Gov. Mike Dunleavy canceled funding increases for a variety of state health and education programs on June 24, vetoing a combined $57.8 million in general-purpose money from state budget bills passed by the Legislature.
Under the Alaska Constitution, the governor has the ability to eliminate or reduce individual line items from the budget.
Dunleavy deleted $20 million in extra funding for cities and boroughs, $11.25 million to increase Medicaid payments to health care providers, $6.4 million to help child care centers find workers, $2 million for the state’s seafood marketing program, $3 million for tourism marketing, and more.
The governor did not veto most of the $300 million one-time boost that lawmakers approved for Alaska’s public schools.
That one-year addition to K-12 school funding will provide about $380,000 in extra state money for Wrangell schools for the 2026-2027 school year, closing about two-thirds of the district’s budget deficit and reducing the amount of money it will need to draw from its reserves account.
State funding will provide about two-thirds of the district’s revenues for the school year.
In his vetoes, the governor canceled $3.7 million for Head Start grants across Alaska, not quite a fifth of the proposed budget for grants for the early childhood educational program, and he vetoed funding for a proposed public education spending adequacy study.
The governor’s vetoes were spread across the state’s operating budget, capital budget and mental health budget, the three bills that determine funding for state services in the fiscal year that starts July 1 and ends June 30, 2027.
It is the lowest amount of budget vetoes of any year in Dunleavy’s tenure.
Altogether, Alaska will spend about $6.6 billion in general-purpose money during the new fiscal year, a figure that’s up by almost $600 million from the budget approved in spring 2025, according to figures published June 24 by the Office of Management and Budget.
The budget includes $782 million for this fall’s Permanent Fund dividend: A $1,000 dividend per eligible Alaskan, plus a $200 “energy-relief” payment per person to help Alaskans deal with the high cost of fuels after global oil prices spiked due to the U.S.-Israeli war on Iran and Iran’s blockade of a key Persian Gulf oil shipping lane.
While high oil prices brought in more tax and royalty revenue for the state treasury than anticipated, they also burdened state agencies, municipal governments and school districts with extra costs.
In response, the Legislature added extra funding to the budget for school districts coping with high energy costs.
“While the state realized additional revenue, those same price pressures placed a real burden on school districts, particularly in rural Alaska,” Dunleavy said. “This budget makes targeted, responsible use of a temporary revenue increase to stabilize school facilities and address energy costs,” he said in a statement.
Larry Persily of the Sentinel and Yereth Rosen and Claire Stremple of the Alaska Beacon contributed to this report. The Alaska Beacon is an independent, donor-funded news organization. Alaskabeacon.com.
