Sausage: House, Senate agree on budget

Conference committee meets on the operating budget earlier today. (Rep. Lora Reinbold photo.)

[June 22, 10 pm Update: The House and Senate have passed the budget.]

The conference committee tasked with grinding out a state operating budget compromise agreed to fund the 2017 Permanent Fund dividend at $1,100, $78 more than in 2016. The House and Senate affirmed that decision and the operating budget by 10 pm Thursday.

The committee met midday and came away with the $4.2 billion budget compromise (plus dividends, which add roughly $700 million to the budget bringing it to nearly $5 billion).

Over the course of the afternoon, each legislative body was searching for the three-quarter vote needed to fund the plan and avert a government shutdown on July 1.

The amount of total funding needed from the Constitutional Budget Reserve fund is $2.4 billion, which will cut the balance in the CBR almost in half, leaving very little financial room for next year’s budget.

The budget shaves $8 million out of the University of Alaska’s budget, far less than the Senate’s proposed $22 million reduction. The university budget is $317 million for the 2018 fiscal year. K-12 education funding remains level, and there is no “forward funding” for education for the following year. Forward funding allows school districts to plan.

As of 9 pm Thursday, the House Republican minority appeared to be split down the middle, with some wanting more cuts to the operating budget. The Senate Republican majority also was coming up short. But the compromise required an up-down vote with no amendment as it uses savings in the Constitutional Budget Reserve, and the votes were eventually found.

By using the Constitutional Budget Reserve, lawmakers kept whole the higher-earning Permanent Fund Earnings Reserve Account (ERA).

The FY 2018 operating budget has $75 million reduction in agency operations and includes $57 million for oil tax credits already earned.

Earlier in the evening, proceedings were held up as the House was waiting for Rep. Adam Wool, a Fairbanks Democrat, to return to the Capitol. He was in his district during critical final hours, when every vote appeared to be needed.