The Alaska Senate unanimously passed the state’s operating budget Monday morning after extensive conference committee work on a compromise with the House. 

The budget, passed by the House on Sunday afternoon, includes $4.3 billion in unrestricted general fund spending and makes $190 million in cuts from the current fiscal year’s budget, one of the biggest single-budget cuts to date. 

In larger areas of funding, the budget struck a balance between the House and Senate’s original budgets. 

The Conference Committee included in the budget the forward funding for K-12 education, which was approved last year, maintaining their stance against Gov. Mike Dunleavy’s claim that forward funding education is unconstitutional. 

The compromise budget also funds 100% of the Legislature’s obligation toward school bond debt reimbursement, a program that provides state funded financial assistance to school districts for school construction and capital improvements.

The University of Alaska is looking at a cut of $5 million from current funding levels. This matches the Senate proposal. The House had proposed cutting $10 million from the university. 

The Department of Health and Social Services is looking at a collective cut of $78 million, a far cry less severe than Dunleavy’s suggested $365 million cut.

The compromise budget added $15 million in supplemental funding to the state’s Medicaid program, ensuring an additional $75 million in federal match dollars.

All three Fairbanks area senators supported the operating budget, but for varying reasons.

Fairbanks Democratic Sen. Scott Kawasaki felt the budget funded important service areas that were left wanting in the governor’s February budget proposal. 

“The budget that the governor had delivered to us was basically a joke. It didn’t fund the operations of the things we needed including public safety, education, corrections and the university,” Kawasaki said Monday. “This Legislature decided we were going to go a different route and since we have the power of the purse, we decided we were going to fund things we felt were important.”

The budget also moves $10.6 billion from the permanent fund earnings reserve to the funds constitutionally protected principal, essentially locking away the money from ready access. If approved, this move would leave just over $9 million left in the earnings reserve to be used to pay dividends and partially fund government.

That was one of the big reasons Fairbanks Republican Sen. Click Bishop said he supported the budget. 

"This locks up that money in a safe place, in the constitutionally protected corpus of the permanent fund, for future generations of Alaskans. Because of that and under the right conditions, the permanent fund will have a better chance to grow from $65 billion today to $100 billion over the next 15 years,” Bishop said. 

Bishop also said he supported the education forward funding and additional resources for Alaska State Troopers and public safety included in the bill.

The budget does not include a dividend. But the Legislature has approved a resolution to create a bicameral working group to debate the future of the PFD and decide how to move forward. 

The House approved House Concurrent Resolution 101 on Sunday in a 22-15 vote along caucus lines with all Fairbanks area representatives except Healy Republican Rep. Dave Talerico voting in favor of the group. The Senate voted 11-9 Monday to pass the resolution, with Fairbanks Democratic Sen. Scott Kawasaki the only Fairbanks area senator to vote against it.

Kawasaki said he wished the dividend had been included in the operating budget but added that he looks forward to future discussions on the issue.

Sen. John Coghill, R-North Pole, carried the House resolution on the Senate floor Monday.

Coghill was unable to be reached for comment on the budget or the dividend resolution.

Senate President Cathy Giessel, R-Anchorage, appointed four senators to the group at the end of Monday’s Senate floor session, naming Bishop as Senate chair of the committee.

“It’s my hope that my colleagues and I can find responsible policy recommendations to use permanent fund earnings for the benefit of all Alaskans, with the goal of protecting the entire permanent fund for now and for generations to come,” Bishop said. 

The other senators in the group are Sen. Shelley Hughes, R-Palmer; Sen. Donny Olson, D-Golovin; and Sen. Bert Stedman, R-Sitka.

House Speaker Bryce Edgmon, I-Dillingham, has yet to make appointments to the group. 

The operating budget will now be sent to Dunleavy’s desk for signature. This presents possible complications as Dunleavy’s own budget proposal suggested cutting more than double the amount from the budget, particularly in areas such as health and social services and the university. 

The governor released a statement noting the passage of the budget but stopped short at commending the Legislature for avoiding a government shutdown that would have gone into affect if there was no budget by July 1. Dunleavy did not confirm whether or not he plans to veto aspects of the budget or the bill as a whole. 

Dunleavy has, on multiple occasions, threatened to use his constitutionally granted line-item veto power to reduce the budget. It would take a vote of three-fourths of the Legislature, 45 of the 60 lawmakers, to overrule the vetoes.

Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter: @FDNMpolitics.

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