House Bill 451 would have allowed Juneau to move forward on construction of a new high school in the Mendenhall Valley that voters approved through a bond measure in 1999.

The bill now goes back before the Legislature for reconsideration during a special session. The new bill is filed as Senate Bill 2002.

The failed House measure, which some say would have been a historical achievement in how school construction and maintenance projects are funded, was rejected because of a last-minute change to the bill.

HB 451 would have linked rural school construction projects with those in urban areas. Municipalities would bond locally for school construction projects and be reimbursed 70 percent of the debt by the state. The state would then fund rural schools at 70 percent of the amount refunded to cities.

But after the deal fell apart Thursday night in the Senate, neither side said the new draft of the bill was what it had agreed to.

"There was a lot of feeling that it was very close to consensus, and if it hadn't been for the new items brought in by the Knowles administration at the last minute, we probably would have gotten done (Thursday) night," said Anchorage Republican Sen. Dave Donley, co-chairman of the Senate Finance Committee. "The

proposal they walked in with at about 10:30 (Thursday) night was simply unacceptable."

But Annalee McConnell, budget director for the Knowles administration, said the ultimate deal-breaker stemmed from a last-minute change to a floor amendment that would have prevented linking funding for rural communities with existing bond debt and debt on projects already approved by voters in Juneau and Anchorage.

After days of negotiations on the plan, McConnell said the bill was sent to Legislative Legal and Research Services to clean up cumbersome language on the link. When the new draft was distributed at 10 p.m. - just two hours before the end of the extended session - new language had been added that dramatically changed the bill's intent.

The new draft added a provision that the funding linking urban and rural school construction would take effect only on bonds approved after June 30, 2002. McConnell said the bill drafter was told to add the effective date, but the drafter did not say who gave the order.

"I said that if it only applies to these payments for votes that are taken after June 30, the only one that is going to kick in any money for rural schools is" $3.2 million in debt-reimbursement for schools in Fairbanks to be voted on in October, McConnell said.

"Seventy percent of $3.2 million is only $2 million," she added. "Clearly nobody expected that rural schools were going to get $2 million. That's just not sensible."

McConnell said that had the new draft passed on Thursday night, rural schools would have lost an estimated $150 million in school projects.

"There had never been a voter-approval date for this linkage in any discussions with us," she said.

McConnell worked closely with Sen. President Rick Halford, a Chugiak Republican, and Sen. Lyman Hoffman, a Bethel Democrat, in crafting the legislation.

Halford's original plan was to create an ongoing debt-reimbursement program to encourage a higher level of local participation. But the plan was changed at the request of minority Democrats, to link the ongoing reimbursement scheme to rural school construction, McConnell said.

Sen. Minority Leader Johnny Ellis, an Anchorage Democrat, said that was a deal-breaker for Senate Republicans.

He said more public process in devising a plan would have benefited the drafting of the bill, which was done largely behind closed doors.

"House Republicans say now that they didn't really understand it," Ellis said. "We think that everybody understood it except for the Senate Republicans."

Ellis said the proposal would not work if it's not linked with the existing debt.

"If urban voters bond for schools and move forward, the rural schools should move forward behind them," he said. "This would be, in my opinion, Rick Halford's legacy to the state of Alaska."

Halford said that when the drafter cleaned up the language of the bill, it came back in a form that most lawmakers did not understand.

"And in cleaning it up he also said there has to be some starting and stopping point, so he just picked a date - whatever the effective date of the bill was," he said.

Hoffman said he thought there was an understanding between the House and Senate, but when the language came back from drafting, the effective date had been added.

He said that House Reps. John Davies, a Fairbanks Democrat, and Eldon Mulder, an Anchorage Republican, had signed off on the bill prior to Thursday night.

But Mulder now contends that the final draft was different from what was agreed to.

"At the end of the day, after we had conceptually agreed with what we thought (House members) were offered, it turned out to be something totally different," Mulder said. "I'm not saying that they were deliberately misleading us. I'm just saying it was a sincere disagreement on what we had agreed to and what they thought we were agreeing to. So at that point it all broke down."