State Supplemental Budget Clears Legislature, Paving the Way for Roads and More

While the other supplemental appropriations cover costs incurred since the 2025 state budget was enacted, the request for $70 million in transportation funding was urgent. A state match is required to unlock roughly $700 million in federal transportation dollars, and the governor’s veto jeopardized that 10x amplification.

Dunleavy’s veto message noted that the funds had already been spent or were tied to projects and couldn’t be reallocated in that way. Legislators, trying to stretch state dollars as far as possible due to a deficit, had cobbled together match funding from older, incomplete, or stalled transportation projects.

While state transportation officials told legislators they could operate through 2026 with funds passed in 2025, construction industry leaders said existing funding paid for a scaled-down set of projects, and delaying supplemental funding could delay or entirely cancel projects.

“The difference between securing the match now versus waiting until later in the session is not about whether or not [the Department of Transportation (DOT)] can function. It’s about whether DOT, Federal Highways [Administration], contractors, and communities have the certainty and planning time that is needed to maximize work during the short 2026 construction season and beyond,” Associated General Contractors of Alaska Executive Director Alicia Kresl told the House Finance Committee in late January. “Under a constrained budget, there is very little ability to adjust, absorb changes, or accelerate work. And that ultimately harms industry and the economy.”

One Step Left

Following the bill’s passage, Kresl issued a cautious note of thanks.

“We appreciate the legislature’s work to secure this funding and the many stakeholders who supported this effort. Alaska is one step closer to securing significant federal transportation investment, but the work is not done yet. The focus now turns to the governor’s office and the Alaska Department of Transportation and Public Facilities to complete the process,” Kresl said in a public statement.

She added, “We encourage the administration to sign the bill quickly and follow through by funding the $70 million federal match from the general fund. With funding in place soon, DOT can identify and move forward projects that are ready for 2026. DOT is best positioned to decide what can be moved on quickly; with the right resources, we are confident they will advance as much work as possible for the fast-approaching summer construction season.”