Lawmakers began returning to Juneau almost midway through the second special session after Gov. Mike Dunleavy agreed to officially name capital city as the venue in a supplemental proclamation.

They arrived bracing for debates affecting energy bills, college scholarships, restored veto funds and the size of the Permanent Fund dividend — all while still reeling from news of one of the sharpest credit rating downgrades for a university.

On Thursday afternoon, the Senate Finance Committee learned more about how some accounts under the Constitution were swept into the reserve savings account.

The familiar term is known as a “sweep” and those accounts usually undergo a “reverse sweep” by a super majority vote, but the Republican House minority held back the necessary votes to restore the funding after a vote for a $3,000 PFD failed.

Unless lawmakers can muster 45 votes, nearly $2 billion worth of funds will no longer be accessible be a simple majority.

The sweep included some funds historically not swept, like the Higher Education Investment Fund and the Power Cost Equalization Endowment Fund.

Established in fiscal year 2001, the PCE fund is designed to help offset high energy costs in rural communities. The fund has about $1 billion in assets and helps more than 190 communities. The education fund holds scholarships for thousands of Alaskans planning to attend one of the University of Alaska campuses.

“The chaos caused by not reversing the sweep is simply massive,” Legislative Finance Director David Teal told the committee.

The House and Senate finance committees are scheduled to meet tomorrow and give Gov. Mike Dunleavy’s capital budget bill a first hearing. The bill typically covers construction and road projects, but language calling for the reverse sweep can be inserted.

“We’re trying to accelerate this to get a conclusion,” said Senate Finance Co-chair Bert Stedman, R-Sitka. “But I’m also very concerned that a lot of my colleagues don’t recognize the mess that is made by not having a reverse sweep and the impact it’s going to have on a litany of funds on the budget side and the impacts locally to citizens all across the state.”

The House Finance Committee also has a bill that would restore Dunleavy’s $444 million worth of vetoes. It may be the only way for the University of Alaska to recover for a three-level downgrade to its credit rating from Moody’s Investors Service.

Committee member and banking executive Rep. Bart LeBon, R-Fairbanks, said the cuts combined with what Moody’s called the first three-grade downgrade for a flagship university worry him.

“The statement, I guess you can take it in its total impact, is the university really open for business,” he said, borrowing the phrase “open for business” from Dunleavy’s signature statements. “We want the state of Alaska to be open for business. That’s a common term you use, but how is the university open for business? Well, you need to attract students.”

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