State budget fight, oil-price drop leave capital projects at risk; education bill draws veto threat

Wendy Chamberlain, the committee’s legislative consultant, told members May 1 that falling oil prices and competing spending priorities in Juneau have created a roughly $600 million shortfall in the state operating budget and are placing capital projects at risk.

Chamberlain said the legislature is currently balancing on an assumption of $67 per barrel of oil; the governor asked leadership to balance at $62 per barrel, but leadership held at $67. She said the senate passed an education bill that would increase the Base Student Allocation (BSA) by $1,000 and that the governor’s office had publicly signaled it would veto the bill unless it is amended to address policy concerns. “It does nothing to support charter schools or has no accountability,” she said, summarizing the governor’s reaction.

Why it matters: Anchorage’s capital requests could be reduced if the legislature reclaims unspent capital money to pay for operating increases. Chamberlain pointed out that the legislature has already repealed capital appropriations that were not yet spent, removing amounts such as $36,000,000 for a crossing project and $10,000,000 for Nome’s port; she said that if Anchorage port money had remained in the capital budget it could have been reclaimed as well. “It’s a lot of posturing right now going on down here,” she said.

Chamberlain told the committee that the house planned to put an operating budget on the floor but had not been able to do so; she said some leaders signaled they might move forward without the other chamber and that a special session was possible. “If they don't get it over next week, the senate has signaled we'll just go ahead without you,” she said.

Committee members asked about the capital budget outlook for Anchorage. Chamberlain said the near-term prospect for new capital funding is slim: “Anybody looking for money this year, I'd give them a 10% chance of getting any. I don't think there's going to be any money in that capital budget other than required federal match.”

The committee did not take a formal vote on any state budget measure during the meeting; members asked staff to continue monitoring developments in Juneau and to circulate urgent action requests if they arise.

Ending: Committee Chair Member Riley thanked Chamberlain and moved the meeting onto federal updates and other agenda items.