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House, Senate negotiators reach agreement on operating budget


JUNEAU, Alaska — House and Senate negotiators reached agreement on a state operating budget, and proposed a way to fund government through the end of this fiscal year without potentially having to draw from the constitutional budget reserve fund.

The committee, meeting late Saturday night, proposed using about $1.1 billion in forward-funding for education for the fiscal year beginning July 1, to help cover this year's deficit. To fund education for next year, the committee proposed $950.5 million in general funds and $157 million from an in-state gas pipeline fund. That fund is what Gov. Bill Walker otherwise would use to help develop an alternate gas line proposal, an issue that's been a point of contention with Republican House and Senate leaders who previously unsuccessfully sought to rein in his plans. Legislative Finance Division Director David Teal said there's about $180 million in it now.

While the Senate proposed cutting $47.5 million in education for next year, the cut for education would be about $16.5 million, on top of cutting $52 million in one-time funds between 2016 and 2017. The repeal of the one-time funds is in a separate budget package. The budget proposal would not forward-fund education for 2017.

Failure to reach agreement on the budget sent the Legislature, which had been scheduled to adjourn last Sunday, into overtime, with education funding a sticking point.

Senate President Kevin Meyer, R-Anchorage, said the conference's actions represent an agreement between the House and Senate majorities. Floor sessions were scheduled for Sunday, though it is expected that two-thirds of each the House and Senate would have to support waiving the Legislature's rules to allow the budget to be taken up without waiting at least 24 hours from when it was delivered to the Senate secretary and chief clerk of the House.

Meyer said the Senate planned to take up at least two other bills that Walker wanted, related to child support and Interior energy needs.

Budget negotiations had been occurring between not only the House and Senate but also between the House majority and minority. It had been expected that a three-fourths vote would be needed to authorize a draw from the constitutional budget reserve fund to help cover costs for this year and next. In the House, Democratic support is needed for that threshold.

Democratic-led minority has been opposed to cuts to education funding and negotiated salaries in labor union contracts for next year, among other things. Members of the GOP-led majority said they had little appetite for adding to the budget. The contract increases also were struck.

Before the meeting, Rep. Les Gara, D-Anchorage, said his resolve was not diminished. "I'm not going to get on my knees and say uncle to anybody," he said. "It's about kids."

Democrats have proposed revisiting the state's oil tax credits, which the majority has shown no interest in, and expanding Medicaid and accepting federal funds that come with it. The budget advanced includes language that says the state could not accept federal money for Medicaid expansion without an "acceptable reformation plan" and appropriation approved by the Legislature.

Medicaid expansion has been a priority for Walker. He has indicated he would call a special session to deal with that if lawmakers don't address it before adjourning.

The budget proposal outlined would still call for a constitutional budget reserve fund vote for the current year in case available revenue doesn't cover costs. It was projected there would be more than $120 million left at the end of this year under the committee's approach. If the three-fourths vote fails and that amount is not enough to cover costs, the amount necessary would come from a fund used for student scholarships. Teal said there is money available that could be used without impacting the scholarship program.

The budget proposal also would call for the three-quarter vote for 2016. While the administration has said there would be money to operate into the fall, it is expected at some point that a draw from reserves would be needed to help fill what is projected to be a multibillion-dollar budget hole.

Walker spokeswoman Grace Jang said by email that Walker's expectation is that the legislature "will fulfill its constitutional obligation to pass a fully funded budget."

She called the budget proposal disappointing.

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