he 34th Alaska State Legislature adjourned its 2025 session a day early, gaveling out on May 20. The House and Senate garnered enough votes to override Governor Mike Dunleavy’s veto of the education funding bill, House Bill, or HB, 57, that includes some policy measures and an approximate $700 increase to the Base Student Allocation. At the time of this article, it was yet to be seen whether the Governor would line-item veto the associated appropriation.

While lawmakers met their constitutional duty to pass a balanced budget, they failed to secure the three-quarters majority vote needed to fund the fiscal year 2025, or FY25, supplemental budget of $193 million using the Constitutional Budget Reserve, or CBR, one of the state’s main savings accounts.

Without the ability to use the CBR, funding FY25 expenses defaults to contingency language added by the House and Senate Conference Committee to use up to $100 million from the unrestricted balance of the Alaska Industrial Development and Export Authority, or AIDEA. Any remaining deficit above $100 million would come from the Higher Education Investment Fund, or HEIF—not an ideal fix, as this could have a significant negative impact on AIDEA’s bonding rate.

During the Conference Committee process, the Legislature produced a FY26 Operating Budget $381 million below the previous year’s post-supplemental budget. This drop is largely attributed to significant reductions in agency spending and a reduced 2025 Permanent Fund Dividend.

The capital budget also remained austere, with the notable absence of district priority projects. But it did include funds for deferred maintenance and statewide emergency response. Some highlights:

• $1,000 PFD
• $700 increase to BSA
• Increases to childcare grants and behavioral health support
• Additional funding for Village Public Safety Officers and funding of State Trooper overtime hours

• $36 million in deferred maintenance for schools, university facilities, and statewide emergency repairs
• Alaska Marine Highway vessel maintenance, using $26 million in fare revenue
• Dalton Highway, or Haul Road, maintenance
• Port electrification for cruise terminals

Key legislative efforts this session included Associated General Contractors, or AGC, of Alaska’s invitation to testify before the Senate Transportation Committee on the importance of a robust, timely, and accurate Statewide Transportation Improvement Plan, or STIP. AGC Executive Director Alicia Amberg, along with industry representatives, shared concerns regarding the lack of available projects for this summer’s construction season. Additionally, AGC, in partnership with the American Council of Engineering of Alaska, provided the state Department of Transportation & Public Facilities, or DOT&PF, and legislators with an industry white paper defining key metrics for a successful DOT&PF program, year over year.

AGC engaged in advocacy efforts on numerous bills, including HB 161, pertaining to paid sick leave exemption, which would exempt employers with fewer than fifty staff members from the state’s new sick-leave requirements, implemented via Ballot Measure 1, which passed in 2024.

AGC supported HB 148/Senate Bill 132, pertaining to controlled insurance programs, and provisions in HB 133, supporting prompt payment to prime contractors. We voiced concern over HB Bill 186, which requires a percentage of workers on state projects to be in a registered apprenticeship program, and were successful in our efforts to encourage legislators to not approve this bill as written.

AGC’s Legislative Affairs Committee, or LAC, held weekly meetings where bills were continually monitored and reviewed to determine support, opposition, or neutrality. AGC voiced support for bills that would have positively enhanced our industry and discouraged movement or provided alternative solutions on several bills that could have negatively impacted our industry. The LAC laid the groundwork to continue our work on these bills in the next session.

LAC members organized a well-attended fly-in event to the state capitol in February, with more than twenty participants—the most to date! This year’s fly-in looked a little different than in past years, with the primary focus being on advocating for a robust DOT&PF program. AGC members met with key legislators and policymakers to voice concerns contractors faced as they geared up for a less-than-robust summer construction season. AGC’s concerns resonated throughout the Legislature; we will continue to dialogue with elected officials and DOT&PF staff to discuss ways to ensure DOT&PF’s annual construction program is sustainable for industry given the state and federal budget climates.

The fly-in event, along with the continued work of the LAC, plays a crucial role in advancing industry priorities, shaping policy outcomes, and championing a supportive business climate for the construction industry.