Christmas and New Years are just around the corner! Which means the legislative session starts in just over five weeks. The big news this week was Governor Mike Dunleavy (R – Alaska) unveiled his FY2026 operating and capital budgets – the sixth since he first took office in 2018. The recount for Ballot Measure 2 and House District 28 left the outcome of both unchanged. Fallout continues from the resignation of Judge Josh Kindred in July. And some more politicos staffers are on the move. 

A friendly message and reminder to all our readers. The Landmine is made possible by myself and a team of awesome Alaskans. I have been covering the legislative session in Juneau for the last six years and will be headed back next month. If you enjoy the content we provide, please consider making a one time or recurring monthly donation. You can click here to donate. We have a system that makes it super easy. We would really appreciate it. And thanks to everyone who has been supportive. 

Gov. Dunleavy proposes budget with full PFD, $1.5 billion deficit

The following is an excerpt from a special edition of the Alaska Political Report. It was done by Neil Steininger, our budget correspondent. You can click here for more information about the Political Report. A subscription is $1,299/year per organization. Discounted pricing is available for non-profits and government entities. Our coverage of the budget starts with the governor’s proposed budget, and we track everything in detail through the entire process. If you have any questions or would like to subscribe, please email jeff@akpoliticalreport.com.

On Thursday, Dec. 12, Gov. Mike Dunleavy released his budget proposal for FY2026. When compared to his first budget – the FY2020 budget proposed six years ago – there are similarities in the fiscal conditions but significant differences in his approach to the problem.

In 2020 Dunleavy faced a budget deficit of about $1.6 billion and a Constitutional Budget Reserve (CBR) with just $2.3 billion in assets. He proposed to balance that with a combination of $1.1 billion in budget reductions and the transfer of $440 million in property tax revenue from municipalities to the state.

For FY2026, the baseline (a status quo budget with flat K-12 funding and a full Permanent Fund Dividend) would have a roughly $1.6 billion deficit against an available CBR balance of $2.9 billion – very similar to what he faced six years ago.

Rather than again propose large cuts or adjustments to revenue, his proposal increases funding in several areas, reduces year-over-year education funding by almost 16%, and spends down about half of the state’s remaining savings.

The Governor’s ten year plan, a statutorily required report meant to outline a governor’s policy strategy for tackling current and future fiscal challenges, shows ongoing deficits for the foreseeable future. His plan, however, provides no ideas to address the states fiscal uncertainty. Under his published plan, Dunleavy would leave a $1.5 billion deficit and roughly $440 million in the CBR for the incoming governor in two years.

Because the Legislature is made up of 60 members with diverse and nuanced views, it is extremely challenging for them as a body to introduce and champion major structural changes without the support and lead of the executive branch. Lacking that support, the Legislature will be faced with difficult fiscal decisions in order to balance the budget on the one-year time horizon. Even if the ten, or two, year projection is dismal.

Expect this session to bring downward adjustments to the PFD, upward adjustments to education, and some room left for both Governor and Legislative priorities. If the Legislature restores FY25 K-12 funding levels and retains all of the Governors’ proposed spending increases, they should be able to balance the budget at current oil prices with a $1,000 PFD, leaving a little room for their own additions.

The Alaska Political Report will provide a more detailed analysis of individual agency operating and capital budgets later this weekend, but below are some initial highlights from the Governor’s proposal.

If you would like to see these highlights, as well as our more detailed coverage, consider subscribing to the Alaska Political Report. Email jeff@akpoliticalreport.com for a copy of the latest special report. 

Other Happenings 

The recount of Ballot Measure 2 – the repeal of the open primary and ranked choice voting – did not materially change the close no margin. While there is sure to be another repeal effort in 2026, the open primary and ranked choice voting will determine there statewide races in 2026: U.S. Senate, U.S. House, governor/lieutenant governor. 

The recount in House District 28 also did not change the outcome. This is the open seat Representative Jesse Sumner (R – Wasilla) decided to not run for. Republican Elexie Moore still defeated Republican Steve Menard, but by nine votes instead of 12. 

File this one in the hyper loose category. In addition to the nudes, Assistant U.S. Attorney Karen Vandergaw sent former Judge Josh Kindred texts detailing how she would perform oral sex on him! And he sent her texts about his fantasies of “anilingus.” My god. Oh, and she lied to the Ninth Circuit about it but is now claiming “victim” status. What a joke. 

With some legislators leaving and new ones incoming, many legislative staff are on the move. Below are a few recent changes. There will be more to come before session starts. 

• Ryan McKee is moving from Representative George Rauscher’s (R – Sutton) office to serve as chief of staff to incoming Senator Rob Yundt (R – Wasilla).
• Clark Bickford has moved from Representative Jesse Sumner’s (R – Wasilla) office to serve as chief of staff to Senator Elvi Gray-Jackson (D – Anchorage). She will be chairing the powerful Legislative Budget and Audit Committee next year. And she’s my senator!
• Rose Larson is moving from Senator David Wilson’s (R – Wasilla) office to work for incoming Representative Elexie Moore (R – Wasilla).

And in non-staffer news, Lindsay Kavanagh is leaving her role as executive director for the Alaska Democratic Party. She starts in January as the Southcentral regional manager for the APEA/AFT union. 

This Week’s Loose Unit 

This week’s designee is short and sweet. This week’s Loose Unit is Governor Dunleavy. In his budget, Dunleavy is again proposing a full Permanent Fund Dividend. This would cost around $2.5 billion, or 40% of projected revenues for FY2026. But that is not the loose part. One could justify following trying to follow the antiquated statue (which has not been followed for the last eight years) if some serious revenues were proposed.

But at Dunleavy’s budget press conference he made it clear he is against an income or sales tax. Instead, he said money from resource development will fill the gap. While I support as much resource development as we can do, it’s absurd to expect the state to bring in billions of dollars more a year in the long term, let alone the short term, to pay for mega dividends.  

Instead, Dunleavy is proposing drawing $1.5 billion from the Constitutional Budget Reserve (CBR) to pay the mega dividend. Only about $3 billion remains in the CBR, and we owe it $12 billion. So even if the Legislature agreed to draw $1.5 billion to pay a mega divined (they won’t), it would only be for one year. There would not be enough to do it the following year without completely draining the CBR! Maximum loose behavior. 

What Dunleavy is really doing is again forcing the Legislature to be the fiscally responsible ones. Then he can say, “See, they took your PFD!” Very loose. 

If you have a nomination for this week’s Loose Unit, or if you have any political news, stories or gossip (or any old pics of politicians or public officials) please email me at jeff@alaskalandmine.com.