April 4, 2025
House Finance Advances Operating Budget, Senate Introduces First Capital Budget Draft
The legislature wrapped up another busy week in Juneau as the start of April brought a stretch of sunny spring weather to the capital city.
The House Finance Committee finalized its work on the FY26 operating budget after making it through the stack of nearly 100 amendments and sent the budget on to its next stop: the House floor. Another round of the amendment process awaits the operating budget when House leadership brings the bill to the floor for consideration, which could begin as soon as early next week and, if history is an indicator, may lead to marathon floor sessions that extend late into the evening.
This week, after debate, the House Finance Committee adopted Amendment 91, which directed $2.5 million to UAA/UAF/UAS鈥檚 important 鈥渞ecruitment, retention and graduation鈥 efforts. These funds are critical as the University 鈥渓ooks to the horizon鈥 and sees lower in-state K-12 student numbers. Tuition will be more critical as state dollars become tight, both this year and next鈥nd maybe longer.
Additionally, the committee adopted the UA鈥檚 proposed distribution plan for $500K, focused on student mental health services. This request was in direct response to our student coalition leaders who raised a voice in the Capitol this year.
The Senate Finance Committee unveiled a stripped-down version of the FY26 capital budget, removing all items put forth in the governor鈥檚 proposed budget except for state match funds to leverage federal dollars. The capital budget, which primarily addresses infrastructure needs around the state, will continue to develop in the Senate Finance Committee as Senator Stedman, who鈥檚 in charge of the capital budget, and his fellow committee members negotiate where to target the limited available dollars.
Budget Deficit Challenges Persist
On Thursday, the House passed the supplemental budget, which covers spending needs for the current fiscal year, FY25. The legislature often has to approve a supplemental budget during session to ensure the state has sufficient funds to make it through the rest of the fiscal year that ends June 30. Despite all the effort that goes into crafting the budget each year, it is not uncommon for costs to come in higher than expected, especially for things like disaster relief and wildfire mitigation. Due to the already-strained state general fund, the supplemental budget required a draw from the Constitutional Budget Reserve (CBR) in order to balance. However, the House fell short of the 30 votes needed to access the CBR, so the supplemental budget now on its way to the Senate contains a deficit of approximately $200 million.
The FY26 operating budget for the upcoming fiscal year that begins July 1 also faces a budget deficit problem, albeit a much larger shortfall than the supplemental. Prior to advancing the bill from the House Finance Committee on Thursday, members were unable to attain enough votes to reduce spending, leaving a $1.9 billion deficit in the budget as it heads to the House floor. Once all 40 members of the House have a chance to vote on budget amendments, the outcome may change for things like the size of this year鈥檚 permanent fund dividend, which is currently included in the budget as a full statutory PFD of roughly $3,900 per person. However, there is an expectation that the PFD amount will be reduced at some point throughout the budget process due to the large cost with no means to pay for it. There is much work remaining to rightsize the budget before lawmakers reach the end of session on May 21, and some of the toughest decisions are still to come.
Senate Considers New Revenue Proposal
Yesterday the Senate Resources Committee advanced that would include S corporations in the state鈥檚 9.4% corporate income tax, if the S corp has taxable income over $5 million a year from oil or gas production in 猫咪社区官网. The measure is crafted to capture tax revenue from one producer in particular, Hilcorp, which is a private company not subject to the current C corp tax and also one of the largest oil producers operating in the state.
This proposal has been discussed in the legislature in previous years, but has gained more momentum this session given the severe fiscal problems facing the state. However, tax bills of any kind often face strong opposition in the 猫咪社区官网 legislature, and oil and gas tax bills are no exception to that. It鈥檚 unclear if the bill can garner enough support to make it through both the Senate and House, but proponents cite the increase it would bring in state revenue, estimated to be around $100 million per year, as a solution to help the state address its budgetary challenges.
UA in the Capitol
On Tuesday, Dr. Bob McCoy, Director of UAF鈥檚 Geophysical Institute, gave a in the Capitol titled 鈥溍ㄟ渖缜偻 is an Aerospace State.鈥 Dr. McCoy told legislators, staff, and members of the public about the cutting-edge technology and projects the Geophysical Institute is involved in, including drones, rockets, and research on everything from earthquakes, permafrost, and volcanoes, to the aurora, atmospheric processes, and space physics.
What We鈥檙e Watching
Monday, April 7
- 9:00 a.m. - Senate Finance: Presentation: Defined Contribution Account Performance by Division of Retirement and Benefits. : Appropriations: Capital/Supplemental/Funds
Tuesday, April 8
- 9:00 a.m. - Senate Finance: : TRS Contribution Rate; PERS/TRS Social Security or SBS. : Appropriations: Capital/Supplemental/Funds
- 1:30 p.m. - House Finance: : Teacher/State Employee Student Loan Program. : Add Faculty Member University Board of Regents
Thursday, April 10
- 1:30 p.m. - House Finance: : 猫咪社区官网 Innovation Council
Friday, April 11
- 1:30 p.m. - House Finance: Appropriations: Capital/Supplemental/Funds
- 3:30 p.m. - Senate Education: : Add Faculty Member University Board of Regents
For more information, contact Director of State Relations for the University of 猫咪社区官网 System Chad Hutchison, cell 907-378-3946, email clhutchison@alaska.edu. You can also follow the University of 猫咪社区官网 Government Relations on our .