Kevin McCabe: Alaska’s constitutional mandate and the Legislature’s capital budget shortfall

By REP. KEVIN MCCABE

Article IX, Section 16 of the Alaska Constitution is clear: At least one-third of our state spending must be reserved for capital projects and loan appropriations.

That’s not a suggestion, it is a constitutional mandate.

Yet the Legislature’s FY25 capital budget allocates just $2.9 billion, or 19% of the $15.7 billion total budget; well short of the one-third requirement. That failure carries real consequences, for roads, schools, and economy. When the Legislature falls short by over $1.6 billion, it is not just a math problem; it is a failure of priorities.

Pressure from expanded social programs continues to squeeze out infrastructure investments. While these have their place, they cannot come at the cost of letting our roads crumble, our ferries rust in port, or our schools fall into disrepair. When every dollar is treated as a zero-sum choice, infrastructure always seems to draw the short straw.

With oil revenue decreasing and unrestricted general fund income falling to $5 billion, the Legislature leaned into what it calls “fiscal restraint”. But real fiscal responsibility means investing wisely in projects that grow our economy, not pulling back so far that we risk stagnation.

Much of the FY25 budget debate centered on increasing the Base Student Allocation. While funding education is important, so is investing in the buildings where that learning takes place. Pouring money into operating costs while letting facilities rot is not a solution, it is a shell game that puts our students and teachers in unsafe or outdated environments. 

After the outright theft of the PFD, the Legislature’s approach favored so-called “maintenance-level budgeting” and avoided Constitutional Budget Reserve Fund draws, which require a three-fourths vote. In doing so, they left over $3 billion in community capital project requests unfunded. That is not balanced budgeting, it is deferred obligation.

There is a popular narrative circulating that paints a misleading picture of the governor’s recent veto of $52 million in state transportation match funding. Critics argue that this decision jeopardizes up to $500 million in federal infrastructure dollars and causes projects to stall, jobs to be lost, and economic momentum to falter. What that argument completely ignores is the reality of how our budget process works.

The governor used vetoes as a fiscal management tool in a system where budget inflation is routine. Some items do come back in supplemental budget requests, but that is not hypocrisy, it’s fiscally responsible governance in a state with wildly fluctuating revenues and real checks and balances.

More importantly, the outcry over the match veto conveniently ignores the fact that the Legislature had the power to fully fund that match upfront but chose instead to spread funding thin across operating programs and politically expedient projects. The match was not vetoed because it lacked merit, it was vetoed because the budget, as passed, overextended the state’s core funding capacity without regard for prioritization.

Now we hear that, without restoration, the Department of Transportation must revise its project schedule. That is not surprising. But it’s also not an indictment of the governor, it is a direct result of a Legislature that refused to follow the constitutional requirement to fund capital needs at one-third of spending. You cannot underfund the capital budget, ignore the constitutional mandate, then feign outrage when hard choices are made to bring things back into balance.

Capital budgeting must come first, not last, in our deliberations. Infrastructure investment is not optional, and it should not be traded away for temporary political gains. We cannot rely solely on oil revenue or federal handouts. Senate Joint Resolution 19 rightly calls for the 90/10 revenue split on federal lands, resources that belong to Alaskans and should be used for Alaskans.

Matching federal funds is smart fiscal policy, but only when we have a stable foundation. Budgeting match money should not come at the expense of constitutional compliance or critical needs elsewhere. We must integrate federal matches into a broader capital strategy, not treat them as afterthoughts or political footballs.

The Legislature should adopt internal safeguards that flag when the capital budget falls below one-third of allowable spending. Compliance with the Constitution should not be optional, or subject to political mood swings. The FY25 capital budget passed by the Legislature falls short of both our infrastructure needs and our constitutional responsibilities. Blaming the governor’s vetoes or trying to score political points with selective outrage misses the target. The real issue is legislative failure to prioritize capital investment in a meaningful, constitutionally compliant way.

This should not be about finger-pointing, or just beating up on the person with the last stage of fiscal restraint; it should be about fixing the broken process that allows these failures to recur year after year. The people of Alaska deserve infrastructure that works, roads that connect, schools that endure, and, most importantly, a legislature that obeys its own Constitution. Anything less is not just mismanagement; it is malpractice. Let us do better. Let us lead with principle, not politics. Let’s fund the Alaska our Constitution envisioned.

Kevin McCabe represents Big Lake in the Alaska Legislature.