This morning, Jan 26, the Senate Finance Committee heard the governor’s presentation of the proposed FY 27 budget. Director of the Office of Management and Budget Lacey Sanders gave the presentation.
According to Sanders, the governor’s instructions for the budget were to fulfill the State’s current obligations as required by law with no new projects moving forward.
Fiscal Summary
The FY 27 budget is proposed at $6.0655 billion. The State will incur a deficit of $1.5306 billion which is proposed to be funded via the Constitutional Budget Reserve (CBR). The CBR is currently at $2.959 billion.
Senators’ Initial Concerns
Senator Jesse Kiehl (D-Juneau) expressed concern that there is no supplemental provided in the budget. Sen. Kiehl says he has never seen a year where no supplemental was provided. A supplemental allows the Legislature to fund needs not specifically identified by the government’s budget.
Senator Burt Stedman (R-Sitka) echoed Sen. Kiehl’s concerns and also highlighted the lack of funding for infrastructure maintenance. “There is nothing for K-12 maintenance, nothing for university maintenance, nothing for courts, nothing for general maintenance,” he stated. “I don’t know what number the administration wants to put forward. But 0 is inappropriate. There needs to be some number.”
Senator Lyman Hoffman (D-Bethel) shared Kiehl and Stedman’s concerns, referencing a school that collapsed in Aniak as evidence that the maintenance funding is needed.
Sanders responded to the maintenance funding concerns by reiterating that this budget is to cover base obligations required by law, but the governor is happy to discuss modifications to the budget. “We continue to rely on a volatile revenue source,” she stated, referencing the need for discussion about new revenue sources.
Sen. Stedman briefly suggested modifying the appropriation for the Permanent Fund Dividend.
Operating Budget Highlights
Then Sanders presented significant highlights from the operating budget:
Capital Budget Highlights
After addressing Senators’ questions about the operating budget, Sanders moved on to present highlights from the capital budget:
More Concerns from the Senators
Sen. Stedman emphasized the need to get the State’s unfunded liability under control. Without addressing the unfunded liability in the budget, Alaskans will pay for it through property taxes. Sen Kiehl added that the legislature put itself in this position of debt by choosing to amortize its liability to keep up-front cash for the gasline project.
The Committee also discussed the rates of vacant positions among different government agencies. Sen. Kiehl emphasized that agencies are running into real issues getting the work done.
Budgetary discussions will continue throughout the Legislative session.