"We as committee members have full-fledged parliamentary privilege. We decide what's right and what's wrong in front of us," government backbencher Jason Luan of Calgary told the committee before the vote.
"I don't care if it's my neighbour commenting on anything. It could be my friends, my constituents and, in this case, this premier.
"It's all up to us sitting here with the full privilege to decide what we're going to vote on."
All eight Progressive Conservatives on the all-party legislative offices committee voted to rescind a decision made last week to reinstate $546,000 to the auditor general's budget. Liberal Laurie Blakeman and the NDP's David Eggen voted against the move.
Last Tuesday, several Tories on the committee voted with the opposition members to reinstate the money. It was a portion of $1.8 million which had been cut from the auditor general's office in December to help the government save money.
They said the auditor general needed the cash and provided value for money.
But a day later, Prentice announced he was directing the committee to reverse the decision, because the cash wasn't available due to low oil prices.
Committee chair Matt Jeneroux, an Edmonton Tory MLA, called the meeting for Tuesday, but said no one directed him to do so or told him what to do. He said the committee reversed its decision based on new information on looming budget cuts and additional research that showed Alberta funds the auditor general well compared with other provinces.
During the meeting, Tory members were criticized for surrendering the committee's traditional arm's-length integrity.
"If you allow the premier to dictate how you vote in these committees ... then what's the point in even holding these meetings?" Wildrose Opposition MLA Rick Strankman asked.
Strankman is not on the committee and could not vote. The party has no representative since a mass floor-crossing to the Prentice Tories late last year.
The committee's two opposition politicians suggested Prentice's power is growing and unchecked in the legislature.
"The fact a premier has gone up on television and said, 'I demand the committee cut this money' ... reflects very badly on Alberta and very badly on the premier," said Blakeman.
"Premier Prentice is arrogant. He's autocratic. He likes to make backroom deals and this is just the latest manifestation of it," added Eggen.
Officials in Prentice's office could not immediately be reached for comment.
Auditor general Merwan Saher said in a statement that his office will continue its work despite the budget cut.
"With a two per cent reduction to our current budget of $27.3 million, we will ...(use) our professional judgment to determine what specific work we can and cannot do."