Here are the Alaska legislative priorities to watch this session

JUNEAU — The Alaska House and Senate on Tuesday convened the two-year session with bipartisan majorities governing both legislative chambers.

Leaders of the Democrat-dominated House and Senate majorities said their priorities include a permanent increase to education funding, reforming Alaska’s public-sector retirement plans, election reform, energy policy and passing a balanced budget.

But legislators face a more strained fiscal environment to fund their priorities.

Republican Alaska Gov. Mike Dunleavy, with his powerful veto pen, will be a looming factor in legislative debates. The all-Republican minority caucuses, particularly in the narrowly divided House, are expected to play key roles in shaping policy and the budget.

A balanced budget

The Alaska Department of Revenue in December projected declining oil prices over the next several years, and an accompanying drop in state revenue. Lawmakers said Tuesday that new revenue measures were unlikely to be considered this session, meaning that the budget process will likely be shaped by the state’s limited fund sources.

“It is going to be a very tough balancing act,” said Democratic Sen. Lyman Hoffman of Bethel, who will manage the Senate’s operating budget.

[Alaska Legislature convenes session with aligned bipartisan majorities in the House and Senate]

He said the Senate majority is striving to craft a budget that does not rely on savings. A draw from the state’s main savings account — the $3 billion Constitutional Budget Reserve — would require support from the Republican House and Senate minorities.

Edgmon, the House speaker, also said that a draw from the CBR would be viewed by his caucus as an “absolute last resort.”

Hoffman said the Senate majority would take a fiscally conservative approach to developing its spending plan and that infrastructure spending could be scaled back as a result. He was dismissive of Gov. Mike Dunleavy’s proposed budget that in December was projected to create a $1.5 billion deficit.

“There is no way that we can afford that,” Hoffman said at a Tuesday media conference.

Hoffman said the Senate would also closely examine some of the operating budget increases that Dunleavy proposed, including a new Alaska State Troopers post in Talkeetna and a new Department of Agriculture.

Permanent Fund dividend

Dunleavy last month called for a dividend of $3,900 per eligible Alaskan in the upcoming budget, adhering to a state statute that lawmakers have not followed since 2016. Paying that dividend would require a vast draw from state savings.

Lawmakers in the House and Senate largely dismissed the idea.

The Senate last session supported adopting a new formula that would appropriate three-quarters of the Permanent Fund earnings to pay for state services, reserving one-quarter for the annual dividend. Senate majority members said they would likely back a similar statutory change this year.

But Sen. Bert Stedman, R-Sitka, said that even providing a dividend equal to one-quarter of Permanent Fund earnings this year — which would equate to a PFD of over $1,400 — could be “challenging.”

“There’ll be some debate above it and below it,” said Stedman.

Without a new formula, lawmakers could choose a dividend size depending on what would be affordable given other budget constraints.

Rep. Andy Josephson, D-Anchorage, who is leading the operating budget process in the House, said the size of the dividend could be impacted by whether lawmakers approve a sizable increase to the state’s education budget. A large increase in funding for schools would mean a smaller dividend, he said.

Education funding

Education advocacy groups have been pessimistic about the prospects of a major funding boost this year amid resistance from Dunleavy. But Senate and House leaders said they planned to get to work early on advancing a funding boost for schools.

Sen. Löki Tobin, D-Anchorage, said that the Senate majority had yet to settle on the exact size of the funding increase they would seek, but that she saw a $200 million increase — which Dunleavy said earlier this year he could support — to the existing $1.2 billion education budget as a starting point.

Dunleavy and conservative lawmakers have said funding increases should be tied to policy changes that measurably improve Alaska’s bottom-of-the-nation test scores. Sen. Bill Wielechowski, D-Anchorage, on Tuesday said that education policy debates should be kept separate.

“I know there are a number of policy bills that people want, but I think with the lack of funding, it’s really critical that we address that, and address that first,” he said.

Edgmon said that the House could try to pass an education funding increase early in the session, in an effort to provide stability to school districts across the state that are looking at shuttering buildings and cutting positions.

“There will be an emphasis on getting that passed, hopefully before the school districts begin to put their budgets together in earnest,” said Edgmon.

Energy

President Donald Trump on Monday signed a sweeping executive order that was intended to drastically expand resource development in Alaska.

Anchorage Republican Sen. Cathy Giessel largely welcomed the order, but said Alaska should focus on managing its own lands and waters. Giessel, chair of the Senate Resources Committee, cited a plan for the state to take over management of permitting development in wetlands.

“We’re not a colony to be pillaged,” she said.

Legislators are set to grapple with a looming shortfall of Cook Inlet natural gas, which is the bulk fuel used to heat and power Southcentral Alaska.

Anchorage Republican Rep. Mia Costello, the House minority leader, said the 19-member minority was still formulating its policy goals. But she said the caucus was opposed to the likely need to import natural gas — at least for the short term.

“We will do everything we can to prevent that,” she said.

Earlier in the month, the Dunleavy administration announced that a private company was set to soon fund and lead the development of a trans-Alaska natural gas pipeline.

Alaska’s state-owned investment development agency in December moved to commit $50 million to advance the long-planned project. Giessel was skeptical about the state committing more funds to the $44 billion mega project, and the project in general.

“I don’t know if something real will come of it. We’ll see,” Giessel said.

The Republican Senate and House minorities were bullish on Tuesday about the Trump administration’s resource development plans in Alaska. However, Senate minority members said they wanted more information about the pipeline project.

“We need to dive into that sooner rather than later,” said Sen. Mike Shower, R-Wasilla.

Elections

Senate majority members said they planned to introduce an omnibus election bill early in the session that would address myriad issues related to the state’s voting laws.

The legislation is intended to speed up ballot counting; eliminate the witness signature requirement on absentee ballots; and clean up the state’s voter rolls, Wielechowski said.

Shower has introduced measures in previous sessions intended to improve election security. In 2022, Shower was part of a bipartisan effort to pass an election reform bill that failed in the final hour of the session. He said that he would again work on election reform with the majority.

“You’ll certainly see me focused on that,” he said during a Senate minority media conference.

The Alaska Division of Elections counts absentee ballots that arrive up to 15 days after an election.

Palmer Republican Sen. Shelley Hughes, another member of the Senate minority, said the caucus was set to introduce a simple election bill. It would require that all ballots arrive on or before Election Day.

Public-sector retirement

Giessel is again expected to lead an effort to reform Alaska’s public-sector retirement system in an effort to boost the state’s recruitment and retention of public employees, including teachers, public safety workers and others.

The Legislature in 2006 eliminated Alaska’s pension program amid an unfunded liability. Since then, the state and other public employers, including schools and police departments, have struggled to retain critical workers. Senate and House leaders say a return to pensions can help address an ongoing staffing crisis.

Giessel led a similar effort beginning in 2023. Republicans in the House were opposed to the system overhaul she proposed, but members of the House bipartisan majority said Tuesday they welcomed consideration of the pension reform.

On Tuesday, Giessel foreshadowed the argument she would make in favor of the overhaul: Though the new pension system was expected to cost the state $46 million annually in new expenses, it was simultaneously expected to save the state more than $70 million a year in costs associated with staff turnover and filling vacated positions.

Correction: In an earlier version of this story, a photo caption incorrectly identified Rep. DeLena Johnson of Palmer as Rep. Andi Story of Juneau.