House Finance adopts committee substitute 1 as working drafts for FY26 operating and mental health budgets

Co-chair Josephson opened the March 12 meeting of the House Finance Committee and said the committee would adopt committee substitutes for House Bill 53 and House Bill 55 as working documents.

Committee staff and Legislative Finance Division walked members through Committee Substitute 1 (CS1), which the committee adopted as its working draft for both the FY26 operating bill (HB 53) and the mental health operating bill (HB 55). Staff reported statewide totals in CS1 of $14,557,770,900; unrestricted general fund (UGF) of $7,508,463,300; designated general funds of $999,253,600; other state funds of $1,972,756,000; and federal receipts of $4,077,298,000. Staff said CS1 increased statewide totals by $44,993,900 (0.3 percent) from the government-plus baseline and raised UGF by $41,906,600 (0.6 percent).

The substitute incorporated subcommittee changes and multiple governor amendments while deleting language the committee said would undercut legislative intent. Staff explained one deletion removed language that would have authorized the Office of Management and Budget to transfer up to $5,000,000 among appropriations within a department for facility operations and maintenance, a change staff said could weaken legislative direction tied to Alaska Statute 37.07.020(e). Alexander Schroeder, staff to the committee, summarized the deletions and technical changes and identified items carried forward as placeholders—including inclusion of a Department of Agriculture transaction summary and a governor-initiated appropriation that may need technical fixes.

The committee also reviewed several technical and policy edits in CS1: removal of a cost-of-job-reclassification section (allowing departments to request supplements next year), a multi-year fisheries appropriation adjustment, restored statutory reporting language about executive-branch bonus letters of agreement, a clarification of AlaskaCare actuarial funding assumptions, technical fixes to power cost equalization references, formulaic changes tying certain allocations to a percentage of boat receipts, and a proposed appropriation from the abandoned motor vehicle fund for vehicle removals. Alexi Painter of the Legislative Finance Division described one technical change as a formula fix, saying, "The governor's language said simply a sum estimated to be 180,000 not to exceed [another amount] without giving a formula ... so this just gives a formula that arrives at nearly the same number." Schroeder also flagged a governor amendment that would reappropriate $225,000 from an emerging energy technology fund that staff said may no longer legally exist without additional technical fixes.

After committee discussion and a brief objection for the purpose of explanation, members removed their objections and, with no further opposition on the record, adopted CS1 for HB 53 and CS1 for HB 55 as the committee's working drafts.

The committee will take public testimony on the working draft and other materials at future meetings.

Why it matters: CS1 sets the committee's working numbers for two major operating bills. The deletion of the OMB transfer authority and other language edits change how agency facility funds and several appropriations would be treated in FY26; placeholders and technical fixes noted by staff indicate some items may change in subsequent substitute versions.