House Finance reviews governor's FY27 amendment packages, flags DOT projects and labor contract costs

On April 27 the Alaska House Finance Committee heard Lacey Sanders, director of the Office of Management and Budget, present two batches of the governor's amendments to the FY27 budget, transmitted April 8 and April 23. Sanders told the committee the transmitted packages had a modest net effect on the governor's budget's fiscal summary for unrestricted general funds: a $8,400,000 reduction in designated general funds and an overall $2,000,000 increase in all funds.

Sanders outlined operating changes including a $50,000 federal receipt increase for the Office of Public Advocacy to support court-appointed special advocates (CASA) and a fund-source reconciliation in the Department of Commerce, Community and Economic Development tied to the Railbelt Energy Fund. She said the Railbelt item initially reflected a proposed $1,300,000 use of rail-belt energy funds but that, after reconciliation with finance and administration, the allocation netted to a zero change in unrestricted general funds for FY27.

The director described negotiated bargaining adjustments for the Public Safety Employee Association that increase salary and health insurance costs, plus an associated fund-source shift for rural trooper housing (troopers will no longer contribute toward housing costs under the new bargaining terms). Sanders also told members the administration is requesting $924,000 to cover rising contractual dispatch costs in the Mat-Su and Kenai regions.

Sanders said the governor's university salary provision in the December budget included a 3% increase for noncovered University of Alaska employees but that, following unionization votes for some groups, those employees' pay adjustments must now proceed through collective bargaining. "Once that outcome is determined by the negotiations and it's finalized and brought forward by the legislature, then it would be included in the budget for a payment," Sanders said.

On capital items Sanders summarized the April 8 STIP-related submissions and asked members to consult the project lists included in the committee packet. Dom Pinone, director of program management and administration at the Department of Transportation and Public Facilities, told the committee the FY27 capital allocations include federal funds for a portion of the Cascade Point ferry terminal and that the new STIP shows a significant increase for the West Susitna access project and associated bridge work. Pinone said the STIP portion for Cascade Point primarily covers in-water work and completion of dolphins and terminal elements and that permitting delays have affected project timing.

Committee members identified a discrepancy between documents on Cascade Point: the STIP cover discussed at the dais listed a $49,000,000 federal allocation while backup materials showed $39,200,000. Pinone said he would refer technical mile-point and backup-document questions to the project manager; Sanders said OMB would follow up to reconcile the two figures. Pinone estimated the state match for the Cascade Point federal request would likely be about 20% (roughly $10 million).

Representatives also questioned West Susitna program scope. Pinone said the amendment increases the project from roughly $84,000,000 to about $222,000,000 and described Stage 2 as containing two child stages; DOT expects to be able to obligate federal funds in FY27.

Sanders closed the presentation by outlining supplemental and special appropriations included in the amendment packets: operating supplementals totaling $1,750,000 UGF (about $2,600,000 total funds) and two department-of-law-related items for settlements' $378,000 for Morris O. Johnson Jr. v. Department of Transportation and Public Facilities and $1,200,000 for Hari v. Department of Family and Community Services/Office of Children's Services. She also said the state received an $819,000 federal Help America Vote Act award with a required $164,000 match; the operating action capitalized the fund and capital spending of $1,000,000 was included for election security. Finally, a re-appropriation of approximately $272,000 remains for deferred maintenance at the Palmer Alaska Pioneer Home.

The committee asked DOT and OMB to provide follow-up briefings and clearer backup documents on Cascade Point and West Susitna; Sanders and Pinone agreed to provide additional details after the meeting. Co-chair Shrogy closed the session and reminded members the committee will take public testimony this afternoon on HB261 (education funding) and HB271 (royalty modification).