Alaska legislators OK $2.5B for new construction and renovation projects

State’s capital budget for fiscal year 2027 is all but complete as lawmakers near adjournment of the regular session

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/Alaska Beacon)

By James Brooks

Alaska Beacon

Five 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.

The amount of state money in this year’s capital budget is almost double what it was last year, when spending was near a record low.

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.

“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.

Members of the House Finance Committee had eliminated the Alaska Industrial Development and Export Authority’s ability to accept federal money for the project. On the House floor, lawmakers restored half of the receipt authority.

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.

The House’s vote sends the capital budget back to the Senate, which approved an earlier version of the bill by a 19-0 vote on April 21. 

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.

• James Brooks Cascade is a longtime Alaska reporter who lives in Juneau. He previously worked at the Anchorage Daily News, Juneau Empire, Kodiak Mirror and Fairbanks Daily News-Miner. Alaska Beacon is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.