Rep. Kevin McCabe: Why Alaska’s Constitutional Budget Reserve shouldn’t be the first place to look for cash

By REP. KEVIN MCCABE

March 14, 2026 – Alaskans hear a lot of acronyms in Juneau, but one of the most important is CBR, the Constitutional Budget Reserve. The easiest way to think about the CBR is the same way most families think about their emergency savings. It is a rainy-day fund. You do not dip into it for routine bills. You keep it for the moment something breaks, when income drops, or when the unexpected hits.

When voters created the CBR in 1990 and placed it in the constitution under Article IX, Section 17, the purpose was simple. Alaska’s finances rise and fall with oil prices. When prices are strong, the treasury fills up quickly. When prices fall, revenue can drop just as fast. The CBR was designed to give the state a buffer when that cycle turns against us.

Money flows into the CBR mainly from legal settlements and disputes over oil taxes and royalties. When the state collects back payments or wins a case, that money goes into the reserve instead of the operating budget. The fund is invested conservatively so it is there when Alaska truly needs it. Today the balance sits at roughly three billion dollars. It has been as high as $10.1 billion and, if nothing had ever been spent from it, the value today would likely be somewhere between $15 and $25 billion.

The constitution also set a high bar for spending that money. Any withdrawal requires a three-fourths vote of the legislature. That requirement was meant to slow down spending and force broad agreement before touching the state’s emergency savings. It was also meant to remind lawmakers that the CBR is not supposed to be a routine funding source for government spending.

Another point often gets ignored. Money withdrawn from the CBR is technically a debt owed back to the fund. The constitution expects future legislatures to repay it when revenues improve. In practice, that repayment rarely happens. The CBR was never meant to be a permanent spending account. It was meant to be insurance against fiscal emergencies.

The current Alaska Senate proposal for the FY2026 supplemental budget is a classic example. They recently passed a version that would draw roughly $373 million from the CBR. The House proposal that they were working from had originally been closer to $500 million.

The expenses that the Senate seeks to pay in the current bill are real. No one disputes that. Alaska has wildfire suppression bills from last summer. There is disaster relief tied to recent storms. The bill also includes money needed to secure federal highway matching funds and recpitalize the Higher Education Investment Fund, so Alaska students continue receiving scholarships. Alaska needs to pay those bills.

The question is whether we actually need to pull that money from savings.

Oil prices have been meeting or exceeding the FY2026 budget forecast for roughly the past eight months. In addition, in recent weeks, prices have climbed even higher due to instability in the Middle East. Alaska North Slope crude has moved toward ninety dollars a barrel, well above the roughly sixty-five dollar price used in earlier forecasts. When prices move that much, it can generate hundreds of millions of dollars in additional revenue for the state in a short period of time.

That is why House minority lawmakers asked a simple question. Why not wait a few days for the Department of Revenue to release its updated spring forecast before voting on a CBR draw? Why not make the decision with all the information in front of us?

The reasoning is something we all understand. When you have bills to pay and you receive a bonus at work or a good tip at the end of the day, you use that extra money to pay the bills. You do not reach straight for your savings account if income is already coming through the door.

The same principle applies to state government. If higher oil prices are already bringing additional revenue into the treasury, the responsible move is to use that incoming revenue first. The CBR should remain what voters intended it to be, a true emergency backstop, not the first place government turns whenever spending runs ahead of forecast.

Waiting a few days for updated numbers is not obstruction or a leverage play. It is simple fiscal discipline. If the forecast shows the revenue is already there, there may be little reason to touch the reserve at all.

And if the numbers show a real shortfall, the legislature can still act. Lawmakers can pass a targeted supplemental once the financial picture is clear. Waiting forty-eight hours does not close that door.

What many Alaskans remember is how quickly the CBR has already been drained. In 2015 the fund held more than ten billion dollars. We have not yet paid that back. And years of deficits have continued to steadily reduce that balance. Today roughly three billion remains.

This particular draw is also structured differently than many past withdrawals. Instead of acting as a backstop that only spends money if revenue falls short, it transfers $373 million directly into the budget. If higher oil prices bring in more revenue than expected, that money simply becomes available for other spending.

Every unnecessary withdrawal weakens Alaska’s financial safety net. When savings disappear, pressure grows for higher taxes or deeper cuts to core services. That is exactly what the CBR was meant to prevent.

The fund exists for real emergencies, when revenues collapse and the state has no other option. Treating it that way today helps ensure it will still be there when Alaska truly needs it.

Rep. Kevin McCabe is an Alaska legislator representing District 30, Big Lake. He has lived in Alaska for 43 years, served in the US Coast Guard, as a Boeing 747 captain, and was a volunteer firefighter.