A round of vetoes by Gov. Mike Dunleavy last summer have Alaska’s construction industry on edge. Industry groups are pushing state lawmakers to quickly pass an appropriations bill that they say would unlock hundreds of millions of dollars in federal matching funds.
The problem started last year, when lawmakers searched for funds to plug holes in the state budget. To fund the state’s share of a variety of new federal projects, lawmakers voted to take millions from older, stalled-out or completed projects — tens of millions from the Juneau Access Project, $138,000 from the so-called Bridge to Nowhere in Ketchikan, even $766 lawmakers found left over from efforts to explore a bridge over Knik Arm from Anchorage.
“At the end of the day, we’re really just pulling out of the couch cushions the little pennies we can find here and there,” said Rep. Ashley Carrick, a Fairbanks Democrat, during debate on the budget last year.
But then, after lawmakers adjourned, Gov. Mike Dunleavy vetoed those transfers. His office said a lot of the money lawmakers identified had been spent, committed to contracts or was otherwise unavailable.
“We don't want to put ourselves as a state in a position where we don't have the match because those funds have already been obligated or are no longer available because they've already been spent,” budget director Lacey Sanders told lawmakers last month.
To make up for the vetoes, Dunleavy has requested state lawmakers send him a budget bill that would fund the state’s match with $70 million in unrestricted funds to enable some $700 million in total spending, 90% of which would be covered by the federal government.
But for now, state officials say they have only enough money on hand to meet the state’s share of federal projects through about the end of the fiscal year on July 1.
That has contractors ringing alarm bells.
“You are introducing unnecessary risk and disruption to this process,” the head of the Associated General Contractors of Alaska, Alicia Kresl, said to the House Finance Committee.
For now, Transportation Commissioner Ryan Anderson appears less alarmed. He told lawmakers the state has its match covered for the current fiscal year, though that money runs out around the end of June.
“It's after July 1, that additional, that we'd be missing out on, so we're really right now focused on that,” Anderson said.
But not knowing for sure whether that money will materialize after July 1 makes it hard for construction contractors to gather the right supplies and equipment, assemble their workforce and be ready to hit the ground running, Kresl said. So any further delays getting the money out the door could risk much of the progress crews would otherwise make in the 2026 construction season, she said.
“When funding comes late, the construction industries and agencies can shift from planning mode into scramble mode,” she said.
Lawmakers have so far appeared receptive. Leaders of the House and Senate finance committees say they plan to move quickly on a supplemental budget that would provide the matching funds. They have said they’ll likely draw from state savings to do it, requiring a three-quarters supermajority in both the House and Senate.
And Sen. Bert Stedman, the Sitka Republican who orchestrated much of the couch-cushion-shaking last year, says the state’s tight budget this year means they’re looking for more spare change floating around state government.
“Last year was not some aberration, it was not some off-the-cuff idea. It was methodically sought out and well-researched by (the Legislative Finance Division) and both finance committees, and this year will be the same,” he said.
But this year, he said, he’s hoping for a different result.
