House rejects Senate's budget that would open budget reserve

JUNEAU, Alaska (KTUU) — The Alaska Senate passed the state’s 2019 operating budget Thursday evening after rejecting some two dozen amendments from Democrats and a new Mat-Su Republican that tinkered with the spending plan, but later in the night, the House rejected the version of the budget, and named its half of a conference committee.

The Senate's budget vote was 13-7, with two conservative Mat-Su Republicans, recently appointed Sen. Mike Shower of Wasilla and Sen. Shelley Hughes of Palmer, joining the five Democrats in the Senate minority opposing the measure. But then a super-majority that included Shower and Hughes agreed to use nearly $700 million from the last remaining big savings account, the Constitutional Budget Reserve, to help pay for the budget.

Shower and Hughes are not in the Senate’s Republican-led majority caucus, which has one Democrat, Sen. Lyman Hoffman of Bethel.

The budget didn’t include education funding in a separate bill the House sent to the Senate in February. Combined, the two bills total $4.5 billion in unrestricted general fund spending, a Senate spokesman said. The unrestricted general fund is generally the term used to describe the budget and is one of the main target of legislative appropriations.

The remaining $1.7 billion deficit will be filled by the earnings reserve of the Permanent Fund. Another $1 billion from the reserve will be used to pay for $1,600 Permanent Fund dividends to every Alaskan.

In explaining her vote on the Constitutional Budget Reserve, Hughes said she wanted to save money from the Permanent Fund. If the CBR vote didn’t succeed, she said, the additional money to fill the deficit had no other source but Permanent Fund earnings.

After the operating budget passed, the Senate voted 20-0 to pass the state’s mental health budget.

The operating budget quickly returned to the House, which had passed its version of the 2019 spending plan April 2 — without a successful CBR vote. While both House and Senate call for $1,600 dividends, the House spent more money for public education, the University of Alaska, health care and other items.

In a vote taken Thursday night just after it received the budget back from the Senate, the House unanimously rejected the changes. Speaker Bryce Edgmon appointed three House members to serve on a conference committee with a like number of senators in an attempt to resolve the two versions.

The House members are the two co-chairman of the House Finance Committee, Reps. Paul Seaton, R-Homer, and Neal Foster, D-Nome, and a finance committee member from the House minority caucus, Rep. Steve Thompson, R-Fairbanks.

The House also rejected the Senate’s version of the mental health budget and directed the same conferees to try to work out a compromise.

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