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Hello from Juneau! Things are moving at a fast pace as we near the end of our session. The major items on the Senate’s agenda continue to be the budgets, education funding, addressing public employee and teacher retirement, updating election processes, and tackling Alaska’s ongoing energy issues to ensure long-term sustainability and affordability. Thank you for your continued efforts to provide public testimony on the bills and budgets. I appreciate hearing your comments and insights.
Education Funding
HB 69 BSA Increase
The Governor vetoed HB 69 that passed both the Senate and House with a $1000 Base Student Allocation (BSA). During a joint session on April 22 the legislature did not meet the 2/3 vote (40) required for a veto override (33 yes to 27 no).
The Governor has introduced a new education bill that includes a $560 BSA increase along with policy changes for charter school reform, increasing funding for correspondence students, and reading incentive grants. HB 204 has been referred to House Finance and its companion bill, SB 182 has been referred to Senate Finance. As well, a $700 BSA increase was recently added to HB 57 in the Senate Finance Committee. Whether through this new legislation or another education bill, I look forward to working with legislators and the Governor on finding a compromise that will benefit our schools, students, and communities. I encourage you all to continue providing your public testimony when you can!
Budgets
FY26 Capital Budget
The Senate has passed the FY26 Capital budget for a total $162 million Unrestricted General Funds (UGF). Much of these funds are used as matching for over $2.3 billion in federal funding for our state. This is almost a 50% reduction from the Governor’s proposed budget. The $70 million reduction in FY26 revenue due to oil forecasted at $68 per barrel has dramatically cut our capital budget. The Senate used a balanced approach of prioritizing essential projects and critical infrastructure needs across the state while remaining within our fiscal means. Unfortunately, there will be no funds available this year for community projects through the state CAPSIS grant program.
Funding was included for statewide programs that benefit our district including Village Safe Water, Housing & Weatherization, and Code Blue match funds for our rural emergency medical programs.
Other statewide projects include:
- $36 million for deferred maintenance for K-12 schools, the University, court facilities, and other emergent repairs.
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$89 million for Alaska Marine Highway vessel maintenance, courthouse security upgrades and law enforcement equipment, and rental and senior housing assistance including support for domestic violence victims.
Here are some projects in the capital budget that are important for District C:
- DMVA: Kodiak - Armory Barracks Conversion $300,000 Other (AIDEA reserves) and $300,000 Federal
- DOT Homer - Kachemak Bay Drive Milepost 0-3.5 Reconstruction $600,000 Federal
- DOT: Cordova – Replace Rotary Plow $855,000 Federal
- DOT: Karluk – Replace Grader $437,000 Federal
- DOT: Seward – Snow Removal and Sand Storage Building $5.414 million Federal
- DOT: Tatitlek - AMHS Ferry Terminal Rehabilitation $328,000 Federal
- DOT: Kodiak - Airport Drainage and Ramp Repave $25.939 million Federal
- DOT: Ouzinkie - Grader $437,000 Federal
- DOT: Seward - Airport Improvements $10.459 million Federal
- DOT: Kodiak - Chiniak Hwy. Milepost 15-31 Rehabilitation Design / ROW Stage 1 $20.104 million Federal
- DOT: Homer – Airport Master Plan Update $712,500 Federal
- DOT: Karluk - Surface/Dust Maintenance $1.235 million Federal
- DOT: Chenega - AMHS Ferry Terminal Reconstruction $328,000 Federal
- DOT: Cordova - Second Street Reconstruction $727,760 Federal
- DOT: Kodiak - Rezanof Drive ADA Improvements $3.047 million Federal
- DOT: Homer - All Ages and Abilities Pedestrian Pathway $208,800 Federal
- DOT: Cordova - AMHS Ferry Terminal Rehabilitation $168,000 Federal
- DOT: Kodiak - Rezanof Drive Resurfacing: West Marine Way to Airport $16.583 million Federal
- DOT: Homer - Sterling Hwy Milepost 157-169 Final Construction Stage 3 $44.4 million Federal
- DOT: Kodiak - Sargent Creek Bridge Replacement $513,980 Federal
- DCCED: Dixon Diversion - Bradley Lake Hydro Power $6 million UGF state (reduced from $6.5 million)
The Capital Budget will now be moving to the House. I anticipate House Finance will have public testimony in the next several weeks. Our LIOs can help you keep track of these public testimony opportunities.
FY26 Operating Budget
The House passed out their version of the FY26 Operating & Mental Health budgets. The operating budget totals $6.167 billion UGF and includes over $950 million for roughly a $1400 PFD. This version of the budget also includes a $79 million unallocated cut, which would allow the Governor to choose where to make the reductions. I have several concerns with this unallocated cut including the fact we would be abdicating our legislative duty as the appropriators of the budget. As well, our legislative legal department has stated that it could be unconstitutional without clear guidance, and I’m concerned that the Governor could choose to take the full cut from one department such as Education. The House’s budget also includes $250 million one-time funding for K-12 education as a placeholder in case legislation for a permanent BSA Increase does not pass this session. The House proposed using our Constitutional Budget Reserve (CBR) savings account to balance their budget, but they did not have the 3/4 vote required. The Senate will work to address this deficit to ensure vital services are met while providing for the largest PFD we can afford and not eliminating our savings.
The FY26 Operating budget will now be headed to the Senate. Our Senate Finance Subcommittees have held their department closeout meetings and reduced the operating budget by $100 million UGF. The subcommittees will share their recommendations with the full finance committee in the coming week.
FY25 Supplemental Budget
The House also passed out their version of the FY25 Supplemental Budget which covers unforeseen reductions in revenue and/or unforeseen expenses in the current fiscal year such as natural disasters. The House proposed using our CBR savings account to balance the $200 million supplemental budget, but they did not have the 3/4 vote required. The budget is now in the Senate Finance Committee.
While I don’t support drawing from our savings, I recognize that we may need to draw from our CBR for part of the current FY25 Supplemental Budget.
The current year Supplemental Budget includes:
· $29 million for disaster funding
· $13 million for wildland firefighting
· $10 million for AK Seafood Marketing Institute (ASMI)
· $1.7 million for the VPSO program
· $6.5 million for AMHS for annual maintenance and overhaul on vessels and at terminals.
You can review the Governor’s proposed budgets here: omg.alaska.gov. The House and Senate reports and budgets are posted here when completed: legfin.akleg.gov.
Revenue & New Revenue Legislation
Oil prices continue to drop creating a difficult budget process for this year’s Supplemental Budget and next year’s Operating and Capital Budgets. Even if we passed new revenue bills this session, it would take time to implement them. Interest in the Alaska LNG gas pipeline is hopeful but would take about 10 years before the state saw any revenue. Recently, the Alaska Gasline Development Corporation (AGDC) entered into an agreement with Glenfarne LLC, who has become a majority owner and lead developer of the project. In 2014, the project’s cost estimate was $44 billion. With inflation, supply issues, and recent tariff increases, this cost is expected to grow. The legislature is working to gather more information on the agreement and address our concerns including the fact that most large projects like this one come in over budget.
We need to look towards new revenue sources to help fund the services our state needs and deserves and address our energy needs. With new, less volatile revenue sources added to our revenue stream, we can have reasonable education funding and a reasonable PFD and not have to slash vital services. I encourage you to learn more about proposed revenue legislation and provide public testimony.
SB 113 E-Digital Business Corporate Income Tax
Passed the Senate and is now in House Finance.
This bill seeks to modernize Alaska’s corporate income tax law to include online sales from outside corporations. It would impose our state corporate income tax on some out-of-state businesses that operate online inside Alaska. The bill could generate as much as $25-65 million in new revenue per year.
SB 109 Permanent Fund – POMV Split
SB 109 is in Senate Finance.
This bill would rewrite the PFD formula to a 75/25 POMV split: 75% of the earnings reserve draw would go to state services, 25% of the draw would go towards PFDs. This bill would help stabilize the state’s revenue and budgeting. This bill has received bipartisan support from the sponsoring Senate Finance Committee members.
SB 92 Corporate Income Tax – Oil & Gas Entities
SB 92 is in Senate Finance.
This bill restructures the state corporate income tax so that it is applied equally to all companies in Alaska including S corporations. The change could generate as much as $100-150 million in revenue per year. Only those S corps that make more than $5 million per year in profit would pay the corporate income tax.
SB 112 Oil & Gas Production Tax
SB 112 is referred to Senate Resources and Senate Finance.
This bill reforms Alaska’s per-barrel oil tax credits to create a more fair and sustainable tax structure for the state. SB 21, passed in 2013, has cost Alaska $8 billion in lost revenue. In 2021, the Department of Revenue testified to the Joint Fiscal Policy Working Group that cutting the oil tax credits from $8 to $5 would have minimal impact on oil company investments in Alaska. Similar comments were provided by independent legislative consultants testifying to the working group. This bill, SB 112, would reduce the maximum tax credits paid to oil companies from $8 down to $5 per barrel. This bill could generate $400 million in new revenue per year.
Seafood Task Force Legislation
I presented in person at ComFish in Kodiak last week and appreciated the discussions on how to address changes and make improvements to ensure the sustainability of our renown Alaskan fisheries. Our federal legislators were also on hand to share their insight into how federal funding cuts, executive orders, and tariffs could affect our seafood industry.
Below is an update on the legislation recommended by the Seafood Task Force that I chaired last year. Click here for a copy of the task force’s final report.
SB 156 / HB 199 AK Commercial Fishing & Agriculture Bank / Loans
SB 156 is referred to Senate Labor & Commerce and Senate Finance.
HB 199 is referred to House Fisheries and House Finance
This bill would allow AK Commercial Fishing & Agriculture Bank to make loans to persons involved in the state’s commercial fishing industry.
HB 116 / SB 115 Commercial Fishing Insurance Co-Op
HB 116 is scheduled for a House Floor vote on April 25.
SB 115 is referred to Senate Labor & Commerce and Finance.
This bill would allow the commercial fishing industry to establish an insurance pool, similar to the Purse Seine Vessel Owner’s Association that operates in Washington state.
SB 130 / HB 129 Fisheries Product Development Tax Credit
SB 130 is in Senate Finance.
HB 129 is in House Finance.
This bill amends the tax credit program qualifiers to include all species of fish and shellfish. It also adds new qualifiers for the credit and requires a quicker determination of credit eligibility from the Dept. of Revenue. The bill extends the sunset date to 2030.
SB 135 Refund of Fish Business Tax to Municipalities
SB 135 is in Seante Finance.
This bill increases a municipality’s share of fish tax revenue for ten years. It is the intent of this legislation that municipalities use the additional revenue to improve their harbor facilities.
SB 181 Employment Information Disclosure
SB 181 is referred to Senate Education and Senate Labor & Commerce.
This bill allows the Dept. of Labor and Workforce Development to share information with other state agencies and the University of Alaska to promote program evaluations and educational outreach, and improved policy research and decision making for the seafood industry.
Other Fishery Bills
HB 111 / SB 108 Finfish Farms and Products
HB 111 is referred to House Fisheries & House Resources.
SB 108 is referred to Senate Resources and Senate Finance.
This Governor’s bill would allow finfish farming in inland, closed system bodies of water. It would prohibit the cultivation of pink, chum, sockeye, coho, chinook, and Atlantic salmon. I am concerned what precedence this bill would set for future fish farming in our state. Opening the door to fish farming in Alaska is dangerous to our wild salmon. While I appreciate the Governor’s willingness to look for solutions for our struggling fishing industry, I do not feel fish farms are a viable option.
HB 135 / SB 131 Duties of Alaska Seafood Marketing Institute (ASMI) Board; Meaning of Seafood
HB 135 is referred to House Fisheries and House Resources.
SB 131 is referred to Senate Resources and Senate Finance.
This Governor’s bill would amend the duties of the ASMI board and the definition of “seafood” to include aquatic farm products. ASMI provided the Governor’s office supporting documentation for the bill.
SB 158 Cook Inlet: New Admin Area
SB 158 is referred to Senate Labor & Commerce and Senate Resources
This bill would establish a new administrative area on the east side of Cook Inlet.
Real ID
As of May 7, 2025, you will need a REAL ID or other federal ID such as a passport, military ID, or BIA card with photo, to fly on domestic flights, access certain federal facilities, and pass through certain TSA checkpoints. More information at dmv.alaska.gov
For Updates on Legislation & Budgets
Senate District C’s Legislative Information Offices (LIOs)
· Cordova LIO (907) 424-5461 LIO.Cordova@akleg.gov
· Homer LIO (907) 235-7878 LIO.Homer@akleg.gov
· Kenai LIO (907) 283-2030 LIO.Kenai@akleg.gov
· Kodiak LIO (907) 486-8116 LIO.Kodiak@akleg.gov
· Seward LIO (907) 224-5066 LIO.Seward@akleg.gov
Gavel Alaska: 360north.org
Live TV - AKleg: akleg.gov/LiveNow.
Bills & Laws: akleg.gov/basis/Home/BillsandLaws
Bill Tracking at akleg.gov/basis/btmf
Legislative Finance: legfin.akleg.gov.
Please keep in touch!
I appreciate hearing from you about legislation, budgets, and other state issues. Please do not hesitate to reach out to my office if we can be of assistance to you with state agency matters.
Phones:
907-465-4925 (Juneau)
800-821-4925 (toll free)
907-235-0690 (Homer)
907-486-4925 (Kodiak)
Email: Sen.Gary.Stevens@akleg.gov
Sincerely,
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