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Yahoo
15-05-2025
- Business
- Yahoo
Juneau road and Nome port lose funding as Alaska Senate passes capital budget
Sen. Bert Stedman, R-Sitka, presents the Alaska Senate's draft capital budget on Tuesday, April 15, 2025, as fellow senators listen. (Photo by James Brooks/Alaska Beacon) As Alaska legislators confront a major state budget deficit, the state Senate on Tuesday voted unanimously to approve a 'bare bones' $162 million capital budget to pay for construction and renovation projects across the state. The spending plan, which would take effect July 1, remains a draft subject to approval by the House. Gov. Mike Dunleavy may also make line-item vetoes. The budget bill passed by the Senate is almost entirely limited to the minimum needed to unlock more than $2.5 billion in federal grants for road maintenance and other priorities. With oil revenue down and costs up — including the Permanent Fund dividend — analysts are projecting a significant budget deficit for the coming year. On Friday, the House voted to reduce the proposed 2025 dividend, but not enough to erase the deficit. To help the issue, members of the Senate Finance Committee clawed back millions of dollars previously allocated to construction projects, reducing the need for new state revenue to pay for the capital budget. Among the clawbacks: $37 million set aside for the Juneau Access Project, an effort to improve road and ferry service to the capital city. 'To even get to the bare-bones capital budget, my district ended up contributing half a dozen ribs and a femur. … I'm not pleased,' said Sen. Jesse Kiehl, D-Juneau and a member of the Senate Finance Committee. Other notable clawbacks included $10 million for a proposed deep-draft port in Nome, and $138,611 remaining in an account to be used for Ketchikan's proposed Gravina Island Bridge, once dubbed the 'bridge to nowhere.' Members of the finance committee also turned to the state-owned investment bank, the Alaska Industrial Development and Export Authority, for an additional $12.5 million above the $20 million already pledged by the bank to the state treasury. Budgeters rejected some of Dunleavy's budget requests: $2.5 million for a proposed road in the western portion of the Matanuska-Susitna Borough, $4.2 million for development of the trans-Alaska natural gas pipeline, $2.5 million for firefighting aircraft, and $6.5 million for a new state plane to be used for emergency response. They also rejected all $3.2 billion in requests from individual legislators for their specific districts. Senate Minority Leader Mike Shower, R-Wasilla, called the result 'a fair and balanced approach' in a statement released after the vote. Some projects saw reduced funding: A $6.5 million request to expand the Bradley Lake hydroelectric project's capacity was cut to $6 million. Bradley Lake is among the cheapest sources of electricity on the Railbelt. The Senate's biggest addition was $19 million for major maintenance at public schools — the governor had proposed no funding for the major maintenance list. 'This is just the beginning of many tough decisions you're going to see over the next few weeks, between now and the end of May, and I don't think some of the folks in the building have quite grasped that yet,' said Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee in charge of the capital budget. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
30-04-2025
- Business
- Yahoo
Between vows against taxes and using savings, the 2025 PFD and Alaska state services are in a vise
Sen. Bert Stedman, R-Sitka, listens to a presentation on the proposed amendment to the Alaska Constitution on Thursday, April 24, 2025. (Photo by James Brooks/Alaska Beacon) As Alaska lawmakers confront a major budget deficit, legislators' opposing views on possible solutions appear likely to lead to a lower Permanent Fund dividend and cuts to services, including public schools. In public statements, members of the Alaska Senate's majority caucus have said they oppose spending from savings to balance the budget and want to see new revenue bills instead. Meanwhile, members of the state House and Gov. Mike Dunleavy have said they oppose new revenue bills and would prefer to spend from savings. Those different positions leave only budget cuts — to public services and the dividend — as the way to balance the budget. 'It's still a very dynamic conversation right now. … We can clearly see we don't have enough funds to pay for everything,' said Rep. Bill Elam, R-Nikiski. 'In the absence of revenue, the PFD is going to go away. An affordable PFD this year is like $500,' said Rep. Zack Fields, D-Anchorage. As it prepares its draft of the state's operating budget, the Alaska Senate's finance committee has already stripped out all spending increases proposed by the state House in its draft budget, and it has nixed most of the increases requested by Dunleavy. Even after cutting more than $200 million from a budget draft approved by the House, the Senate Finance draft budget has a deficit of at least $70 million — and possibly much more, depending on the results of ongoing labor negotiations and other factors. Next on the chopping block is the dividend, set at $1,400 per recipient by the House. 'I believe, because of the tightness of this year's budget, we are looking at reducing that further, but no further than $1,000,' Hoffman said. That reduction would save close to $420 million, he told reporters on Tuesday, but the size of the reduction hasn't been finalized. While legislators have not agreed on a new formula to set the dividend, the amounts each of the past two years were based on 25% of the annual draws from the Permanent Fund, a share supported by some senators since at least 2017. Reducing the dividend below $1,400 would end that practice. With three weeks left in the Legislature's regular session, the Senate has passed one revenue bill — modifying the state's corporate income tax for big Internet companies like Amazon — and two others remain in committee. On Tuesday, Senate Majority Leader Cathy Giessel, R-Anchorage, confirmed that the Senate will not pass the biggest revenue proposal this year: a reduction in the per-barrel tax credit given to oil companies as part of the state's oil tax system. That leaves only a change to the taxation of privately held companies like Hilcorp, the North Slope oil firm, on the Senate's docket. Even if both bills were to pass the Legislature and gain Dunleavy's approval, the combined gain to the state treasury would be the equivalent of less than $200 for the Permanent Fund dividend. On top of that, the odds of the House passing and the governor allowing both revenue bills appear low. In a March opinion column published by the Anchorage Daily News, House Majority Leader Chuck Kopp, R-Anchorage, joined 15 members of the Republican House minority in opposing two of the three Senate bills. Asked why Alaskans should endure a PFD cut to avoid higher taxes on those companies, Kopp said on April 8, 'Right now, our oil and gas industry is recovering from the COVID-19 setback and we are currently on the verge of a renaissance in the energy industry. … I don't want to kill an energy renaissance when it is just forming, coming online and showing tremendous promise.' The House's majority caucus has only 21 members, meaning that Kopp's opposition would require the majority to have the support of at least one member of the House's Republican minority in order to advance one of the oil-related bills. But even if a bill were to pass the House and Senate, Dunleavy would still have to OK it. 'I told legislative leadership, I'm not interested in new taxes. I'm not interested in a program that taxes and spends, taxes and spends,' the governor told reporters during a news conference earlier this month. As an alternative to cutting the dividend and services, the Legislature could unlock the Constitutional Budget Reserve, a $2.8 billion savings account. Lawmakers are already planning to do so in order to cover a $200 million shortfall in the current year's budget. But on Tuesday, members of the Senate's majority caucus reiterated their opposition to that idea. As bad as the state's budget situation is this year, it's likely to be worse next year, said Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee. 'We're very concerned (about) any access to the CBR this year … because the concern is next year, it's highly likely we're going to need it,' he said. Between federal budget cuts and depressed oil prices, the problems that the state is facing now will be repeated next year, both Stedman and Hoffman said. That's when the Legislature will debate the budget to cover the fiscal year from July 2026 to June 2027. 'That is also an integral part of what we're having dialogue on — positioning the state for the FY27 budget a year from now, so we're not … halfway down a cliff, heading for a final stop,' Stedman said. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
04-02-2025
- Business
- Yahoo
Alaska is running a significant deficit, latest fiscal estimates show
Sen. Bert Stedman, R-Sitka, presides over a meeting Friday, Jan. 20, 2023, of the Alaska Senate Finance Committee in the state Capitol at Juneau, Alaska. (Photo by James Brooks/Alaska Beacon) The state of Alaska is bringing in less money than it is spending, and is on pace to finish the current fiscal year with a deficit of $171 million, according to figures presented Tuesday. Lacey Sanders, Gov. Mike Dunleavy's top budget official, told the Senate Finance Committee that spending from the Constitutional Budget Reserve likely will be needed to close the gap. To do this would require support from three-quarters of the House and three-quarters of the Senate. That's a critical threshold: Neither the majority caucus in the House nor the majority caucus in the Senate have enough votes, requiring negotiations with the all-Republican minority caucuses in each body. While Tuesday's numbers appear grim, they may not be as bad as they seem. That's because they rely on last fall's estimate of oil price and production. At that time, the Alaska Department of Revenue estimated that North Slope oil would have an average value of $74 per barrel for the current fiscal year, which ends July 1. Through Monday, the average price has been $76. In this price range, every dollar difference is worth between $35 million and $40 million, said Alexei Painter, director of the Legislative Finance Division, last week. If prices stay around $76, it's likely enough to drive the deficit to less than $100 million. The Department of Revenue is expected to release an updated revenue forecast later this spring. Much of the remaining deficit comes from late budget revisions proposed by Dunleavy. Those revisions are normal: Every year, the governor and legislators revise the budget they passed the previous year by enacting a 'supplemental budget' to deal with things like unforeseen expenses or unexpected federal grants. Tuesday is the last day for Dunleavy to add or subtract items to the supplemental budget. This year, Dunleavy has requested $97.5 million in supplemental operating budget changes, and that cost is included in the $171 million deficit estimate. Those changes are spread across two separate bills — a 'fast-track' budget bill designed to pass ahead of the main budget, and the main budget for the fiscal year that starts July 1. The $97.5 million includes only general-purpose state revenue, known formally as 'undesignated general funds.' There are almost $550 million in supplemental changes overall, if federally funded and fee-funded changes are included. Lawmakers could revise those figures upward or downward by adding or subtracting items from the governor's proposal. Normally, the items funded by general-purpose revenue garner the most attention because those contribute to the deficit. The biggest single item, one proposed by the governor in December, is $50 million for the Alaska Gasline Development Corp. to continue work on the proposed trans-Alaska natural gas pipeline. The $50 million would be used to underwrite the participation of a third-party company in development of the pipeline's front-end engineering and design. According to documents provided to the Legislature, If the company decides to not proceed with the pipeline after that work is done, it would receive the $50 million. If it decides to go ahead, the company would assume the cost and the state would keep the $50 million. Another $10 million has been earmarked for the Alaska Seafood Marketing Institute, there's an additional $14.2 million for Medicaid expenses, $3.9 million in pay increases for the Department of Corrections, and almost $2.8 million to pay for court cases lost by the Department of Law. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
