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The court declined to rule on whether correspondence allotments could be used at private schools, sending the question back to a lower court.
The governor cut over $230 million from the operating and capital budgets with his veto pen.
Officials say Anchorage likely now has more latitude to clear any encampments that it deems problematic and unsafe, even without shelter beds to offer homeless campers.
The decision could affect any federal agency decision challenged in court, including those related to fisheries, resource development and the environment.