ANCHORAGE, Alaska - Facing a loss of federal grants for highway construction projects and village water systems, Alaska Gov. Mike Dunleavy has amended his call for a second special legislative session and will support lawmakers meeting in Juneau.

Dunleavy, a first-term Republican from Wasilla, originally called for the special session to be in his hometown, which led to legislators meeting in two locations and a legal dispute over the legality of any actions taken.

Leaders of the state House and Senate, citing security and a television service that allows residents around the state to observe proceedings, gathered most lawmakers July 8 at the Capitol.

About a third of the Legislature, including minority Republicans in the House and a handful of senators, met at a makeshift legislative hall inside the gymnasium of a Wasilla middle school.

The split Legislature ended Wednesday when Dunleavy called for the special session to be in Juneau. Lawmakers from both locations said progress was needed on the state construction budget and could not be completed at two locations, Dunleavy said.

“With sensitivity to the time that remains to capture federal funds, the Legislature will be able to quickly consider the capital budget, the PFD (Alaska Permanent Fund dividend), and conclude this work for the people of Alaska before the end of July,” Dunleavy said.

Senate President Cathy Giessel, R-Anchorage, said she and House Speaker Bryce Edgmon, an independent from Dillingham, have been in talks with Dunleavy and minority leaders of both houses to find common ground.

“In the past week, he has made time to meet with us personally for several hours at a time,” she said. “I’m very grateful for him engaging with us.”

Dunleavy on Thursday plans to introduce a construction budget that will contain state matching funds for federal transportation programs and village water projects. The bill will contain funding for a crime bill passed this year and “necessary fixes” for a capital projects bill passed in May.

Obstacles remain, however.

Dunleavy vetoed more than $400 million from the state operating budget. About one-third, $130 million, was directed at the University of Alaska. On top of a $5 million reduction made by legislators, the university faces a 41% state funding loss and UA officials have said the result could be the loss of 2,000 positions.

Dunleavy also eliminated or reduced funding for early childhood education, public libraries, Medicaid dental coverage, behavioural health treatment grants, the state arts council, public broadcasting, benefits to poor senior citizens and reimbursement to school districts for school construction.

State lawmakers who tried unsuccessfully to override Dunleavy vetoes have vowed to use other legislation to restore funding for the university.

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Legislative leaders found common ground with the governor on the session location and expansion of the agenda to include construction projects, Giessel said, but so far not on restorations to the operating budget.

“They are, however, one of the main discussion points we are having with the governor, seeking alignment,” she said. “I am very optimistic we will find agreement on those issues and they’ll be coming forward as well.”