As lawmakers mull budget, unprecedented state shutdown looms


Fixed Income Portfolio Manager Maria (Masha) Skuratovskaya studies her screens at the Alaska Permanent Fund Corp., March 14, 2016. (Photo by Skip Gray/360 North)
Fixed Income Portfolio Manager Maria Skuratovskaya studies her screens at the Alaska Permanent Fund Corp., on March 14, 2016, in Juneau.  Employees who manage the fund were among the 18,000 who got layoff notices on Thursday. If lawmakers don’t come to an agreement on the budget within the next 30-days, the government will shut down. (Photo by Skip Gray/360 North)

For the third straight year, state employees are being warned about a looming government shutdown and the potential for mass layoffs.

Lawmakers in Juneau appear to be at an impasse on the budget. They’re halfway through a 30-day special session and are cutting it close to their deadline to negotiate a budget for the state.

If they don’t have it figured out before July 1, thousands of state employees will be laid off and state business will grind to a halt.

Gov. Bill Walker’s administration sent out 18,000 notices on Thursday, warning state employees that they could be laid off if lawmakers don’t come to a compromise.

Kate Sheehan, who heads the state’s division of personnel and labor relations, said there are critical positions that the state can’t function without, so some people are still going to have to go to work.

“But the decision as to who will actually report to work if there is a shutdown has not yet been made,” Sheehan said.

It’s the third straight year that state employees have been faced with the prospect of temporarily losing their jobs.

In 2015, the state sent notices to some employees that they could be laid off. The legislature had a budget plan, but it wasn’t fully funded.

Then, in 2016, the state printed thousands of letters, but didn’t send them after lawmakers reached a compromise.

“So, like I said, it’s a little bit unprecedented where we are now, without having a budget at all,” Sheehan said.

And because there’s never been a shutdown in Alaska, Sheehan said her department is getting a legal opinion on who can come back to work and who can’t.

Among the thousands of state employees who got notices today, is the team of people who manage the state’s Permanent Fund Corporation.

The fund has been at the center of the budget debate this year. Lawmakers have been trying to figure out how to fill a $2.5 billion hole in next year’s budget that opened after oil prices crashed.

“There doesn’t seem to be any debate about whether or not the Permanent Fund should be used,” said Permanent Fund Corporation CEO Angela Rodell. “It’s more about how much of the Permanent Fund should be used.”

Rodell said the funds investments could be automated.

“… in other words, you just put on the money and let the computer decide the asset allocation, and there’s a standard passive index fund,” she said.

But that could have a real impact on how much money it brings in. Rodell said employees at the corporation have added an additional $4.1 billion to what the fund has brought in over the last five years.

“So I am hopeful and I am confident that the legislature will reach an agreement prior to July 1, but I do, I do worry,” she said. “I do worry about what the potential cost of inaction or slow action yields.”

Walker put out a statement on Thursday saying that mass layoffs could affect both the public and private sectors of the economy as people who process everything from fishing permits to driver’s licenses and record home sales would be forced to stop working.

Walker said lawmakers in the House and the Senate have asked for one more day to reach a solution.

Rashah McChesney

Daily News Editor

I help the newsroom establish daily news priorities and do hands-on editing to ensure a steady stream of breaking and enterprise news for a local and regional audience.

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