Gov. Mike Dunleavy released his proposed Fiscal Year 2027 budget, which covers July 1, 2026, to June 30, 2027.
Announced on Dec. 11, the budget reflects the Department of Revenue’s forecast that Alaska will receive $15.3 billion in total state revenue in FY 2027, with $6.2 billion of that being Unrestricted General Fund Revenue available for appropriation by the Legislature.
Dunleavy’s budget draft is roughly $16.8 billion, and it requires drawing $1.5 billion from the state’s main savings account, the Constitutional Budget Reserve (CBR), which now sits at about $3 billion.
In a video announcing his budget, Dunleavy highlighted that his proposed budget follows the law by fully funding government education, as well as the statutory Permanent Fund Dividend, which is expected to be about $3,650 per Alaskan. He also noted that his budget prioritizes support for public safety.
It is almost certain, however, that the Legislature will – once again – reduce the PFD payments in order to divert money to government programs, namely government-run education.
Dunleavy acknowledged that this is not sustainable for the long-term and he blasted lawmakers for failing to produce a long-term fiscal plan to stabilize state finances without having to impose new taxes or annually divert Alaskan’s PFD checks.
“For decades, politicians have talked about the need for a long-term fiscal plan to stabilize state finances,” Dunleavy stated. “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.”
In January, Dunleavy said he will introduce a fiscal plan that he hopes the Legislature will act on.
“Raising taxes on the people and businesses that are already here is anti-growth,” he noted. “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 that we’re not just reliant on oil.”
Alaska budget problems are exacerbated by a decline in revenue due, in part, to lower oil prices. Petroleum revenue and earnings from the Permanent Fund make up 90% of the state’s Unrestricted General Fund (UGF) revenue. This is the portion of funds that is available for the legislature to appropriate for any purpose. The Alaska Department of Revenue, however, forecasts Alaska will receive $6.21 billion in Unrestricted General Funds in Fiscal Year 2027. That’s based on forecasts of about $62 per barrel of oil. Every $1 change in the price per barrel of Alaska North Slope crude impacts unrestricted state revenue by roughly $30 million.
