State senate approves bare-bones state construction budget; Mat-Su Republican senators applaud fiscal restraint

The state Senate passed a capital, or construction budget and sent it to the state House.

The vote endorsing the bill was unanimous and the Senate’s Democrat-led coalition Majority was even praised by Republicans including Mat-Su senators for developing a lean, bare-bones capital spending plan amid the state’s lean times.

“It is the smallest FY26 Capital Budget since the Covid recession.It is a challenging year with many financial barriers, however, the Senate Republican Caucus successfully collaborated with the Majority, the Governor’s Office of Management and Budget and the House to craft a FY 2026 Capital Budget that best reflects the needs of constituents,” Senate Republicans said in a statement.

“The Senate Finance Committee worked diligently to create a capital budget that provides for Alaska’s necessities and allows for flexibility to receive federal dollars, while also reflecting the current fiscal constraints our state is facing,” and Sen. Mike Cronk (R–Tok/Northway), a member of the Senate Finance Committee.

The legislature received $3.2 billion in requests from communities from across the state. All were denied by the Senate Finance Committee, Cronk said.

The Senate Finance Committee denied 16 projects from the executive branch, multiple projects were reduced in scope to create a total $10.4 million in cuts, and multiple reductions and eliminations were made to state departments.

The budget addressed requests for deferred maintenance in schools, matched federal dollars in order to maximize the state’s ongoing projects capacity, and dedicated funding to essential services including energy development, public safety, judiciary, and infrastructure.

Senate Minority Leader Sen. Mike Shower (R – Wasilla) said: “With a budget already several hundred million dollars in deficit and shrinking oil tax revenues, the Senate Republican Caucus appreciates the fair and balanced approach the (Majority-led) Senate Finance Committee used to create the capital budget.”

“It was refreshing to see old and stalled projects be scrubbed to reappropriate money into current projects. This was a necessary step considering the tight monetary situation Alaska faces,” Shower said.

Highlights from the FY26 Capital Budget include:

• $36 million for deferred maintenance, including:

• $19 million for K-12 school major maintenance

• $5 million for University of Alaska facilities

• $1.4 million for Mount Edgecumbe High School Maintenance

• $750,000 for judiciary facility needs

• $10 million for statewide emergent repairs

• 26 new capital projects totaling $89 million, including:

• Fairbanks Public Safety Evidence Facility remodel, replacing unsafe mold-ridden storage currently in use

• Renewable Energy Fund projects in Pelican, Naknek, Skagway, Kwethluk, Quinhagak, and Nenana

• Alaska Marine Highway vessel maintenance ($26 million in fare revenue)

• Dalton Highway (Haul Road) maintenance

• Port electrification for cruise terminals

• Courthouse security upgrades and law enforcement equipment purchases

• IT modernization across several departments (Administration, Law, Revenue, Labor)

• Rental and senior housing assistance, including support for domestic violence victims

• Reappropriation of $47.1 million in unused capital funds from prior projects

• Reallocation of $20.9 million in unused federal highway and airport match funds

The process of reappropriation involves finding leftover or unspent appropriations from previous capital projects, many of them built.This year, however, some funds approved for transportation projects in Juneau and Nome that are not underway or are otherwise not yet committed were tapped by the Senate Finance Committee.