After Governor Mike Dunleavy pushed his fiscal plan forward Tuesday, including a proposal for a year-round sales tax, lawmakers are marking their calendars for its discussion.
, increased oil taxes and a PFD constitutional amendment—appears to face steep odds in the legislature, with even Republican leaders expressing skepticism about key provisions introduced Tuesday. “I appreciate the administration rolling out a fiscal plan,” House Majority Leader Chuck Kopp, R- Anchorage , said walking into the capitol Tuesday.
“We live in challenging fiscal times.”imposes a statewide 2% sales tax year-round, jumping to 4% during summer tourism season. The tax, the governor argues, aims to help close the state’s $1.5 billion budget deficit. Another option would be toThe tax, planned to expire in 2034 applies to most goods and services, including groceries, gasoline, heating oil, restaurant meals and online purchases like Netflix and Amazon. The bill exempts most business purchases from the sales tax, including supplies, equipment and services that companies can deduct on their federal taxes. The plan also raises the minimum oil production tax rate from 4% to 6% for a five-year period beginning in January 2027.“The governor has brought forward something for the consideration of the legislative body it’ll be vetted in committee,” Kopp said. “We’ll have the various aspects of it modeled, the sales tax.”“Alaskans deserve a stable, rules-based fiscal system that avoids the boom-and-bust cycle that comes with a budget based on the price of oil,” Dunleavy said in a press release announcing plan specifics Tuesday. “This plan charts a course through short-term budgetary challenges to the more prosperous period ahead for Alaska.” The plan splits permanent fund earnings 50-50: half for government spending, half for dividends. That, according to an estimate in the governor’s press release, would create a $3,600 PFD every year. “Governor Dunleavy’s fiscal plan puts an end to this by revising, rather than ignoring, the PFD formula and putting it in the Alaska Constitution and returns Alaska to a rules-based system for paying PFDs,” the release reads. A constitutional amendment requires two-thirds approval in both the House and Senate, then a simple majority of voters in the general election. Senate finance co-chair Bert Stedman, R-Sitka, wasn’t too confident of that specific bill’s chances Tuesday. “With all the issues we have on the table, the interest of embedding the dividend into the Constitution and the rate of the dividend, there’s just too many moving parts,” he said in a press conference. “It’s just not ripe yet this year, unfortunately.” According to Sen. Bill Wielechowski, D-Anchorage, it raises up to $972 million annually through 2030 but drops to $389 million in 2032 as temporary revenue measures expire. “I don’t think he balances the budget after . In fact, I think he craters the budget in FY32,” Wielechowski said. “Probably looking at a billion and a half to maybe even a $2 billion deficit at that point.” Reaction in the capitol to the fiscal plan itself has been largely stifled, with many saying they’re appreciative a plan has been pushed forward but stopping short of gauging its chances or saying how they think it could impact Alaskans. House Minority Leader DeLena Johnson, R-Palmer, stopped short of backing her support behind the bill in a statement Tuesday. “There are a lot of parts to this bill, and the No. 1 thing for me, without a complete analysis, is it’s really unclear on how this is going to affect hard working Alaskans,” Johnson said. “It is my No. 1 priority to make sure every day Alaskans aren’t on the losing end of this” Wasilla Senator Rob Yundt, R, while also praising the governor bringing a bill forward, said there were key elements, like the sales tax, the end of corporate income tax and a phase out of the oil tax floor which he did not agree with. “The good news is there’s still months of public process left so I’m hopeful we in the legislature & the Governor can work together to come up with a great deal that works for Alaskans,” he. “A deal that gets us back to a statutory PFD. A deal that avoids broad based taxes on residents. A deal that focuses on residents, not special interests.” Senate Minority Leader Mike Cronk, R-Tok/Northway, said it was early to make judgements on the bill, but said he planned to stay optimistic.“It’s tough to say what you like and what you don’t like, just because if you want a whole fiscal plan, everything has to be part of it. I could say some of my constituents really don’t want a tax, but is that part of a complete plan?” Despite their skepticism and disagreements of the governor’s plan, lawmakers in the majority have largely praised Dunleavy for putting something forward altogether. When Kopp was asked whether he thought the bill stood a chance to clear the legislature, he said he couldn’t forecast its chances but “I can promise you it will be given a fair vetting.”“It’s an aggressive tax on working Alaskans, and it’s very light on taxing outsiders,” he said Monday. “It’s very light on taxing the oil industry. It’s very light on taxing the people at the top and very heavy taxing the poor and working class.” The bill also prohibits local sales tax exemptions, meaning communities like Juneau that currently exempt food from their local sales tax would lose that authority. The state would take over collection of both state and local sales taxes. In a Tuesday Senate Majority press conference, Senate President Gary Stevens, R-Kodiak, said the bill was heading towards both the Senate Finance and Resources committee. “Big issues facing us this session,” Stevens said in a time crunch to leave the conference room. “Probably more issues than I’ve ever seen before so we’re working as well as we can to get through all these things.” The legislature has until May 20 to act on the governor’s proposal. If the constitutional amendment passes both chambers, it will go before voters in the November general election.Anchorage homeowners see property assessment increases up to 40%UAA students embrace record January snowfall
Sen. Bill Wielechowski Sen. Bert Stedman Sitka Anchorage House Minority Leader Akleg Delena Johnson House Majority Leader Sales Tax Permanent Fund Dividend Alaska Constitution Juneau Senate President Gary Stevens Kodiak
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