Senate slashes millions from schools, university and health care

If the Alaska Senate gets its way, Alaskans can expect fewer teachers, less ferry service, fewer criminal prosecutors, fewer Alaska State Troopers and a much lower Permanent Fund Dividend in 2018.

On Thursday night, the Senate formally voted 15-5 in favor of a spending plan that cuts $276 million from the state’s operating budget. According to figures from the Legislature’s nonpartisan Legislative Finance Division, schools spending will be cut $55.3 million from the current fiscal year. Health and Social Services will lose $49 million. The University of Alaska will lose $34.5 million.

One thing that wasn’t cut at all was the state’s subsidy of oil and gas drilling. Drillers are expected to be eligible this year for more subsidy payments than the state earns from production taxes.

The annual Permanent Fund Dividend, the most expensive line in the state budget, will take the biggest hit.

Without action by the governor or Legislature, the dividend is expected to be about $2,300 this year. The Senate’s budget takes that to $1,000.

“These are trying times financially for the state of Alaska,” said Sen. Lyman Hoffman, D-Bethel and the member of the Senate Majority that drafted the budget.

Hoffman said that as bad as those cuts are, Alaska’s savings accounts are running low, and failing to cut would lead the state deeper into recession.

“The alternatives of doing nothing are even more scary than any of us could even imagine,” he said.

Alaska has a $2.8 billion deficit, and the Senate’s proposal is one of two in the Legislature to address that issue. In the House, lawmakers have proposed a budget with much fewer cuts — including to the dividend —but the House’s proposal would be paid-for with an income tax and some of the earnings of the Permanent Fund. The Senate, meanwhile, is planning years of budget cuts and the use of the Permanent Fund as well.

Even if the Senate’s plan is put into place this year, Hoffman warned, Alaska will still have a $685 million deficit and require additional cuts. The House’s plan would eradicate the deficit within three years with no additional cuts.

Voting against the proposal Thursday were all five members of the Senate’s Democratic minority and Republican Sen. Mike Dunleavy, R-Wasilla, who defected from the majority to vote “no.”

Due to a voting error, Dunleavy’s “no” vote was not tallied in the final sum.

Sen. Bill Wielechowski, D-Anchorage and a member of the minority, blasted the spending plan as “the absolute most regressive tax” on Alaskans because it cuts the dividend equally for rich and poor recipients, and it asks nothing from out-of-state workers.

“We’re not asking them to pitch in a dime,” he said.

Sen. Bert Stedman, R-Sitka, said there’s no doubt that lawmakers would prefer to not cut the budget, but they have no choice.

“There’s a little bit of pain in it for everybody in every region of the state,” he said.

Before the final vote, minority Democrats offered 20 amendments on various portions of the budget. Only two were accepted. Both restore funding to schools programs and amount to less than half a million dollars in total.

All substantial amendments were defeated, including attempts to restore the dividend to its full amount and to reverse Gov. Bill Walker’s last-year veto of half the dividend. The majority refused to allow a vote on either amendment; both were tabled.

Thursday’s vote allowed the Senate to have its say, but it will not have the final word. The budget next returns to the House, which is expected to reject it outright.

When that happens, the House and Senate will form a small committee to iron out the differences in the proposals. That process that will be complicated by the fact that the budget bill only talks about how money will be spent — it says little about where that money will come from.


• Contact reporter James Brooks at james.k.brooks@juneauempire.com or call 419-7732.


More in News

The Norwegian Bliss arrives in Juneau on Monday, April 14, 2025. (Jasz Garrett / Juneau Empire file photo)
Ships in port for the week of May 18

This information comes from the Cruise Line Agencies of Alaska’s 2024 schedule.… Continue reading

Senate President Gary Stevens, R-Kodiak, prepares to open the Alaska Senate’s floor session on Friday, May 2, 2025. (James Brooks/Alaska Beacon)
Senate President Gary Stevens to retire; House Rep. Louise Stutes announces run for seat

At least one other member of Senate’s bipartisan majority is expected to not seek reelection in 2026.

Juneau Assembly members discuss a proposed increase in the mill rate for the fiscal year starting July 1 during a meeting of the Assembly’s Finance Committee on Wednesday, May 21, 2025. (Mark Sabbatini / Juneau Empire)
Increasing mill rate to 10.24, rather than 10.19 in earlier versions of city’s budget, gets OK from Assembly

Extra costs in budget, loss of federal funds cited for higher increase from current rate of 10.04 mills.

Rep. Calvin Schrage, I-Anchorage, speaks to the Alaska House of Representatives on Friday, April 25, 2025. (James Brooks/Alaska Beacon)
At adjournment, Alaska Legislature leaves elections overhaul, campaign finance bills undone

House Bill 16 and Senate Bill 64 could be part of a wave of big legislation that passes early next year.

State Sen. Lyman Hoffman (D-Bethel) exits the Senate Chambers after the Senate on Tuesday, May 20, 2025, adjourns until next January. (Mark Sabbatini / Juneau Empire)
Alaska Legislature adjourns a day early in ‘smoothest ending in 20 years’ following months of budget battles

Lawmakers speed through final votes on veto override on education funding bill, budget with $1,000 PFD.

Rep. Andi Story (D-Juneau), Rep. Rebecca Himschoot (I-Sitka), and Rep. Sarah Vance (R-Homer) watch the vote tally during a veto override joint session on an education bill Tuesday, May 20, 2025. (Jasz Garrett / Juneau Empire)
Legislature overrides governor’s education veto in moment of ‘courage’

Supporters of bill raising BSA by $700 stand together as session nears adjournment.

(Michael Penn / Juneau Empire file photo)
Police calls for Sunday, May 18, 2025

This report contains public information from law enforcement and public safety agencies.

Visitors walk along the downtown cruise ship dock on Wednesday, May 14, 2025. (Mark Sabbatini / Juneau Empire file photo)
Initiative to limit number of cruise ship passengers, shorten season fails to get signatures to make ballot

“Enthusiasm for this just wasn’t there in the same way as Ship-Free Saturday,” author of proposal says.

Gov. Mike Dunleavy speaks to reporters about his decision to veto an education funding bill earlier this session at the Alaska State Capitol on Thursday, April 17, 2025. He vetoed a second such bill on Monday. (Jasz Garrett / Juneau Empire file photo)
Gov. Dunleavy vetoes second bill increasing education funding; override vote by legislators likely Tuesday

Bill passed by 48-11 vote — eight more than needed — but same count for override not certain.

Most Read