Federal match refers to the portion of funding the State of Alaska must contribute in order to access federal transportation funds. For every dollar the state provides, the federal government typically contributes a significantly larger amount—for the Federal Aviation Administration Airport Improvement Program match rates can be up to 95% Federal share, and on Federal Highway funded projects, match rates can vary on a sliding scale between 90% and 95% Federal share. Other funding sources from the Federal Transit Administration, Maritime Administration, or discretionary grants offer 80% Federal share. Without the state match, these federal funds cannot be used.
1. What was proposed in the Governor's FY26 budget for federal match?
The Governor's initial FY26 budget proposed $115.9 million for federal match. These funds would support highway, aviation, safety, and transit programs. Most of the match was to come from Unrestricted General Funds (UGF).
2. What did the Legislature change in the budget?
The Legislature removed over $70 million in UGF from the match request and replaced it with reappropriations from older projects— some of which were already spent, actively being spent from, or planned to be spent and already accounted for on our STIP—and with funds from the Alaska Industrial Development and Export Authority (AIDEA) reserves. In addition, $6 million in match was not replaced with reappropriations or another funsing source and is an overall reduction.
3. What did the Governor veto and why?
On June 12, 2025, the Governor vetoed the legislative reappropriations used to replace part of the UGF match. After review, DOT&PF was able to determine that the majority of these funds were likely unavailable for reappropriation due to their status as active projects. Additionally, reappropriating match funds carry risks such as delays in project delivery and reduction of overall spending power. Due to these concerns, veto of these particular projects was necessary.
4. Why is reappropriating funds from prior authorized projects not a good idea?
Prior project funds are often still needed for project payments, overruns, or closeout costs. Some may also be tied to federal programs with specific eligibility rules. Using these funds for new match obligations could cause delays in project delivery, reduce the department's financial flexibility, and may have already been spent in the current fiscal year.
5. Did DOT&PF communicate their concerns regarding the Legislature's reappropriation plan?
Yes. The department expressed concern both in writing and in testimony that using reappropriated funds posed risks and could destabilize the federal funding program.
April 8, 2025 Email to Alaska Legislature from Dom Pannone
May 1, 2025 House Finance Testimony from Dom Pannone
6. What is the impact of the Legislatures removal of the unrestricted general funds, reappropriations, and subsequent vetoes on transportation projects in Alaska?
At this time, no 2025 projects are being canceled. However, without a solution, new project starts may be delayed, and the Statewide Transportation Improvement Program (STIP) will need to be revised to reflect limited resources.
7. Will the Statewide Transportation Improvement Program (STIP) need to be adjusted?
Yes. DOT&PF has update the STIP—a federally required planning document that outlines which projects will be funded and when—to align with the actual match funding available. This ensures compliance with financial constraints and helps set realistic expectations for project delivery. STIP Amendment #2 has been approved by Federal Highway Administration (FHWA) and Federal Transit Administration (FTA). STIP documents can be reviewed here.
8. What types of projects are most at risk if no fix is approved?
Projects without committed match funding, especially those not yet under construction, may be delayed. Some safety and rural access projects tied to older match pools could be affected. The Governor's veto helps preserve these funds for their intended purpose, but a new appropriation is needed to move forward with future work.
9. Can the Legislature resolve this issue?
Yes. A legislative solution is possible. The DOT&PF looks forward to collaborating with the legislature on a solution to resolve this issue.
10. What happens if match funding remains unresolved?
If the issue is not addressed, DOT&PF will exhaust its available UGF in Spring 2026. It will then need to limit new project starts and rely on converting existing Advance Construction Authorization from prior years.
11. Has this happened in other states?
Yes. States like Illinois, New Jersey, and Kansas have experienced project delays, shutdowns, and even lost federal funding due to match funding issues. Alaska is making every attempt to avoid a similar outcome by ensuring full compliance with federal requirements.
12. How is DOT&PF reassuring its staff and partners?
DOT&PF leadership is assuring employees that project development and design work will continue. The department is coordinating closely across teams and with federal partners to manage any short-term disruptions. Project managers are being briefed, and schedules are being maintained to keep scheduled projects moving forward without delay.
13. What is being communicated to the public and contractors?
The public is being informed that 2025 projects will continue with no related cancelations or delays. Adjustments to schedules or scope may be made temporarily, but DOT&PF remains committed to delivering the full program. Contractors and stakeholders are being kept informed through briefings, outreach, and letters.
14. How are federal partners responding?
DOT&PF is maintaining active communication with the Federal Highway Administration (FHWA) and the Federal Aviation Administration (FAA). These agencies expect the state to maintain fiscal integrity and appropriate matching practices. The department is assuring them of its commitment to compliance and program stability.
15. What's next?
DOT&PF will continue advancing projects using available funds and will be working with the Office of the Governor on a legislative solution. The department is providing updates to stakeholders and briefing materials for decision makers to support a swift resolution.