Senate President Gary Stevens, R-Kodiak, announces the final vote passing the operating budget of 17 to 3 on May 7, 2026. (Photo by Corinne Smith/Alaska Beacon)
The Alaska Senate has finalized its draft of the state’s operating budget for the upcoming fiscal year, moving lawmakers closer to the end of their last regular session before the 2026 election.
In a 17-3 vote, Senators approved a $13.1 billion proposal that includes a $1,000 Permanent Fund dividend for 2026, plus a $150 “energy rebate” for PFD recipients.
The Senate plan conflicts with a different version drafted by the House. Legislators are expected to convene a committee to negotiate a compromise plan that will be sent to Gov. Mike Dunleavy, following standard policy.
After the budget leaves the Legislature, the governor may veto individual line items but cannot add or increase items.
The operating budget is one of four budget bills that pass through the Capitol in a typical year. One, the supplemental budget, has already become law. A second, the $2.5 billion capital budget, is being considered in the House. The third, the state’s mental health budget, is advancing in the Senate as well.
With lawmakers’ attention focused on legislation addressing a possible trans-Alaska natural gas pipeline, this is the first time in several years that the budget isn’t the top unresolved item in the Capitol.
Senate Minority Leader Mike Cronk, R-Tok, said legislators entered the year anticipating a $500 million deficit. High oil prices caused by the Iran war erased that gap and left lawmakers with more than enough expected revenue to balance the books.
“I think the Senate did a really good job of trying to stay fiscally responsible and keeping a balanced budget at a certain level,” Cronk said.
“When you do that, there’s a lot less to argue about in the end,” he said.
Sen. Lyman Hoffman, D-Bethel and co-chair of the Senate Finance Committee, was the lead drafter of the operating budget.
He said the war may have made things easier for his committee, but it has made things much harder for the people of Alaska, because of the price of oil.
“That gave us more money to spend, but it provided additional hardships to the people and the organizations of the state of Alaska,” Hoffman said of the war. “That’s why we tried to concentrate on using that one-time money to give some more money to the individuals, through the dividend energy relief, helping school districts out … and to double the amount for community assistance so those communities can get some relief from the high prices of oil.”
On Wednesday, the Alaska Division of Elections made an unusual last-day request — a $4.75 million increase to cover spending for the 2026 election.
Senators instead approved $650,000 on Thursday, including $100,000 intended to cover the cost of prepaid envelopes for absentee ballots. Until now, the state has required absentee voters to pay for their own postage.
“It’s very unusual,” Hoffman said about the last-minute request, “but I felt we couldn’t ignore it. We don’t want to be blamed for a dysfunctional election, so we added the money at the last minute, so hopefully it will result in a better election.”
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