Alaska
Alaska Senate eyes $100 million-plus in cuts in draft budget
JUNEAU — The Alaska Senate is eyeing over $100 million in budget cuts, but a more than $85 million shortfall remains in the Senate’s draft spending plan.
The Senate Finance Committee on Thursday unveiled its new version of the budget for the fiscal year that starts July 1. The spending plan has a roughly $1,400 Permanent Fund dividend, and plans to pay a $172 million increase in school funding, closely matching what was appropriated last year for schools.
Legislators are grappling this year with a dire fiscal outlook due to diminished oil revenue. The Legislature is facing a $680 million-plus deficit over two fiscal years based on status quo spending.
Lawmakers say they have few good options to balance the budget.
Leadership of the Democrat-dominated Senate majority has opposed drawing from savings to fill the projected deficit for the next fiscal year. Senators have instead introduced new revenue measures, including oil tax hikes, to balance the budget. But the House has shown little interest in those proposals.
Bethel Democratic Sen. Lyman Hoffman, who manages the Senate’s operating budget, sent a memorandum to senators in March directing them to look for cuts and not to fund new programs.
Additionally, Hoffman said that the Senate should reject additions to the baseline budget proposed by Gov. Mike Dunleavy, except for Medicaid spending. Over $60 million in requests from the Dunleavy administration were rejected by Senate subcommittees, Hoffman’s staff said Thursday.
The Senate is calling for over $100 million in agency reductions in its draft budget:
• After years of increases, the Alaska Department of Corrections would see an almost $32 million cut from the spending plan proposed by the Dunleavy administration for the agency. Reductions include a $7.5 million cut to Spring Creek Correctional Center, with the intention to close a housing unit.
• Almost $18 million would be cut from the Alaska Permanent Fund Corp. The fund provides over 50% of state revenue each year. Senators are calling for a 10% reduction in staff not involved in making investment decisions for the fund.
• The Alaska Department of Health would see a $14 million cut, including $4 million cut from a new virtual call center used to pay Alaskans state benefits.
• The Alaska Department of Public Safety would see an almost $12 million budget cut. Dunleavy had proposed reopening an Alaska State Troopers post in Talkeetna, but that was rejected in the Senate’s draft budget along with additional Village Public Safety Officers in the Arctic.
• The University of Alaska would see an almost $10 million cut, largely from rejecting salary increases that are not part of labor agreements. Almost $8 million would be cut from the Alaska Department of Transportation and Public Facilities, largely by not replacing state vehicles as quickly as planned.
Jason Brune, chair of the Permanent Fund’s board, said trustees are concerned the proposed budget reductions could impact the corporation’s ability to “maximize” the value of its investments. But Brune said trustees recognize the budget process is ongoing.
“There is an opportunity to work together with the Legislature to ensure that optimal funding is available for the investment management work we do for the Permanent Fund and the other funds entrusted to our care,” he said.
Additionally, the Senate is looking to make smaller budget reductions that could prove contentious.
Last year, the Legislature voted to defund the Alaska Gasline Development Corp. unless it secured financing for a long-sought gas pipeline. This year, the Senate is planning to cut $2.5 million from the Alaska Gasline Development Corp.’s budget with plans that the agency be largely funded by private sources.
Frank Richards, president of the AGDC, told lawmakers on Wednesday that if that cut is approved, the agency would continue representing the state’s interests in the planned pipeline with “very few assets.”
“It would make it a challenge to be able to perform the functions to properly act as a minority owner in a major, significant project development,” he said.
Senators report making tough budget decisions during the subcommittee process.
Juneau Democratic Sen. Jesse Kiehl, a member of the Senate Finance Committee, warned earlier in the month that the Senate’s “austere” budget would still see a sizable fiscal shortfall.
The Senate’s draft budget has the same $1,400 Permanent Fund dividend as the House. But in general, the Senate’s current spending plan is markedly different from the budget approved by the House earlier in the month.
The House’s operating budget advanced with most of Dunleavy’s budget requests intact, along with spending added by legislators. The House’s budget advanced with a projected $259 million deficit for the next fiscal year as Republican minority members complained that the Democrat-dominated House majority had done enough to cut the budget.
The House included a one-time, $253 million school funding increase in case a permanent $1,000 boost in per-student spending is not approved this year. The Legislature on Tuesday failed to override Dunleavy’s veto of a $1,000 Base Student Allocation increase.
The Senate’s draft budget contains a $172 million one-time school funding increase. That would roughly match the same school funding boost the Legislature approved last year.
Additionally, the Senate rejected an unallocated $79 million cut to the budget approved by the House. That would have directed Dunleavy to reduce the budget from wherever he chooses. But the Legislature’s attorneys warned that move would likely be unconstitutional.
Earlier in the month, the Senate advanced a stripped-down capital budget. The spending plan, which funds infrastructure and maintenance projects, would draw $120 million less from the state treasury than the capital budget proposed by Dunleavy.
Despite the Senate’s planned budget reductions, a more than $85 million projected deficit remains for the next fiscal year. That could balloon as labor agreements are finalized with state agencies, lawmakers said.
Hoffman concluded Thursday’s Senate Finance Committee meeting by telling members that “there still has to be work that needs to be done on this budget in order to have it balanced.”
“We are still in deficit mode,” he added.
The regular legislative session must end by midnight of May 21.
Alaska
State of Alaska Secures Win in Fight for Transparency Around Oil Development
(Bethel, AK) –Wednesday, the Ninth Circuit Court of Appeals issued a favorable opinion for the State of Alaska in ConocoPhillips Alaska v. Alaska Oil and Gas Conservation Commission (AOGCC), agreeing that State laws requiring disclosure of oil well data are not preempted by federal law.
“Alaska relies heavily on our resources and resource development,” said Acting Alaska Attorney General Cori Mills. “We are also stewards of those resources for the citizens of Alaska. Alaska’s law both allows resource development now, and encourages further development and exploration in the future. We’re pleased that the Ninth Circuit recognized that federal law has not overridden Alaska’s balanced approach.”
The Alaska Oil and Gas Conservation Commission regulates oil and gas operations throughout Alaska, including within the National Petroleum Reserve–Alaska (NPR–A). Under Alaska law, companies need permits from the AOGCC to drill and must submit well data. The AOGCC is required to keep well data confidential for 24 months.
ConocoPhillips drilled several wells on lease holdings within the NPR–A and submitted data to the AOGCC. When the 24-month period expired, the AOGCC notified ConocoPhillips of the upcoming well data disclosure. ConocoPhillips sued in federal court to stop the disclosure process claiming that the Naval Petroleum Reserves Production Act, the federal law allowing private exploration in the NPR–A, preempted Alaska’s 24-month disclosure law. The federal district court found Alaska law preempted, and the AOGCC sought appellate review by the Ninth Circuit Court of Appeals.
On appeal, the Ninth Circuit agreed with the AOGCC. The federal Production Act does not preempt state law. The Ninth Circuit therefore reversed the district court’s holding to the contrary.
“The Alaska Oil and Gas Conservation Commission is pleased with the court’s decision upholding Alaska law,” said AOGCC Commissioner Jessie Chmielowski in a declaration filed in the litigation court. “Alaska’s balanced approach to well data confidentiality leads to increased exploration activity, not less. Alaska law allows for a two-year confidentiality period on exploration well data to leverage a company’s investment in drilling. Thereafter, making the data public has incentivized exploration on the North Slope. Placing well data in the public record allows competing companies to evaluate different exploration concepts or interpretations based on seismic data that, without well data, are just educated guesses.”
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Alaska
Opinion: A governor’s race for Alaska’s next generation
Alaska needs change. That’s why I’m running for governor: to bring new energy and a new generation of leadership to the governor’s office.
For 13 years in a row, more Alaskans have left our great state than have moved here. Prices are rising, schools are closing and Alaskans are getting left behind.
This year, those planning to leave Alaska include Ben and Catherine Walker, both recipients of Alaska’s Teacher of the Year Award. They can’t justify staying in the place they grew up in and love because of our failure to invest in the fundamentals, such as our schools.
The problem is personal. I’m 37. Many of those leaving Alaska are my age — debating whether there’s a future for us here or not. It’s a challenge we must solve.
I love challenges.
Back in 2012, I dropped out of college to challenge an entrenched Republican incumbent legislator who was running unopposed to represent my home region of Southeast Alaska. I launched a scrappy, grassroots campaign and focused on the kitchen table issues that matter to every Alaskan: good schools, getting our fair share of oil revenues, lowering costs, protecting our fisheries. I won — by 32 votes.
When I was sworn in, I was baby-faced and bushy-tailed, just 23 years old. It was the beginning of a decade-long tenure in the Legislature. A lot happened in those 10 years.
Among the most important: We formed the House Bipartisan Coalition in 2016. While I have a “D” next to my name, I believe strongly in working across party lines. That’s what the Bipartisan Coalition was, and is, all about: Democrats, moderate Republicans and independents, all working together to do what’s best for Alaska.
I want to bring that same bipartisan, vigorous problem-solving spirit to the governor’s office, where it has been nonexistent the last eight years.
As governor, I want to work hand in hand with the Legislature to deliver some desperately needed wins for Alaska that will make our lives better and get our state back on track:
• Reinvest in our public schools. Our school districts are in battlefield triage mode, but instead of amputating limbs, our school boards are forced to choose which sports to cut, which electives to discontinue and which neighborhood school to close. Enough already. Get school funding back up to par.
• Forward fund our schools. Our school districts shouldn’t have to guess how much education funding will end up being appropriated in end-of-session legislative haggling.
This circus forces school districts to prospectively fire teachers, then rehire them a month or two later, when they find out the final education funding number. It’s awful for all involved. We should fix it by forward funding.
• Close the Hilcorp corporate income tax loophole. Hilcorp should pay their fair share in taxes just as ConocoPhillips, and nearly every other major corporation in Alaska, already does.
• Lower the cost of energy. Chugach Electric Association, Golden Valley Electric Association, Homer Electric Association and Matanuska Electric Association operate about 1,700 megawatts in power generation capacity. Peak Railbelt winter demand is half that: about 850 megawatts. Guess who pays for the nearly gigawatt in underused and unused power plants? You, on your power bill. The governor should force the co-ops to work together, reduce redundancies and diversify energy sources, including renewables, in order to reduce the sky-high cost of energy for Alaskans.
• Lower the cost of childcare. Alaska has inadvertently created a system of childcare permitting and licensing that effectively amounts to death by a thousand pieces of paperwork. It’s creating scarcity and cost. We need to fix it.
• Lower the cost of housing. Cut red tape to make it easier and cheaper to build more homes of all kinds — from tiny homes and ADUs to manufactured and modular housing, to apartments and condos, to traditional single-family homes. More housing of all kinds, faster.
• Rein in bottom-trawl bycatch. I will nominate Alaskans to the North Pacific Fishery Management Council who will make sure that Alaska and Alaskans — not Seattle and Lower 48 industry interests — foremost benefit from our fisheries.
• Responsibly develop our resources. Support projects that have regional buy-in and support, such as Pikka on the North Slope, which just produced first oil this month, while saying “no” when the risks are too great and those in the region are opposed, as is the case with Pebble.
• Grow our tourism economy. And let’s crack the code on winter tourism while we’re at it. If Iceland can do it, we darn well can, too. Fairbanks is having burgeoning winter tourism success. Let’s follow their great lead.
• Make Alaska an awesome place to live. Let’s build dozens more public-use cabins. Let’s build an alpine hut-to-hut system like they have in New Zealand and the Alps. Let’s build the Alaska Long Trail. Let’s make Anchorage a world-class winter city.
Does this sound like the kind of Alaska you want to live in? Then I have great news: We are the governor campaign for you. And if what you just read gives you indigestion, you’ll be relieved to know you have 17 other options.
I have more great news: I can win.
After beating an entrenched Republican incumbent, I spent a decade representing a swingy district that voted for Donald Trump.
In those 10 years, I recorded some of the highest margins of crossover support from Trump voters of any Democrat in Alaska. I ran 12% ahead of Hillary Clinton in 2016 and 15% ahead of Joe Biden in 2020.
Here’s the simple truth: Whoever becomes our next governor will need to win with the support of significant numbers of independents and moderate Republicans, in addition to Democrats. I’ve done that. And I’ll do it again. Will you join me?
Former state Rep. Jonathan Kreiss-Tomkins of Sitka is a candidate for governor of Alaska.
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Alaska
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