With the state facing a sharp drop in oil revenue forecasts, Alaska Gov. Mike Dunleavy has asked legislative leaders to eliminate all but two of his proposed budget amendments for fiscal year 2026, as he prioritizes essential state needs over discretionary spending.
In a letter sent to House and Senate Finance Committee chairs, Dunleavy spoke to the fiscal urgency driven by declining oil prices. “We should only be focused on the most critical items to preserve our reduced cash flows and liquid reserves in this lower price environment,” he wrote.
The governor’s request leaves just two amendments on the table: capitalizations for the Disaster Relief Fund and the Fire Suppression Fund. He emphasized the need for these funds to maintain “operational integrity” and ensure readiness for natural disasters and wildfires statewide.
Alaska’s state budget relies on the most recent revenue forecast from the Department of Revenue. The FY 2024 budget was supported by an average Alaska North Slope oil price of over $85 per barrel. FY2025 projections were lowered to $78. But the department’s Spring 2025 forecast, released a few weeks ago, projects an FY2026 average of just $68 per barrel — a roughly 20% decline from the prior estimate. Right now, the price of North Slope crude is $65.53 per barrel.
That drop represents a loss of hundreds of millions of dollars in expected revenue. Dunleavy noted that recent decisions by the Organization of the Petroleum Exporting Countries to increase supply suggest prices may remain depressed in the near future.
“In this environment, we must separate our needs from our wants,” Dunleavy stated. He also pointed to ongoing uncertainty about future oil prices and federal funding levels, cautioning that the state must prepare for further volatility.
By withdrawing his other budget amendments, Dunleavy is seeking to reduce new spending commitments and safeguard Alaska’s limited financial reserves. His pared-down proposal puts the onus on lawmakers to keep the budget lean as they enter the final stretch of the legislative session.
Lawmakers in the House and Senate are dominated by Democrats and their enablers, and they may ignore the governor and challenge him to veto his own amendments, which he will likely do without political penalty, since he is term-limited.
Once again we find ourselves in a position that we shouldn’t be in had our elected officials done their jobs. Tax revenue is dropping meanwhile the legislature is so3nding money we don’t have. HB 57 must be vetoed. It’s time for these clowns to get serious about the mess they’ve put this state in. People calling for more taxation to prop up government spending at absurd levels should review the data instead of repeating the same old tired give us more nonsense. Government spending more than tripled when oil prices and taxes were at record highs, when prices dropped and taxation eased spending did not follow suit and return to anything close to previous levels, instead they spent all our reserves and took PFD’s from every Alaskan man, woman, and child. Now they want to restrict the dividend based upon income, from each according to their ability to each according to their need…Karl Marx would be proud.
Steve-0, Your comment was well articulated. The biggest problem to be solved really boils down to the size of government. What I mean is that when Dunleavy says we need to separate our needs from our wants, the tax and spend liberal democrats want everything thinking that government should answer all needs for all people, (Marxism?) whereas conservatives want a government that fits our budget. Until the populace can find common ground on this, nothing good will happen. Couple this with conservative Republican voting apathy and you get what we have now, a legislature full of wild spenders with RINO support decoupled from fiscal reality. My challenge to every one of the legislators: Run your personal finances at your house like you attempt to run the government and see how long it lasts. They would be bankrupt in weeks.
Dunleavy needs to rein in the eskimo mafia so mining proceeds can be earned by the state
When do we see this calamitous crash in prices at the pump?
You won’t. In the past there was a relationship between the price of crude and retail sales of gasoline at the pump. Those days are gone and the retail sale of gasoline and diesel is a product all its own. Unless the price of crude sharply rises then that relationship will return.
Thats what I’m wondering too? Everywhere else the price of gas has dropped but we haven’t felt that in Alaska. I remember when Trump left office, we were paying $2.35 a gallon. and that was up from its lowest.
According to the US Energy Information Agency, prices have declined since the election. Do your own homework in the future. My guess is that no decline in the price at the pump will be enough under the current administration. But you were more than happy to enjoy the 30% increase under Biden.
I have sometimes thought that the obligations of the State that require funding should be identified from the ground up, that is starting with the constitutional requirements of the Alaska Constitution. Then add in federal programs that require matches from the federal government if those federal programs are in the best interest of the state (they may not always be so.) Then, go by State Department and evaluate each program within the Department for its effectiveness and necessity to carry out the functions of the Department.
Look at combining Departments and functions. For example one group of auditors could audit for both natural resource royalties and production taxes. Or, Environmental Conservation could be combined with Natural Resources. Previously, the Department of Community and Regional Affairs was combined into the Department of Commerce. Centralize groups within the Departments such as human resources that could be centralized. There will be turf battles, but we are facing limited funding.
Reexamine allocated funds as to whether they are truly dedicated funds as defined in the State Constitution. Many special funds have been set aside and politically treated as dedicated for specific purposes. However, many are not dedicated and may be used for any public purpose. Many of the special funds created by law have the limitation that nothing in the section of law creates a dedicated fund.
This day of limited revenue was never unforeseen. It has only become a crisis after all the savings and rainy day funds had been tapped. I am not a newby. Except for times outside for school, I and my family have been residents since moving to Fairbanks in 1955.
Get the veto pen warmed up, Mike.
Nice to read a common sense statement from the guvnr. “Fund critical needs”, not bloated bureaucracy. No to HB57 and Etsy tax plan! DOGE this entire budget.
Democrats will NEVER give up their wants, That’s the only reason they are there They could give a rat’s … about other people
Trump wants oil at $50 a barrel. He was a disaster for the oil industry in his first term and he will repeat this during this term. Buckle up!