The House on Wednesday widely approved a $1.4 billion capital budget, which primarily covers road maintenance and construction projects and is largely funded with federal grants.

But the House failed to get the 30 votes needed to tap into a state savings account called the Constitutional Budget Reserve, creating uncertainty for the budget.

The Republican minority offered amendments that would have eliminated the need to tap into the savings, but they failed. House Minority Leader Lance Pruitt, R-Anchorage, said failure to adopt their amendments kept lawmakers from advancing a fully funded budget.

“We gave the House Majority every opportunity to use the right funding source on the capital budget today and they did not want to do it," he said in a statement. "They should have taken this up in March when we asked them to, but instead they decided to play games with the capital budget and pull what they needed from a savings account. We offered amendments today that would have addressed every single obstacle that stands in the way of us finishing out this special session, and those were all turned down as well.”

Lawmakers still have two more days in the current special session to approve that budget, which still needs another Senate vote to support changes to Senate Bill 19The Legislature also needs to determine the size of the Permanent Fund dividend, a funding debate that lasted nearly three hours on Wednesday, but produced no results.

Minority Republicans introduced an amendment that would have paid a $3,000 dividend this fall, a sum that reflects adhering to the statutory formula; it failed, 21-15. Even before the vote, many lawmakers were resolved to another special session focusing on the dividend.

Republicans have said they would not support the budget without a full PFD — a stance House Speaker Bryce Edgmon, I-Dillingham, obstructs a budget that generates jobs.

"The House Minority is holding several hundred million in capital dollars hostage by refusing to fund a capital budget unless the State of Alaska pays the largest Permanent Fund Dividend in the history of our state," Edgmon said in a statement. "If we followed the minority’s proposed course of action, we would risk taking dividends away from our children and grandchildren, and this political gamesmanship has the immediate effect of hamstringing the private sector at the height of summer construction season."

Amendment supporters says lawmakers should follow a nearly 40-year-old law that’s been ignored each of the last three years with reduced dividends. The payouts come from the Permanent Fund’s earnings account, which has close to $19 billion dollars, thus making the $3,000 payout affordable, they say.

Those opposing the full dividend say the state cannot sustain such high payouts, citing a law passed last year restricting how much money gets drawn from the earnings. But Senate Bill 26 did not say how much of the draw would go toward the dividend.

“This is bad policy,” said Rep. Andy Josephson, D-Anchorage. “It results in compliance with one law and defiance of another law. It is a very liberal policy to adopt this amendment. It is a liberal draw on the Permanent Fund earnings reserve. 

Pruitt said a full PFD will help restore the public trust and faith he believes has been eroded with reduced payouts.

“We have two statutes, one that’s been on the books for a year,” he said. “We have one that’s been on the books for 40 years. And I think we have to at this point follow that statute that’s been on the book for 40 years so that we establish the trust and the faith in the public for which we represent.”

Gov. Mike Dunleavy has remained steadfast that Alaskans should receive a full dividend this fall. Shortly after the House's vote, Dunleavy weighed in with a social media post that reads:

“When given the chance to provide Alaskans with a full statutory PFD (approximately $3,000 this year), the Alaska House said no by a vote of 21-15. While this was a disappointing vote, now we at least know which legislators support a full PFD and which legislators support taking the PFD to continue the growth of government and an unsustainable budget. I said it before and I’ll say it again, the Legislature’s job is not over until it passes a full statutory PFD for Alaskans.”

PFD discussions are hardly over. Earlier this week, the House and Senate approved forming a task force to review how the state should move forward with dividends as the state’s economic climate continues changing. The group held its first meeting on Wednesday.

Representing the House are Republicans Jennifer Johnson (Anchorage) and Kelly Merrick (Eagle River), plus Democrats Adam Wool (Fairbanks) and Jonathan Kreiss-Tomkins (Sitka).

Representing the Senate are Republicans Click Bishop (Fairbanks), Bert Stedman (Sitka) and Shelley Hughes (Palmer), plus Democrat Donny Olson (Golovin).

“As long as we’re still talking moving forward on the issue, I firmly believe we’ll find a resolution, conclusion and people will get their Permanent Fund dividend check on time,” Bishop said.

The group will meet again Thursday morning, but Bishop says they will not be meeting daily.

Bishop and Johnston are serving as co-chairs. Bishop says the group will spend up to three weeks, or July 2, working on policy recommendations that are non-binding.

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