This week, the Alaska Department of Revenue released updated projections for state revenue, lifting expectations for what may be included in this year’s budget.
The state is expecting $58 million in additional revenue during the current fiscal year, which runs through June 31, and $140 million in the next fiscal year. Those numbers are largely driven by higher oil price expectations compared to the fall revenue forecast.
Legislators and the governor will determine just how that money is used over the remaining month and a half of the legislative session, and there are already some ideas.
“The numbers are encouraging for ’25 at $140 million; we’ve got a lot of need out there,” said Sen. Click Bishop, a moderate Fairbanks Republican who serves on the Senate Finance Committee. Some of the areas that Sen. (Bill) Wielechowski and Sen. (Bert) Stedman and I look at our snow removal numbers statewide, and maybe we’ve got some wiggle room to help with that snow removal funding, which is direly needed.”
He also supported making increased funding for snow removal part of the base budget, calling the higher snowfalls in recent years the “new normal” that the state should plan for. He said he’ll also look to help with the maintenance of public infrastructure, particularly schools.
“If you saw our deferred maintenance needs for our K-12 schools, western Alaska, it’s embarrassing,” he said, “To look at the black mold in those schools that those kids have to be in with. Fire alarms that are defunct, et cetera. Hopefully, we can throw a lifeline in that deferred maintenance list for our schools.”
Sen. Cathy Giessel, R-Anchorage, also highlighted the need to invest in the energy grid, specifically in the transmission system for road system communities. With natural gas shortages on the horizon for Anchorage and Southcentral Alaska, legislators and utilities have identified the state’s aging transmission system as a key solution.
But before the senators can make their changes to the operating budget, the House must first update and pass it. The governor has also requested a handful of amendments to the budget.
Senate Finance Committee co-chair Sen. Bert Stedman said that an agreement with the House on the schedule for the budget will give the House the opportunity to weigh in on how that money should be spent before the legislation is sent over to the Senate. The move comes after a rocky budget fight in 2023, where the bipartisan Senate supermajority got the upper hand in negotiations with a narrowly divided House.
The new process is designed to lessen the leverage points in the process.
Big picture
Looming over the negotiations this year are the issues of education funding and the dividend, as it has been every year since the state broke from the formula.
While the Legislature passed a sweeping education bill earlier this session, outlining more than $200 million of education funding, the funding will still need to be provided through the budget. Such funding would typically not be controversial, but Gov. Mike Dunleavy hinted that he could veto education funding from the budget when outlining his intent to veto the legislation at a late February news conference.
As of this writing, the governor has not announced whether he’ll follow through on his plans to veto the legislation, but the decision is due by midnight. If he does, legislators can override his veto with a two-thirds majority, or 40 legislators. However, he could still exert control over the process via a line-item veto of the bill’s funding from the budget, which requires a high three-quarters majority, or 45 votes.
Both thresholds have proven to be high bars, even though the education bill passed with the votes of 57 of 60 legislators, as many Republicans have been reluctant to defy the governor.
The timing of both potential vetoes also complicates the issue. A veto of the education bill would be an in-session veto, where the Alaska Constitution calls for legislators to meet “immediately” to consider an override. Leadership has already planned a vote for Monday in the case of an override. The budget, however, is usually one of the final bills to pass out of Juneau, making a budget line-item veto an interim veto that would require agreement from legislators before the meeting.
That didn’t happen when Dunleavy vetoed half of the $174 million in one-time school money approved last year. When reluctant House Republicans were eventually forced into a joint session at the start of this year, many who had supported the $174 million figure voted to uphold the veto and against restoring the money.
If they approve the money and it is successfully vetoed, the Legislature could reallocate it through a supplemental budget next year. If they can’t come to an agreement, the unspent money would go to the state’s savings account.
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Twitter.