he Alaska Department of Transportation and Public Facilities (DOT&PF) had one important message for Associated General Contractors (AGC) of Alaska members at its presentation on the opening day of AGC’s annual conference in November: when projects are ready to deliver, DOT&PF wants to deliver them.

Transportation staff members repeated this message during individual presentations at the meeting as they gave their annual update on federal and state funding, statewide projects, regulations, and communications.

In August, DOT&PF reached its redistribution target of $183 million in additional federal funding, bringing its total obligation amount through the federal highway program to $922 million. DOT&PF Deputy Director Katherine Keith told AGC members this is a massive increase from prior years, in part due to a focus on project delivery and ongoing constant communication between staff, federal partners, federal highways, and contractors within the state.

August Redistribution is unused spending authority provided back to the states. It allows states to access more of their statutory formula funds, funds that would otherwise simply carry forward to the next year and comes from unspent program funds—under-used grant programs, loans, and new Infrastructure Investment and Jobs Act programs for which allocated money has not been spent. The redistributed spending authority allows states to put that money into projects that meet eligibility requirements for funds they have remaining. If a state is unable to spend those funds through August Redistribution, those funds typically carry over to the next year.

“That was a record year,” Keith told AGC members. “We’ll continue to strive for that goal, but it does depend on the revenue [match] that we get from the state.”

DOT&PF Commissioner Ryan Anderson says many things contributed to the significant increase in the August redistribution. Over the past couple of years, DOT&PF has modernized systems by updating its processes with digital tools, streamlined its tentative advertising schedule, and advanced its project delivery plan. He says this has positioned the department to pursue multiple projects across diverse federal funding categories. Likewise, it increased DOT&PF’s ability to track costs and schedules in real time, enabling it to quickly adapt when challenges arise. This modernization has resulted in a more transparent system in which data entry occurs as work is being done, ensuring an accurate list of projects ready to be delivered when federal highway funds become available.

“When we have an FHWA project that meets the criteria, has right-of-way secured, and the environmental pieces in place, we certify it and obligate it with federal highway funds,” says Anderson. “We have to obligate the August distributions by the end of the federal fiscal year to projects that will be constructed over the next year or two.”

FHWA funds are just one piece of the overall funding picture. Anderson explains that DOT&PF relies on multiple funding sources for surface, airport, marine, and facility projects. The Legislature in June removed more than $70 million in unrestricted General Funds from the FHWA match request and replaced the money with reappropriations linked to older projects, some of which were already spent, actively being spent from, or planned to be spent and already accounted for on the Statewide Transportation Improvement Program (STIP) plan, and added in some funds from the Alaska Industrial Development and Export Authority reserves. Another $6 million in match money was not replaced by the Legislature, resulting in an overall reduction in available funds. Governor Mike Dunleavy vetoed these appropriations in part because some funds were not available to be spent that way and, in part, because moving the funding carried associated risks. Federal highway projects in Alaska are primarily funded through the Federal Highway Administration, which requires a ten-percent state match. This means the majority of project costs are supported by federal dollars. Anderson says any information related to the Federal Fiscal Year (FFY) 27 budget, or potential supplemental requests for FFY26, will be available once the budget is formally released.

“Until then, we’re committed to continuing our work and ensuring every dollar—state and federal—is used responsibly to improve Alaska’s transportation system,” he says.

Marcus Trivette, co-chair of the Associated General Contractors of Alaska Department of Transportation & Public Facilities (DOT&PF) steering committee, relays questions from the crowd to DOT&PF staff.

Keith says the current fiscal year contains $1.7 billion in overall funding for the surface transportation program. That number includes $966 million in federal highway funds, $160 million in federal transit administration funds, and $171 million in federal transit discretionary funds for the ferry program, including both vessels and ferry terminals. Also in this category, approximately $49 million in competitive grants are moving forward this year, and the state match is anticipated at $76 million based on the enacted budget, as well as any state match that carried over from previous years. Keith also anticipates a projected $285 million in advance construction funding, a financial management tool explained by Program Management and Administration Director Dom Pannone later in the presentation.

On the aviation side, DOT&PF expects $272 million this year. Keith clarified that fluctuations in aviation funding occur because the program is discretionary. Though they are not guaranteed funds, the state continues to submit requests and aim for an increase. She says the Federal Aviation Administration is heavily focused on safety right now, and DOT&PF is currently reviewing its airport program to identify projects that involve safety modifications, making them eligible for federal funding.

Finally, DOT&PF’s National Highway Performance Program provides an additional $360 million for main road corridors and $200 million for surface transportation block grant programs, allowing flexibility to work in rural parts of the state. Combined, DOT&PF has $1.98 billion in surface and air transportation projects planned for the coming year.

Anderson says DOT&PF is also working in the background to prepare for several large state projects on the horizon. The most notable is the proposed 807-mile Alaska Liquified Natural Gas line that will transport natural gas from the North Slope to Nikiski for export to international LNG markets. This complex project requires multiple connection points for in-state gas distribution and eight compressor stations. DOT&PF is coordinating with the Alaska Gasline Development Corporation to ensure that existing projects within the gasline corridor do not conflict with the construction of the treatment plant, pipeline, or the liquefied gas facility in Nikiski.

To accelerate project delivery, DOT&PF will continue to use advance construction as a financial management tool, allowing it to proceed with shovel-ready projects as long as the department has matching state funds. Essentially, the state can start a project using non-federal funds and then later get federal reimbursement for the costs, as long as the project is eligible and all federal requirements are met. Pannone says this is a tool the department has used for many years, managing funds strategically to make sure federal funds catch up as the balance grows. Last year, the advance construction balance was around $576 million. In the latest STIP amendment, ADOT&PF plans to use advanced construction and state matching funds to get started on $783 million in projects.

“This means that our needs as a state are greater than the amount of federal funding we get,” says Pannone. “[Advance construction] is the tool we use to deliver those projects.”

Without advance construction, Pannone says some projects would stall while they wait for the next year’s federal funding allocation. Over the next few years, DOT&PF will carry an advance construction balance representing roughly 87 percent of the federal highways program funding the state expects to receive each ear. The department will most likely continue to grow that balance until it grows to about a year of federal funding. However, if there is any period of project slowdown, DOT&PF can use the advance funds to pay down the balance.

Several external challenges have made advanced construction even more necessary. Highway construction inflation has risen over 100 percent since 2012. Inflation costs have risen by more than 60 percent in the last five years alone, starting with the pandemic. That has caused DOT&PF to reevaluate their project delivery timelines, project scopes, schedules, and estimates, and triggered a cascading refactoring of the entire program. This means relying on tools and technology to show potential projects for the next year.

For federal FY26, DOT&PF anticipates advertising approximately ninety projects statewide, valued between $670 million and $1.1 billion. Most are highway projects; about twenty are aviation projects. Pannone considers the count a healthy and sustainable workload across all three of Alaska regions.

“We haven’t slowed down on developing and having projects ready to go, simply because our match funding was reduced,” says Pannone. “Those projects are waiting for additional funding or a match from the legislature. We’ll continue to update these and ensure this is accurate information. Overall, this represents a continued effort to make sure we’re communicating with our partners and being transparent about what we can deliver and how we’re delivering that.”

Pannone adds that if DOT&PF doesn’t get the anticipated $70 million match from the legislature, department leaders will use the federal dollars to pay down the advanced construction balance instead of keeping the momentum with delivering projects. He says this will ensure the State of Alaska is not at risk of losing federal dollars, even if it affects how many projects the state can deliver.

DOT&PF staff announced a few additional changes affecting contractors. First, Governor Dunleavy signed an administrative order in August directing all state agencies to review their regulations and make a 15 percent reduction in the number of regulations by the end of December 2026, followed by a 25 percent reduction by December 2027. Part of this process includes seeking shareholder feedback on any regulation that is outdated, redundant, open to interpretation, or too difficult. DOT&PF says this is a great way for contractors to let the department know about changes they want to see.

Finally, the Disadvantaged Business Enterprise (DBE) Program is being modified. The US Transportation Department issued an interim final rule on October 3, stating that DBEs will no longer be presumed disadvantaged solely on the basis of race or gender. With this ruling, all DBEs were decertified and must reapply for certification. Acting Northern Region Director Lauren Little says it’s not yet clear how recertification will work; rules for the process are currently being created. However, she says the department still encourages large prime contractors to support smaller contractors when possible.