Dunleavy signs nearly $450M supplemental budget to cover state expenses this year
- Alaska Beacon
- 3 hours ago
- 3 min read
Funding for the bill relies on war-driven oil prices staying high through the remainder of the fiscal year
By Corinne Smith
Alaska Beacon
Gov. Mike Dunleavy signed off on a supplemental budget bill that authorizes nearly $450 million in additional state spending this year.
The budget bill covers additional costs incurred by the state this fiscal year ending in June, including funds for disaster relief, education, corrections and transportation.
The bill was approved by the Alaska State Legislature two weeks ago. Dunleavy signed the budget on Apr. 2, and transmitted it back to the Legislature on Thursday.
“I appreciate the Legislature’s support of these proposals,” Dunleavy said in a letter announcing his signature on the bill. “The supplemental budget I have signed into law today enables the State to meet current fiscal year responsibilities and represents prudent and fiscally responsible investments in emergency and fire response, public safety and statewide transportation needs.”
The budget includes $75 million for disaster relief to address the response to the Western Alaska storms last fall, and nearly $100 million for fire suppression, particularly in Interior Alaska. It includes $20 million for the Alaska Department of Corrections overtime expenses, as well as $70 million in time-sensitive funding for transportation — sought by the construction industry to unlock a federal match of $630 million for state construction projects.
It also includes $130 million for the Alaska Higher Education Fund which provides grants and scholarships for students, as well as $34.4 million for Medicaid and $12.8 million for other public assistance programs through the Alaska Department of Health.
The governor’s office submitted an additional $11.6 million request, but it was submitted too late to include in the budget bill, and will be rolled into the proposal for next year’s budget.
Additionally, the state is waiting on an appeal decision after failing a federal disparity test for education funding, and could potentially be liable for $72 million in K-12 funding for next year, according to officials with the Legislative Finance Division.
Oil revenues still uncertain
In the Legislature, the bill was delayed this year amid ongoing debate in the House of Representatives on whether to pay for the larger than usual budget bill out of state savings — an act that requires the approval of three-quarters of legislators.
Members of the House Republican minority caucus objected to spending from a state savings account, the Constitutional Budget Reserve. After the Alaska Department of Revenue projected the state would see an additional $500 million in oil revenue due to a surge in oil prices driven by the Iran war, they argued the state would not need to pull from savings to pay its bills.
Members of the multipartisan House majority caucus objected to the uncertainty of revenue forecasts and future oil prices, and argued for a draw from state savings to fund the budget bill immediately.
If oil-driven state revenues from now until the end of the fiscal year are not sufficient to cover the $450 million supplemental budget, then lawmakers agreed to draw from state savings. That means oil prices must average approximately $82 per barrel of oil through June for state revenue to cover spending, according to officials with the Legislative Finance Division.
House Speaker Rep. Bryce Edgmon, I-Dillingham, was among legislators who supported the draw from savings several weeks ago, instead of banking on uncertain future oil revenues. On Friday, he said it seems revenues will cover the budget bill.
“As appears now, oil prices are continuing to move in an upward trajectory, which means that the bill at the very end could be fully funded,” Edgmon said. “But there’s still a fair amount of time in front of us for oil prices to, you know, continue to be volatile.”
Edgmon said barring a dive in oil prices, he doesn’t expect another vote on drawing from the state savings this session.
“That’s pending a dramatic drop in oil prices, of course, which doesn’t seem to be on the horizon.”
• Corinne Smith started reporting in Alaska in 2020, serving as a radio reporter for several local stations across the state including in Petersburg, Haines, Homer and Dillingham. She spent two summers covering the Bristol Bay fishing season. Originally from Oakland, California, she got her start as a reporter, then morning show producer, at KPFA Radio in Berkeley. Alaska Beacon is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.
