A proposed budget for the next fiscal year — July 1, 2025, to June 30, 2026 — was published by Gov. Mike Dunleavy on Thursday. The draft budget includes funding for Kenai Peninsula projects including more than $4 million for the Alaska LNG project and $6.5 million for the Dixon Diversion project at Bradley Lake Hydroelectric Dam.

During a press conference the same day, Dunleavy spoke bullishly about the Alaska LNG project. The Alaska Gasline Development Corporation this fall touted a study by Wood Mackenzie as evidence that the project should move forward, and the Alaska Industrial Development and Export Authority last month resolved to contribute a $50 million backstop for “front-end engineering and design” of the first phase of the project — a pipeline from the North Slope to Nikiski that would provide natural gas to local utilities.

“Things like the gas line are going to be needed for energy in the state of Alaska,” Dunleavy said.

In 2020, he said, there weren’t secured federal permits for the project, and there weren’t interested sellers of gas circling the project. Also, “we know that we’re running out of gas in Cook Inlet.” He said the front-end design work is important because the existing analysis of the project is nearly 10 years old.

“If we can get this updated (front-end engineering and design) done here in the next several months, I think we are as close as we’ve ever thought we could be to a line,” he said. “I think we’ll end up consummating a line here over the next year or so.”

Dunleavy’s draft budget includes $4.2 million to the Alaska Gasline Development Corporation from the state’s general fund for contracting “expertise necessary to represent the State’s interest and investments” in both the first phase of the project and in further development.

Funding for the Dixon Diversion, similarly, is described in a request document attached to the budget as necessary for completing engineering and design to obtain licensing. The budget describes $6.5 million from the general fund to that end, with the hopes of completing design and obtaining licensing to support a project to completion by 2030. In June, Sen. Jesse Bjorkman, R-Nikiski, said that the Dixon Diversion could, if completed, greatly increase output of the Bradley Lake Hydroelectric Dam — “the cheapest electricity on the railbelt” — and put downward pressure on electricity rates.

On the northern Kenai Peninsula, $325,000 is included in the budget, from the state’s general fund, for construction of an overnight bunkhouse at Silvertip Maintenance Station to allow workers to overnight at the station rather than commute in daily. This would, per a request included in the budget, improve response times and allow for more favorable schedules for employees. The facility would be projected to open in the winter, following construction this summer.

Roughly $700,000 in federal funds are directed to an update for the Homer Airport Master Plan.

In Seward, the proposed budget includes federal funding of more than $10 million for Seward Airport improvements and $5 million for Seward snow removal and a sand storage building.

A project to improve safety at several courthouses statewide describes improvements to the courthouses in Kenai and Seward. Beyond that project, no funding is directed to projects in House District 7, which includes both Kenai and Soldotna. Local lawmakers and officials earlier this year said they were frustrated by Dunleavy’s vetoes to capital projects in Kenai and Soldotna in the last state budget.

Dunleavy’s budget also describes a permanent fund dividend amount of $3,838 and a $1.52 million deficit that draws upon more than half of the state’s budget reserves. The budget also lacks any increase to funding for education — with school funding at a rate that Kenai Peninsula Borough School District Board of Education President Zen Kelly has said will likely result in a $17 million deficit for local schools.

In a press release, Senate President Gary Stevens, R-Kodiak, called the proposed budget “just the beginning of the process.”

“Throughout the upcoming legislative session, the Senate will focus on what is essential to Alaskans that serves their basic needs, supports public education, grows our economies, and finds solutions to many of the challenges we face.”

For more information, including to view the budget documents, visit omb.alaska.gov.

Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.