The Alaska House of Representatives approved a $6.2 billion draft state operating budget on Wednesday, paving the way for a significant deficit in the upcoming fiscal year starting July 1.
If this draft budget is combined with a capital budget draft passed by the Senate and a planned supplemental budget to address a current fiscal year deficit, total general-purpose spending could reach approximately $6.6 billion.
The Alaska Department of Revenue projects that general-purpose revenue for the upcoming fiscal year will amount to $6.1 billion.
To compensate for the financial shortfall, the House proposes utilizing funds from the Constitutional Budget Reserve, which serves as the state’s primary savings account.
“This is the best our body can do right now,” stated House Majority Leader Chuck Kopp, R-Anchorage.
Kopp emphasized that the House-passed budget is preliminary and may undergo changes when reviewed by the Senate.
An earlier iteration of the House budget had included $2.5 billion allocated for the 2025 Permanent Fund dividend, allowing for a payout of nearly $3,900 to each recipient.
In an effort to curb the expected deficit, the House has decided to cut the PFD spending to $950 million, which would provide a payout of around $1,400 per recipient.
“Some may argue that we should cut the fat. What fat is there? We are at the bone,” remarked Rep. Andy Josephson, D-Anchorage and co-chair of the House Finance Committee.
One significant increase in the budget is an $86 million addition to K-12 public school funding, representing a one-time $1,000 increase to the base student allocation, which is central to the state’s per-student funding formula.
In the previous year, lawmakers had approved a one-time increase of $680 to the BSA.
“I want to celebrate today … this is a pro-growth budget that puts our state on a path toward prosperity,” declared Rep. Zack Fields, D-Anchorage.
The vote on Wednesday split along caucus lines, with all 21 members of the House coalition majority, consisting of 2 Republicans, 5 independents, and 14 Democrats, supporting the budget draft.
In contrast, all 19 members of the House Republican minority opposed the plan, citing concerns over the projected deficit.
“This budget is a bunch of lofty promises. That’s what’s so heartbreaking about it, because everybody here knows they will not be kept,” voiced Rep. Sarah Vance, R-Homer, a member of the minority.
Vance and others within the minority contended that the budget is unsustainable, as it endorses a reliance on withdrawals from savings.
Although the CBR currently holds $2.8 billion, members of the minority expressed doubts about its sufficiency to cover next year’s anticipated deficit, which is expected to be even larger.
“This budget makes promises it can’t keep,” insisted Rep. DeLena Johnson, R-Palmer, also of the minority.
“It will probably be the other body that takes on the responsibility that we have given up,” she added, referring to the Senate’s responsibilities.
Senate leaders have consistently expressed their goal to pass a budget without resorting to savings.
“We’ve got to balance the budget without a CBR draw for this year and prepare for next year,” stated Sen. Bert Stedman, R-Sitka, co-chair of the Senate Finance Committee, during a Tuesday news conference.
As the Alaska Department of Revenue anticipates average North Slope oil prices to fall to $68 per barrel over the next fiscal year, a significant drop compared to the current year, the revenue available to the state is expected to decrease.
“To the fundamental core question: Can the Senate balance the budget at $68? The answer is yes. Is it going to be fun, without any difficult decisions? No,” concluded Stedman.
When asked about potential cuts, Stedman indicated that the specifics are yet to be decided.
“Everything’s in play,” he remarked.
image source from：https://alaskapublic.org/news/politics/2025-04-17/alaska-house-approves-draft-budget-with-large-deficit-and-estimated-1-400-dividend
