A high-profile budget bill that would enable hundreds of millions of dollars’ worth of government-funded construction projects across Alaska took a substantial step forward in the state Legislature on Wednesday. The Alaska Senate unanimously passed what’s known as the supplemental budget and approved a $373.5 million draw from savings, setting up an up-or-down final vote in the House in the coming days.
The budget bill faced a brief delay in the Senate as Republican lawmakers objected to the initial half-billion-dollar proposal passed by the House and expanded by a Senate committee. Because the budget bill taps the Constitutional Budget Reserve, which is the state’s main savings account, it needed a three-quarters supermajority, giving the six-member Republican minority leverage to negotiate.
But on Wednesday, minority Republicans agreed to a roughly 30% reduction in the budget, and all 20 members of the Senate voted to advance the slimmer spending package.
Bethel Democratic Sen. Lyman Hoffman said a spike in oil prices linked to the U.S. and Israel’s war with Iran erased some of the deficit lawmakers had planned to fill from savings.
“As a result of that, we are able to accomplish what I feel needs to be addressed for the state of Alaska, and also the concerns of many of the members of the minority,” Hoffman said.
About a fifth of the spending would go towards the state’s portion of $700 million in federal transportation projects. Construction companies warned lawmakers earlier this year that a series of budget vetoes by Gov. Mike Dunleavy — who said the money lawmakers set aside for the projects was unavailable — endangered the 2026 construction season unless lawmakers promptly approved $70 million in matching funds.
The Senate-approved bill also includes tens of millions to support Western Alaska storm relief and the upcoming wildfire season.
Additionally, the budget bill also returns nearly $130 million to the state’s Higher Education Investment Fund, a scholarship account lawmakers tapped last year after a complicated series of events set off by the House’s failure to approve a draw from the Constitutional Budget Reserve.
The deal removes from the budget bill tens of millions of dollars to make up for unexpected spending by some departments this past year — most prominently the Department of Corrections.
Majority-caucus lawmakers emphasized nearly all of the spending proposed in the supplemental budget was requested by Gov. Dunleavy, a Republican who frequently aligns with the House and Senate’s all-Republican minority caucuses.
“This is money to fund the budget that was passed last year for things that the governor already spent,” said Anchorage Democratic Sen. Bill Wielechowski.
Tok Republican Sen. Mike Cronk, the minority leader, says it’s important for lawmakers to dig a little deeper into why agencies spent more than planned.
“This is one step closer to not withdrawing as much as what was initially looked at,” Cronk said.
Wasilla Republican Sen. Rob Yundt thanked the majority for paring the budget back to only what they saw as the most urgent items. He said he was glad to see the Legislature refill the scholarship fund, saying last year’s decision by the bipartisan majority to tap the fund as a savings account jeopardized students’ future.
Sen. Robb Myers, a Fairbanks Republican, put it more bluntly.
“What are we doing holding that fund hostage?” he said. “Which fund is going to be held hostage again next?”
It’s unclear whether the Senate deal will placate House Republicans who initially withheld their votes to draw from savings, leaving the budget unfunded. House Republicans said at the time they wanted more time to examine why spending had grown.
House leaders indicated Wednesday afternoon they’d seek a final three-quarters supermajority vote on Thursday, but the Republican minority leader, Palmer Rep. DeLena Johnson, said in a statement it’d be “irresponsible” to hold a final vote before a new state revenue forecast is released on Friday.
