The Alaska House of Representatives has staved off a state government shutdown by passing their version of the state budget. Governor Dunleavy has called lawmakers back into special session in August to finalize the budget, and there are several weighty issues left to be resolved. These include the PFD, scholarships for Alaska students, power subsidies, and more. KHNS’ Mike Swasey checked in with Juneau area Democratic State Senator Jesse Kiehl on Tuesday about the future of the budget and the lawsuit the Governor has filed.

Swasey – What is the governor bringing a lawsuit about?

Kiehl – Okay, the governor has a new understanding of how an effective date on a bill and a retroactive effect on a bill work together. So for our budgets, we have for a very, very, very long time, put in an effective date that says on July 1, the start of the state fiscal year, this becomes effective, but just in case, special sessions run long and it takes time to get the government budget or in case you don’t get the two thirds, you put in a retroactivity clause. So that if the budget takes effect after July one, for whatever reason, it’s retroactive to July one. And what that means is the governor can run the state government subject to his line-item veto power, of course, and we don’t have this shutdown wastefulness.

Swasey – What’s his end game with this lawsuit? Is he just holding out for a higher PFD, is that what this is all about?

Kiehl – Mike, I’m not going to tell you that I know what the Governor’s motivations are. I’m going to tell you that the effect of creating that chaos, let him go on single-point-of-view radio shows, and say, “I’m helping the House Minority get a bigger PFD and say it’s not my fault if anything bad happens. It’s the legislature couldn’t get the job done.” He actually called us stupid and lazy.

The judge will figure out whether this lawsuit goes forward or not. But the Governor, if he thinks this through, doesn’t want to win this one. Because it will stop him from running programs when he needs a supplemental. And every Governor, every year, for at least the last 25 has needed a supplemental somewhere.

Swasey – Oh political wrangling… This is exciting.

Kiehl – You know, everybody uses what levers they have to do the best job they can for the way they see the world. And sometimes what their constituents see as important is not necessarily the same as what my constituents see as important. 

I will tell you that because that three-quarter vote did not pass yet it leaves the PFD this October at about $525. We can afford for it to be about $1100. I think we’re gonna get it there. Some of those folks think it should be substantially higher, and they don’t have a plan to pay for that without overdrawing from the earnings reserve of the permanent fund. That will be a big, big, big negotiating point. 

So in August, one of the things we’ll talk about is can we find an agreement to fix the permanent fund dividend formula so that it is something Alaskans can count on, and it is something that Alaska can afford without destroying state services? Because look, we shouldn’t really have laws we’re not following. We’ve got a PFD formula on the books, we can’t afford it and still pay for state services. So we need to fix it. Now, how do we agree on how to fix it? That will be a very difficult question. That will be the biggest issue that we face in August.

Swasey – Jesse, thank you so much for talking with me today. And good luck in the August session. We’ll see you in July. All right, I’m looking forward to it.

Both Kiehl and State Representative Sara Hannan will be in Klukwan on July 8, Haines on the 9th, and Skagway on July 10 for town hall-style meetings.