It will be a challenging year in the Legislature, with more wants and needs than money to pay for it all, said Rep. Jeremy Bynum, who is finishing up his first two-year term in the state House.

Low oil prices and budget deficits this year and next — which will require drawing on savings — will cut into lawmakers’ ability to say yes to a lot of requests.

Such as capital budget requests for public works projects, including new construction. “It’s definitely a real problem. … But, unfortunately, the fiscal climate is what the fiscal climate is,” Bynum said in an interview on Jan. 13, a week before lawmakers convene in Juneau.

Alaskans need to solve the problem, he said. “Just by ignoring it doesn’t make it go away.”

Bynum, who represents his hometown of Ketchikan along with Metlakatla, Wrangell and Coffman Cove, was elected in November 2024 and has filed to run for reelection this fall.

His goal for the state is a 10-year budget plan that shows revenues and expenses in balance, which has not been the case in a long time. The governor’s 10-year budget outline, released last month, shows estimated revenues coming up short between $1.6 billion and $1.9 billion a year through 2036.

Gov. Mike Dunleavy penciled in “new revenues” to fill the gap, with no specific proposals.

Much of the reason for the large gap between income and expenses is the governor’s insistence on annual Permanent Fund dividend of more than $3,700 for every Alaskan.

“If I was to put bets down,” Bynum said, he would expect the October 2026 PFD at about the same $1,000 as last year.

Under the governor’s proposed budget, which lawmakers will start working on this week, half of the state’s Constitutional Budget Reserve of close to $3 billion would be drained to pay a $3,700 PFD.

“I’m not going to support taking a massive chunk out of the CBR to pump up the dividend,” Bynum said.

His Senate colleague, Sen. Bert Stedman, in his 23rd year in the Legislature, sees it the same way.

“That’s not going to happen,” Stedman said of a $3,700 dividend. The Legislature needs to find an affordable, permanent solution to the annual debate over the amount of the dividend. “But it probably won’t get done because there’s still people running campaigns on sending significant checks out to individuals,” Stedman said in an interview with the Daily Sitka Sentinel.

“We don’t have the money to pay for it.”

At the amount in the governor’s budget, the PFD would cost about twice as much as what the state contributes to school district operating budgets for K-12 education.

“We don’t have a lot of savings, $3 billion sounds like a big number but not when you look at how quick it could get drained,” the senator said.

Stedman’s district covers Sitka and southern Southeast Alaska, including Wrangell.

Both Bynum and Stedman talked about legislation that the governor vetoed last year that would have applied Alaska’s corporate income tax to out-of-state digital businesses that sell goods and services to Alaskans, the same as it applies to companies doing business in the state.

“That’s a kind of common-sense approach,” Bynum said of the legislation, which passed the House and Senate last year by a combined 42-18 score. Bynum voted yes.

Lawmakers will have five days after they convene on Tuesday, Jan. 20, to meet in joint session to decide if they want to override Dunleavy’s veto.

The Alaska Department Revenue estimates that the change in tax law could generate between $25 million and $65 million a year for the state treasury.

“It’s likely I would support (an override),” Stedman said. “We do need to deal with some revenue measures.” He voted yes on the bill last April.

Bynum noted that if lawmakers fail to override the veto, they could introduce similar legislation this year, making some changes in an effort to accommodate the governor’s concerns, and try a second time to get it into law.

Bills that do not make it into law this year do not carry over to next year, which means legislators will be pushing to win passage for their measures before the adjournment deadline in May.

“It’s going to be a lot busier,” Bynum said. “We already have the docket full of bills,” with more coming. “There will be a lot of pressure to get things done.”

A lot of the pressure will focus on finding money to cover the deficit in this year’s budget, and the budget for the new fiscal year that starts July 1.

Because the governor vetoed funding in this year’s budget for forest firefighting, disaster response and some transportation projects, coupled with lower oil revenues, lawmakers will need to come up with an estimated at $350 million to $450 million to plug the gap.

The deficit for next year’s budget will depend on oil revenues, the amount of the PFD and other factors.

Alaska North Slope oil prices last week were around $63 a barrel, almost $15 a barrel lower than when legislators convened in January 2025, and almost $5 under where they were when lawmakers finished their budget work this past May.

In that price range, every dollar over the course of a full year equals about $30 million to $40 million for the state treasury.

Money to cover the revenue shortfall likely will come from the Constitutional Budget Reserve.

“Clearly we’re going to have challenges balancing the budget,” Stedman said.