Capitol Report: Wrapping up the 2025 Legislative session

I have tried my best to support all my constituents over the years whether you voted for me or not.  I appreciate the great honor it has been. I’m not quite done yet and will preside as Senate President over  the 2026 session where I have had the pleasure of leading a bi-partisan Senate Majority for an unprecedented eight years (2009-2014 and 2023-2026). 

It is my pleasure to endorse Representative Louise Stutes who will be running for the Senate after my term is up. She has enormous experience in the House Leadership as Speaker and Rules Chair. Louise has been a colleague and friend for many years and will well represent our district as she moves to the Senate. 

Again, Thank you for your support, understanding, and patience with me over the past 25 soon to be 26 years. 

EDUCATION FUNDING

I joined a bipartisan group of legislators to override the Governor’s veto of HB 57 Base Student Allocation (BSA) Increase of education funding in a joint session,  by 46 yeas to 14 nays.  Increasing the BSA improves every form of public education in Alaska, including correspondence programs, which serve Alaska’s growing homeschool student population. The bill also incorporates policy initiatives to support Alaska’s charter schools, directs districts to create policies for cellphone use, and establishes an Education Task Force to analyze the state of public education funding and the current accountability provisions for schools. Though the $700 BSA increase is now law, the Governor could still reduce funding for education through a line-item veto in the operating budget.  Should that happen, the legislature would need 45 votes to override a budget veto.  I do not anticipate a vote on this until January. 

HB 57 also provides $22 million for Alaska Reading Act grants and $10 million in career and technical education funding that only becomes effective if Senate Bill 113 is enacted. SB 113 E-Digital Business Corporate Income Tax, also passed both bodies.  Once transmitted to the Governor, he will have twenty days, excluding Sundays, to either veto, sign the bill, or let it become law without his signature. I believe there is a strong possibility that the Governor will veto this bill.  The legislature would need 45 votes to override a veto because it is a revenue raising bill. 

FY26 OPERATING BUDGET

The Senate and House passed the Fiscal Year 2026 (FY26) operating budget totaling $5.8 billion Unrestricted General Funds (UGF). Faced with a drastic revenue loss from declining oil revenue, many hard decisions were made for spending cuts. For perspective: this budget is $1.7 billion less than the budget proposed by the Governor back in December.  Both bodies worked diligently to find a balance while providing for essential services like AMHS, public safety, fisheries management and ensuring the PFD for future years.  The budget does provide a $56 million surplus as a buffer for next year when we expect the deficit to be between $300 to $600 million due to declining oil prices, state employee salary increases, and unknown federal funding cuts.  As well, to help balance the FY26 budget, the legislature voted to use some one-time funding sources which will not be available next year. 

FY25 SUPPLEMENTAL BUDGET

The operating and capital budgets also included $200 million for current year (FY25) supplemental items including fire suppression, disaster funding, Alaska Seafood Marketing Institute (ASMI), AMHS maintenance and overhaul on vessels and at terminals, Medicaid shortfall, and the VPSO program. The Senate voted to use our Constitutional Budget Reserve (CBR) savings account to cover these items, but that vote failed in the House.  Instead, the supplemental items will now be paid using $100 million from the unrestricted balance of the Alaska Industrial Development and Export Authority (AIDEA) and the remaining coming from the Higher Education Investment Fund (HEIF). It is our intention that the money borrowed from HEIF would be paid back early in 2026.

FY26 CAPITAL BUDGET

The Senate and House passed a FY26 Capital budget that totals $161 million UGF.  Much of these funds are used as matching for over $2.38 billion in federal funding for our state. This is almost a 50% reduction from the Governor’s proposed budget. Unfortunately, there will be no funds available this year for community projects through the state CAPSIS grant program.  The capital budget includes over $1 billion for transportation and infrastructure projects, more than $500 million for water and sewer improvements in rural communities and prioritizes funding for deferred maintenance backlogs at our schools, university, courts and public facilities, including $38 million for School Major Maintenance projects.

LEGISLATION THAT PASSED BOTH THE SENATE & HOUSE

Several good pieces of legislation passed both bodies this year and head to the Governor next for his signature. These include Seafood Task Force bills HB 116, Commercial Fishing Insurance Co-Op which allows the commercial fishing industry to establish an insurance pool and SB 156, AK Commercial Fishing  & Agriculture Bank/Loans which allows the AK Commercial Fishing & Agriculture Bank to make loans to persons involved in the state’s commercial fishing industry.  Two other bills improve access to affordable childcare through SB 95, Child Care Assistance Grants and  SB 96 Child Care Tax Credits.  SB 97 Big Game Guide Permit Program establishes a big game guide concession program on state lands. SB 133 Insurance; Prior Authorizations requires a process for prior authorization that is easily understood by health care providers and their patients and establishes time frames for approvals. 

LEGISLATION TO CONTINUE NEXT YEAR

The legislature will continue work on bills next January including: HB 78 Retirement Systems, which would bring back a defined benefit pension program for state employees, SB 64 Elections which strengthens our elections process, and HB 16 Campaign Finance which reinstates campaign contribution limits and allows for adjustments based on the state consumer price index rates going forward. SJR 14/HJR 10 Constitutional Amendment: Permanent Fund consolidates the Permanent Fund’s two account structures into one and constitutionally limits the draw from the Fund to 5% of Percent of Market Value (POMV). The endowment model structure guarantees a sustainable POMV draw to support state services and protects the Fund by preventing the legislature from making any additional ad-hoc draws. 

I will continue work on my two bills: SB 24 E-Cig/Tobacco which would increase the minimum age to buy, sell, and possess tobacco and E-cigarettes from 19 to 21 years old, and places a retail sales tax on electronic smoking products (ESPs) and SB 23 Civic Education which adds civics curriculum and assessment into public school statutes.   

New revenue bills include: SB 109 Permanent Fund — POMV Split that rewrites the PFD formula to a 75/25 POMV split to help stabilize the state’s revenue and budgeting, SB 92 Corporate Income Tax — Oil & Gas Entities which restructures the state corporate income tax so that it is applied equally to all companies in Alaska including S corporations, and SB 112 Oil & Gas Production Tax which reforms Alaska’s per-barrel oil tax credits to create a more fair and sustainable tax structure for the state. 

Additional Seafood Task Force bills to continue next year include: SB 130 / HB 129  Fisheries Product Development Tax Credit which amends the tax credit program qualifiers to include all species of fish and shellfish, SB 135 Refund of Fish Business Tax to Municipalities which increases a municipality’s share of fish tax revenue for ten years, and SB 181 Employment Information Disclosure which allows the Dept. of Labor and Workforce Development to share information with other state agencies and the University of Alaska to promote program evaluations, educational outreach, and improved policy research and decision making for the seafood industry.

Please keep in touch!

I appreciate hearing from you about legislation, budgets and other state issues. Please do not hesitate to reach out to my office if we can be of assistance to you with state agency matters.  Should we be called in for a special session or if any other important issues come up, I’ll be sure to update you in another Capitol Report.  For now, I hope you all enjoy a fun and safe summer!

Sincerely,

Sen. Gary Stevens

District C

Sen.gary.stevens@akleg.gov

Phones:

907-465-4925 (Juneau)

800-821-4925 (toll free) 

907-235-0690 (Homer)  

907-486-4925 (Kodiak)