I call this meeting the House Finance Committee to order.
Let the record reflect that it is 135 on Friday, January 23rd, 2026.
Present today are Representative Ballard, Representative Hannon,
Representative Moore, representative Bynum,
Representative Thomas Shefsky,
Representative Galvin, myself, co-chair Josephson.
And I saw, yes, I think as well, all right.
Also present today are House Finance Committee staff, Committee Assistant Helen Phillips,
Paige Tallulah-Lestufka, Secretary Brie Wiley, and Secretary Leah Frazier.
We've been joined by co-chair Neil Foster.
We also have our moderator, Emily Mesh here from the Legislative Information Office.
Before we start, please mute your cell phones.
In today's meeting, we will hear the Office of Management and Budget present its overview of the Governor's FY27 operating budget.
With this today from OMB is Director Lacey Sanders. Good afternoon. Happy New Year
Director Sanders, please come forward put yourself on the record and begin your presentation
Good Afternoon everyone for the Record. My name is Lacy Sanders
I am the Director at the Office of Management and Budget for The Governor
today as noted
by the chair I will be providing an overview of the governor's FY 27 budget
that was introduced in December and I
will walk through both operating and capital today as well as the
supplemental's that were included in that budget on December 11th all right
please proceed thank you
So with that, I am I was going to start the presentation today doing a little bit of a look back and where we are today
So I'm going start with fiscal year 2026
This is the budget that was passed last year by the legislature and enacted into law
At the time when the Budget was signed we had a spring revenue forecast of 68 dollars a barrel
and a total budget of just over $6 billion
in unrestricted general funds.
At that time, that provided a surplus
of about $141 million.
However, at that, time we worked with
the Department of Revenue on what
what realistically we were seeing in the market
as it pertained to the price of oil.
And at the time that the budget was passed,
we we're seeing the Price of Oil come down
very significantly.
And so that drove a lot of the work that was done
in The Vito Review process with the governor
to determine what
What level of a budget was going to be sustainable looking forward into the future?
If you may recall, and as posted out on the website, there was a letter from the former commissioner of revenue providing various scenarios at that point in time on price of oil.
Leading to where we are in December, the fall revenue forecast came out.
I know this committee received a presentation from both the Department of Natural Resources and
the department of revenue on the production and the revenue forecasts.
The fall forecast included the price of oil at $65.48, which is a decrease of $2.52 from
which results in approximately $193 million
in less revenue available for the state.
So moving on down,
just giving a comparison of where we are now
with the fall forecast,
we have an overall deficit of about $52 million,
without any supplementals being added at that point in time.
And then just for comparison purposes, we've provided just a brief snapshot of the subliminals
that were included in the budget on December 11th.
I will walk through them in a bit more detail as I go through the presentation, but those
And so at that time, last year, if we had continued at $68 a barrel that was projected
in the spring, the overall deficit would have been $153 million.
Now with the price of oil going down, we are looking at a total deficit overall of $346
million between the $52 million deficit for oil and then the additional supplementals
Slide three. So moving forward
We have a question of director from
Representative bynam. Thank you coach here justice senate through the chair
Before we really get jumping in here. I hate to ask this but we looked and you you're posting the fall number for oil at
6548 and that's what the that what? the published number is
But when we did the forecast on the budget we're saying that we were going to forecast for this full period of 68
is the 6548 number, are we taking into consideration
or account fluctuations prior to that forecast number?
So we know that we're looking at a forecast
for where we are going to be
to the rest of the fiscal year
and where have come from,
is that number taking in to consideration
the previous fluctuation and then the assumption
for were we gonna go forward?
Yes, through the chair, Representative Bynum, the Department of Revenue, obviously, they're
the ones that are responsible and very knowledgeable when it comes to the revenue forecast.
They work to incorporate actual oil that has prices that have occurred leading up to that
December date, and then the Revenue forecast is based on those actuals, then a projection
of the remainder of year that they anticipate.
you know, I feel like it's for me something that I do on a daily basis or I
feel my heart rate might go up or down with the price of oil. We've seen it you
know as low as down to $60 a barrel. Today it is about at $65 so they are
tracking that really closely and as you're aware later in March we will have an
updated spring forecast that will capture the December, January, February
Please continue slide three. Thank you
So slide 3 moving forward
Just wanting to continue that look at where we were and where were we are now
So again starting with the spring 2025 forecast. It was
Approximately $67 a barrel that was being projected for the 2027 budget
As we've seen in the fall forecast, it came down $5 to $62 a barrel, so this is projecting
forward to next year, which is approximately a $119 million decrease in unrestricted
general funds or revenue.
One of the conversations when we started working on the budget for the governor and in those
conversations of budget development were how do we move forward?
And so with the Governor recognizing that there were decreases in the price of oil and
the, you know, the unknown about what was going to be happening at the federal level,
and really focus on those contractual obligations
of the state and what we are statutorily required to do.
So as many people have noted,
this is a very slim budget or a light budget this year,
but that was the approach that it was taken.
So starting off with what
we refer to as a base budget,
meaning we've taken all of
the one-time items out of
the budget from the prior year.
We start off
You know, last year's budget was just over $6 billion.
We've removed all of those one-time items,
which were about $46 million.
We added in $55 million for our contractual agreements
and about 22 million dollars worth of what we consider
obligations that are statutorily required
for things like debt or retirement.
Those totaled about twenty-two point eight million
dollars, we get an overall fiscal year 2027 budget
Six just over almost $6.1 billion at that point we do there there
reflects the surplus of $269 million if you were using the spring forecast and $150 million
if your utilizing the fall forecast. As was stated in the December press release, the governor's
budget again this year includes the statutory dividend. So we have included that. It is a $1.7
billion increase over last year's dividend amount. And this brings us to our overall surplus in
excuse me, are overall deficit of about 1.5 billion dollars. As noted earlier the
governor's budget does draw from the constitutional budget reserve fund that
fund balance is just at about three billion dollar.
And I have provided on slide four, if it's okay,
just a brief snapshot of what we refer to
as our fiscal summary, this is the short fiscal
summary combining all of the information
that we just talked about for just unrestricted general funds
and I'm happy to take questions.
Okay.
Any questions on Slide Four?
Please represent
Thank You chair josephson
Sanders I'm
Flip real quickly and I don't see a slide specifically on the supplementals and you're going to address them
But in some of these calculations where we're looking about our base budget
They're not included and then some
Of them are in the 26, but they're 20
So I am looking for that detail pretty soon here to keep
Running that surplus deficit math in my head.
Director.
Chair, Representative Hannon, I will talk through each one of them and whether they are incorporated into the 27 budget that we've proposed.
Thank you.
Okay, all right.
Moving on to slide number five, this is just a representation each year.
We refer to this graph, you know, legislative finance division has their own version of it.
This is the swoop graph.
providing a comparison to the FY26 budget to
the FY27 budget for unrestricted general funds only
from least to greatest.
And you can see a comparisons of where we've also identified and
highlighted this year the formula funds associated with the programs.
So just informational slide for the group.
Happy to address any questions if there are any, you know,
Each year we highlight the fact that K through 12 foundation formula and Medicaid make up a substantial portion of the budget
All right, I don't see any questions. We'll move to slide six
So beginning on slide 6 I'm just going to walk through a few of highlights in the Budget today
Obviously, I know the subcommittees and the committee, the House Finance Committee will
go through in more detail each of the agencies as they work through their budget process,
happy to address any questions as we go though if there's something that's not noted here
today.
But just wanting to highlight a few of things that are captured in the budget.
Division of Personnel completed the statewide information technology classifications study.
and is working on the implementation plan associated
with that.
So there is a budget increase to address the cost.
It was an estimate based on, excuse me,
the Office of Management and Budget completed an
estimate, based
on The Division of Personnel's allocation of all
of the positions that would have been changing.
They are working
on a phased approach to implementing that
classification study as we speak.
One other significant change in this year's budget is the transition of shared services of Alaska, or SSOA, and accounts payable back to departments.
This is something that is being done statewide, so that division will be the employees that were working that Division will
returned to agencies, and then the services will be completed by the department as part
of a review and a survey of departments.
We ask questions about how well the process was working if we were seeing duplication
or redundancies in the processes and we will.
Things are processed more quickly. Those positions will be returned to departments. So you will see throughout the
budget those changes being made in all departments
Additionally, we are transitioning payroll services back to eight respective departments
As part of the survey, there was an inquiry
about the payroll services that were being performed.
And what we found is that a lot of agencies
that have more complex and technical contracts
that they're implementing in payroll service.
There was a strong desire to bring those individuals back
into the department to be more centralized focus
on processing payroll associated
So if you think about agencies like Department of Corrections with the Alaska Correctional
Officers Association or public safety, those contracts tend to be more complex and complicated.
Those individuals will move from the Department
of Administration back into the departments and payroll will be processed.
within those respective departments.
I will say the Department of Administration
is taking the lead on this process.
They are also setting up steps to continue
to support the agencies that are more administrative
and be a lead for all agencies as we work to ensure
that processes are still consistent
and that we are making sure that rules are applied appropriately.
Thank you, Chair Josephson. Through the chair, thank you for that information. So what does
that process look like as far as positions? Is each department going to need extra positions
to process the payroll? Are you going be eliminating positions in your department that's going
through the chair. That's a great question. So right now what we've done is we have identified
the positions that are within the division of finance that will be returning to the departments.
The departments that taking on payroll within their agencies will need to determine
what organizational structures that they need
to have with those either individuals that
are in the position or the vacant positions
There are a group, excuse me, there is a
group of employees, positions with employees in them that will be staying in the division
of finances. They process payroll for other agencies that didn't have it returned to them.
So it's kind of a mix of everything. We're not adding any new positions at this time,
we're just reorganizing. That's how I would think about it.
Director Saunders, so thanks for being here.
As always, kind of on the note of the payroll.
Oftentimes we do this back and forth centralization
of services into decentralization of service.
Obviously, we are now decentralizing a service again.
So I guess my question is, is there any way
that maybe we can leave behind?
best practices or after action review as we call in the army of like hey we tried to
do this this is why I didn't work out and this why we're going back because at some
point you know maybe not us here at this committee but at
some point down the road some is going to try to centralize payroll again and then
it would be nice for them to know why. We didn t do that anymore through the chair
I in my 20 plus years with the state have seen
Organizational shifts and undoing and redoing and I do think it is it
Is a good opportunity for us to sit down and and maybe write out?
What we're experiencing or what agencies are experiencing?
So yes, thank you for that. Thank you
Representative Galvin
Thank you, Co-Chair, Trustee Sin, through the chair.
Hi, thank you so much for being here.
I really appreciate the work you've done, Commissioner.
My question is around the new classification study
or the classification that we've been waiting on
for quite some time, and then it sounds like later
we're gonna hear about the implementation.
phasing in and it's the phazing that I had a question around if you and you may already have this built in but if
You could give us a sense of this is the first portion
But there will be more next year and the year after whatever it is that design looks like so that we can have a little
bit of anticipation of
Of the build up or maybe even what percentage of the change that you've decided to take on
Given what you learned that would be great
Yeah, through the chair, Representative Galvin, I'm going to provide just a little bit of clarification.
So there was a salary study that was completed, and the Department of Administration is working forward on what the next steps are there.
This is the statewide information technology study.
The FY 27 budget incorporates the cost associated with an entire year of implementation.
Okay.
The phased approach meant that the division of personnel would start with classes now
that don't have a cost change associated
with them.
So we can break up this large study into groups
as we move forward so that on July 1,
everybody's in their correct classes
or as near to that as well.
If I may, I just want to make sure I'm tracking.
Thank you, co-chair.
So the idea is that no change in funds,
just a change and classification,
and you're trying to help build that in
They are appropriately titled, given whatever they're doing.
Through the chair, Representative Galvin, yes,
for that first phase.
Thank you very much.
OK.
Representative Hannon.
Thank You, co-chair Josephson.
Ms. Sanders, the budget books for the subcommittee
that I'm chairing says something different.
So let me walk this out.
that the IT classification study for the Department of Environmental Conservation
and Department Of Transportation both have increments for
the implementation of the I.T. classification
study to be implemented. I think the
IT reclassification versus the salary
study are two different things and that we are
My understanding is that the IT reclassification is being done in the base in
the budget as submitted and through all the departments for FY 27 through the chair
represent a hand and that is correct I was speaking to the Department of
Administration starting now in this current fiscal year on classes that
for the information technology study.
So that is being broken into phases.
So follow up?
Yeah, I think what you're saying is.
The budget books I'm looking at show an increase.
So for fiscal year 2027,
we're in fiscal years, 2026 now through the chair.
Sorry, yes.
Okay, yep.
You're,
Representative Hannah, you were saying the correct thing.
Yes.
Helps a lot.
Thank you.
Okay.
the Department of Agriculture.
Absolutely.
So the December 11th budget that was released
does include the transfer and establishment of
the department of agriculture.
So what you will see in the budget subcommittee books
is the Transfer of the funding and the positions associated with the
Department that were in Department
of Natural Resources being transitioned to the new Department
And I'm happy to take any questions if there are any.
Yes, Representative Hannah.
Thank you, Co-Chair Josephson.
So I completely understand that the time the budget was created,
the governor intended to implement an executive order 137.
There is a court order that says he cannot,
and so the Department of Agriculture does not legally
And although there is an appeal pending before the Supreme Court,
the supreme court is not taking it up on an expedited calendar,
has not yet calendared it.
It is unlikely to have both hearing and
conclusion prior to our budget process concluding in the next 120 days.
At some point is OIM be going to amend the budget or
To reflect that through the chair representative hannon. No not at this time
The the governor has put for that appeal. I am not
Department of law. Oh, let them speak to that, but yeah, okay, and
Follow-up mr. Chairman could you remind me which of our committee members overseas the DNR budget? Yes, it's co-chair Calvin Tragi. Thank you
Thank You
All right moving on to Department of Commerce and community and economic development two items to highlight
The two point two million dollars associated with the Alaska gas line development corporation
For the operating funding associated with the Alaska liquefied natural gas or AKLNG development project
Is the same amount that was included last year? It was carried forward last
Year was put in as a one-time item and so this is restoring that money for fiscal year 2027
Additionally, there is funding for the power cost equalization program within the
excuse me, AEA, Lask Energy Authority, that totals 44.3 million dollars.
Okay, go to slide seven.
Moving on to slides seven under the Department of Education and Early Development.
the funding associated with the foundation formula
and the People Transportation Program
are both funded at the statutory formula
for school districts.
Additionally, there is an increase for $3.3 million
and $1.6 million from the higher education investment
from for the Alaska Performance Scholarship
and The Alaska Education Grants.
I will note here.
that there also is an appropriation in the bill that recapitalizes the Alaska Higher Education Investment Fund
for the amount that was used to cover the deficit in prior closed fiscal years, approximately $129 million.
That appropriation is one time, is not carried forward into the next year, and is appropriated from the Constitutional Budget Reserve Fund.
Moving on to the Department of Health, we have the continuation of the senior benefits payment program being fully funded based on the statutory formula.
There is an increase of $2.7 million in federal receipts associated with several grants under the division of public health.
So bringing on additional receipt authority so those receipts can be distributed.
and utilized. And then as well as increasing authority, federal authority to support the
Crisis Context Center in fiscal year 2027. Under the Department of Labor and Workforce
Development, there is a $1.4 million increase of unrestricted general funds to
support The Loss of Worker Safety and Compensation Administration account. This account is also
Several years ago when the reverse sweep was
not completed. The balance of this count was swept into the general fund.
The workers' compensation has also done an excellent job over the last several years at
bringing down our rates, excuse me, the rates for Alaskans that contribute to this account,
meaning there's not as much revenue going into this fund, leaving a shortfall
for operations to continue that work in the division.
Let me stop here and ask you
The Department of Health has indicated to ledge finance, which inform me that there would be a supplemental item for Medicaid
Cost overruns essentially in the amount of 34 point something million are are we to expect that as a
Supplement on the 2nd of February an amended supplement chair Josephson. That's a great question. Yes, so each year
By December 15th, the Department of Health transmits a Medicaid projection.
The timing doesn't work out where we can get that item included in the budget
by the release of the budgets, so that Medicaid protection comes out after the fact.
So each year we bring forward a supplemental to the legislature
based on that Medicare projection, and you are correct, yes.
All right, I want to follow up with my own question, just you probably noticed that we've
calendared a hearing on a supplemental budget bill, and that bill may or may not include
this amount.
And so I just want make sure I understand that sometime, presumably in early February,
as outlined in the regular operating budget
to include these extra dollars for Medicaid.
Is that a fair?
Chair Josephson, that is fair.
So statutorily on February 3rd.
the governor has to transmit the supplemental's request to the legislature.
So on February 3rd, I anticipate that we will be sending a bill over to you
with any costs associated with supplemental and that will include the Medicaid item.
That's the traditional approach that
we have taken to bringing that before the Legislature.
I will note that, we do another update on that Medicaid projection
and it's due to legislature by February 15th.
not ideal, but we will submit based on the December projection on February 3rd, and then
there will be an update provided to the legislature on Feb. 15th.
Okay.
And another question at the top of the page about the draws on, extra draws, increased
draws of higher education investment fund.
The governor and I'm happy with his decision.
He wants us to restore funds drawn in the amount of about 130 million in
the current fiscal year.
Who should we query about the longevity of the fund
in its current status in a depleted status?
Would that be OMB or should go to deed
with that kind of question?
Chair Josephson, the Office of Management and Budget
can help coordinate a response on that.
We do watch the projection.
I know ledge finance also has their own projection,
we work closely with the Department of Revenue.
And we do have projections on the impacts of not returning
that funding to the higher education investment fund.
The impacts would begin in fiscal year 2028.
And I was remiss in mentioning the two increases
for the Alaska Performance Scholarship
and the Laska Education Grants is due
to the legislative changes that occurred
and increased utilization of those accounts.
So these are projected increases based
on student eligibility and they,
the outcome may differ depending on actual utilization.
Okay. All right.
And then Department of Labor, did we talk about that?
Yes, you did. Yes you do. Thank you. It's coming back to me. Slide eight moving to slide eight.
Thank You. So the under the Department of Military and Veteran Affairs, we have two deposits.
One is a supplemental of 40 million dollars and one is
a base FY 27 deposit.
for 33 million of which 24 million is unrestricted general funds.
As we all are aware, we have seen an uptick in the number of disasters that are impacting
our state.
I heard a number referenced about one a month.
The most recent, you know, typhoon hollong was substantial as well as,
and others. For the record, for fiscal year 2027 in an attempt to come up with a methodology
that we are using, we've provided a 10-year average as the amount that would be deposited
in fiscal years 20-27. But I will say I don't think that there is any way that any one person
or any group could predict what costs will be associated with the disasters or what disasters
we may experience moving into the future.
director we're going to want of course before the end of the session the best
possible accounting of what the federal government paid and didn't pay and then
I would be curious and if I could make this a formal ask
or I could write you a letter, but which departments,
because we know that we think DEC had some revenue
plus as a minus, minus as DOT, perhaps, certainly DMVA.
But if we had an overall one-pager or.
one paper at any rate that would describe those dollars.
Yes, through that, Chair Josephson,
we can provide a summary of that.
I know the Department of Military and Veteran Affairs
is working hard with the federal government
on the breakdown of what will become state costs
versus federal costs that are reimbursed.
We have asked each of the departments
to track their costs associated with
the responses that they've been assisting with
and can't provide that information.
Representative Hannon.
Thank you, co-chair Josephson, Ms. Sanders.
My recollection is that last year we budgeted for a disaster relief using a five-year average versus a 10- year.
I am speculating that a 5-Year average is a higher amount than the 10 year average.
And I'm curious whether you ran those calculations and could tell us what the difference is because I happen to believe even using the five year
average, we are underfunding it.
the perpetual cycle of we're always going to have
supplementals and trying to get us to a
more accurate
Annual prediction of where we need to be so do you know the difference between the five-year average and the ten- year average?
Through the chair representative Hannah, and I don't know off the top of my head
We can absolutely provide the different between. The two
You're correct in your recollection that last session the legislature used a five year. Average. I
response to what the difference is. I think it's unpredictable. So we could we
could go either way. We were trying to use a methodology as we move forward. Okay.
Okay, please continue on slide eight.
Okay so this year we have in the Department of Natural Resources two items that are
They're maintaining programs that were previously in the capital budget.
We have tried very hard to review what we are proposing in
the Capital Budget to ensure that it is truly a capital appropriation.
And whether it should be.
Really reflected in the operating budget as an operational item that should be included moving into the future
So we have two items one is a continuation of the National Historic Preservation Fund
Grant as well as the critical minerals mapping earth MRI program
So both of these are federal projects
The National historic preservation fund does have a match requirement of 1.3 million again
budget and are now just being reflected in the operating budget.
Moving down to the third bullet under the Department of Natural Resources, we have the
fire suppression fund.
And what I will say is that there have been two disaster declarations that have
been transmitted to The Legislature totaling $55 million this year.
the amount for fiscal year 2027 is 47.5 million dollars and again you know that
is another area where we have difficulty projecting what a fire season is going
to look like across the state we do our best. I will say having the
Fire funding deposited into the fire fund is is helping us get away from those
reoccurring trying to fit everything into one year. It gives us a little bit smoother.
prediction and if there is ever excess funding, which there's not at the time, but if
there ever is, it does carry forward to the next year as the Department of Natural Resources is
working very hard with their other counterparts that are in the fire area on reimbursements to
Lastly, we have the Department of Public Safety.
Again, the body worn and in car camera operations and equipment was a previous capital project.
This is moving it into the operating budget to continue that funding as operational funding that will be ongoing for
maintenance and maintaining that equipment as well as ensuring that they can replace it if it is damaged.
And then lastly, there's an increase for $550,000
to expand the training and certification support
of law enforcement and village police officers.
So there are those that pay to participate
in the Training that DPS provides, the Academy.
Representative Stepp.
Thank you, Coach, you're just in through the chair
to direct your senators or sign or excuse me.
Just.
Interesting exercise here, $1.3 million for body cams,
right, and car cabs, I assume, for troopers.
How many officers and how many cars do the chair?
Director.
Through the Chair Representative Sap,
we can provide statistics.
I do know that part of this is for the operational component
of them, as well as your collecting a lot of data.
But we could definitely give you a breakdown.
Just a quick follow-up.
Yeah, thank you, go chair through the chairs.
You mean like the software stuff, that type of thing?
OK, thanks.
Director, on the 55 million fire declarations,
your budget treats that as needing ratification,
because the funding, you argue, comes
through a previous declaration.
I think if I have that right.
Chair Josephson, in conversations with Director Panter at Ledge Finance Division, we decided
not to submit a transaction for those items because they had already been approved by
the legislature.
We will incorporate them in the supplemental summary of overall changes as something that
has already appropriated.
Through that disaster process it is up to the legislature if they want to take additional action to ratify so to speak
That the that approval in the past
We have not specifically had an outline outlining the
Work the the disaster declaration. So it's something that we can work through
Technically, we just didn't want I have something being double counted or seen as a new request
okay, I
I know enough to be dangerous about ratification from the COVID period May of 2020 in particular, but
It could be important to future governors or legislatures how it's described
But as long as we get this thing paid, I assume that that's the we've got other battles to fight
Chair Joseph said I would agree. Yes, okay. Let's go to slide nine
So slide nine, starting with the Department of Transportation and Public Facilities.
There were several reductions throughout the department of transportation and public
facilities last session.
increments bringing that money to restore that level as it was prior to the
reduction. So five point two million dollars for highways aviation and
maintenance.
$1.3 million for their one-time funding that was utilized last year from the Alaska Housing Capital Corporation
And then there is an increase of
$ 1.8 million of motor fuel taxes for a statewide guardrail and roadside
hardware repair that's statewide as well as
$420,000 of Motor Fuel Taxes for
statewide
Under statewide items, I know I mentioned it earlier under the Department of Education and Early Development, but here is where the
the right recapitalization of the Alaska Higher Education Investment Fund is for the 129.
$1.6 million, very spoken, so I'm going to keep moving on down.
I've also mentioned that the governor's budget includes $2.3 billion in general funds to provide
that full statutory permanent fund dividend of approximately $3,600 to Alaskans.
And then there is $ 1.4 billion for permanent funds inflation-proofing from the earnings
reserve account into the permanent funding principle.
Thank you, co-chair Josephson, through the chair.
Dalton Highway, we had some reference
to maybe 80 foot sections of pipe going up that highway.
Are we anticipating extra maintenance funds
for that Highway in next year's budget?
Director.
through the chair representative times actually at this point there is no
additional funding directed outside of the federal programs that Department of
Transportation administers but I you know we recognize that that area needs
extensive work and will need maintenance associated with it and we're working on
that but nothing planned right now
Director, on the statewide guardrail on roadside hardware repair,
Lechfein is for reports that this appropriation would draw or
request more than will arrive in motor fuel tax.
I think the total was several million and this looks like part of the item.
But should that, should, that?
I mean, I'm all for improved guardrails, it sounds like it could save someone's life.
Right. So should that come as a supplemental or?
Well, I guess it's an FY 27 item.
Should it should it be covered with general fund? I don't know.
Through the chair, Joseph, so.
we consider this a receipt. So just like any other receipt, if the revenue is not collected,
if revenue, is insufficient, then there is nothing to spend there.
So we would need to monitor this revenue source very closely to ensure that
The projects that the Department of Transportation is moving forward with, it aligns with the revenue forecast.
And I will follow up with The Department Of Transportation and Public Facilities following this.
I believe we had checked on that and we may have just a difference of information between us and
ledge finance, we can follow-up.
Okay.
Let's go to slide 10.
So for fiscal year 2027 we're providing just a brief snapshot of the capital budget this year's capital
budget again the governor's direction was to you know provide the bare minimum when it comes
to capital projects, and ensuring that it really was meeting
the match that we expected to receive from the,
or providing the map that
we expect to see from
the federal government.
So their general fund match portion of the budget
is $128 million, which is about 82% of
the capital budget.
As you can see, the majority of that is going to fall
into your transportation and public facilities.
We've got, you know,
about just over 20 million dollars in the Department of Revenue and I walk
through each one of these related to the AHFC, Alaska Housing Finance Corporation,
sorry, acronyms, housing projects that are there and then within the
Department Of Environmental Conservation again we've got our matching projects
for federal wastewater and water projects.
So, if we move forward into slide 11, I'll start at the top with the Department of Commerce,
Community, and Economic Development.
There is a $15.3 million capital project utilizing ocean ranger receipts that will be
appropriated to the Alaska Energy Authority for a cruise ship port terminal electrification
project.
At the top of my head, which project,
which communities is next, but the Department of our Commerce
will administer this through the Alaska Energy Authority.
Under the Department of Environmental Conservation, as I mentioned, we have our federal programs for
a village safe water and wastewater infrastructure projects as well as the Clean Water and Drinking Water Grant Fund.
And those have a required state match associated with them.
And then lastly, under the department of Fish and Game,
we had a continuation of $3.3 million associated
Salmon program again. This is a continuation of that program or excuse me project
We have eight hundred and twenty five thousand dollars for the Alaska marine salmon program and
Six point eight million dollars in federal receipts for The Pacific Coastal Samron recovery fund activities
Moving on if I could director and I don't want to spend too much time in this because I have
folks I can ask about the ocean ranger program but but is the next is to the
purpose of the Ocean Ranger program that this might clean up the air in calls of
ports of call is that the through or to The Chair of Justice and my
those receipts can be utilized by four projects that are associated with the
cruise ship industry. We have a need. My brief level of knowledge is that there
is a federal law that is requiring us to electrify our ports. It's an extensive
cost in the state and it would provide cleaner air measurement by having those
cruise ships plug in instead of being operating off fuel or diesel.
Yes, a co-chair foster. Thank you
Miss Sanders, thanks for being here
This might be a fishing game question, but
any reason off top of your head as to why
Funding for the Western Alaska genetic testing any of the studies was not included
Chair foster if I can
Maybe call on a lifeline if that's okay. I've got Director Bonnie Jensen here and
I'm not remembering that project so I apologize.
Ms. Jensen. For the record my name is Bonnie Jenson and I am the Administrative Services
Director for Fish and Game. Through the chair Representative Foster are you referring to the
South Peninsula study that was in the capital budget last year?
No, it would just be the just genetic testing for Western Alaska and salmon.
I know there's been a debate over the years as to why are we seeing declines in shutdowns
and in subsistence fishing up the Kaskikwim and the Yukon.
as much as we want to reduce fishing by whether it's just
large commercial fishing boats.
We're always told, well, we need to test
because some of those fish don't go up those.
And so what they're catching is not necessarily
being what's going up to those rivers.
And we're also told there needs to be more genetic testing.
And I believe over the past year,
We had sent a letter in requesting more funds some of the Bush caucus members and and I just don't see any
You know funds in the budget for that. So
If it's something that you need to go back and just look into more that's totally fine, too
Through the chair representative Foster
I would have to reach out to the division of commercial fisheries to get a list of
The genetics projects. Thank you
Yeah, there was half a million dollars for a chum study and maybe they found another source we don t know
Yeah, Chair Josephson and Foster, we'll follow up and get back to you.
Let's go to slide 12.
Okay.
So on slide twelve, starting with the Department of Health,
we have a mental health trust item home modification that upgrades to retain housing.
It's $1.2 million.
This is our traditional mental-health trust project that we
have on an annual basis.
Under the Department of Military and Veterans Affairs, we have several federal projects
that we are receiving funding for, starting with $5 million for public protection and
infrastructure support, $26.8 million dollars for a state homeland security grant program,
$25 million dollar for deferred maintenance, replacement and renewal, and this is specific
And then $1.8 million in federal seats for Air National Guard modernization and sustainment.
So great that we have federal funding that can address some of these issues in the Department
of Military and Veteran Affairs.
Under the department of natural resources, we had the continuation of the forest inventory
Tananaw Valley's, excuse me, it's $1.9 million of timber receipts.
We have a continuation of the Land and Water Conservation Grant Fund program,
a total of $4.8 million, and then lastly, $12 million in federal receipts
for our Cooperative Forestry and Fire programs.
So again, many of these projects are continuations from the prior year,
or from previous years.
On slide number 13 under the Department of Revenue,
I noted this earlier, there's 22.9 million dollars
of the HFC dividend that came to the state of Alaska.
Being used for our housing programs, these are our standard housing
programs that the department of, excuse me,
the Alaska Housing and Finance Corporation administers
on an annual basis, so your teacher housing,
you know, senior housing projects, so on and so forth.
Under the Department of Transportation and Public Facilities,
we have another one of the
supplemental items that I noted earlier.
So $70.2 million of state general funds
to provide the match for the statewide transportation
improvement plan.
This is associated with the,
I'm sure everyone recognizes the veto
that was made last year of the reappropriations.
So this would provide
the Department of Transportation,
the matched required in fiscal year 2026,
so they can meet that matching requirement
at the federal level.
Additionally, you have the continuation of this year's federal program match for
both highways and aviation, which totals $107.8 million in state general funds.
And this here a change, we are proposing moving the statewide deferred maintenance and
renovation and repair capital project.
This previously had gone to the office of the governor.
transportation and public facilities to administer those funds in state agencies and make the
improvements across the state. So we're proposing moving the appropriation to the Department of
Transportation in an effort to reduce the number of papers being shuffled back and forth and let
them administer it directly.
And then lastly, there is 27.5 million dollars of marine highway system funds for
the last marine highway system vessel overhaul annual certification and
so our shore side facilities rehabilitate.
Question from Representative Hannon.
Thank you, Chair Josephson.
Sanders on the statewide deferred maintenance renovation repair, 26 million.
Do we have a list of projects that's intended to cover?
Through the chair, Representative Hammond,
we have a statewide facilities council
that works through an annual process
of ranking all of the projects
throughout the state facilities.
So all state agencies submit their list,
they're prioritized and ranked,
and then that funding is administered
on a prioritised level.
We can provide the most recent version
to the committee if you'd like to see that,
but it is done on reoccurring basis.
So it's continually updated
so that we can make sure we're addressing
the highest needs in the State.
Follow-up. I understand that I'm trying to figure out how many projects does 26 million get us to because in
My recollection again from last year. That's only a couple of projects at the very top of the list and
Through the chair representative Hannah, I think you are possibly referring to the school major maintenance. No
Oh, okay. Separate from that.
Okay. Yep. We'll follow up with the list so you can see it.
Um, I think, you know, over the years,
we've been able to address a significant number of projects and we can provide that as well.
Okay, so we'll go on to, uh, represent Thomas Sheffske.
Thank you, co-chair Joseph, and through the chair.
So maybe this is a better question for DOT,
but I would like to see a breakdown of what they're actually planning and preparing to do.
for maintenance on the adult in the highway I know I've been having many
questions on that throughout my time in The Legislature and it seems like we
really need to be focusing on The maintenance I mean they don't want new
projects up there they they want you to tear up the road and put new road in they
Go down the road with their big trucks because there's a lot of potholes
So you have probably a better question for DOT, but I really want to see the breakout on what the maintenance is for the that section of highway
Through the chair representative. Yes, we can follow up with you on projects that are underway at DOT and what?
The plans are for future
Representing me, Hannah. Thank you. Coach or Josephson. I thought since my wheels were getting very specific in my head on the deferred maintenance
I would like to know where the Fairbanks pioneer home is on this deferred maintenance list that has
26 million because I still hear
Director like
Mr. Painter telling us
We we are at risk of a building collapsing and we're nowhere near maintaining it and you know at some point
We're going to take it off the maintenance lists because it's
Practically a derelict building and I'm just trying to figure out if it's now number one and we can get there before we have
residents of our pioneer home
That we cannot care for
Through the chair representative Hannah and just just to clarify a bit
The replacement of that facility would not be on this list
But we could make sure we follow up with those type of items for you if that's what you're looking for
Yeah, and the follow-up is my understanding is that we've left it on the maintenance list, but it's so far down
It's not getting maintained and it and and he's pointed out that quandary if we haven't maintained it
And we're not replacing it, But where is it? On that maintenance? List and I
My recollection is, it was 18 or so million
Through the chair, we'll follow up with you and get you additional details. Okay slide 14
So slide fourteen each year. We're asked just to provide a brief snapshot on
budgeted versus build positions
So this year we've added a comparison to last December 2024 and where we were
with budgeted positions.
So that is the first column 2024
with a budget positions for 2025
and then where we are as far as positions being filled.
You can see the comparisons in the graph by agency
on the right-hand side.
I'll scroll forward to the next slide as well, which just provides vacancy rates by department
Where we currently are this is just a snapshot as of December 2025
And just happy to address any questions. We're at about 15.3% across the state
Questions yes represent Galvin
Thank you, co-chair Josephson and through the chair. I have a few questions that are more directly related to
deed and
kind of the budgeting to help myself and the public kind be more aware of
how it's sort of a separate animal and I really appreciate
that you included it on the bar graph when you went over all of
the Budget I think that's
helpful for the public to see how much funding goes into that on slide five, and to help folks
understand when we're looking at deed here, which is the Department of Education with
the districts get the either the funds that are pass through funds or sometimes they also
get professional development help and things like that and I want to make sure also we
appreciate that when you have listed here on trying to find the right slide number salary
according to, I assume, labor agreements, and so that would be reflected on employees from the different departments, is that correct?
Through the Chair, Representative Galvin, that is correct.
So the salary adjustments that are reflected in the budget are only associated with state employees.
all of the educators within the state, that is done separately through the formula and
each district then would have to pay those salary adjustments.
Is that correct?
Through the chair, yes.
That is correct.
Okay.
And then when we look at, follow up if I may please, co-chair Josephson, when you look
has no adjustment though for any teacher salaries is that correct through the chair representative
Galvin so the state of Alaska provides funding through The Foundation formula to the school
districts they determine how they're going to allocate their funding for the purposes
that they are operating in their school district so that is a school-district decision it does
Any changes in contractual salary adjustments made by the individual school districts follow up
Thank you. So in the formula
So for this year is not changing and so there will be zero dollars in there
Specifically to adjust to any salary
Agreements that have been made within any of the 53 districts
Is that correct through the chair? That is correct. Yes. So follow-up if I may just to be clear on this then
each district is receiving
the same amount of funds through
the formula that is so that it's different depending on how many students are there and
they will be working with the saying number of dollars and
Unlike other departments
which have public employees, these public
employees operate within a different system because
they are not, they're a set aside, so to speak,
and the districts have to find the dollars to make ends meet
to afford any salary adjustment.
Is that correct? Through the chair it is incumbent upon the school district to determine what their
operations are going to be. You are correct. The base student allocation is a statutory item
that would need to adjusted through law legislation and that is not changing at this time.
or has not changed.
Thank you.
I appreciate you giving me that flexibility, co-chair Josephson, because I think a lot
of the public don't understand why it is that these teacher salary conversations are so
difficult for us, and I thank it incumbent upon us to help us understand that that's
because it's not built into our system.
It makes it very difficult for our districts to still deliver education in the same way.
So thank you.
Appreciate that.
Thanks for answering those questions.
Let's go to slide 16.
Slide 16, I just wanted to take a moment to to touch on the work that's being done under the two
administrative orders administrative order 359 addressing budget efficiency and then administrative
order 360 addressing regulatory reform.
I'm not going to read through these bullets, but I will talk to you about what is being
done in the state relating to both of these administrative orders.
So under the budget efficiency item, that is one that I am working very closely on.
In the office of management and budget, we have been able to establish what we're calling
a grants dashboard.
It is out there.
It's publicly available on our website and is a historical and live reference to the
grants that have been administered in the state who they're going to, the dollar amounts.
So it's just providing more public information or information to
the public on how the State is spending their money or administering grants across the
state.
Additionally, we have been working with several key departments in the state that administer permit and licensing programs.
in an effort to review the processes and technology that they have in place related to permitting
and licensing.
So we've got the Department of Natural Resources involved, the department of commerce, community
and economic development with their programs that the administer for licensing, we have
a identification of about just over 50 items
where we can make improvements in the state
to our licensing and permitting processes.
And then the second report is roadmaps
and how do we get from point A to point B
and where can we maximize or leverage resources
to streamline operations or modernize processes?
Under it, oh, sorry.
Ask at the end of this slide if you prefer, thank you.
So under administrative order 360, all of our state agencies are working through their regulatory reform packages and plans.
Those plans are intended to be posted online just at beginning of February.
The office of governor is working closely with the Department of Law on each department's regulatory package and
meeting those requirements of reducing their regulations in their departments.
This is, it's very eye opening to go into departments and to look at some of the things that we've done over the years as statutes and laws have been passed.
We establish regulations and those don't always get addressed.
They sit out there for years and years, and this is an opportunity for us to.
review those regulations that are in place
and make sure that we can reduce burdens to industry
or reduce burden to the individuals in Alaska doing business
and find ways to streamline that
we have and we make them more modern
and more, you know, get to a cycle
where we're going through and reviewing these on an annual basis.
Representative Galvin and then co-chair Aditya.
Thank you.
Thank for sharing these pieces.
Innovations that are happening and much more transparency for the public very much appreciate. I have a question around the dashboard
I appreciate that we're going to have better insight to the grants or rather the Public Will and all of us
On the grant piece, I can't help but to think about the $272 million coming in for the health transformation funds.
And I'm wondering if the intention is to include that as well on this dashboard.
Through the chair, Representative Galvin, yes.
So the dashboard that we have is all encompassing with grants statewide.
I do know that the Department of Health is working really hard to make sure that
Funding is transparent and how it's being allocated or awarded. They may have additional dashboards on their own
Website that provide that information if if somebody wants to go directly to it. Great. Thank you very much coach
Yes, thank you director Sanders. I really like the regulatory reform piece you've got here
And I think you know a lot of times folks in the public
look at our regulations sometimes and they get frustrated and so my question is if folks in the
public have suggestions on how regulations that are obsolete can be gotten rid of or just updated
or changed, what's the best way for them to provide their suggestion? Would it be to go through
get that to you or is there some mechanism that the public can also weigh in on this?
That's a great point, Chair Foster,
but Chair Foster.
So part of the process that the agencies are going through
is a public comment period.
So those individuals are welcome to go directly
to the departments.
I think you have a good point.
I thing we need to maybe set up something
that allows people to bring items to us,
whether that's through yourself or directly to myself,
for example.
So I will think on that and how we can make
any point an opportunity for people to point out
where we think we might have a burden.
And bring that back to our deputy chief of staff,
Balsma, who's leading that process.
Thank you.
Director, how would one calculate
whether a regulatory reduction was 15%
of an entire regulatory package?
How do you do that?
Chair Josephson, the departments are developing
a list to track how many are out there,
and come up with a methodology,
a methodology where they can calculate
what that reduction looks like.
But you couldn't, to meet the letter
of what's written in that sentence,
you could just say you had 100 regs and you removed 15
because they could have been simple to remove.
I mean, I could think of lots of examples.
There could be a regulation that requires
all hearings be recorded with a cassette recorder.
Well, no one uses cassette recorders,
so no-one cares about that regulation.
Do you get credit for getting rid of the cassette
recorder as part of your 15 percent?
Josephson, yes, they do.
I have one example that was given to me
is there is a regulations out there
You know go send a
Document, you know, we're in today's technology. We're an email and they're still using a telegram like
If they make that change to update and to revise their regulation
They should be able to count that as a a change
To their processes that impacts Alaskans, so
Okay
Representative Bynum. Thank you co-chair justice, and I think that was a very
Good question. I was thinking the same thing. And I guess the answer is we just don't know yet. We'll find out.
But question for the director through the chair, you know, I'm assuming that the intent of this
regulatory reform is to make things easier for Alaskans and if our goal is
to go through and remove old regulations like the example you just gave with telegrams or whatever,
I am not sure that I understand that that's really making it easier
And so I just want confirmation that our goal here is actually for us to be able to do business
in Alaska in a more efficient way and make us more business friendly, getting people
back to work, being more productive, and that's really what the goal is here, as opposed
to maybe going through and modernizing regulations, because those two things are not the same.
Through the chair, Representative Bynum, yes, you are correct.
The intent is to find ways where we have regulations in place that are burdensome, whether somebody
has to go through 15 different steps, or they have to start here, and then they
have go over here.
The example that I gave was merely just an example off the top of my head, so please
don't maybe use that as the shining light.
a quick follow-up. Yep follow up. Thank you. Is there an anticipation that once you go through
that processor as you're going through that process you'll be communicating not only to us but to the
public on the successes that you are finding and making it easier to do business in Alaska?
Through the chair. Yes, that is the intent.
Thank You. Cool Chairman.
Thank you, I just want to laud the efforts, you know, in my life I've come to the conclusion
that I can't be 100% on everything and I need to follow more of the 80% rule, which means
I am thus working at least in the right direction.
And I think that's what this does, whether or not we hit 15%, 10%, atleast we're trying,
we are going in a right-direction and it's a good thing, so thanks.
Are there, are there other items in amended self amountals that you feel comfortable sharing with us now or should we be patient?
Through the chair, Joseph saying excuse me, we're working through that process right now and
ensuring that we have the governor's approval to move forward with things, so I would prefer not to share at this moment.
Again, it's right around the corner.
very, very not very far away. So we'll make sure that we communicate with your staff to make
sure we get the documents transmitted and again I'm willing and happy to come before the committee
and walk through those once they're released. Great. Well I want to thank you Director Sanders
for your presentation. Our next house finance committee meeting is scheduled for Monday the 26th
I apologize if I don't change your Monday schedule, but go ahead.
No, thank you.
All right.
Shoot.
Now that we're at the end, I did have a couple quick follow-up questions.
I didn't want to weigh down the presentation here.
I apologise if it had missed it.
One of the big things we were hearing about when we talked about
supplemental and concerns and things that were in the budget and not in
the Budget, one of those had to do with the federal disparity test for
education.
We know that right now in The Budget there isn't that
There isn't that the funding set aside for that. Can you talk a little bit about what you anticipate seeing happening with that?
Assuming
Under the scenario that we we do not win the appeal
Director so through the chair representative Bynum at this point as you noted there there hasn't been a determination or a decision on that
Once a division is are you know conveyed to us that would be brought before the legislature to be incorporated into the budget
It's premature at that point. So therefore it's not included
Second question. Yes. Thank you Zafalte obviously we don't know where the appeal currently stands
but
It could be very well the case that we don't know about this until very late in the process
Maybe even to the end of this budget cycle. So I was just trying to get a better understanding of what
What the
The plan might be assuming that. We are not successful. I mean, it's a big
Impact so this isn't a minor thing. This is a Big Thing and so
If we're just gonna say that were going nor at
Or that because we don't know, we're going to ignore it until the very end.
I'm very concerned by that.
And through the chair, Representative Bynum, from my perspective, is the proposed budget?
There's a lot of work that's going to happen over the next several months on this.
I anticipate this committee will come out with a CS.
You guys, are they appropriators?
If you decide that that is what you want to put in or put something in,
that it is the discretion that you guys have.
At this point, from our perspective, it's premature without having a decision.
Appreciate that. And then one final. One final question.
Appreciate you bringing all the information here,
give us the highlight, as you just indicated,
we do have a lot of work to do.
I do a high level of concern
that when we look at our budget right now,
how we prioritize our spending
and where we're putting our money matters for Alaskans
and the thin capital budget that we have here
raises a big concerns.
And I know that our capital problems in the state
aren't gonna go away because we ignore them.
for us as a committee, it's something for
us to consider and communicate not only to
Alaskans but to the administration on how
important our capital program is and what we
should be doing to invest in Alaska. So
appreciate your time today. With that, again,
thank you, Director Sanders. Next meeting
Monday, the 26th, 130th at that meeting.
We'll hear the Office of Management and
Budget present on the Governor's F-Hort 26
I will adjourn this meeting at 2.51 p.m. meetings adjourned.