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Governor to introduce fiscal plan, releases proposed 2027 budget
Kay Cashman Petroleum News
In January, Alaska Governor Mike Dunleavy will introduce a fiscal plan that he hopes the Alaska State Legislature will act on.
"Raising taxes on the people and businesses that are already here is anti-growth," he noted in a Dec. 11 press release. "Instead, my fiscal plan will focus on predictable revenues built on a stronger private sector, restraining the growth of government, and capitalizing on the many incredible opportunities in front of us. My plan will also incentivize diversifying the economy so that we're not just reliant on oil."
Dunleavy's proposed budget is roughly $16.8 billion.
The Alaska Department of Revenue forecasts that the state will receive $15.3 billion in total state revenue in FY 2027, with $6.2 billion of Unrestricted General Fund Revenue available for appropriation by the legislature. Given declining revenue forecasts and increased costs driven by inflation, the governor's proposed budget fully funds statutory obligations while restraining discretionary spending.
However, the budget will require drawing $1.5 billion from the state's main savings account, the Constitutional Budget Reserve, which currently has a balance of approximately $3 billion.
For decades, politicians have talked about the need for a long-term fiscal plan to stabilize state finances. Yet time and time again, those conversations have ended with no action. This inaction is why Alaska has the most unstable fiscal approach in the country, the governor said.
"Alaska's future is bright, but we have to have discipline and be forward-thinking now so that our short-term budget challenges don't turn into long-term burdens on Alaskan families and businesses. If we make the right choices today, we can lay the foundation for prosperity for Alaska for decades to come," the governor said.
Key items in the governor's proposed FY 2027 budget include:
* Full statutory funding for K-12 education
* Full statutory Permanent Fund Dividend ($3,650 per Alaskan)
* Continued support for public safety
Petroleum revenue and earnings from the Permanent Fund make up 90% of the state's Unrestricted General Fund revenue. This is the portion of funds that is available for the legislature to appropriate for any purpose.
The Alaska Department of Revenue forecasts the State of Alaska will receive $6.21 billion in Unrestricted General Funds in Fiscal Year 2027.
More on fiscal plan "Even before my election as governor, there have been ongoing discussions about creating a fiscal plan that provides certainty in revenue and budgeting and not just again a tax and spend plan," the governor said.
"Throughout my tenure, I've exercised fiscal restraint and encouraged the legislature to create a sustainable fiscal plan. I'll once again be calling upon the legislature to join me in finally creating and implementing a
sustainable fiscal plan that moves Alaska forward, once and for all. It's certainly time to act.
"That fiscal plan ... does not rely on any singular lever but focuses on creating a business climate that brings new investment and great jobs. Developing new opportunities to make the most out of our natural resources. Ensuring key projects such as the Alaska LNG project keep moving forward growing the permanent fund, putting measures in place to make sure any growth of state government is small and responsible, and creating a pro-investment environment to assure Alaska can compete with other states for investment capital.
"This is how we protect the PFD, create jobs, and avoid blowing through our savings over the long haul. This is how we diversify and grow the economy and leave our children a much better Alaska.
"If we do this, government will be effective and efficient. Wealth will be generated through resource development and other industries, and the PFD will ensure that Alaskan share in the wealth created," the governor said.
"This year's budget deals with the challenges in front of us," he said.
"The long-term plan I'm rolling out will, however, help us take advantage of the opportunities ahead.
"I'm confident about Alaska's future. We have new oil coming online, great progress on the gas line, and huge potential in our minerals and forests, as well as untapped opportunity in the future AI, data, and digital world.
"At the end of the day, the state government is here to meet the needs of individual Alaskans. Alaskans are the welders, the fishermen, the teachers, the small business owners and families who make this state work and make it great.
"My responsibility is simple. Use Alaska's dollars wisely and make fiscal decisions that protect the freedom and opportunity that define Alaska. Not more unnecessary government, not more bureaucracy, but creating the space for Alaskans to build their own success.
"As we tighten the budget and put a real long-term fiscal plan in place, I'm confident in one thing. Alaskans will carry the state further than any government agency ever could," the governor said.
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