Mayor LaFrance proposes record $692.5 million Anchorage budget, warns of fiscal cliff in 2028

By SUZANNE DOWNING

Oct. 5, 2026 – Anchorage Mayor Suzanne LaFrance has proposed a $692.5 million operating budget for 2027, pushing municipal spending to a new high while warning that the city is running out of one-time money to sustain its operations.

The proposal is approximately $271 million larger than Anchorage’s operating budget in 2010, an increase of about 64% in nominal dollars. Even at that spending level, the administration says recurring revenues cannot cover the cost of maintaining municipal services.

To balance the proposed budget, LaFrance is relying on $12.1 million in one-time funds, including $8.4 million from a remaining Municipal Light & Power account. Those funds account for roughly four-fifths of the approximately $15 million gap the administration says it needed to close.

The mayor’s warning is that the temporary fix carries Anchorage through 2027, leaving a fiscal cliff in 2028, the fiscal year starts in January, 2028, 15 months from now.

“We’ve used one-time funds to buy our community one more year and protect essential services, but that money will not be available next year,” LaFrance said in the administration’s announcement. “Without new revenue or increased outside support, we will hit a fiscal cliff in 2028.”

The proposal remains subject to Assembly review and amendment.

The administration describes the proposal as a continuation of 2026 operations, with spending changes largely driven by contractual labor increases (union contracts)  and inflation rather than increases in service levels.

But maintaining those services comes with a growing price tag.

The Assembly originally approved a $656.8 million operating budget for 2026. First-quarter revisions increased the appropriation to approximately $665.8 million. LaFrance’s proposed 2027 appropriation of $692,537,996 is about $26.7 million, or 4%, above that revised amount. Compared with the originally approved 2026 budget, the increase is about $35.7 million, or 5.4%.

The administration says it also trimmed nearly $1 million in vacant positions and reduced reliance on contractual services to help close the gap.

LaFrance attributes the financial pressure to rising costs for labor, health care, fuel, heating and building materials, along with deferred maintenance and equipment needs. Her announcement also points to declining alcohol and marijuana tax revenues and reduced state support.

Anchorage’s general government operating budget stood at approximately $421.3 million in 2010. By 2025, the approved budget had reached approximately $648.3 million, an increase of nearly 54%.

The proposed 2027 budget would extend that growth to approximately 64% over the 2010 level.

The following historical figures are approximate. Approved budgets and first-quarter revisions sometimes differ by several million dollars, and some documents use direct-cost totals that include depreciation rather than the final appropriation.

These dollars without an adjustment for inflation for a general government operating budget funding police, fire protection, street maintenance, snow removal, libraries, public health, planning and other municipal functions. Separate utility and enterprise budgets and the capital improvement budget are outside this comparison.

The proposed budget leaves just $34,245 in unused capacity under the municipal tax cap. $34,245 is essentially at the tax cap.

Municipal budget documents project approximately $383.1 million in property taxes subject to the cap for 2027, compared with $363.2 million in the revised 2026 calculation. Including service-area property taxes outside the cap, the proposed general government property-tax total is approximately $413.3 million. Those figures exclude school district property taxes.

Being under the tax cap does not eliminate the underlying funding problem. The cap limits tax collections; one-time money can balance an annual budget without providing a recurring source of revenue for the following year.

The administration used temporary funding for 2026 as well. In its November 2025 announcement of that budget’s passage, the mayor’s office acknowledged that one-time funds were filling the gap and warned that service reductions could follow without new revenue.

The 2027 proposal therefore buys another year while leaving the longer-term imbalance unresolved.

Separately, LaFrance is proposing an $87.9 million capital improvement budget.

Projects include replacement fire apparatus, additional ambulances, fire station work, road and drainage repairs, pedestrian safety improvements, library and Performing Arts Center energy upgrades, and improvements to parks and trails.

Assembly-approved bond proposals would go before Anchorage voters in April 2027. If approved, the borrowing would be repaid over time through property taxes. Many ballot proposals are written in such a way that they exempt themselves from the tax cap.

The administration’s announced review schedule includes public hearings Oct. 20 and Nov. 4, with a final Assembly budget vote expected Nov. 17.