When Rep. Gabrielle LeDoux said, “If the Senate thinks we are going to get out of here with just the POMV (Permanent Fund restructuring) they have another think coming,” no one in the press conference thought she meant passing the second largest budget in Alaska history.
Or making the largest draw ever on the Permanent Fund Earnings Reserve Account, cutting it nearly in half.
Or passing a budget that actually shuts government down for between 70 and 90 days starting July 1.
Or passing a budget that wasn’t even fully funded.
That’s what happened last night in the Alaska House. The Permanent Fund wasn’t restructured, but the reserve account was raided to pay Alaskans a $2,000 dividend, and to put money into an “education savings account” that earns 2 percent.
Led by hard-line leftists, the House passed a budget that will, if left unchecked by the Senate today, lead to a government shutdown on July 1. That’s because the body did not pass an “effective date clause,” so the budget can’t take effect until 90 days after being signed by the governor, and that’s assuming he would even sign it. The fiscal year starts July 1.
The Alaska Senate this morning will likely gavel out “sine die.” That will allow the governor to call another special session in a last-ditch attempt to head off a shutdown. Neither the Senate nor the governor indicated that the budget bill passed by the House was anything but a recipe for chaos.
Rep. Tammie Wilson, a Republican from North Pole, was poring over the budget this morning that she and the conservative caucus had not been allowed to review before voting on it last night. That is when House Democrats, in a surprise move, crammed the operating budget into the capital budget, dropped it on the desks of Republicans, passed it without debate, and adjourned sine die. That means there is no ability to return this session to reconsider.
This morning, Wilson said she has already discovered numerous changes to the operating budget from previous versions that legislators had seen, including increased funding to village public safety officers but a $4 million cut to Alaska State Troopers. The state can’t even fill the village public safety officer positions it has, but another $190,000 has been added to the program.
“This budget isn’t even fully funded,” Wilson said. “It took into account some kind of income tax, but no income tax passed, so the governor would have to make cuts just to get it to balance.”
Wilson found other significant changes and increases from previous draft budgets, and she is working on a complete analysis this morning.
EARNINGS RESERVE RAID
The House budget removes more than $5 billion from the Permanent Fund Earning Reserve Account. Some $1.7 billion of that will go from the high-earning Permanent Fund into the low-earning Education Fund, where it would sit earning about 2% interest.
Between fiscal years 2014 and 2015, total state government spending in Alaska increased by $2.4 billion — from $11.4 billion in fiscal year 2014 to an estimated $13.8 billion in 2015, a 17.22-percent jump. The budget passed by the House last night is at least $12.1 billion, although legislators are still trying to understand all the changes.
If the Earnings Reserve Account is depleted as House Democrats propose, a market correction could have a chilling effect on the ability of the fund to pay Permanent Fund Dividends next year or the following years.
Finally, by aggressively depleting state reserve accounts, the House’s reckless budget gambit would put Alaska at grave risk of a financial crisis that, among other things, would require massive cuts in state spending.
So those are a couple more “thinks” that Gabrielle LeDoux has coming.