The fate of a closely watched budget bill in the Alaska Legislature is back up in the air after House Republicans declined to back a supermajority vote on Thursday that would have funded the bill from savings.
Republicans argued higher-than-expected oil prices — due largely to the war in Iran — would negate the need for a savings draw. And that’s true, if new state revenue projections released Friday hold up.
But lawmakers in the Democrat-dominated House and Senate majority caucuses say they’re not so sure they will.
For now, that means it’s not clear when the time-sensitive supplemental budget bill will clear the House and Senate and head to Gov. Mike Dunleavy’s desk.
House Republican minority whip Rep. Justin Ruffridge of Soldotna said it should happen as soon as possible.
“I think that that bill should be back on the floor Monday morning,” he said Friday afternoon. “Frankly, I think it should be back on the floor today.”
At stake is funding for disaster relief, wildfire suppression and $70 million in matching funds for federal projects — which the construction industry says is critical to ensure Alaskans don’t lose valuable time in the short summer season, or worse, their jobs.
On Thursday, all 40 members of the House voted to approve the $373.5 million budget bill. All but one minority Republican, though, voted against funding it from savings, leading the majority to pull the bill from the House floor.
Lawmakers disagree over implications of revenue forecast
Republicans had been in touch with the governor’s budget office and were confident even ahead of Friday’s official forecast that the state would have enough money to cover the cost without a savings draw, said Palmer Republican Rep. DeLena Johnson, the House minority leader.
Oil prices have shot up dramatically since the U.S. and Israel started striking Iran two weeks ago. And according to a new forecast from the state Revenue Department released on Friday, that means the state will have half a billion dollars more than it anticipated this past December — plus an extra half a billion dollars in next year’s budget.
“This revenue forecast may be even greater than they foresaw,” said Rep. Andy Josephson, an Anchorage Democrat and co-chair of the House Finance Committee.
The higher revenue projections could remove a key point of leverage for House Republicans, he said, because drawing from the Constitutional Budget Reserve takes a three-quarters supermajority.
If the state has the money to avoid a draw, “where it puts them politically is, we don't need a supermajority,” he said — not now, and critically, not at the end of the session.
But not so fast, said House Speaker Bryce Edgmon, a Dillingham independent.
“It's not extra revenue at this point,” he said. “It's projected to be extra revenue.”
And for now, Edgmon said, the safest thing to do is to pursue another draw from savings.
“You would take money out of the state savings accounts, and if this increase in oil money is realized, we’ll then replenish the money that we've taken out of the accounts,” he said.
It is extraordinarily difficult to project oil prices, especially when it’s not clear how much longer the war will last. And the state Department of Revenue’s forecast makes that clear.
“As always, it is important to note this forecast represents one scenario within a range of potential outcomes,” Acting Commissioner Janelle Earls wrote in a letter accompanying the forecast. “This is true now more than ever given current world events, and oil prices over the next year could be materially higher or lower than the official forecast.”
For example, the Revenue Department said it was 80% sure that the price of oil from July 2026 to June 2027 will average somewhere between $45 and $130 a barrel — a 10% chance it’s higher, a 10% chance it’s lower.
“That means they don't know where oil is going to be. They’re just throwing a dart,” said Sen. Bert Stedman, a Sitka Republican and a co-chair of the powerful Senate Finance Committee.
Stedman said he’s with Edgmon — draw from savings now and replenish it if the money materializes.
“We need to be a little cautious,” Stedman said. “When that ends, and they straighten that out, I would expect oil prices to reverse course and come back down substantially, and very quickly, depending on the structural damage.”
But Johnson, the House minority leader, said she’s confident there’s at least enough sitting in state coffers right now to cover much of the need — basically, because the last forecast was a bit low.
“There's a large amount of money that's been accrued over the year that was sitting there,” she said.
Edgmon, the House speaker, is not convinced.
“We don’t have $373 million in surplus revenue at this point,” he said.
Edgmon doesn’t plan to bring the budget bill back up in the House until he’s confident he has the three-quarters supermajority needed to withdraw from the Constitutional Budget Reserve, he said.
And that means for now, the bill remains in limbo.
