The Senate Finance Committee rejected the 2016 operating budget the House of Representatives passed Saturday morning, making it likely that layoff notices will be sent to 10,000 state employees on Monday.

“Extremely disappointing,” said Sen. Bill Wielechowski. “We don’t want to put the state employees through this turmoil.”

Fairbanks Republican Sen. Pete Kelly says he’d be surprised if the Legislature did not meet the July 1 deadline.

“These are notices, these are not pink slips,” he said. “They are not going out for 30 days.”

There was a lot of “extra spending,” Kelly said in reference to one section of the budget deal the House Majority and Minority made.

“Giving raises when we have an $8-billion deficit coming at us over the next two years, it just doesn’t make sense to give raises,” Kelly said. “So we were resistant to that.”

The House passed a budget and voted to use the Constitutional Budget Reserve (CBR) to fund it — but also inserted language that restricts using money from the CBR without a final vote of the House. In doing that, the House — particularly the Minority Democrats — have the final say on any amendments the Senate makes.

“That’s only insurance; we want to make sure everyone is in agreement before we give up our three-quarter vote,” said minority leader Rep. Chris Tuck. “The last thing we wanted to do was send over a budget that was fully funded and have them strip everything out.”

The Senate Majority isn’t happy with the move and isn’t happy with the budget it was sent by the House. So much so, the Senate Finance committee rejected it, and replaced it with an older version that was passed by the Senate in Juneau during regular session.

“The difference between the budget that the Senate passed in Juneau and the one the House passed early Saturday morning is minimal,” said Tuck. “I don’t see why they wouldn’t concur on this.”

The budget bill passed in Juneau doesn’t contain the $31.9 million worth of compromises that the House Majority and Minority made a deal on, including additional funding for education, the ferry system and social workers. The deal also included nearly $30 million in wage increases for union and non-union state employees, though Gov. Bill Walker would have to find that money for the first year in other cuts.

“The only ones who aren’t willing and ready to compromise are the Senate Republicans who have blown this deal up,” said Wielechowski.

Walker’s administration is preparing to send out notices of layoffs at around 1 p.m. on Monday.

“We were ready to go until two or three o’clock in the morning, we were ready to stay all night if we had to, to get this done,” said Wielechowski. “Yet, the Senate Majority didn’t want to go forward.”

The Senate voted to adjourn until Monday.

On Sunday, the Senate Finance committee offered an additional $16 million in one-time funding for education that will likely be used as a bargaining chip if the two versions of the budget make it to a conference committee this week. Kelly says if a conference committee is called, the budget deal made in the House is on the table, as well as the Senate’s version.

Kelly says he would support moving money from the Permanent Fund earnings reserve into the principal to trigger a 21-vote access into the CBR, instead of 30 votes. The move would remove the House Minority Democrats’ power next legislative session.

“What it would do is it would put Alaska in a situation like every other state, where you have majority rules on budget issues,” Kelly said. “This three-quarter vote is dysfunctional.”

Kelly predicts next legislative session will go into special session to fund a budget if the Permanent Fund earnings money isn’t moved.

“That’s why the earnings reserve shift is so valuable, is it helps the state from here on out and we don’t have to go through this nonsense,” he said.

The final version of the Senate’s budget bill is not complete and still needs to be voted on.