The Senate is poised to cast final votes on Monday for the state’s operating budget, which, if passed, will avert any government shut down for the coming fiscal year that starts July 1.

The House on Sunday afternoon approved the budget, 22-15, along caucus lines. It's a  $4.3 billion budget for agency spending and statewide operations. Lawmakers say it's the lowest budget in 15 years, when adjusting for inflation and population.

"I think it’s a budget that, based on the House finance committee actually going out and holding hearings throughout communities in Alaska, it was very responsive to what Alaskans told us they wanted," said House Speaker Bryce Edgmon, I-Dillingham.

On Saturday, a special panel — called a conference committee — made up of three members each from the House and Senate completed a compromise covering 270 differences between the two budget proposals.

Missing from the budget agreement is a Permanent Fund dividend appropriation.

The House did not place a dividend appropriation in its budget before sending its version of HB 40 on April 11, nor did Dunleavy request one when he rolled out his amended budget on Feb. 13. Rather, the PFD discussions are on separate bills, SB 23 and 24.

The Senate placed $3,000 in its budget for the PFD but several senators issued a caveat with the approval: it could be negotiated to a lower figure and some hoped it would.

Conference Committee member Rep. Cathy Tilton, R-Wasilla, said she and the conference committee should have followed the Senate’s recommendation rather than rely on a separate bill.

“I believe that it is our obligation as lawmakers to follow the law,” Tilton said.  “And I would like to see that dividend remain in the budget as I’ve seen no other bill come forward to support a dividend for the people.”

Senate Finance Committee co-chair Bert Stedman, R-Sitka, reminded the committee the budget does not represent the final word on the dividend.

“The position is not a zero dividend,” Stedman said. “It is technically not being addressed in this budget bill. My personal opinion is the legislature will be paying a dividend in October this year. It just won’t be in this vehicle.”

After discussing the one line item for about 10 minutes, the committee approved treating the dividend separate, 4-2, a reflection of how difficult the PFD debate has been during the 121-day regular session and a special session that’s already lasted 25 days.

The committee also approved a fund transfer moving about $10.5 billion from the Permanent Fund earnings account to the principle. This means the funds are not accessible for a draw under the state constitution. About $9.4 billion of that is in addition to a $1.1 billion transfer in place for the fund’s inflation proofing.

Lawmakers have considered a wide range of such transfers this year. The fund's total value is slightly more than $65 billion; it has about $19 billion in its earnings reserve account.

The House Finance Committee approved an $8 billion transfer under HB 31, which originally proposed a $5 billion shift.

The Senate Finance Committee initially considered a $14 billion transfer but agreed to $12 billion, which the Senate later approved on a 19-1 budget vote. The compromised produced the lower figure.

“We have ample funds after this transfer to make whatever dividend amount we so choose this year, whether it’s $3,000 or $1,600 or $2,500 or any other number,” Stedman said. “We’ll have significant funds in the Permanent Fund to pay next year’s dividend regardless of the dividend amount."

“So, this does not affect the dividend. But what it does do is put $9.4 billion in the constitutionally protected side, which would take a vote of the people, by the constitution, for the legislature to access,” Stedman said.

Conference meetings typically don’t last long with the six members quickly voting on previously negotiated compromises over the course of several hearings, but Saturday’s meeting took 45 minutes.

Even with the June 30 fiscal year deadline looming, Dunleavy may have to take action on the budget sooner, depending on how fast it gets sent to his office.

If the budget gets sent to Dunleavy with lawmakers still in session, the governor has 15 days, excluding Sundays to take action. The governor can sign with line-item vetoes, veto the entire budget or let it become law by taking no action. 

If he receives the budget during an interim, he has 20 days, excluding Sundays.

The Senate still has a PFD bill that failed to pass last week, but could receive another vote under a procedure called a rescinding action. That bill would pay a $3,000 dividend. Should it pass, Edgmon said the House Finance Committee would produce a thorough analysis of the impacts of this and future payments.

The House is still working on the capital budget, which covers highway and construction projects, plus one-time appropriations. 

Lawmakers have until Friday to complete their work in the 30-day special session.

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