House Finance Committee co-chair Josephson convened the committee on March 28, 2025 to take testimony on House Bill 56, the "Fast Track" supplemental budget. Heidi Teshner, policy analyst for the Office of Management and Budget, told the committee the governor "is supportive" of the bill and, when asked about the funding source, said, "In short, yes," in reference to drawing from the Constitutional Budget Reserve (CBR) to cover shortfalls.

The committee was told the package bundles a mix of general fund requests, federal receipt authority and capital appropriations intended to meet fiscal year 2025 obligations. "The disaster relief fund is probably the highest priority item in here," Teshner said, listing it along with Medicaid, fire suppression and corrective retirement contributions as among the largest items in the bill.

OMB and agency witnesses described the bill's largest line items and near-term consequences if the supplemental is delayed. OMB staff described Medicaid as a major item, roughly $142,000,000 in federal receipts plus required state match. The supplemental also includes a $29,000,000 unrestricted general fund (UGF) appropriation for the disaster relief fund and approximately $13,100,000 UGF for the fire suppression fund. Corrective contributions to retirement accounts were listed at not to exceed $2,679,460. The OMB presentation identified additional capital items including federal receipt authority tied to orphaned wells and vessel overhaul funds for the Alaska Marine Highway.

On federal receipt authority for orphaned wells, Hannah Lager, administrative services director for the Department of Commerce, Community and Economic Development, told the committee the language in HB 56 provides federal receipt authority and that the Oil and Gas Conservation Commission has a $25,000,000 orphaned-wells grant "in hand," with additional federal opportunities pending. Lager characterized that authority as federal receipt authority "for grants received," and confirmed the grants in question would not impose direct state cost if awarded.

Committee members pressed OMB staff on consequences if the fast-track items were not approved quickly. Teshner said the package addresses obligations within FY25 and that, while not everything required immediate action "today," some items (notably the disaster relief and fire suppression funds and corrective retirement contributions) were treated as the highest priorities. She said pending grants could not be issued to grantees without receipt authority and that, in some cases, scholarships already committed to students — specifically the Alaska Performance Scholarship — could be at risk: the administration has spoken with the university and "there's an agreement that that students are still expected to receive the attend school, receive the scholarship with this supplemental to be forthcoming," she said.

Corrections officials described specific shortfalls if the supplemental is delayed. Kevin Worley, director of the Division of Administrative Services at the Department of Corrections, told the committee the department is short about $195,000 for regional and community jail contracts because of prior budget adjustments that removed Seward and Dillingham and then partially restored funding. "So that $1.95, currently, there's a pot of money that we allocate for the regional and community jails. Overall, that shorts the community and regional jails that participate in that program," Worley said, and added that the shortfall would mean the state would be "short funding them based on the contracts that we have signed." He said communities could return to the department to renegotiate or pull contracts if the funds are not provided.

Worley and committee members also discussed supervisory standby pay and population-management funding in the Department of Corrections. The committee was told the supplemental includes about $3,300,000 UGF for population management/standby pay; Worley said the department projects it needs those FY25 funds to meet payroll obligations for correctional and related staff and does not have other readily available appropriations to cover the obligation for the fiscal year.

On the constitutional budget reserve language, Ken Alpers, staff to Representative Josephson, walked members through section 16 of HB 56. He said subsection A would appropriate amounts needed to cover the known shortfall in last year's budgets (the committee was told that shortfall is roughly $80,000,000) plus the general fund value of this supplemental (described in the hearing as about $112,000,000 for a combined coverage target). Subsection B, Alpers said, provides a limited additional "headroom" appropriation — "Subsection B is limited but to 7 and a half million dollars" — to allow a small buffer for last-minute needs, and subsection C references the constitutional provision requiring a three-quarter vote for such withdrawals. Alpers emphasized the language is more specific than prior, broader CBR provisions and that the section is written to appropriate specified amounts from the CBR if unrestricted revenue for FY25 is insufficient.

Committee members also questioned OMB about lapse assumptions and how agencies are using vacancy savings. Teshner said OMB works with agencies to determine whether a supplemental is necessary and that agencies often redeploy vacancy or travel savings to meet current-year needs; she cautioned that lapses and vacancy use vary by agency and that OMB follows up with agencies to understand whether long-standing vacancies should be repurposed.

No formal committee votes on HB 56 were recorded at the March 28 hearing. The committee adjourned at 2:27 p.m. and the chair noted the committee will not take up the FY26 operating budget (House Bill 53) or bill 55 that day; the committee's next scheduled meeting was March 31, 2025, where HB 53 and HB 55 were scheduled for consideration. The chair said that if advancing HB 56 becomes "the will of the body," the committee would try to assist the governor in advancing the bill.

(Reporting note: this article summarizes testimony and answers taken on the record to the House Finance Committee on March 28, 2025. It does not report any committee final action; no roll-call votes on HB 56 were recorded in the transcript.)