Wildfires, Medicaid push state to request $262.5M more than budgeted

Wildfires and Medicaid costs led state officials to ask the Legislature to add more money to the state budget than they have in at least 10 years.

Nearly every year, the state government adds money to the current budget in what’s known as the supplemental budget bill. This year, the request is for $262.5 million.

Neil Steininger, director of the state Office of Management and Budget, described the measure, House Bill 234.

“The first part is to address items that have a urgent need for additional funding or are related to emergency response,” he said. “So these are items where the cash needs of the program are such that we will run out of money to cover these programs in the near future.”

The largest single item is $128 million in state funds for Medicaid.

Officials in Gov. Mike Dunleavy’s administration said the state had to spend more than planned because many of the cuts weren’t allowed under the federal Medicaid law.

House Finance Committee co-Chair Jennifer Johnston, a Republican representative from Anchorage, said the administration has learned that the state can’t cut the Medicaid program without first reaching agreement with the federal government.

“It’s not one where we can cut our way out of,” she said. “It’s one that we have to negotiate with our partners, in particular the federal government.”

The Medicaid cost could pressure the Legislature to pass the bill by late March or early April. That’s when the state expects to run out of Medicaid money until the new budget starts in July.

Without the bill passing, health care providers wouldn’t be paid until then.

The second largest item is $110 million to suppress wildfires.

The most noteworthy item that wasn’t included in the budget was the more than $800 million that Dunleavy has said Alaskans are owed in permanent fund dividends. Every Alaskan would have received another $1,400 more last October if the state followed the formula in a 1982 law.

But the Legislature didn’t fund the full amount. Lawmakers say larger dividends would harm the permanent fund and the state’s economy. They haven’t agreed on a new formula for dividends.

The Alaska Journal of Commerce reported in December that Dunleavy said he would seek the PFD money in the supplemental request.

Administration officials said they could still ask for the added dividend money. They said they could seek to amend a bill introduced last year that would have paid back the dividend amounts cut in the previous three years. Neither chamber has passed that bill, which would cost roughly $3 billion if last year’s dividend were to be added.

Other items funded in the supplemental budget request include $12 million for the Alaska Marine Highway System. There is also $8.6 million for adult public assistance, which supports seniors and residents with disabilities who have low incomes. It would also include $6 million to increase the number of residents at the Alaska Psychiatric Institute and $6.7 million to pay for state trooper positions, which have become vacant at a lower-than-expected rate.