The Alaska House of Representatives passed a critical element of the state’s budget bill Monday to avoid a potential state government shutdown on July 1. As part of the agreement on the budget, lawmakers also agreed to create a working group to address the state’s long-term financial situation which will provide recommendations for yet another special session beginning Aug. 2.

“Alaskans no longer need to worry about the disruption a shutdown would cause at the peak of summer and at a time when we’re finally getting back to life as normal,” House Speaker Louise Stutes said in a statement.

In a statement Monday afternoon, Gov. Mike Dunleavy said he would review the budget.

“Once I receive the budget and review individual items, I will make a decision on possible line-item vetoes and prepare the budget for implementation on July 1,” Dunleavy said. “This action will avert a government shutdown.”

More to come

While the state’s operating budget will go into effect July 1, much of the state’s budget remains unfunded as the effective date clause was only one of the pieces missing from the state’s budget. A sweep of certain state accounts into the Constitutional Budget Reserve at the end of each fiscal year still needs to be undone, but that vote will have to wait until at least August for resolution.

A reverse sweep vote takes a three-quarter vote in both bodies and no single caucus in the Legislature has that many votes. But negotiations to attempt to reach that threshold won’t happen until at least the next special session. Until lawmakers do vote for a reverse sweep, state programs including the Alaska Performance Scholarship and Power Cost Equalization will remain unfunded.

The Monday afternoon deal happened after several breaks and closed-door negotiations.

On Friday, House Speaker Louise Stutes, R-Kodiak, and Minority Leader Rep. Cathy Tilton, R-Wasilla, said an agreement wherein minority members would vote for the effective date clause was close at hand but declined to give details. On Monday, it was announced the agreement would be in the form of a sense of the House vote, a non-binding statement made collectively by lawmakers, saying minority members would be given equal status during negotiations for the next special session in August.

The House did vote 31-7 for a sense of the House and an accompanying letter outlining the intentions of the August special session but not after several members of the minority raised objections to the letter and Monday’s process. Minority members said on the floor they came into Monday’s session with the understanding the Sense of the House vote was to be taken before the vote on the effective date, and that statements and tactics by members of the House Majority Coalition, including Stutes, had undermined trust in the process.

“I was fully prepared to vote for the effective date,” said Rep. Tom McKay, R-Anchorage, on the floor Monday. “We negotiated in good faith to have the Sense of the House vote first. If the other side is going to play tricks, I’m voting no on the budget.”

Stutes said there had been miscommunication between herself and Tilton after meetings that morning.

“Unbeknownst to me, Cathy didn’t think the negotiations were over, and I’m grateful for that because we’re able to iron out the stumbling blocks,” Stutes said.

After the vote on the Sense of the House, House members voted 28-10 in favor of the effective date clause with some members of the minority caucus joining the majority. Republican minority members Reps. Bart LeBon, Fairbanks; Steve Thompson, Fairbanks; Laddie Shaw, Anchorage; James Kaufman, Anchorage; Ken McCarty, Eagle River; McKay and Tilton voted in favor. Rep. Sara Rasmussen, R-Anchorage, who’s not a member of any caucus, voted in favor of the clause as well. Rep. Sarah Vance, R-Homer, voted against the effective date clause.

Work group in progress

The sense stated an intention to create a bicameral working group to craft policy recommendations to solve the state’s long-term fiscal situation. The governor set a special session for Aug. 1 and introduced three constitutional amendments he says will put the state on a better fiscal path. According to the text of the sense, the working group will include equal representation from members of all four caucuses with the structure and makeup of the group will be determined by the presiding officers and the respective minority leaders.

“Once formed, the working group will be tasked with establishing a timeline and structure for developing policy recommendations to be delivered to the legislature no later than first the day of the next special session,” the sense said.

Under the agreement at least two of the working group’s meetings will be public and take public input.

Some minority members said they voted against the sense, as it was nonbinding and trust with the majority had been broken. The letter attached to the sense said the majority coalition would address the concerns of the minority but also said it could not guarantee outcomes, which was also criticized by minority members.

“We are committed to implementing a fiscal solution and a solution to the PFD; however, the fiscal policies pursued at the upcoming special session should be those recommended by the working group. The House should not endorse particular policies prior to the recommendations of the working group,” the letter said.

Following the floor session, Stutes couldn’t say which lawmakers would be appointed to the working group. In a statement, Sen. President Peter Micciche, R-Soldotna, thanked House members for passing the effective date.

“Make no mistake, we have much work left to do this year,” Micciche said. “The teamwork that began this week with all four caucuses must continue so that we can pass an acceptable PFD, and a three-quarter vote for the remaining work to be completed in this budget cycle.”

Sen. Minority Leader Tom Begich, D-Anchorage, also issued a statement thanking the House for avoiding a shutdown. Neither Begich nor Micciche’s letters mentioned the working group, but both emphasized the large amount of work still to be done on a fiscal resolution.

Legal action ongoing

Lawmakers were brought back to Juneau by Dunleavy, who said the budget sent to him earlier this month was “defective” as it lacked an effective date. That touched off a legal dispute between lawmakers and the governor, and an Anchorage Superior Court has said it will release a preliminary decision no later than noon, June 30.

Attorney General Treg Taylor said in a statement that he will continue with the lawsuit and seek a court decision on the effective dates of legislation.

Following the vote on the budget and an agreement on the August special session, House members adjourned the second special session of the summer. Senators met briefly, but only to adjourn “sine die” for the current session.

Dunleavy called a special session for Aug. 2, but because that session would be limited to what the governor has placed on the call, some lawmakers have floated the idea of calling themselves into a special session. The agreements made Monday gave no mention of a start date for the working group.

Contact reporter Peter Segall at psegall@juneauempire.com. Follow him on Twitter at @SegallJnuEmpire.