Senate Finance Committee adopts committee substitute for House Bill 89 supplemental budget

ANCHORAGE — The Senate Finance Committee on March 2 adopted the committee substitute for House Bill 89, the supplemental budget, after a staff presentation and brief questioning from members.

"I move that the finance committee adopt the committee substitute for House Bill 89 Finance 34 before the committee as our working document," Senator Stedman said when offering the motion. Committee staff then walked members through an amendments packet showing changes from the governor's supplemental requests and the other chamber's version.

Pete Eklund, staff to Senator Hoffman and the finance committee, told members the CS incorporates a number of line-item adjustments. "It's a $2,000,000 reduction in the Medicaid projections," he said, and the package adds $1,250,000 for Village Public Safety Officers (VPSOs). A $263,236 request to reclassify positions in the Department of Revenue using charitable-gaming receipts was denied for the supplemental and deferred to the FY2027 budget, Eklund said, because it was judged a new request rather than an unforeseen expense.

Eklund outlined statewide items and contingencies: the CS contains fire-suppression funding, and he described a conditional $35,000,000 appropriation to the disaster relief fund that would be triggered if Alaska's appeal to FEMA fails and a 25% state match is required rather than a requested 10% match. "This is conditional then. It's conditional language," Senator Hoffman said during that exchange; Eklund confirmed the conditional nature.

The presentation noted a pending OMB amendment for fire suppression: Eklund said OMB Director Sanders intends to submit an amendment for an additional $55,000,000 for fire suppression that was not filed by the day-30 deadline.

Eklund also described a transfer from the Constitutional Budget Reserve (CBR) to the Higher Education Investment Fund (HEIF). The CS includes a $129,600,000 transfer to HEIF that some members questioned as a timing and fiscal-impact issue. "I guess I'm curious if we can't do something to try and pull this down a little bit," Senator Kauffman asked, suggesting the committee consider payment timing or a phased approach to reduce the immediate draw on the CBR.

Committee discussion ranged from technical mechanics of account balances to broader revenue assumptions. Senator Stedman and others noted higher-than-expected oil prices could reduce the projected need to draw on the CBR; the packet Eklund displayed estimated a potential CBR impact of roughly $530.8 million if the listed items are realized.

After the presentation and questions, Senator Hoffman said he would remove his objection to adopting the CS; with no further objection, he declared the committee substitute adopted.

The committee set an amendment deadline for HB89 at 4:30 p.m. the same day and adjourned until a 1:30 p.m. afternoon session when it will take public testimony on HB78, the retirement system defined-benefits option.

What happens next: The CS will be available for amendments up to the announced deadline; staff and members said additional OMB amendments are possible before final enactment, and the package includes conditional language tied to federal disaster-match outcomes.