The House remains one vote shy of fully funding a capital budget Monday, but the House Finance Committee made forward movement on a plan to restore a significant portion of Gov. Mike Dunleavy’s vetoes.

The deadline approaches

For the second straight day, the House failed to pass a fully funded a capital budget that restores college scholarships and rural energy assistance.

Monday’s 29-7 vote was one short of the necessary 30 that would have also secured money for various airport, roads and construction projects that draw significant federal matching funds.

The vote came one day after the House approved the Senate Bill 2002, but failed to support the funding source – the Constitutional Budget Reserve – which requires 30 votes or a supermajority.

Lawmakers have long been operating under a July 31 deadline for SB 2002, identifying this as the date that must be met to leverage federal funds.

They are currently halfway through their second 30-day special session that could last through Aug. 7.

The road toward a capital budget

On Saturday, the Senate unanimously passed SB 2002. On Sunday, the House approved budget in principal, but fell five votes short from drawing money from the CBR. On Monday, those supporting using the CBR picked up four votes from the Republican-led minority.

Anchorage Reps. Laddie Shaw, Josh Revak, and Sara Rasmussen were absent Sunday and supported using the CBR. House Minority Leader Lance Pruitt, R-Anchorage, joined them after voting against it Sunday. Minority member Rep. Kelly Merrick, R-Eagle River, also voted yes, just as she had on Sunday.

“I feel that the best path forward for all Alaskans and specifically my neighbors in Sand Lake who have reached out to me is to support funding the capital budget, including almost a $1 billion in federal match,” Rasmussen said.

“Tens of thousands of private sector jobs rely on this funding,” she said, “and we simply cannot risk the devastating effects that would ripple (through) our state if we were to lose our federal match.”

For the House, this is the second battle over funding. Last month, the House couldn’t get enough votes to draw from the CBR, forcing a do-over this session with the capital budget.
Since that mid-month vote, the state’s financial dynamics have undergone some significant changes.

Impacts on education

On June 28, Gov. Mike Dunleavy announced $444 million in budget vetoes, including $130 million for the University of Alaska.

On July 12, Dunleavy’s office released a list of accounts swept into the budget reserve, an obscure transaction that occurs yearly, but typically undergoes a reverse sweep. This includes several historically not swept, such as the higher education and Power Cost Equalization funds.

On July 17, Moody’s Investor’s Service issued a three-step credit rating downgrade to the university system, citing, in part, the “unprecedented” cuts.

With reductions from state legislators, the university faces a 41% cut in state funding. The cuts led the university Board of Regents to declare a state of financial exigency Monday, allowing administrators to expedite layoffs of tenured faculty.

But with the House Finance Committee’s plan to restore a significant portion of those vetoes, much of what was discussed in the regents’ meeting might not become a reality.

It’s called House Bill 2001, and it would replace all but $20 million of what Dunleavy cut from the university system and provide a $1,600 Permanent Fund dividend.

The committee approved the bill, 7-3, along caucus lines.

Moving forward

House Speaker Bryce Edgmon, I-Dillingham, said there will be another vote on the capital budget taken in coming days.

“This bill not passing is having immediate impacts, and Alaskans are understandably nervous and angry as they witness continuing gridlock in Juneau. Jobs, scholarships, and vital services are all on the line,” he said in a prepared statement.

“We are not giving up hope,” he said. “We thank everyone who voted for the capital budget and for the growing commitment to find compromise on this issue and the many other challenges ahead.”

In a Facebook post, Dunleavy wrote:

“Alaskans should know that the Legislature still has the time and tools available to come to an agreement on the capital budget. My staff and I are ready to assist lawmakers in coming to agreement and passing a capital budget that provides the maximum benefit to Alaskans as quickly as possible.”

Meanwhile, Rep. Tiffany Zulkosky, D-Bethel, also took to her Facebook page:

“I have said, and continue to believe, that budgets are not just spreadsheets,” she said. “Rather, they are a reflection of how we choose to invest in our state and have real impacts in the lives of Alaskans and communities we call home.”

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