JUNEAU (AP) -- The Alaska Legislature voted shortly before midnight to extend their session by two days to resolve an impasse over the state's budget.
Just moments before the clock ran out on the 22nd Legislative session, the Senate approved a $2.3 billion operating budget by a party-line 14-6 vote. It is now before the House.
Lawmakers did not resolve the state's capital budget and a major school bond package that sparked tense negotiations with the GOP-majority and minority Democrats.
Republicans had offered a package that would have included rural schools on a general obligation package that would go before the voters in November. Democrats wanted $35 million more for the state's school funding formula and a plan to preserve an energy subsidy for rural communities.
''Our disagreement is about money, money, money,'' said Senate Finance CO-Chairman Pete Kelly, R-Fairbanks.
Democrats counter that the GOP had allowed rural schools to erode and the state is far behind in aid to the Bush. Without Democrat votes, the Republican Legislature can't access the state's budget reserve.
''We're looking for a solution that gets going on a backlog of rural school construction, but in the future moves urban and rural interests ahead together,'' said Senate Minority Leader Johnny Ellis, D-Anchorage.
Ellis emerged from a closed-door meeting with House Speaker Brian Porter, R-Anchorage, and Senate President Rick Halford declared negotiations at an impasse.
Gov. Tony Knowles has called lawmakers into a special session on subsistence just prior to the historic vote to extend the session. The special session will begin after lawmakers resolve their extended session, said Majority Leader Loren Leman, R-Anchorage.
The Legislature hasn't had an extended session since 1987 when Gov. Steve Cowper called lawmakers back to work, said Bob King, press spokesman for Gov. Tony Knowles. The Legislature has never voted to extend its own session.
Lawmakers spent the final hours of the session haggling over a budget deal, with senators and representatives walking quickly through the halls from one closed-door caucus to another.
Legislative leaders emerged from a closed door meeting late Tuesday with no resolution to key sticking points in approving the state budget by midnight. They voted to extend the session just before midnight, when the Legislature was to have adjourned.
Halford had been pushing a multimillion dollar bond package that included a number of rural schools along with a plan to encourage urban school construction.
But minority Democrats, whose votes are needed to access the state's Constitutional Budget Reserve, remained entrenched.
Democrats wanted $25 million in the state's school funding formula along with more state spending to preserve the Power Cost Equalization program. Power Cost Equalization uses an endowment to subsidize high energy costs in rural areas.
Republicans plan to use $15.7 million from the fund to subsidize high power costs, but Democrats complain that it eats into the principal of the endowment. They want state general fund assistance to support the fund.
Ultimately, that proved to be too expensive, Kelly said. Republicans were unwilling to give more for the subsidy program and were satisfied with putting $10.9 million into schools through a grant program.
The state faces an estimated budget deficit of $963 million next year and Republicans had fought to hold the line on spending. But that meant painful cuts in some services.
''The argument really should be over the bond package itself,'' Kelly said. ''That's a huge historical funding mechanism for rural schools.''
Kelly said negotiations broke down quickly as the time drew near for lawmakers to adjourn this session. Republicans were unwilling to meet Democrat demands in a year when the focus had been to hold the line on spending.
Democrat lawmakers wanted the bond package to include the top 19 rural schools on a state list of priority projects. A bond package offered by Halford included at least 11 schools.
The Legislature was sued by plaintiffs who alleged discrimination in construction projects. Among the school projects on the list is the Akiachak district, where plaintiffs in the lawsuit live.
The earlier bond package in the House included fewer rural schools and more urban school projects. It would be funded through general obligation bonds that must be approved by voters.
House Finance co-chairman Eldon Mulder, R-Anchorage, said the plan tried to include enough urban projects to win voter approval in the most populated areas.
The bond package also includes $61.7 million for University of Alaska system projects and $102.8 million in Grant Anticipation Revenue Vehicle bonds. Those GARVEE bonds allow the state to borrow against future federal highway dollars.
Gov. Tony Knowles also wanted lawmakers to pass a series of veterans bills and reauthorize the Regulatory Commission of Alaska.
Republican majority members also want an increase in the state's minimum wage to $7.15 per hour. If the bill is approved, a similar proposal would be removed from the November ballot. Republicans fear such a proposal would drive Democrat-leaning voters to the ballot box.
The measure is poised to pass in the Senate.
The Legislature is scheduled to adjourn at midnight on Thursday. It will then go into a special session on subsistence.
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