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Alaska governor calls budget passed this week ‘defective’

Alaska Gov. Mike Dunleavy proposes paying qualified residents a sum of $3,678 over three years to make up for years that checks from the state's oil-wealth fund were capped at a news conference in Juneau, Alaska, Wednesday, Jan. 16, 2019. (AP Photo/Becky Bohrer)

JUNEAU, Alaska (AP) — Alaska Gov. Mike Dunleavy labeled as “defective” the state spending package passed by lawmakers this week and said he was prepared to call them into another special session next week if they do not act before the current special session expires Friday.

Dunleavy said notices warning of possible layoffs were sent to state employees, with the new fiscal year two weeks away. He pinpointed as a main concern a failed effective date vote, which he said raises constitutional issues.

The House and Senate this week passed a state spending package, but the House failed to get the two-thirds support for a procedural effective date vote. Attorneys for the Legislature and the state Department of Law have offered differing views on what that could mean.

Megan Wallace, director of Legislative Legal Services, said the spending package includes a section that makes all the provisions retroactive to their intended effective dates.

“Because the bill contains a retroactivity provision for all appropriations in the bill, the executive branch may choose to give effect to the retroactivity clause, and allow state government to continue operating before the bill takes effect 90 days later, knowing that the appropriations are retroactive to their intended effective dates,” Wallace wrote in a memo to House Speaker Louise Stutes, dated Wednesday.

Wallace, however, noted the Dunleavy administration “may choose not to give effect to the retroactivity clause.” She also said there may be “unintended consequences” of a failure to adopt special effective dates “that are not immediately foreseeable.”

Under the state constitution, laws become effective 90 days after they are enacted, but the Legislature can provide a different effective date with a two-thirds vote in each chamber.

Deputy Attorney General Cori Mills, in a memo to Dunleavy’s chief of staff dated Thursday, said under a “plain application” of the constitution, the appropriations set out in the bill “are only authorized to be expended when that bill becomes law, which is 90 days after enactment.”

Mills wrote that a retroactivity clause has no effect until the bill becomes law.

The retroactivity clause “doesn’t save this,” she told reporters.

Some lawmakers expressed frustration with Dunleavy’s stance.

Rep. Zack Fields, an Anchorage Democrat, on social media said Dunleavy could ask minority House Republicans to rescind action on the effective date vote and to vote in favor.

“But he has not done that because he’s manufacturing a crisis to hold the whole state and economy hostage over the dividend,” Fields said.

The annual dividend paid to residents has become a politically charged debate, overshadowing other issues and causing divisions even within caucuses.

Dunleavy, who has spent much of his term under threat of a recall effort, has proposed putting a dividend formula in the state constitution as a way to help resolve the perennial dividend fight.

It was an issue he wanted debated during this special session, but a number of legislators pushed back against the assumptions underlying his proposal. Many lawmakers said they would prefer a more full-fledged debate on the dividend later this year alongside other pieces of a possible fiscal plan.

During Tuesday’s budget votes in the House, two of the minority’s 18 members voted for the effective date clause, which received 23 votes total but needed 27.

A message seeking comment Thursday was left for House Minority Leader Cathy Tilton through an aide.

Minority House Republicans expressed frustration with the budget, which included strings attached to funding for programs like the dividend. Traditionally dividends have been paid with earnings from the nest-egg permanent fund. But the budget took money from various pots for a dividend this year and tied the dividend’s size to a key vote involving a reserve fund that requires three-fourths support in each the House and Senate to access.

The budget called for a roughly $1,100 dividend this year with a successful three-quarter vote and a $525 dividend if the vote failed. Neither the House nor the Senate achieved the three-quarter threshold. But legislative leaders have vowed to continue negotiations on that and ways to address funding for other programs affected by the three-quarter vote failure.

The budget maneuvers irked many legislators, and Tilton has said members of her caucus felt their perspective wasn’t being heard.

Corey Allen Young, a Dunleavy spokesperson, did not answer questions on whether Dunleavy would be open to allowing legislators to address the three-quarter vote issues later and if he would be content to get the effective date approved for now.

An effective date of July 1 “would repair the constitutional flaw,” Young said by email.

Sen. Jesse Kiehl, a Juneau Democrat, called Dunleavy’s position on the effective date issue a “radical reinterpretation” of the law.

Wallace, in her memo, said state attorneys general have opined “on several different occasions in several different contexts that funds may be obligated and expended prior to the actual effective date of an appropriation.”

House Speaker Louise Stutes, in a statement, called it “hard to comprehend the governor’s decision to ignore more than four decades of legal advice and longstanding precedent. However, in light of the governor’s interpretation, the House majority stands ready to reaffirm our yes votes in hopes that the minority will join us. We can fix this by tomorrow.”

Stutes said lawmakers would continue negotiations in the waning hours of this special session.

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