Alaska House advances deficit-fixing budget bill, but there's a catch

Yahoo

04-04-2025

The Alaska State Capitol is seen on Monday, Feb. 3, 2025, in front of snow-covered Mount Juneau. (Photo by James Brooks/Alaska Beacon)
The Alaska House of Representatives on Thursday approved a bill that seeks to solve a nearly $200 million state budget deficit, but legislators failed to approve spending from a state savings account, something needed to fix the deficit.
House Bill 56, which passed on a 21-19 vote, is a 'fast-track supplemental' budget bill designed to address the current fiscal year, which ends June 30.
Because of lower-than-expected oil prices and higher-than-expected costs, there isn't enough money in the budget to pay for spending through the end of the year. That's caused lawmakers to turn to the Constitutional Budget Reserve, the state's principal savings account.
'The vote we're taking today is just about paying for what we've already authorized,' said Rep. Andy Josephson, D-Anchorage and co-chair of the House Finance Committee, before the vote. 'These items we've already authorized are for these immediate-term priorities like disaster relief, fire protection and ongoing lawsuits that were brought to us by the governor.'
Spending from the reserve requires three-quarters of the 40-person House and three-quarters of the 20-person Senate, plus the assent of the governor.
But on Thursday, only 21 members of the House voted in favor of the clause that unlocks the budget reserve. All of the 'no' votes came from members of the House's Republican minority caucus. All of the 'yes' votes came from the House's multipartisan majority.
If the bill fails to pass the Legislature, Gov. Mike Dunleavy would be forced to make unilateral cuts to the state budget, impounding funding for various programs.
For the moment, that's a distant prospect.
Despite the failed budget reserve vote, HB 56 will advance to the Senate — 21 votes is the minimum needed to advance a bill from the House to the Senate — but the failed vote means that the House will need to revote on the budget reserve clause once the Senate acts.
'We're still early in the process,' said House Minority Leader Mia Costello, R-Anchorage.
Historically, members of the House minority have withheld support for the CBR vote until after the Senate approves the bill.
By waiting, the minority preserves its negotiating leverage, Costello said. That makes it less likely that minority-opposed provisions will be added to the bill.
In addition, it's possible that the fast-track budget bill will later be combined with the budget bill for the next fiscal year, which starts July 1. So-called 'turducken' budget bills have previously included one budget reserve vote for both fiscal years.
Rep. Kevin McCabe, R-Big Lake and a member of the minority caucus, said before Thursday's vote that the fast-track bill lacks minority input and that as a result, he could not support it.
As currently written, the bill would use savings to pay for more than $111 million in previously unforeseen spending, including millions for wildfire response, Medicaid and disaster aid. Those additions were requested by the governor to meet state needs.
One late-adopted amendment, approved Thursday by the House, restored a funding request for village public safety officers, who serve a police and lifesaving role in rural Alaska communities.
On top of the additional spending, revenue is down about $80 million from what had been expected last year.
The Senate Finance Committee has already scheduled hearings for HB 56, indicating that it may move quickly toward a vote of the full Senate.
Even if the fast-track supplemental budget is adopted in time, lawmakers still must resolve an expected deficit in the 2026 fiscal year, which starts July 1. The House is expected to begin debate on a budget bill for that fiscal year next week.
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