Senate Finance reviews $543.7 million FY2025 supplemental; $171.1 million deficit would draw from CBR

The Alaska Senate Finance Committee on Feb. 4 received a presentation from Lacey Sanders, director of the Office of Management and Budget, on the governor’s FY2025 supplemental budget requests totaling $543.7 million, of which $97.5 million is unrestricted general funds. Committee Chair Stedman led the session in Juneau.

The presentation covered agency operating supplementals of $83.2 million in unrestricted general funds and $448 million in all funds, statewide items of $14.3 million UGF (about $15.1 million all funds) and capital supplementals totaling $71.5 million in all funds and $0 in general funds. “With the addition of the supplementals being presented today, it brings the overall deficit to $171,100,000 and that again is proposed to be drawn from the state's constitutional budget reserve, the CBR,” Sanders told the committee.

Why it matters: Committee members pressed OMB for detail on which items are time‑sensitive and which might be deferred into the FY2026 budget. Chair Stedman and members asked about options to avoid a three‑fourths legislative vote required to draw CBR funds and requested analysis of oil‑price or revenue scenarios that could close the deficit without dipping into the CBR.

Major items highlighted

- Medicaid: Sanders said updated projections require supplemental authority of roughly $14.2 million in state funds and approximately $214 million in federal receipts to align FY2025 spending with Medicaid projections provided in December.

- Department of Corrections: The request includes roughly $3.9 million in unrestricted general funds for supervisory standby pay tied to recent bargaining agreements and an additional $195,000 to fully fund Dillingham jail operations; OMB said those items cannot be moved into FY2026. Committee members and OMB staff discussed an outstanding federal inmate‑days reimbursement issue that may result in a future amendment for FY2026.

- University of Alaska: OMB and the university worked to reclassify receipt authority. Sanders said the change moves some amounts from designated general funds/tuition to statutory designated program receipts to reflect non‑federal grant awards and tuition receipts more accurately.

- Capital items: The presentation included $65 million in federal receipts for the Alaska Oil and Gas Conservation Commission to address orphan‑well plugging and mitigation (a $40 million competitive performance grant and a $25 million formula grant), and $6.5 million for unanticipated Alaska Marine Highway vessel repair cost increases (Columbia, LeConte and Kennicott projects).

- Other items: The supplemental includes $4 million for ongoing litigation expenses in a child‑welfare class‑action (discussed separately by the Department of Law), $2.7 million for judgments and settlements, and a $3 million reappropriation from a DOT capital project into the disaster relief fund.

Committee questions and follow up

Members asked OMB to identify items that could be deferred to FY2026 to reduce reliance on the CBR and requested an updated analysis showing the oil‑price and volume assumptions that would be necessary to avoid the CBR draw. Senators pressed for updates on LIHEAP (low‑income home energy assistance) and other public assistance backlogs; Sanders said she would follow up with the Department of Health and Social Services and report back to the committee.

Committee members also requested a forthcoming briefing from the Department of Revenue on the state’s debt profile and the mechanics and net effects of recent bond refundings described in the supplemental.

The committee took no votes during the Feb. 4 presentation; members scheduled follow‑up requests and additional briefings.