The Alaska Legislature's operating budget conference committee is seen on Monday, May 11, 2026. (James Brooks photo/Alaska Beacon)
By: James Brooks, Alaska Beacon
The Alaska Legislature’s operating budget conference committee is seen on Monday, May 11, 2026. (James Brooks photo/Alaska Beacon)
Alaska lawmakers are planning to vote on a $13.9 billion compromise state operating budget that includes a $1,000 Permanent Fund dividend and a $200 energy rebate.
In a 4-2 vote Sunday morning, a panel of House and Senate negotiators finalized a deal that combines two different versions of the budget — one passed by the Senate and the other by the House — preparing legislators for a final vote before the last regular day of the legislative session on Wednesday.
Once passed by the Legislature, the budget will go to Gov. Mike Dunleavy, who may sign it or use his line-item veto powers to eliminate or reduce specific items. The governor has never let a budget go into law without some vetoes.
Legislators convened in January with the expectation that they would be facing a massive deficit in fiscal year 2027, which starts July 1.
The Iran war, and the subsequent closure of the Strait of Hormuz, has sent oil prices soaring, resulting in hundreds of millions of dollars in extra revenue for the state.
That eliminated the projected deficit, but lawmakers don’t expect to have much left over for the Permanent Fund dividend.
While a payment formula from the 1980s remains in state law, legislators since 2016 have adopted a “surplus dividend” approach, paying the dividend with what’s left over after services are covered.
The final compromise version of the budget closely resembles the Senate plan, but the one-time bonus was slightly increased, to $200, in an amendment proposed over the weekend.
The final version of the budget also contains $144 million in one-time bonus payments for public schools across the state, including $29 million intended to offset the high cost of heating fuel.
The one-time bonus is less than the House proposed but higher than the Senate’s figure.
The budget also proposes to fund a heating assistance program for Alaskans, increase Medicaid reimbursements for medical providers, send additional money to cities and boroughs, and increase funding for wildfire response.
Altogether, the budget balances if Alaska North Slope oil prices average at least $75 per barrel in FY27. The average price since March is above $100 per barrel.
The operating budget advancing to a final vote is the last of four budget bills that lawmakers approve in an ordinary year.
The state’s supplemental budget — making changes to fiscal year 2026 — was adopted in March and signed by the governor in April. The $2.5 billion capital budget, which funds construction and renovation projects statewide, is awaiting a final vote in the Senate.
Alaska’s comprehensive mental health budget is moving in parallel to the operating budget and is expected to pass when the operating budget does.
House lawmakers watch the voting board Friday, May 15, 2026, on the floor of the Alaska House of Representatives as they vote for the state’s capital budget. (James Brooks photo/Alaska Beacon)
Days before the end of their regular legislative session, the Alaska Legislature has almost finalized the state’s annual capital budget, one of four regular budget bills that pass through the Capitol annually.
Passed by the state House in a 24-16 vote on Friday, the capital budget contains $2.5 billion in spending, including $323 million for drinking water projects, $148.3 million for K-12 public school repairs and construction and $42.5 million for the University of Alaska.
Various federal programs are expected to pay for the bulk of the bill — $1.8 billion in total. State accounts would be used to pay for the remainder.
Even with the increase, spending remains short of what’s needed to cover deferred maintenance. Two years ago, the statewide deferred maintenance backlog was estimated at $2.4 billion, with $180 million per year needed to keep that figure from increasing.
The part of this year’s budget devoted to deferred maintenance is near that amount — it does not significantly reduce the backlog.
The capital budget covers spending in fiscal year 2027, which starts July 1. If oil prices are higher than predicted during the first half of that year, the state would earn millions of dollars in extra revenue, and the bill calls for diverting that money to a variety of maintenance and construction projects statewide.
Rep. Calvin Schrage, I-Anchorage and co-chair of the House Finance Committee, speaks Friday, May 15, 2026, on the floor of the Alaska House of Representatives. (James Brooks photo/Alaska Beacon)
“This capital budget, to be honest, is in some ways a huge step forward over last year,” said Rep. Calvin Schrage, I-Anchorage and co-chair of the House Finance Committee in charge of the capital budget.
“We see a much larger investment in being able to address some of our key areas in the state, but it also, I will recognize, does not go far enough, given the levels of deferred maintenance and other needs throughout our state,” he said.
Before the final vote, House lawmakers spent two days considering possible amendments to the bill but adopted only two. The most substantial restored some federal funding for the West Susitna Access Project, a proposal to build a road into the western Matanuska-Susitna Borough in order to support mining projects.
Rep. Kevin McCabe, R-Big Lake and a booster of the project, thanked his colleagues for restoring that money but said he couldn’t vote for the bill because it didn’t contain full funding for the access project.
Even then, “It’s a decent bill. It’s got things in there for just about everybody,” McCabe said.
Before that vote, House and Senate leaders negotiated an agreement that would allow the House to add no more than $100 million in projects funded by general-purpose state dollars to the capital budget.
The House-passed version abides by that agreement, and Senate aides familiar with both the budget and the agreement said they do not expect senators to object to the House’s additions.
House and Senate lawmakers are negotiating a compromise operating budget and a compromise mental health budget; those are expected to pass from the Capitol on Wednesday, the last day of the regular session. Legislators and Dunleavy previously approved the supplemental budget, the first of the four regular budget bills.
After being transmitted to the governor, all budget bills are subject to his line-item veto powers. Dunleavy may eliminate or reduce specific items in the budget but cannot add any or increase their amounts.
NOTN/ JPD- According to a press release, the Juneau Police Department would like to notify the public that, this week, all the way through Sunday, May 17, the Alaska Dive Search, Rescue and Recovery Team (AK Dive Rescue) will be conducting search operations by the downtown cruise ship piers. The search is related to the ongoing missing persons investigation involving Benjamin W. Stepetin, who was originally reported missing on June 26, 2025.
Benjamin was last seen downtown.
Following his disappearance his family raised money for a search of the Gastineau Channel by divers back in September.
During this operation, members of the public may observe search vessels operating in the area, including the use of sonar-equipped remotely operated underwater vehicles (ROVs), as well as divers conducting underwater search activities.
The investigation into the disappearance of Benjamin W. Stepetin is currently being investigated as a criminal investigation. During the course of the investigation, information was developed indicating it is possible Mr. Stepetin may have gone in the water in the downtown area on the night of his disappearance.
JPD detectives are coordinating the search operation with AK Dive Rescue and members of the Stepetin family.
Anyone with information regarding the disappearance of Benjamin W. Stepetin is encouraged to contact the Juneau Police Department at (907) 586-0600. Anonymous tips may also be submitted through Juneau Crime Line.
Alaska Attorney General Stephen Cox, with Goov. Mike Dunleavy, speaks at a Feb. 12, 2026, news conference in Anchorage about drug enforcement. (Photo by Yereth Rosen/Alaska Beacon)
In a historic vote, Alaska lawmakers rejected Stephen Cox as the state’s new attorney general by a 29-31 vote that saw Cox become just the second cabinet appointment in state history to fail confirmation.
Thirty-one votes were needed for confirmation as the 40-person state House and 20-person state Senate met jointly Thursday to vote on 75 nominations for state boards, commissions and the governor’s cabinet.
Speaking in the Capitol on Thursday, opponents said they viewed Cox as a Republican ideologue who favored party-supported policies at the expense of Alaskans. In particular, opponents pointed to Cox’s support for a lawsuit that could end birthright citizenship and his failure to support the state’s absentee voting program.
The Legislature’s rejection is likely to have limited long-term effects. Immediately after the vote, Dunleavy announced he had named Cox as “Counsel to the Governor,” a position he will take immediately.
“Stephen Cox has a strong understanding of Alaska law and the challenges facing our state,” Dunleavy said in a written statement. “His experience, professionalism, and commitment to public service make him a valuable asset as Counsel to the Governor. I look forward to working with Stephen as we continue advancing policies that strengthen Alaska’s economy, uphold the rule of law, and serve the people of our state.”
Rep. Andrew Gray, D-Anchorage and chair of the House Judiciary Committee, opposed Cox as attorney general but supports the new role.
“I think it makes perfect sense,” Gray said. “I think that’s actually a perfect fit. I think Stephen Cox would make an excellent attorney to the governor because they have a lot of alignment and similar priorities.”
The new position was created specifically for Cox within the Office of the Governor.
“The governor has those choices,” said Sen. Matt Claman, D-Anchorage and chair of the Senate Judiciary Committee. “That’s within his power.”
Dunleavy also named Deputy Attorney General Cori Mills as the acting head of the Department of Law.
Dunleavy may designate a permanent replacement who can serve until he is replaced by a new governor in December.
State law prohibits the governor from reappointing Cox as attorney general.
The governor’s other cabinet appointees, including officials in charge of natural resources, the environment and the treasury, received wide support and were confirmed by near-unanimous votes.
Legislators have not rejected a cabinet appointment since 2009, when the Legislature failed to confirm then-Gov. Sarah Palin’s choice of Wayne Anthony Ross to become attorney general.
Speaking Thursday, Rep. Andrew Gray, D-Anchorage, criticized Cox’s decision to hire an out-of-state attorney with no experience in Alaska as the state’s first Solicitor General.
Following that hire, Cox led the Department of Law in joining Alaska in more than 100 friend-of-the-court briefs on national cases. In some of those cases, Gray said, the briefs were contrary to Alaska law and Alaskans’ interests.
“I believe that Stephen Cox would make probably a good attorney general in a state, just not in our state. He is not the right choice for Alaska,” said Rep. Andrew Gray, D-Anchorage and chair of the House Judiciary Committee.
Sen. Loki Tobin, D-Anchorage, speaks Thursday, May 14, 2026, during a joint session of the Alaska Legislature. (James Brooks photo/Alaska Beacon)
Sen. Lӧki Tobin, D-Anchorage, was particularly critical of Cox’s signature on a letter supporting President Donald Trump’s attempt to eliminate birthright citizenship in the United States.
“That stance threatens my rights. It threatens your rights,” she said, speaking to Senate President Gary Stevens, R-Kodiak. “It threatens every Alaskan’s rights.”
Rep. Kevin McCabe, R-Big Lake, appeared to offer a rebuttal to that argument, noting that in general, “attorneys are mercenaries.”
“Somebody’s their boss, whether you’re paying them or whether the governor or the executive hires them. So I suspect that a lot of what we are talking about here is not some rogue attorney general off on his own. I think that he’s had directions that have been provided to him. He’s doing a certain number of things that his boss is telling him to do,” he said.
Rep. Steve St. Clair, R-Wasilla, speaks on the House floor Thursday, May 14, 2026. (James Brooks photo/Alaska Beacon)
Sen. Forrest Dunbar, D-Anchorage, responded to that argument. He said the case against birthright citizenship isn’t just wrong on a moral basis, it’s wrong on a factual basis, and it was unethical for the state to back it.
“We should not have signed on to it, and a qualified attorney should not have signed on to it. I don’t know if the governor pressured the Attorney General to sign on to it, or if he did it voluntarily. It actually doesn’t matter to an ethical attorney,” Dunbar said. “An attorney being asked to make those spurious arguments and sign on to an amicus brief that would repeal birthright citizenship should have resigned rather than go forward with that argument.”
Legislators rejected only two other appointments.
Hannah Mielke was turned down for a public seat on the Alaska State Medical Board.
Opponents said she was unqualified to supervise the state’s doctors and medical professionals. Supporters noted she would be the only female member of the board and significantly younger than other members.
“Frankly, I think a fresh perspective would be good,” said Rep. Mike Prax, R-North Pole. “It really doesn’t matter if you’re 20 or 69, soon to be 70.”
Rep. Sarah Vance, R-Homer, said a large number of young women are skeptical of the medical industry, and Mielke’s perspective could be useful.
Mielke’s nomination failed 13-47.
Lawmakers also turned down Crystal Herring for a seat on the State Board of Professional Counselors. Tobin, speaking in opposition, said her appointment may not follow state law, which requires the appointment go to someone involved in mental health treatment. Herring just provides transportation, she said.
Members of the Alaska Senate watch the voting board as Stephen Cox fails to be confirmed as Alaska’s attorney general on Thursday, May 14, 2026. (James Brooks photo/Alaska Beacon)
Students arrive for the first day of school at Harborview Elementary School in Juneau on Aug. 15, 2025 (Photo by Corinne Smith/Alaska Beacon)
The Alaska Legislature passed a resolution urging the Trump administration to waive a steep visa fee to allow the continued recruitment and hiring of international teachers.
Alaska school districts have increasingly relied on international hiring to fill an ongoing teacher shortage across the state, particularly in rural and remote districts. Last fall, the Trump administration issued an executive order increasing the H-1B visa fee from $5,000 per applicant to $100,000 per applicant — putting such visas out of reach for Alaska districts.
The Alaska Senate unanimously passed House Joint Resolution 39 on Tuesday, previously passed by the House, sending it on to Gov. Mike Dunleavy for consideration.
The H-1B visa program provides non-immigrant visas for highly skilled workers, including in education, health care and technology. In Alaska, districts have relied on international educators, particularly for teaching math, science and special education, according to the resolution. The visa is valid for up to six years.
Currently, roughly 570 international teachers are working in Alaska via the visa program. And there are over 1,000 teacher and staff openings in Alaska posted on a job board run by the Alaska Educator Retention and Recruitment Center, a division of the Alaska Council of School Administrators.
Alaska school officials say the new fee is an insurmountable financial burden for districts, as they are in the process of recruiting and hiring teachers for next year.
Sen. Löki Tobin, D-Anchorage, speaks in support of a new state pension plan on Apr. 28, 2026. (Photo by Corinne Smith/Alaska Beacon)
Sen. Löki Tobin, D-Anchorage, carried the resolution in the Senate and said the roughly 2,000% increase in the fee has restricted the flow of critical education professionals coming into the state. “Unfortunately this means that many of these education professions will go unfilled, we just don’t have the resources to cover that $100,000,” Tobin said on Wednesday.
“HJR 39 simply asks our federal government to waive this fee,” Tobin said.
The Legislature’s support and the joint resolution reinforces proposed federal legislation backed by U.S. Republican Sens. Lisa Murkowski and Dan Sullivan. It was introduced in the U.S. Senate by Murkowski in March but has not advanced since then.
Stak Energy’s data center would sit roughly one mile west of the Dalton Highway, which connects urban Alaska to the state’s North Slope oil fields. (Arthur T. LaBar, CC BY 2.0)
One of the largest data centers in the nation has been proposed on Alaska’s Arctic North Slope, where boosters say it could take advantage of abundant land, cold temperatures for cooling and a huge supply of natural gas for power.
The $500 million development would occupy an entire square mile with multiple buildings in a remote area off the Dalton Highway, some 25 miles south of the North Slope’s major infrastructure. That’s according to documents released this week by the state, which on Tuesday issued a preliminary decision to lease the property to the project’s operator.
A newly built pipeline would carry natural gas to fuel the data center’s power plant — which, according to the documents, could use more than twice as much of the fuel as urban Alaska consumes for electrical generation and home and commercial heating. The project could ultimately produce up to three gigawatts of power for its own use, making it competitive with some of the largest data centers under development in the Lower 48.
The company behind the project is Stak Energy, which last year proposed a far smaller project more narrowly focused on digital mining of cryptocurrency. It now says it plans to support “large-scale AI and cloud computing operations,” including training of large-scale machine learning models and high-performance scientific and analytical computing.
The company in November proposed its lease to the Alaska Department of Natural Resources, which subsequently published a notice to solicit competing bids. None came in, so the department is now proceeding with the leasing process, with a public comment period on the preliminary decision open through June 15.
Stak has not disclosed who would finance its new project, though it previously said it was raising money from Anchorage firm McKinley Alaska Private Investment.
Stak has expanded significantly in recent months, making a number of politically connected hires including Gov. Mike Dunleavy’s former natural resources commissioner, John Boyle, and a former special assistant at the natural resources department, Jim Shine.
The company’s founder and chief executive, Sparrow Mahoney, grew up in Alaska and attended Wasilla High School.
Stak officials declined to respond to specific questions about its proposal. But the company shared a prepared statement that describes itself as having “deep Alaska roots, built on decades of combined experience across the state’s energy and infrastructure landscape — and proud to help build Alaska’s next era of prosperity.”
The lease application, the company said, “reflects an important milestone for anchoring Alaska as America’s at-scale energy solution — a meaningful step toward bringing opportunity, jobs, and revenue home to stay.”
“Stak Energy is committed to responsible development, expanding opportunity, and contributing to a more diverse and resilient Alaskan economy,” the company said.
Energy experts said that Stak’s lease application, released by the state, is thorough. But it also raises a number of questions.
One is how quickly the company can secure the natural gas-powered turbines that it would use to generate electricity. Rising demand for those turbines, prompted by the rush to build new data centers and the overall expansion of natural gas-fired power, is leading to manufacturing backlogs as long as seven years; Stak says it wants its initial operations to begin in 2028.
Then, there’s the question of where, exactly, Stak will get its natural gas supply.
Alaska’s North Slope oil fields contain huge deposits of natural gas. But historically, petroleum companies have almost exclusively extracted oil from those fields, as it’s more energy-dense and can be shipped down the 800-mile trans-Alaska pipeline; minimal infrastructure exists to move North Slope natural gas to market.
Companies presumably would be willing to sell gas to a project like Stak’s, according to Antony Scott, a former commercial petroleum analyst for the Alaska Department of Natural Resources.
But details of Stak’s land lease application makes clear that at the time it was submitted, the company hadn’t yet struck a firm deal for gas supply, he added. Stak says its gas pipeline could run anywhere between 25 and 90 miles, which implies that it could connect to any number of different petroleum fields on the North Slope.
“That means they don’t have a gas supply,” Scott said.
Scott added, though, that the project’s remote location — and the fact that it wouldn’t connect to Alaska’s urban power grid and risk driving up demand and prices for electricity, like data centers have in the Lower 48 — help smooth the project’s path.
“The issue of data centers and the effect on normal humanity’s electricity bills is causing real angst,” Scott said. On Alaska’s North Slope, he added, “we avoid all of that. You can just step into this friendly environment.”
Stak’s application and supporting material say its project has another leg up on Lower 48 developments.
Outside projects have faced increasingly strident opposition in response to their enormous consumption of water for cooling. The company says in its lease application materials that its North Slope location is a “crucial design advantage” because of an average annual temperature of 12F — allowing it to use air for cooling instead of depending on water.
Air cooling, the company says, is expected to reduce water consumption by 90% or more, “compared to industry norms.” Stak isn’t proposing any formal use for the project’s waste heat for now, but it says that “potential applications” include keeping greenhouses warm or supporting aquaculture.
One comparative disadvantage for Stak: It would be powering its computer infrastructure with fossil fuels. Some technology companies with carbon emissions targets are making efforts to run their data centers on non-fossil energy like nuclear power, wind and solar, though other projects have also tapped into natural gas.
Stak, in its application, says it’s monitoring developments in technology that could allow it to capture and store its carbon emissions. But at least initially, a dearth of infrastructure and a lack of understanding of the region’s geology for storing carbon are among the obstacles it faces, the company said.
Dunleavy’s administration, which has pushed to develop a data center industry in Alaska, has issued a preliminary, formal decision that the project is in the state’s “best interest” — a necessary step before it can issue the 50-year land lease that it’s currently considering.
The preliminary decision cites a peak construction workforce of 1,500 people, with some 60 permanent jobs that would be created by the project.
Stak will have to complete additional permitting before the project can move forward — namely, a federal Clean Water Act authorization needed to create the company’s gravel pad that will elevate its power plants and computer systems at least five feet off the tundra.
The project would require an enormous amount of gravel — some 7 million cubic yards worth, according to the state leasing documents.
That’s nearly twice as much as petroleum company ConocoPhillips is authorized to use for its big Willow oil project, Stak says.
Nathaniel Herz welcomes tips at natherz@gmail.com or (907) 793-0312. This article was originally published in Northern Journal, a newsletter from Herz. Subscribe at this link.
NOTN- Juneau’s city officials are still weighing cuts to city services, new debt for infrastructure and a major change to sales tax rules as they work to close a nearly $12 million dollar budget deficit.
After a nearly five-hour finance committee meeting last night, officials began prioritizing a list of possible reductions. The work will shape the budget the Assembly expects to pass by the deadline on June 15.
Still under consideration are cuts to destination marketing through Travel Juneau, economic development funding for the Juneau Economic Development Council, potential closure of Mount Jumbo Gym, reduced hours or closure of the City Museum, and cuts to arts and culture funding through the Juneau Arts and Humanities Council.
Some of the most controversial ideas have been taken off the table for this year, including closing one of the city’s pools, the field house and the Treadwell arena. Those facilities will instead be supported with city savings which will be a short-term solution.
“Those were the ones that we had heard lots of public feedback on.” Said Finance Director Christine Woll, “Closure of the ice rink is no longer in consideration. I will say, everyone on the assembly acknowledged we can get away with not making those cuts this year, but that’s because we have a lot of money in savings, and so using our savings to fund those facilities will not work much for longer than a year.”
The Assembly is also considering up to two bond proposals for the ballot, Woll said, one for improvements to aging school facilities and another for water and wastewater infrastructure. She said general obligation bonds are appropriate only for capital projects and must be approved by voters.
“With approval from the taxpayers, the city does have a good amount of debt capacity and one piece I’ll add to that is, we would only use debt for Capital Projects, right? So the idea is you would borrow money so you can improve something or build something, and then pay it back over time, as opposed to taking on debt to operate something into the future.” Woll said, “So the Assembly is looking at putting up to two bond proposals on the ballot. We haven’t decided yet, but basically we’re looking at taking on debt for some improvements to our aging school facilities, as well as our water and wastewater infrastructure. So those in my opinion, good projects for debt.”
The Assembly plans a public hearing June 8, the same day many budget decisions are expected, and is accepting email comments at boroughassembly@juneau.gov. Woll urged residents to weigh in on the tax cap and potential service cuts as soon as possible.
The trans-Alaska pipeline threads along the Dalton Highway in northern Alaska. (Nathaniel Herz/Northern Journal)
Is the value of the trans-Alaska pipeline system $2.8 billion, or $10.3 billion? Or is it $20 billion?
This week, a state review board will hold a formal hearing to determine which figure is the right one — with major financial implications for state government and the three municipalities along the pipeline system’s route.
At stake are hundreds of millions of dollars in property taxes, equal to 2% of the pipeline system’s value, that its oil company owners could owe each year to the state, the North Slope and Fairbanks boroughs and the city of Valdez.
The pipeline’s value had been set at $8 billion by a five-year settlement reached in 2016, which the parties extended through the end of 2025. But before that, the municipalities and the system’s owners spent a decade feuding over annual assessments in the courts — with appeals to the Alaska Supreme Court and one trial that lasted more than two months.
The pipeline system property taxes, in past years, have represented more than half of Valdez’s regular recurring revenue, according to city budget documents, as well as a significant contribution to the state’s yearly unrestricted revenues.
A decision setting the system’s value at the municipalities’ preferred value of at least $20.083 billion would result in pipeline ownerspaying at least $400 million a year in property taxes — compared to the $56 million that would be owed if the value is set at $2.8 billion, the value favored by the owners.
This week’s hearing, before the governor-appointed State Assessment Review Board, is unlikely to be the last word on the matter. While the board can consider arguments from all sides, its decisions are ultimately appealable to the courts.
The pipeline system’s owners include affiliates of ConocoPhillips, ExxonMobil and Hilcorp, the North Slope’s major oil-producing companies.
With the expiration of the settlement at the end of 2025, the state Department of Revenue’s assessment for 2026 — based on the estimated cost to replace the system, minus depreciation — actually boosted the pipeline system’s value from the settled figure, to $10.3 billion.
Discussions had been underway about a new settlement, Fairbanks finance officials wrote in a letter to borough policymakers in January. But no such deal has been announced.
The trans-Alaska pipeline passes through Fairbanks. (Nathaniel Herz/Northern Journal)
A spokesperson for Alyeska Pipeline Service Co., which operates the pipeline system for the owners, declined to comment on those companies’ behalf, citing the pending review by the state board. A spokesperson for the Department of Revenue also declined to comment.
Robin Brena, a longtime Alaska attorney who for decades has represented the municipalities in their fights over the pipeline system’s value, said he hopes that the parties can mediate their differences and strike a new agreement.
He stressed that historically, the pipeline system’s owners have argued for aggressively low valuations of the property that the courts have rejected. In 2006, the owners argued for an $850 million valuation, before the Alaska Supreme Court ultimately affirmed a lower court judge’s ruling that the value was actually $9.98 billion.
Brena’s clients, the municipalities, wrote in their recent appeal to the board that the state revenue department made a legal mistake in its $10.3 billion valuation by ignoring updated estimates from the municipalities that say replacing the pipeline system today would cost some $40 billion.
Instead, the municipalities say, the state relied on a court decision that set the 2009 replacement cost of the system at $19.1 billion, then made inflation adjustments to produced a 2026 replacement cost of $28.6 billion.
The courts and the state assessment board have preferred new cost estimates to inflation adjustments, the municipalities said, because they better capture updates in the pipeline system’s designs and allow mistakes to be corrected.
A second major error by the revenue department, the municipalities said, was that it used an inappropriate new technique to calculate depreciation: comparing the current flow of oil through the pipeline system, some 460,000 barrels a day, to its peak flow of 2 million barrels, which came in the late 1980s.
That depreciation technique, the municipalities argued, ignores legal precedent that says the calculation should account for the quantity of oil not just actively flowing from, but also available for future production at, Alaska’s big oil fields — a figure known as proven reserves.
A calculation based only on current production neglects the value contained in two huge new oil fields, Willow and Pikka, that are still under construction, according to Brena. Those fields are set to help boost the daily flow through the pipeline system to some 650,000 barrels at a new peak in 2034, according to state projections.
“The department’s calculation completely ignores proven reserves that are not in production,” Brena said.
The oil companies, meanwhile, say in their appeal that the pipeline system is a “depreciating asset” with a value that declines each year. The state, they say, is now proposing to assess a higher value for the pipeline than the $9.25 billion the Alaska Supreme Court affirmed for the 2009 tax year.
“It is fundamentally unreasonable to conclude that a pipeline that is now 17 years older — with 17 fewer years of proven reserves to transport and 17 years of additional depreciation — has an assessed value significantly greater than the value assessed in tax year 2009,” the oil companies wrote.
The companies also say that the state’s assessment fails to account for “operational and economic realities” of the pipeline system — including that the flow of oil is eventually projected to resume its longstanding decline after a “short-term spike.”
The revenue department, the companies said, also ignored the companies’ own “comprehensive” report on the pipeline system’s replacement cost that they shared for the 2026 tax year.
“The owners furnished the department with a significant volume of information relevant to the proper assessment of the subject property,” the companies said. “The department’s assessment ignores all of it in favor of reliance on a 17-year-old appraisal report that is outdated, unsupportable, and fundamentally flawed.”
The board’s hearing on the pipeline system’s value is set to begin Wednesday and finish by the end of the week. Decisions are expected within seven days afterward, according to the board’s support staff.
Nathaniel Herz welcomes tips at natherz@gmail.com or (907) 793-0312. This article was originally published in Northern Journal, a newsletter from Herz. Subscribe at this link.
Members of the Alaska House of Representatives convene on the first day of the second session of the 34th Alaska State Legislature on Jan. 20, 2026 (Photo by Corinne Smith/Alaska Beacon)
Lawmakers in the Alaska House passed a bill that aims to stabilize budgets for Alaska school districts by redefining how they calculate their student counts. The student count makes up the base of the state’s education funding formula.
Lawmakers passed House Bill 261 by a 31 to 9 vote, with bipartisan support, on Tuesday. Under the new calculation of the student count, the bill would provide an additional $143 million in state funding to school districts next year.
But with competing education funding and policy proposals in the Legislature — and just seven days left in the legislative session — the bill heads to the Alaska Senate for consideration and its future is uncertain.
Rep. Andi Story, D-Juneau, speaks on the House floor on May 11, 2026. (Photo by Corinne Smith/Alaska Beacon)
The legislation, sponsored by Rep. Andi Story, D-Juneau, would allow school districts to make their student counts and budget estimates earlier in the year. Currently, schools make an estimated student count in October, and revise it in the spring. Under the proposed legislation, districts would use the previous three-year average of their student count — or the previous year’s count, if it is more than 5% higher.
Story described the change as a way for school districts to get off a budgeting “rollercoaster” and allow districts to have firmer budget estimates, including more certainty in offering contracts to teachers and staff in the spring.
“This is such a policy change that would so help Alaska stabilize education and get more relief and more certainty, and less stress for our families,” she said Tuesday, after the vote.
Alaska school districts are grappling with major budget deficits and rising costs, which have them planning cuts and teacher and staff layoffs across the state — at least 11 schools are slated for closure — amid years of ongoing debates among legislators and Gov. Mike Dunleavy on how much the state should fund education.
School districts currently estimate their student counts in October and draft budget estimates in the spring, and sometimes up to the first day of school in the fall. But with declining enrollment and other changes among student populations, those budget estimates can change, leaving districts uncertain about what staff or programs will be offered in the fall — as well as how much state funding they will receive. Under the new legislation, districts would instead have a solid student count number to budget off of in the year ahead.
Additionally, the bill would change how districts count students who receive intensive special education services. Districts could use the previous year’s count, or the current year’s count in October or in February.
“And what’s great about smoothing is it can help them plan for their educational programs when they are in a climate of declining enrollment,” Story said. “Other states are doing this, and they don’t have the volatility that we do. Because our process, our funding process timeline, is messed up, it really is.”
Alaska has seen a steady decline in enrollment in public schools in recent years, with more students and families opting to enroll in homeschool programs and private schools, or leaving the state altogether. When student numbers decline sharply, the state has a “hold harmless” provision which protects districts from funding dropping dramatically, and phases funding down over three years. Proponents of the legislation say the more predictable student counts and budgeting will help districts with long term stability, their ability to retain teachers and attract new students.
The adjusted student count would have varying effects on school districts statewide — a state fiscal analysis projects the Anchorage School District would receive $31 million more next year. Sitka would see $2 million more, and Yukon-Koyukuk would see $3.8 million in additional funding. But several districts would see less funding under the new calculation, like the state-run boarding school Mt. Edgecumbe High School.
Members of the Alaska House debated and passed an amendment to the bill which would also change the calculation for local municipalities’ contribution to school districts in the state’s complex funding formula, known as the local contribution.
Rep. Justin Ruffridge, R-Soldotna, sponsored the amendment that would cap municipalities’ contribution at a fixed increase of 2% annually, which would relieve boroughs seeing rapidly rising property assessments — those assessments inform how much they contribute to their local schools. Ruffridge said large boroughs like the Kenai Peninsula, Matanuska-Susitna and Anchorage, which are seeing rising property values, are shouldering education funding that should be placed on the state. The adjustment is estimated to cost the state $30 million next year.
Rep. Justin Ruffridge, R-Soldotna, speaks on the House floor on May 11, 2026. (Photo by Corinne Smith/Alaska Beacon)
“What you’re seeing in a lot of districts with high increases to property assessment values is their required local contribution is going up and up,” Ruffridge said in an interview on Wednesday. “As a result, they’re being required to pay a significantly higher portion, so to the state it looks like the state funding to schools is going down. That’s what it looks like. And on the municipal side they’re being asked to pay more and more and more.”
The amendment passed by a 24 to 16 vote, with Story among those opposing. After the vote she called it a “significant change” and said she had concerns about capping funding for education.
The prospects of the bill are uncertain. Sen. Löki Tobin, D-Anchorage, who chairs the Senate Education committee said Tuesday the policy changes will need to be vetted by the Senate with just days left in the session.
Sen. Löki Tobin, D-Anchorage, speaks in support of a new state pension plan on Apr. 28, 2026. (Photo by Corinne Smith/Alaska Beacon)
“Bringing everybody along while we are also trying to deal with property tax bills and sales tax proposals and a Rural Health Transformation Fund and all these different healthcare compacts, along with the omnibus crime bill, and of course, the budgets, it might just be too much for us to take that large of a bite,” Tobin said. “But I do believe that components of House Bill 261 will end up in the final package.”
“I’m not trying to be a future teller by saying what is and is not going to continue to be considered by this body,” she added, and said that it’s likely the policy changes will be taken up by the Task Force on Education Funding. “This could be a part of that overall package you see introduced in the 35th Legislature.”
The draft bill redefining districts’ student counts would cost an estimated $113 million, plus additional provisions, for a total of roughly $143 million.
Meanwhile, the Senate is in the process of considering another “mini-bus” education bill, also originally authored by Story, which would fund an additional $82 million for schools, including targeted funding for transportation, energy relief, reading instruction and career and technical education programs.
A draft budget passed by the Senate includes up to $100 million in one-time funding for schools, if oil prices remain high. The House drafted a budget with nearly $158 million in one-time education funding — the two proposals are currently being negotiated and compiled by a conference committee of three senators and three representatives over the next few days.
The bill is subject to a reconsideration vote on Wednesday at the request of House Minority Leader Rep. DeLena Johnson, R-Palmer, which delays the bill’s transmittal to the Senate.
The Alaska State Capitol in Juneau is seen on Apr. 24, 2026. (Photo by Claire Stremple/Alaska Beacon)
NOTN- With just over a week left before Alaska lawmakers adjourn on May 20, the Legislature is entering its busiest stretch of the year as lawmakers scramble to pass budgets, major policy bills and a contentious natural gas tax proposal that lawmaker’s say has become the Governor’s biggest priority this session.
Alaska Public Media conjectured the final days of the session will likely center on three major areas: the state budget, the proposed Alaska LNG pipeline project and a flood of remaining legislation that must pass before the end of the two-year legislative cycle. Bills that don’t pass by adjournment will die and have to be reintroduced in a future session.
Negotiations are now underway between the House and Senate on the state operating budget. The House version includes a $1,500 Permanent Fund dividend, one-time school funding and expanded spending on child care and social programs. The Senate’s proposal is more conservative, with a $1,150 payment that includes an energy relief component and less education funding overall. Final negotiations may depend heavily on oil prices, which have recently remained above forecast levels.
Lawmakers are also debating how much tax relief should be offered to support the proposed Alaska LNG gasline project. Governor Mike Dunleavy has proposed replacing the state’s existing property tax on oil and gas infrastructure with a lower tax tied to pipeline throughput.
At the same time dozens of other bills are moving quickly through committees and floor votes, including a broad crime package, which includes bills targeting AI generated Child Sexual Abuse content, Sexual Assault kit tracking and raising the State’s age of consent.
There is a pension bill for state employees, a long time win for the legislature, that many expect Governor Dunleavy to veto before lawmakers leave Juneau.
But, the big question remains- will legislators pass these bills by the scheduled end of the session?
Juneau Senator Jesse Kiehl says it’s unclear pointing to that massive gas line bill that could push work into overtime.
“The Governor’s number one priority this year is the Gas line bill. He waited until two thirds of the way through the session to give us that.” He said, “The Resources Committees have been working like crazy, meeting multiple times a day. This is billions and billions of dollars worth of decisions, the kinds of things that will have impacts for 30 years to come. We’re working as hard and as fast as we can. Boy, it’s tough to see that passing before the end of the regular session. This time of year, it always looks like it’ll be overtime. Sometimes it is. Sometimes we can avoid it. But when I look at the issues that are pretty big, and may result in extra innings, we got that gas line bill on day 80 out of 121.”
