Senate Finance hears OMB overview of governor's FY26 vetoes as legal dispute over reappropriation surfaces
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Summary
The Office of Management and Budget told the Senate Finance Committee the governor's FY26 vetoes total about $122 million; the hearing focused on a legal dispute over whether the administration can reappropriate funds the legislature repealed and lawmakers urged the administration to hold spending on disputed items.
Lacey Sanders, director of the Office of Management and Budget, told the Alaska Senate Finance Committee the governor enacted approximately $122,000,000 in line-item vetoes to the FY26 budget and that changing oil prices have shifted the state's revenue outlook, leaving a projected shortfall of roughly $50,000,000 after those vetoes.
The dispute centered on two capital-appropriation lines the legislature had repealed and the administration vetoed. Chair Hoffman told the committee he considered those dollars no longer appropriated and asked the administration not to spend them "until this issue is clarified." Sanders said the administration considers those items subject to the governor's line-item veto and has shared the legislative-legal opinion with the attorney general for review. "We do stand by, that those items being vetoed," Sanders said.
Senator Stedman and Chair Hoffman pressed for a prompt legal determination and urged the administration to refrain from spending the disputed funds so projects dependent on federal match and planned contracts will not be delayed by uncertainty. "I would request that those dollars not be spent until this issue is clarified," Chair Hoffman said, noting the request would signal good faith between branches.
The committee discussed the practical stakes: senators said contractors and members of the public have raised concerns about stalled projects and the potential for other states to capture federal funds if Alaska cannot provide necessary matching money. Sanders said OMB will follow up and consult the attorney general and governor on next steps.
The committee did not take formal action on the legal question at the hearing; members asked for written follow-up on which appropriations were affected and what accounting balances (lapsing appropriations and reappropriations) are available. Chair Hoffman also asked for an immediate accounting hold on the specific lines until the legal status is clarified.
