Month: March 2026

A potential $500 million windfall is giving the Alaska House of Representatives a headache. 

On Friday, the Alaska Department of Revenue released a forecast predicting that the state of Alaska will collect hundreds of millions of dollars more oil revenue by June 30 than previously expected.

That forecast landed in the middle of an ongoing debate over whether or not to spend from savings to cover almost $530 million in extra expenses, largely added by Gov. Mike Dunleavy, to the state budget since last spring.

The Senate approved a proposal to pay for roughly three-quarters of those expenses and it is now in the state House, awaiting a vote that could come as soon as Monday. 

Tensions rose on Friday, with no agreement among House lawmakers on how to pay for the proposal. 

The House is led by a 21-person multipartisan coalition whose members have been urging fast action on the issue. They say it is particularly important to fund $70 million for the state’s transportation projects to unlock more than $630 million in additional federal funding.

Without sure money, majority lawmakers say projects can’t go out to bid and construction firms can’t make purchasing and hiring decisions. 

The construction industry has been lobbying heavily on the issue since before the legislative session began.

The majority wants to use the state’s Constitutional Budget Reserve, a savings account, to provide guaranteed funding.

The majority can pass a bill on its own, but it can’t spend from savings on its own. It takes 30 members of the House and 15 from the Senate to approve spending from the Constitutional Budget Reserve, the state’s principal savings account. 

The Senate has already given that approval, but in the House, at least nine members of the 19-person, all-Republican House minority would have to support the majority, and so far, they’re not willing to do that.

Part of that reluctance is because as currently written, the supplemental budget bill allows lawmakers to spend up to $373.6 million from the reserve regardless of whether or not the war-caused bonus becomes real.

If oil prices stay high and the reserve money isn’t needed, the majority could spend it on other things without further input from the minority. That’s because it takes only 21 votes to advance a budget bill.

In a Saturday post to Substack, Rep. Kevin McCabe, R-Big Lake, expressed worries about that prospect.

The money would return to the reserve only if it was unspent at the end of the fiscal year.

If lawmakers don’t spend from savings and the Iran war ends unexpectedly quickly, causing oil prices to fall, the minority could vote to spend from savings later to fill the gap. 

The result is an ironic set of circumstances — Trump has said that the war will be short, but minority House Republicans’ action is effectively a bet on a long war.

Minority members say they’re being fiscally responsible. So do members of the majority, who add that there’s an opportunity cost for any delay — Alaska construction companies can’t make plans for the summer until they know what projects they’ll need to build.

Majority members also expressed frustration that the supplemental budget was largely requested by the governor, who they say has been absent in negotiations.

In addition, legislators and Gov. Dunleavy could also find themselves with a problem if oil prices fall after legislators have adjourned for the summer.

Legislators typically write budgets based on forecasts from the Department of Revenue, but this year’s forecast is especially uncertain, the department said.

Rep. Calvin Schrage, D-Anchorage, co-chair of the House Finance Committee and a member of the majority, said he’s skeptical of banking on the forecast.

“I have a lot of concern over budgeting based on that forecast, because that’s all it is. It’s a forecast. It’s not realized money, it’s not money in hand,” he said Friday. 

“Even with this optimistic forecast, you are just barely, maybe able to balance the budget — if everything goes perfect. We still don’t have additional supplementals,” he said, referring to more budget amendments that could be requested by the governor.

Schrage said lawmakers will be scrutinizing the forecast in the coming days and weeks, and he said there’s still the possibility the Legislature may need to draw from savings.

But minority Republicans said they considered drawing from savings fiscally irresponsible.

“Taking a draw from our savings account to put into the general fund to fund things that were, by all accounts and purposes, able to be funded without it would have been irresponsible,” said Rep. Justin Ruffridge, R-Soldotna, on Friday. 

House Minority Leader DeLena Johnson, R-Anchorage, said she’s confident in the forecast projections. “There’s some actuals there too. So I’m very comfortable with actuals, and I also know, if there’s changes, we can come in and we can come in and make them, and make a different vote. I’m not as worried about that.”

Speaker of the House Bryce Edgmon, I-Dillingham, expressed frustration at the delay.

“This is pure politics. We should have had the supplemental budget funded. A long time ago,” he said. “The House Majority coalition prioritized the funding of the entire package that was proposed by the governor. Every single item came from the governor. And so here we are, you know, in a really precarious state, because we’re at the point where every week that goes by gets us a week closer to that federal match not being achieved for the summer construction season.”

Edgmon and other majority legislators have voiced frustration about “moving goal posts” on the budget bill. While there are more than $530 million in proposed additions, the bill in front of House lawmakers contains only three-quarters of that amount because majority members wanted to attract members of the minority for the savings vote.

The remainder will still have to be addressed later, regardless of what happens in the upcoming vote.

Edgmon said it’s not clear to him what the Republican minority wants in exchange for a budget reserve vote.

“We don’t know what the ask is,” he said. “But it’s all about leverage, and unfortunately, it’s falling on the shoulders of a lot of smaller contractors around the state.”

As of Friday afternoon, it appeared as if the budget bill was on course to pass, but without approval to spend from savings. 

If that occurs, the state of Alaska will be in the awkward position of hoping for a war long and difficult enough to keep oil prices high for months.

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