,” Tuck said.
If the two caucuses can’t agree on a CBR draw, the legislature could vote to close the deficit with a large draw from the Permanent Fund earnings reserve. Or it could pass a budget without saying how the state will pay for it. This would require the legislature to return to the topic in a special session.
Perhaps as notable as what the legislature did pass were the bills it didn’t — like most of the revenue-generating bills Gov. Walker proposed. They include Walker’s plan to introduce a state income tax, and various bills to increase taxes on motor fuel, mining and fishing.
The legislature also didn’t vote on Walker’s plan or any other bills to restructure Permanent Fund earnings.
House Majority Leader Charisse Millett, R-Anchorage, said there was no agreement on these proposals.
“I think that most of what prevented that from happening is that there was no consensus that that was something that either the Republicans or the Democrats were interested in doing,” Millett said.
The Permanent Fund proposals aren’t popular because they would lead to lower dividends. But Walker said a large draw from Permanent Fund earnings without a long-term plan would be more risky for dividends, because they would put the state on a course to deplete the earnings in as little as four years.
Millett said the legislature could still finish its work on Wednesday.
“Our obligation, obviously, is to get an operating budget, and that’s the only constitutional mandate,” Millett said. “I’m optimistic that we’ll get through that tonight, with both the House majority and the House minority. I think we’re coming to a consensus.”
If that doesn’t happen, the legislature could vote to extend the session 10 days. If not, it’s all but certain Walker would call them back into a special session.
Tuck said he’d prefer a special session to an extension.
“We need to get all other distractions off the table, and then allow the governor to call us in on the things that he wants to see done,” Tuck said. “And it’s going to be probably revenue and the budget. And that’s what we should be focusing on in the next few days.”
With the end of the regular session, all bills that the legislature hasn’t passed will die. If Walker calls a special session, his announcement would say what the subjects of the session would be. They’ll likely include bills that would fund the budget. But Walker could also call to revive other legislation, such as a bill intended to improve the state’s individual health insurance market.
