Private Construction Promises Strong Season; Questions Remain for Public Spending

While the tally of all expected spending, $6.71 billion, is level with the 2025 forecast, the balance of public versus private spending is tipping further toward private spending. 

Over the past five years, the balance between private and public construction spending has maintained a fairly even split, with one sector holding 51 or 52 percent of spending and the other, 48 or 49 percent. This is the first year within the last five that private spending has started to pull ahead by more than a few percentage points.

While public sector spending is down nearly across the board—with less money spent on school maintenance, expansion, and renovation projects; less on national defense, as several large projects wrapped up last year; and less on state, local, and federal government-funded projects—two other categories bear a closer look. 

The airports, ports and harbors, and railroad category is nearly double last year’s forecasted amount, from $470 million in 2025 to $900 million in 2026. Projects pushing that increase are the Port of Nome expansion, which is expected to get going this year, and the Don Young Port of Alaska Terminal 1 replacement, a project the Anchorage port has been working toward for more than a decade. Also in-process is a project to extend shore power to Seward’s port, allowing ships to plug in while idling their own engines, starting next year. 

The second category to scrutinize pertains to highways and roads. While McKinley Research estimates $690 million in spending this year, the forecast contains a caveat: “Funding of these projects is highly contingent upon state match funding to access federal transportation grants, and spending in this category may fall short of this forecast if the full state match funding is not appropriated in 2026.” 

The state match at issue is 2025 funding that the Alaska Legislature, cash-strapped and trying to patch a budget deficit, reallocated from older, incomplete, or stalled projects to cobble together the required state match for several 2025 Department of Alaska Transportation and Public Facilities (DOT&PF) projects. Although the measure passed the Alaska House and Senate, Governor Mike Dunleavy vetoed it last summer, noting that the funds had already been spent or were tied to projects. Now legislators are considering a $70 million supplemental appropriation to allow construction to proceed apace in 2026.