Tag: Alaska Legislature

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Alaska governor debuts fiscal plan, including statewide sales tax and guaranteed PFD

By: James Brooks, Alaska Beacon

 Gov. Mike Dunleavy gestures during his State of the State address on Jan. 22, 2026. (Photo by Corinne Smith/Alaska Beacon)

Gov. Mike Dunleavy has proposed a 4% statewide summer sales tax, effective through 2034, as part of his plan to bring Alaska’s state revenue and expenses in line for the long term.

If adopted, the sales tax would be Alaska’s first statewide, general-purpose levy since state legislators abolished Alaska’s income tax in 1980.

Alongside the tax bill, the governor has proposed a tighter state spending cap and a constitutional amendment that would guarantee a Permanent Fund dividend lower than scheduled by current law but above what legislators have approved in recent years.

“This comprehensive plan is designed to bridge the next seven years by stabilizing state finances, limiting spending growth, restoring a rules-based PFD, and sharing responsibility through targeted, time-limited revenue measures that support investment and predictability,” the governor wrote in a letter to state lawmakers.

Since 2015, persistently low oil prices and plateaued oil production from the North Slope have dogged state lawmakers who have struggled to balance Alaska’s need for services with the desire to pay large Permanent Fund dividends.

While most of Alaska’s general-purpose state revenue comes from the Alaska Permanent Fund, oil remains the No. 2 source of flexible spending money for the state, leaving the annual budget process subject to the vagaries of global markets.

The governor’s plan resembles one drafted by a bipartisan, bicameral legislative working group in 2021 and 2022. That plan and others like it have never significantly advanced in the Legislature.

Senate Bill 227, containing the bulk of the governor’s plan, was introduced on Monday and referred to the Senate Finance Committee for further discussion. An identical version will be introduced in the House on Wednesday.

The most fiscally consequential item in the bill is the sales tax, which would peak during the summer tourist season and drop to 2% between October and March.

That tax is expected to raise as much as $815 million per year for state services and the Permanent Fund dividend by Fiscal Year 2032. 

Dunleavy’s proposed budget for the fiscal year that begins July 1 — fiscal year 2027 — is about $7.75 billion and has a deficit of almost $1.5 billion.

The Dunleavy administration expects that revenue from oil production and a proposed trans-Alaska natural gas pipeline will compensate for the phaseout of all the taxes in the long term.

Under SB 227, the state’s corporate income tax would fall to zero in 2031; the sales tax wouldn’t expire until 2034, leaving individual Alaskans paying higher tax rates than corporations for a period.

“Normally, sales tax is left to local governments. So I know it was a hot issue in Anchorage when the Mayor proposed that, so I think it is going to hit a lot of households,” said Sen. Lyman Hoffman, D-Bethel and co-chair of the Senate Finance Committee.

Sen. Bill Wielechowski, D-Anchorage, applauded Dunleavy on Monday for putting forward a fiscal proposal, even if he disagrees with some of the components.

“The governor’s putting out a bill. I commend him for that. He’s putting out, you know, he’s throwing out ideas. I give him credit for that,” he said.

Wielechowski and other legislators said they want to fully analyze what the governor is proposing before opining on it. 

“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,” said House Minority Leader DeLena Johnson, R-Palmer. “It is my No. 1 priority to make sure everyday Alaskans aren’t on the losing end of this.”

The Alaska Municipal League, which represents local governments across Alaska, is particularly interested in the governor’s proposal.

The League has previously said it would prefer a statewide income tax to a sales tax.

In almost every part of Alaska, except for Anchorage, sales taxes are a pillar of services. 

Many cities and boroughs exempt certain things, like food and utilities. Under the Dunleavy proposal, the state would be in charge of collecting sales taxes and would remit money to cities and boroughs.

Local exemptions and sales tax caps could vanish in the process, with the state instead determining what is taxed and not. 

“This is a 56-page bill that we are still going through. Sales tax is a major component of that, but sales tax shouldn’t be thought about independently from the other components,” said Nils Andreassen, director of the league.

In addition to the sales tax, SB 227 temporarily raises the state’s minimum oil tax, adds a surcharge of 15 cents per barrel of oil produced on the North Slope and adds part of the corporate sales tax update that Dunleavy vetoed last year.

Andreassen noted that regardless of its source, tax revenue flows into the state’s general fund for any number of uses.

“All taxes are connected at some level,” he said. 

The governor’s plan for the Permanent Fund dividend, enclosed in a constitutional amendment proposal separate to SB 227, is similar to one he proposed in 2021. 

Currently, the state’s No. 1 source of general-purpose revenue is an annual transfer from the Permanent Fund to the state treasury. In FY27, that transfer will be worth $4 billion.

The “50-50 dividend” proposed by the governor would reserve half of that transfer for dividends, or about $2 billion, if it were in place this year.

That amounts to roughly $3,200 per PFD recipient, based on the number of recipients in 2025.

Under a current, disused formula in place since the 1980s, the dividend would be about $3,800 per recipient.

That formula hasn’t been used since 2015, and lawmakers have instead set the amount by fiat, typically using a figure that can be paid with available revenue after services are covered. 

Legislators can ignore formulas in state law because the state’s annual budget bill is a law, and when one law conflicts with another, the newer law takes precedence.

Putting a dividend formula in the constitution would bind future governors and legislatures, and put the dividend atop the annual budgetary priority list, alongside education and other constitutionally mandated functions.

Adopting a constitutional amendment requires two-thirds of the House, two-thirds of the Senate, and approval by voters in the next general election. 

Alaskans have not adopted an amendment since 2004, and the Legislature hasn’t put one before voters since 2016. 

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‘Our government is out of control,’ Alaska legislator says, calling for end to state aid for ICE

By: Corinne Smith and James Brooks, Alaska Beacon

U.S. Army Soldiers with the 11th Airborne Division, load Air Force C-130 Hercules aircraft in preparation for deployment into the Joint Pacific Multinational Readiness Center’s 25-02 training exercise, Fairbanks, Alaska, Jan. 23, 2025. (U.S. Army Photo by Master Sgt. Justin P. Morelli)

A Democratic state lawmaker from Anchorage loudly denounced the actions of U.S. Immigration and Customs Enforcement’s surge in Minnesota while speaking on the Alaska House floor on Friday.

Rep. Andrew Gray, D-Anchorage, is a military veteran and co-chair of the Legislature’s Joint Armed Services Committee. 

“The facts are that our government is out of control. Norms have been broken at an alarming rate, and the world is watching us in shock,” he said.

Gray’s remarks were met by loud desk-thumping — a form of applause — and came on a day when thousands of Minnesotans marched in subzero weather and held a general strike to show their opposition to ICE efforts in their state.

Tensions are particularly high after several shootings by federal officers, including one in which an officer killed a mother of three.

The remarks came one day before federal agents fatally shot another Minneapolis resident on Saturday, prompting nationwide protests throughout the weekend. 

On Friday, Gray questioned Gov. Mike Dunleavy’s decision to provide National Guard administrative support for ICE in Alaska and President Donald Trump’s threatened use of regular U.S. Army troops in Minnesota. 

Up to 1,500 active-duty troops of the U.S. Army’s 11th Airborne Division, based in Anchorage, have been ordered to stand by for possible deployment to Minneapolis — Minnesota’s largest city — according to National Public Radio. 

Gray and Sen. Scott Kawasaki, D-Fairbanks and the other co-chair of the Joint Armed Services Committee, have sent letters to Alaska’s congressional delegation and Brig. Gen. John P. Cogbill, commander of the 11th Airborne.

In those letters, Gray and Kawasaki say they are receiving “enquiries … from the Alaskan people” and pose a series of questions.

How long will the 11th Airborne be in Minnesota? How does a deployment fit in the division’s mission to defend the United States against foreign threats? Could soldiers be detaining suspected undocumented people? Would the 11th Airborne fight the Minnesota National Guard if Gov. Tim Walz activates it to defend protesters?

“Fifteen hundred active-duty soldiers may be sent from Alaska to Minnesota to protect ICE agents as they continue their efforts to arrest and detain suspected undocumented immigrants,” Gray said, “But who really needs the protection? Is it the ICE agents, or is it the folks who are terrified to leave their homes, to go to work, to pick their kids up from school or to actually show up at their immigration appointments?”

While Gray’s comments appeared to have the support of many legislators in the chamber — judging by the desk-pounding applause — there was at least one dissenting voice.

Rep. Jamie Allard, R-Eagle River, is a veteran, the spouse of a veteran, and a Latina, she said, explaining that she had also sent a letter to Gen. Cogbill, but her letter was to remind him that he is not legally obligated to answer the Legislature’s questions or testify in the Capitol.

Allard said she has been deployed overseas with the military and with the U.S. State Department.

“I experienced things when I worked for the US State Department, of women being abused, hit — watched them get their teeth knocked in, where I had to stand by and couldn’t do anything,” she said.

“We have a lot going on in our country, dividing, saying we’re this or we’re that. We’re all Americans, but it doesn’t mean that it’s okay to have riots across our country. If the military and the federal government and the Department of War and the 11th Airborne Division decide that it’s best to go to Minnesota, that’s what we need to do,” she said.

Allard’s comments were met by quieter but noticeable desk-pounding, with the loudest coming from Rep. Kevin McCabe, R-Big Lake.

He said afterward that he thinks Gray incorrectly described some aspects of ICE’s work in Minnesota. For example, Gray said ICE detained a five-year-old in Minnesota.

“There’s a little bit more to the story, McCabe said.

“We shouldn’t be messing around in another branch of the government in their bailiwick,” he said. “The worst people in Alaska to manage the National Guard is probably the state Legislature.”

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New lawsuit claims Alaska’s description of a proposed elections ballot measure is biased

By: James Brooks, Alaska Beacon

A summary sheet is seen during ballot review on Tuesday, Aug. 27, 2024, at the headquarters of the Alaska Division of Elections in Juneau. (Photo by James Brooks/Alaska Beacon)

Supporters of Alaska’s election system filed a lawsuit against the Alaska Division of Elections on Thursday, alleging that the state’s description of a roll-back-the-clock ballot measure is biased and inaccurate. 

The state has defended its language, with a spokesperson calling it “accurate, neutral, and consistent with prior initiatives.”

This fall, voters will be asked with Ballot Measure 2 if they want to return Alaska’s election system to what it was in 2020. The state’s description would be printed on ballots alongside the measure. 

Until 2020, political parties determined who could vote and run in primary elections, voters were required to pick just one candidate in the general election, and people could donate secretly to nonprofits that could then pass money to candidates.

In November 2020, Alaskans approved Ballot Measure 2, which put all political candidates for an office into the same primary election. The top four advance to a general election that uses ranked choice voting. Nonprofits that donate to political candidates are required to disclose their donors.

In 2024, an effort to repeal the primary and general election changes failed by 737 votes out of 320,985 cast statewide.

The plaintiffs in the new lawsuit are AFL-CIO president Joelle Hall, state Sen. Cathy Giessel, R-Anchorage, and former Juneau city council member Barbara Blake. All three are represented by attorney Scott Kendall, the prime author of the 2020 ballot measure that installed the current elections system.

The suit was organized by the Alaskans for Better Elections Foundation, Kendall said. Alaskans for Better Elections supported the 2020 measure and has opposed prior efforts to repeal it. 

“I think (Alaskans) should know that the ballot language that has been offered by the Division of Directions is materially inaccurate, and in some cases, says the measure does the opposite of what it does, and it omits very significant changes the measure will make,” Kendall said by phone on Thursday.

In particular, the suit objects to the state’s claim that the ballot measure would restore or “bring back” campaign finance rules.

“The proposed measure (24ESEG) would not ‘restore,’ ‘bring back,’ or add even a single

campaign finance rule to Alaska’s statutes,” the suit states. “Rather, 24ESEG would fully repeal a litany of campaign finance disclosure requirements, and eliminate enhanced fines.”

A key part of the 2020 ballot measure and existing state law is the requirement that nonprofit groups disclose their financial supporters if those nonprofits contribute money to election candidates. 

A prior effort to repeal the 2020 ballot measure would have left the disclosure requirement in place. The new repeal effort would eliminate the dark-money disclosure law, concealing donations.

A section-by-section analysis published by the Alaska Department of Law in February 2025 concluded that this year’s measure would “reverse several changes to campaign finance disclosure requirements.”

“It repeals a ton of very, very popular campaign finance disclosure provisions, and yet, the ballot language proposes to say it restores them,” Kendall said.

The lawsuit also asserts that the state’s approved language downplays the way that political parties would be permitted to determine who may vote in primary elections.

Independent candidates would not appear on primary election ballots unless one or more political parties allow them. Independent voters would not be allowed to vote in a primary unless permitted by political parties.

Before 2020, both the Republican and Democratic parties in Alaska allowed some independent voters to participate in their primaries.

“Granting major political parties in Alaska the power to disenfranchise voters for primary elections is neither mentioned, nor even implied, in the proposed ballot language,” the lawsuit states. 

The Alaska Division of Elections is being legally defended by the Alaska Department of Law, which has not been formally served with the lawsuit but has a copy of the complaint. 

“We have been in the midst of ongoing discussions with plaintiffs’ counsel, who was urging the adoption of ballot language that would have departed from the legal standard requiring accuracy and neutrality,” said Sam Curtis, a spokesperson for the Department of Law. 

“We have not yet been served with the complaint and will review it when we are. The ballot language at issue is accurate, neutral, and consistent with prior initiatives. The alternative language advanced by the plaintiffs would be confusing and inject advocacy where the law requires impartial description. We are confident the courts will uphold the State’s language.”

The plaintiffs challenging the state have diverse political perspectives: Hall is a registered Democrat, Giessel is a Republican, and Blake is a registered nonpartisan. All three have opposed prior repeal efforts and are opposing this year’s as well.

Giessel said she wants Alaskans to know what they’re voting on.

“People tell me that they’ve signed initiatives, particularly this year — and other years previously as well — and then they find out that actually what they were told they were signing was misrepresented to them. So I want them to know exactly what’s in this,” she said.

Hall is an experienced campaigner.

“People need to know what they’re being asked to vote on, as clear as possible. Because some people will walk into that booth and read that word for word,” she said. “They will not have made up their mind ahead of time. So it just needs to be really clear.”

What do you think?

Below are the two versions of the proposed language on Ballot Measure 2. Which do you think is clearer and more accurate?

First, the state-written language:

An Act Restoring Political Party Primaries, Single-Choice General Elections, and Campaign Finance Rules

This act would get rid of open primary elections and ranked-choice general elections. It would bring back political party primaries and single-choice general elections. It would also bring back campaign finance rules.

Elections will occur as they did before open primaries and ranked choice voting. In the primary election, voters will choose a party’s ballot. They will vote for one candidate in each race and the winning candidate will be the party’s nominee. In the general election, voters will select one candidate in each race. The candidate with the most votes will win. Party petitions, special runoff elections, and other parts of the prior election system would return.

Campaign finance rules would also return to the way they were in the prior election system. This act would remove the limits on donations to joint campaigns for governor and lieutenant governor. It would remove limits and disclosure rules under current law, including for digital ads, out-of-state donations, undisclosed donations, and the true source of donations. It would remove some fines and change the meaning of a campaign expenditure.

Second, the language proposed in the lawsuit:

An Act Restoring Political Party Primaries and Single-Choice General Elections, and Repealing Certain Campaign Disclosure Requirements and Fines

This Act would get rid of open primary elections, where all candidates appear on one ballot. It would get rid of ranked-choice general elections. It would replace them with political party primaries and single-choice general elections. This Act would also repeal certain campaign finance disclosure requirements and get rid of or reduce some fines for violations.

In the primary election, voters would choose one party’s ballot and vote only for candidates from that party. Political parties would be given the power to prohibit voters who are not registered members of their party, including Nonpartisan and Undeclared voters, from voting in their primaries. The winning candidate from each primary would be the party’s nominee. In the General Election, voters would vote for only one candidate. The candidate receiving the most votes would win, whether or not that candidate has a majority of the votes cast for the race.

This Act would end the ban on dark money by getting rid of the requirement that independent expenditure groups report the true sources of their contributions. It would also get rid of the requirement that such groups, when they are funded mostly by out of state money, disclose that fact in their ads.

Finally, it would get rid of or reduce the fines for some campaign finance violations.

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In final legislative address, Dunleavy highlights past successes and future of oil and gas projects

By: Corinne Smith, Alaska Beacon

Gov. Mike Dunleavy shakes hands with Rep. Frank Tomaszewski, R-Fairbanks, as he exits the House chambers after his State of the State address on Jan. 23, 2026. (Photo by Claire Stremple/Alaska Beacon)

Alaska Gov. Mike Dunleavy delivered his eighth and final State of the State address on Thursday to a joint session of the Alaska State Legislature, touting the accomplishments of his term and promising continued momentum, particularly for large-scale resource development.

“Even though it’s my last year, there is no slowing down,” he said, and promised to work with legislators to advance policies in the spirit of Alaska’s independence and resilience.

In a nearly 80 minute speech, Dunleavy gave wide-ranging remarks on his administration’s initiatives over the last seven years, from reducing crime to improving reading scores. He touched on economic and workforce development, as well as the advancement of mining, oil and gas projects, like the proposed Alaska LNG gas pipeline project from the North Slope to Cook Inlet. 

On Thursday, Dunleavy shared only a few details on a promised new state fiscal plan to help balance declining state oil revenues and pay for his proposed $7.75 billion draft budget this year. He said he plans to introduce a fiscal package in the next week, as well as bills focused on job training, child care and affordable housing. 

Dunleavy did not mention a seasonal sales tax proposal, as promised in a cabinet meeting on Wednesday. 

Lawmakers with the House and Senate majorities expressed interest and some skepticism about his new fiscal plan after the speech, and concern around the lack of details for potential new tax proposals as the session gets underway.

“Honestly, that’s a tremendous amount of things he said he wants us to get through, so we have to do things properly and slowly and rightly and correctly,” said Senate President Gary Stevens, R-Kodiak. “And everything does take more time than you think, but we’re willing to work with the governor, and anxious to see what the specifics are of his fiscal plan.”  

House Speaker Bryce Edgmon, I-Dillingham, said he is not optimistic for a fiscal plan this year.

“This is the eighth year that the governor has put a budget in front of the legislature with an over billion dollar deficit,” he said. “Yet to be contrasted this session with a fiscal plan that is going to be very controversial that none of us have seen yet.”

Dunleavy began the speech by applauding the state’s disaster relief efforts, most recently the response this fall in the devastating aftermath of ex-Typhoon Halong in Western Alaska. He noted the state has experienced 85 state and federal disaster declarations during his term, an average of one per month.

“We can’t control natural disasters. But we can control how we respond,” Dunleavy said. “I couldn’t be prouder of how we’ve responded to these events thanks to the brave men and women that I have the honor to serve as Governor.”

Dunleavy thanked the Trump administration throughout the speech, particularly for its focus on boosting Alaska resource development, which was outlined in the president’s executive order that promised to develop the state’s resources “to the fullest extent possible.” 

He praised the Trump administration for re-opening offshore drilling and federal lands in the Arctic for oil and gas development, as well as for the millions promised for health care through the Rural Health Transformation Program. 

“Alaska is benefitting greatly thanks to President Trump, and his administration. We need to do all we can to work with our federal partners over the next three years,” he said. “We may never get this opportunity again.”

Television cameras capture Gov. Mike Dunleavy’s State of the State speech on Jan. 22, 2026. (Photo by Corinne Smith/Alaska Beacon)

Dunleavy touted dropping crime rates and a declining unemployment rate, citing a growing economy and state population. 

“I know there’s a feeling that things can be better, and of course they can, but our economy has been getting stronger and stronger every year of my administration,” he said.

Dunleavy said his administration will continue to work on reducing crime, in part by focusing on a new partnership with the municipality of Anchorage to combat crime there. 

“Public safety has been my No. 1 priority and it will continue to be so until the end of my term,” he said.  

Support of the proposed AK LNG pipeline featured prominently in his speech, though the financing and budget ask from the legislature remains uncertain. Dunleavy applauded the gas line developer, Glenfarne, a private energy developer that owns 75% of the project while the state of Alaska owns a 25% share.

Glenfarne Group CEO and founder Brendan Duval and Alaska LNG President Adam Prestidge stand while Gov. Mike Dunleavy recognizes their work in his State of the State address on Jan. 22, 2026. (Photo by Corinne Smith/Alaska Beacon)

Glenfarne executives were in the House chamber as Dunleavy praised the company’s most recent announcement: that they had signed new gas sales and contractor agreements and are headed into final investment negotiations to begin construction.

“This will be the single most transformative project in Alaska since the Trans-Alaska Pipeline,” he said.

While education was a major priority of the governor and legislature last year, Dunleavy only briefly touched on the topic. He said he would like to see legislators take action on bills he’s already introduced to expand charter schools, create open enrollment, address teacher retention and expand tribal compacting, which would allow schools to be run by local Alaska Native tribes. 

Lawmakers react to the governor’s state of the state address

Republican lawmakers praised the speech and its scope. 

“I thought it was a great address,” said Senate Minority Leader Mike Cronk, R-Tok, who was especially excited about movement towards a new gas pipeline. “He tried to cover everything that he possibly could, you know, still holding that optimism of getting things done that we need to get done.

“It was good to hear his overall enthusiasm going into his last year,” said House Minority Leader Rep. DeLena Johnson, R-Anchorage. “We do need to evaluate our revenue and our expenses and to really take a good look and be good stewards going forward. So I’m interested in seeing what he will promote.”

Members of the House and Senate majority caucuses echoed the interest in more details on the AK LNG pipeline proposal.

“I come from a district where people are not opposed to resource development, but we’re definitely skeptical,” said Rep. Ashley Carrick, D-Fairbanks. “We want to be practical, and we want to be critical, not to the point of stopping projects, but to the point of just understanding and having fair and reasonable oversight on projects.”

Senate President Gary Stevens, R-Kodiak, answers press questions following Gov. Mike Dunleavy’s State of the State address on Jan. 22, 2025, while Sen. Bill Wielechowski, D-Anchorage, Senate Majority Leader Cathy Giessel, R-Anchorage, and Bert Stedman, R-Sitka, look on. (Photo by Corinne Smith/Alaska Beacon)

Others, like Sen. Bill Wielechowski, D-Anchorage, were more skeptical about the project. “Do they have gas purchase agreements? Not that we’re aware. Do they have gas sales agreements? Not that we’re aware. Do they have financing for the project? Not that we’re aware,” he said. “So they’re talking a lot about the project, and it feels like progress, but do they have any firm commitments on any of those things? Not that I’m aware.”

“We applaud his efforts. We all want a gas line. We’re all excited that we’re as close as we are,” Edgmon said. “But there are other sorts of existential issues that we’re not dealing with here in the legislature.” 

The speech failed to address fisheries for the second year in a row. Sen. Bert Stedman, R-Sitka, praised the governor’s optimism, especially around other resources, but noted the fisheries omission on Thursday. 

“It is one of our largest employers in the state, and they’re still having significant problems after the turn down a couple years ago. So we’ll continue to have discussions with the administration and see what help we can put forward for the industry guys,” he said.

Rep. Calvin Schrage, I-Anchorage, said most of his constituents would like to see an improvement in the level or quality of state services. “The governor did a good job of highlighting some of the achievements from his administration, but I think in many cases, he missed the mark on the reality felt on the ground,” he said. 

“With closing small businesses, we have a summer construction season that’s not funded — for the first time in state history. We have to address that,” said Rep. Zack Fields, D-Anchorage. “We have a stressed fishing industry. So just a big difference between a sort of a glossy speech and the much more challenging reality on the ground that we have to address.”

But Dunleavy noted in his speech that he’s still got some time to get work done — and he’s not running down the clock.

“Contrary to what you may have heard, my time is not up until noon on December 7th, 2026,” he said. “And our time here together in this last regular session isn’t up until midnight on May 20th.”

Claire Stremple contributed to this story.

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Alaska Legislature fails to override Dunleavy’s veto of a tax bill intended to help education

By: James Brooks, Alaska Beacon

Members of the Alaska House of Representatives and Alaska Senate watch as the final vote on Gov. Mike Dunleavy’s veto of Senate Bill 113 is displayed on the voting board in the House on Thursday, Jan. 22, 2026. (Photo by James Brooks/Alaska Beacon)

Republicans in the Alaska Legislature voted down a new funding source for public school programs Thursday as they sustained Gov. Mike Dunleavy’s veto of Senate Bill 113.

The vote on overriding the governor was 35-25, 10 votes short of the 45 needed for an override. All of the “no” votes came from Republicans in the House and Senate minority caucuses. Those voting no included some legislators, such as Sen. Rob Yundt, R-Wasilla, who had strongly supported the bill last year.

If SB 113 had been enacted, the bill would have shifted some corporate income tax payments from other states to Alaska. 

The result was expected to be between $25 million and $65 million per year in new revenue for the state treasury, and the bill called for much of that money to go to programs that help young children learn how to read and to career-technical education programs that teach Alaskans non-college trades. 

Dunleavy vetoed the bill last fall, saying he was unwilling to approve any tax measure that was not part of a comprehensive, long-term plan intended to balance state revenue and expenses.

Under the Alaska Constitution, the veto needed to be taken up during the first five days of the regular session if lawmakers wanted to override it.

This article will be updated.

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Dunleavy to propose ‘temporary, seasonal sales tax’ in final Alaska State of the State address

By: James Brooks, Alaska Beacon

Alaska Gov. Mike Dunleavy speaks during a cabinet meeting on Wednesday, Jan. 21, 2026. (Photo byJames Brooks/Alaska Beacon)

Alaska Gov. Mike Dunleavy is expected this evening to detail his plans for a long-term plan to balance Alaska’s expenses and revenue.

“There will be a temporary, seasonal sales tax concept put forward for discussion with the legislature,” Dunleavy said Wednesday during a cabinet meeting open to reporters. 

Will state lawmakers approve that idea?

“I don’t have the answer to that until we start having discussions,” he said.

Since 2015, Alaska’s annual budget process has frequently been snarled by low oil prices that have made it difficult for legislators and governors to balance the state’s books without spending from savings. 

Alaska relies on oil revenue for almost a third of its general-purpose revenue, and for most of the past decade, the price of North Slope crude has been relatively low. 

Alaska has never had a statewide sales tax, and it hasn’t had a statewide income tax since 1980. 

Since 2018, the state’s No. 1 source of general-purpose revenue has been the proceeds of the Alaska Permanent Fund, followed by oil. 

Dunleavy’s proposal will mark a major shift for the governor, who is term-limited and in the final year of his second term. For his first seven years in office, the governor has attempted to resolve the long-term imbalance in state finances by cutting services and spending. 

On the rare occasions that legislators have passed new tax measures, Dunleavy has vetoed them, saying he will accept no tax bills that are not part of a complete fiscal solution.

The governor is expected to unveil his proposal for a complete solution on Thursday. He said he views any tax measures as a temporary “bridge” until the North Slope begins producing more oil and a proposed trans-Alaska natural gas pipeline comes to fruition.

“The proposal and the fiscal plan has multiple components, and basically what it is, it’s a road map to inject stability, especially over the next five years when revenue is not quite what will be in the out-years,” he said.

In addition to proposing a statewide sales tax, the governor is expected to propose bills changing oil taxes and the Permanent Fund dividend.

“There’s always room for negotiation, but there’s two sides. That (goes) both ways,” he said.

Dunleavy’s remarks came during a Wednesday cabinet meeting that saw the leaders of state departments praise Dunleavy and point to ways in which the state’s position has improved since he entered office.

Crime is down, commissioners said, statewide employment is expected to reach a new historic high this year, and the state’s gross domestic product is also up.

Alaska remains near the bottom of national rankings in educational performance and violent crime, but Dunleavy said he wanted to emphasize that many of the state’s problems are improving.

“We wanted to make sure that people in Alaska know that … there’s a lot happening. These people are working hard. State employees are working hard. There’s a lot going on,” Dunleavy said. “It is a safer place. Is it the safest place in the country? No. That’s a motivator to keep going. We are creating more jobs. Can we, should we, do better? Absolutely. Keep going.”

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Alaska legislators convene session, with budget issues and a veto override vote awaiting

By: James Brooks, Alaska Beacon

Members of the Alaska House of Representatives leave their chambers on Tuesday, Jan. 20, 2026, the first day of the second session of the 34th Alaska State Legislature. (Photo by James Brooks/Alaska Beacon)

Alaska lawmakers opened the second year of their regular legislative session on Tuesday with an ambitious agenda but low expectations amid a tight budget that appears likely to draw the lion’s share of legislators’ attention.

“It’s one big log jam,” said Sen. Bert Stedman, R-Sitka. 

The Alaska Legislature operates on a two-year cycle between elections; bills are carried over from the first year to the second, but if they don’t pass the Legislature by the end of the second year, they expire and must start all over again. 

Speaking Tuesday, members of the coalitions in charge of the House and Senate said they hope to address pensions for public employees, the proposed trans-Alaska natural gas pipeline, a long-term plan to balance state expenses and revenue, elections legislation and a handful of other major topics — all while dealing with an annual state budget that’s tightly constrained by the price of oil and a reluctance to enact legislation that will raise revenue.

On top of that, there are two newly appointed members of the state House, two members of the House who switched to the Senate, and new leaders in both the House and Senate’s minority caucuses.

The regular session is scheduled to end May 20. 

Topic No. 1 is the state’s annual budgetary balancing act

“I think the big topic always is the budget,” said Speaker of the House Bryce Edgmon, I-Dillingham.

In December, Alaska Gov. Mike Dunleavy proposed a $7.75 billion state budget for the fiscal year that starts July 1 plus additional spending in the current fiscal year.

Alaska lacks the revenue to pay for that spending, so the governor has proposed spending $1.8 billion from savings.

Sen. Lyman Hoffman, D-Bethel and co-chair of the Senate Finance Committee, noted that the governor’s budget proposal calls for a large Permanent Fund dividend.

Reduce the governor’s proposal to $1,000 per recipient, and the deficit disappears — but only if you don’t include additional expenses that the governor left out of his budget, Hoffman said.

The Legislature could use savings to balance the budget, but members of the Senate majority believe the state’s Constitutional Budget Reserve — the state’s primary savings account — shouldn’t be used for recurring expenses.

“I’ve said it a couple of times, we shouldn’t be spending those dollars on one-time items,” Hoffman said.

If that position holds, the governor’s budget will need to undergo major changes before becoming final.

It takes 45 votes — 30 in the House and 15 in the Senate — in the 60-person Legislature to spend from the Constitutional Budget Reserve. 

Getting those votes has historically been a challenge because it will require members of the majority caucuses to compromise with members of the minority caucuses.

In prior years, the Legislature has deadlocked over the issue, driving the state to the brink of a government shutdown.

“The budget is in an environment that’s fiscally constrained, and it’s going to be challenged by additional expenses that we’re going to see in the supplemental measure. That’s our top priority,” Edgmon said.

Governor’s veto of transportation projects looms large

One of the “additional expenses” that has legislators worried the most is funding for the state’s annual transportation construction budget.

Last year, Dunleavy vetoed a chunk of that budget because lawmakers intended to pay for it by diverting money from previously funded projects. Legislators did not take up a veto override during their August special session.

That’s left a hole of about $70 million needed to unlock ten times that amount of federal money.

Filling the hole will likely require spending from the Constitutional Budget Reserve, which needs a supermajority in the House and Senate.

“There are businesses that are going to close if the next construction year is not funded, and so I’m pretty concerned about it,” said Sen. Cathy Giessel, R-Anchorage.

Stedman called it a “significant issue.”

“We do have a deficit in this current fiscal year, and it is very difficult to deal with the three-quarter vote. … So we’ll wait and see what the governor’s proposal is to fix the mess he created,” Stedman said.

More than 20 groups representing a variety of organizations across the state have been urging lawmakers to act on the issue, going so far as to launch a statewide ad campaign that asks Alaskans to also join the lobbying effort.

Without quick action, the groups say, there will not be enough time to put money to work during the summer construction season.

Members of the Alaska House’s all-Republican minority caucus pose for photographs on Tuesday, Jan. 20, 2026, the first day of the second session of the 34th Alaska State Legislature. (Photo by James Brooks/Alaska Beacon)

Governor expected to reveal fiscal plan during State of the State

Shortly after opening their session on Tuesday, lawmakers formally invited Dunleavy to deliver his annual State of the State address at 7 p.m. Thursday.

That’s unusually early, but Dunleavy is expected to use the speech — his final State of the State before leaving office in December — to unveil a comprehensive plan to bring state expenses and revenue into alignment over the long term.

That’s likely to require significant new taxes or major budget cuts: A 10-year plan published by the governor’s office in December showed that the state will need to raise as much as $1.6 billion in additional money per year to keep state services at current levels in 2035. 

Since oil prices plunged in 2015, state legislators and governors have been unable to fully resolve a fiscal gap that has bedeviled the state.

“It’s something that’s been on the docket for a long time, but it comes with a certain level of controversy, angst and maybe outright resistance,” Edgmon said.

Senate President Gary Stevens, R-Kodiak, said lawmakers initially expected the governor to propose a handful of bills, “but now there’s going to be an omnibus bill that has all of the issues in it,” he said.

House and Senate leaders were briefed on the outline of the governor’s plan earlier this week without receiving details.

Stevens, Edgmon and other legislators reserved comment on the governor’s ideas until they see the full text. 

“It’s impossible to opine on it at this point without seeing the bills, without seeing what he’s truly putting forward,” Edgmon said.

Newly confirmed Sen. Cathy Tilton, R-Wasilla, shakes the hand of Senate President Gary Stevens, R-Kodiak, on the first day of the session at Jan. 20, 2026 (Photo by Corinne Smith/Alaska Beacon)
Newly confirmed Sen. Cathy Tilton, R-Wasilla, shakes the hand of Senate President Gary Stevens, R-Kodiak, on the first day of the session at Jan. 20, 2026 (Photo by Corinne Smith/Alaska Beacon)

Veto override vote possible on Thursday

Hours before the governor talks about a comprehensive fiscal plan, legislators will vote on an incremental bill that would provide funding for education programs across the state.

The House and Senate passed Senate Bill 113 last year but Dunleavy vetoed it. If lawmakers override the governor, online companies would be required to pay corporate income taxes in Alaska for services delivered in Alaska. 

Current law allows them to pay those taxes at the site of their server farms or other physical offices.

“I think Senate Bill 113, quite frankly, is a litmus test for where we’re going to go with the fiscal plan,” Edgmon said.

Pension bill awaits attention in the Senate

On Friday, the Senate Labor and Commerce Committee will begin hearing a bill that would re-establish a pension plan for state employees and teachers.

The House passed the bill last year, leaving the issue in the hands of the Senate, which passed a similar bill in 2024. While Dunleavy has previously voiced opposition to the idea of a pension revival, a narrow majority of legislators appear favorable to the idea, saying it is important for Alaska to offer competitive benefits when hiring prospective workers.

Rep. Garrett Nelson, R-Sutton, introduces his wife and youngest daughter (standing at background) on Tuesday, Jan. 20, 2026, the first day of the second session of the 34th Alaska State Legislature. (Photo by James Brooks/Alaska Beacon)

New legislators and legislators take their seats

Last year, Sens. Mike Shower, R-Wasilla, and Shelley Hughes, R-Palmer, resigned from the Legislature to cover statewide office. Dunleavy appointed Reps. George Rauscher, R-Sutton, and Cathy Tilton, R-Wasilla, to fill those Senate seats. 

Rauscher and Tilton sat as senators for the first time on Tuesday, while their replacements sat as representatives for the first time in the House — longtime legislative aide Steve St. Clair and Sutton Community Council member Garret Nelson.

Both are stalwart Republicans and aren’t expected to significantly change the mix in the state House, where they will sit in the 19-member, all-Republican House Minority caucus.

The House is controlled by a 21-person coalition of Democrats, independents and two Republicans. 

The House’s Republican minority has a new leader this year — Rep. DeLena Johnson, R-Palmer, who replaced Rep. Mia Costello, R-Anchorage, during the legislative interim. Johnson gave up her position on the powerful House Finance Committee — a hurdle for any bill with a price tag — in order to take her role as the face of the minority.

Replacing Johnson on the finance committee is Rep. Elexie Moore, R-Wasilla. 

Some members of the House minority were unhappy with Johnson’s election as leader in part because that vote took place before St. Clair and Nelson were appointed. Since then, Johnson has been confirmed with a second vote, and any division among members of the House has quieted.

In the Senate, Shower’s departure required the selection of a new leader for the six-person, all-Republican minority caucus there. Sen. Mike Cronk, R-Tok, was elected to that role by his fellow minority Republicans.

The Senate continues to be led by a 14-person coalition that includes nine Democrats and five Republicans.

Newly appointed House Minority Leader Rep. DeLena Johnson, R-Anchorage and House Minority Whip Rep. Justin Ruffridge speak with reporters on the first day of the second session of the 34th Legislature on Jan. 20, 2026 (Photo by Corinne Smith/Alaska Beacon)
Newly appointed House Minority Leader Rep. DeLena Johnson, R-Anchorage and House Minority Whip Rep. Justin Ruffridge speak with reporters on the first day of the second session of the 34th Legislature on Jan. 20, 2026 (Photo by Corinne Smith/Alaska Beacon)

Legislators prepare to take up natural gas pipeline issues

The proposed trans-Alaska natural gas pipeline will be the top priority of the Senate Resources Committee, Giessel said on Tuesday. 

Developers of that project have said they intend to make a go/no-go decision on the pipeline’s first phase early this year, and Dunleavy has floated the idea of a large state property tax break in order to encourage the project.

On Tuesday, members of the Legislative Budget and Audit Committee voted to spend up to $250,000 to hire Pegasus Global to advise the Legislature on the pipeline project. The Legislature already has an advisory firm, GaffneyCline, on contract, but that firm’s parent company, Baker Hughes, plans to get involved with the pipeline project.

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Legislative Welcome to take place at Centennial Hall

NOTN- Lawmakers, their families and members of the public are invited to gather today at Centennial Hall for the annual legislative welcome, marking the opening day of the Alaska Legislature.

The reception is hosted by the Alaska Committee with support from Travel Juneau, the City and Borough of Juneau and dozens of local businesses. Organizers say the event has been held for nearly three decades and is intended to offer a bipartisan welcome to legislators arriving in the state’s capital for the session.

“The Alaska committee was formed in 1995 and we’ve been doing the reception just about since the very beginning.” Said Wayne Jensen from the Alaska Committee, ”We want all the local community members to come and say hi and welcome to the Capital City. It’s their Capital City.”

According to Jensen, being the Capital City is both a privilege and a responsibility.

“’That responsibility is to be as friendly as we can, and as hospitable as we can and make everything work well for the legislators and the State government.” Said Jensen.

Travel Juneau, the city’s marketing organization, assists with coordination for the event, including catering and use of Centennial Hall, according to Liz Perry of Travel Juneau.

“What we do is, we’re your front and center alongside the Alaska committee, to help make those invitations for people to come down and visit the Capitol, take a look at the building itself. The building is historic, and have a chance to talk with their legislators, if they have not had the opportunity to do so in their hometowns, and promote this as a great Capital City.” Perry said.

 Organizers said the welcome also serves as an opportunity to promote in-state travel, noting that many Alaskans from other regions, even Anchorage and Fairbanks, have never visited Southeast Alaska or the Capitol.

Local businesses and organizations will contribute food, gift bags and promotional items for legislators and staff. The city also participates by providing passes to local amenities such as Eaglecrest Ski Area, city pools and public transit.

“We prepare a bag for each one of the offices, and it’s just a way to say welcome to Juneau.” Perry said, “So it can be anything from artwork to books to candy, or an offer of some kind. And we look forward just to saying thank you to our legislators.”

The event is free and open to the public.

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Lawmakers eye continued education funding wins for 2026 session as Dunleavy drops policy push

By: Corinne Smith, Alaska Beacon

Snow falls around the Alaska State Capitol in Juneau on Dec. 31, 2025. (Photo by Claire Stremple/Alaska Beacon)

Alaska schools, students and education funding will continue to be in focus in the 2026 legislative session set to begin on Jan. 20, but early signs show they are unlikely to be at the center of the political spotlight as they were last year. 

Gov. Mike Dunleavy will not be pursuing education policy changes this year, according to a spokesperson with his office on Friday. Instead, he will focus on a state fiscal plan and the proposed development of the Alaska LNG gas pipeline, his office said. 

Those policy changes were at the heart of Dunleavy’s objection to increased education funding last year, and he said they were essential to boosting student achievement. He called a special session in August for lawmakers to address his policy items, but legislators took no action other than overriding two of his vetoes. 

One of those veto overrides was an historic win for education advocates: it restored a $700 increase to per student funding, known as the base student allocation, adding $50.6 million in education funding to the state’s budget.  

Yet many Alaska school districts continue to face steep budget deficits, and struggle to address the rising cost of operations, school maintenance, teacher retention and lost of federal funding. The Anchorage School District — the state’s largest district — is grappling with an $80 million shortfall, however the district and the union representing teachers reached a tentative agreement over the weekend on a new three-year contract. There may also be changes on the federal level because the Trump administration has promised to dismantle the U.S. Department of Education.

Sen. Löki Tobin, D-Anchorage, and chair of the Senate Education Committee, said it is still unclear whether lawmakers will again take action this year to increase education funding through the base student allocation. Tobin also co-chairs the special task force on education funding created this year. 

“It is difficult to know what the body is willing to do at this point in time,” Tobin said, as lawmakers are in transit back to Juneau this week, and caucuses are meeting to discuss policy priorities. 

But Tobin said she anticipates some kind of funding increase to help districts keep up with inflation. “Inflation continues to be a pressing issue in the state, and we don’t want the gains we made by increasing the basic allocation by $700 this last budget cycle to diminish because of inflation,” she said.

Rep. Andi Story, D-Juneau is co-chair of the House Education Committee and agreed an inflation adjustment is a major priority. “We don’t want to lose any ground,” she said in an interview Friday, pointing out the increase to the BSA only added $20 per student more than the year before.  

Dunleavy told reporters in December he hoped the legislature would pass a bill to launch a pilot program for schools run by Alaska Native tribes, known as tribal compacting, introduced last year. Tobin said the initiative is a priority, and said she supports tribal compacting statewide and wants to see greater tribal consultation and engagement throughout all districts. 

She said increasing funding for school maintenance will also be a major priority, as many rural districts grapple with deteriorating facilities and an estimated $800 million in deferred maintenance. 

Tobin said members of the task force recently made a visit to a school in Fairbanks with one of three boilers working — in subzero temperatures — and a plan to evacuate students if the last one failed. “That’s 726 students that will be displaced. It will be a huge hit to the Fairbanks education community,” she said. “It has the potential to really harm our students’ learning and what we need to do in Juneau, during this 34th legislature, to set us up for a long term solution on rebuilding our schools, is very much at the forefront of my mind.”

Tobin co-chairs the task force on education funding, which was established this spring to conduct an 18-month study and create policy recommendations for how the state funds schools. Members have expressed interest in a wide variety of policy initiatives: from revisiting the school funding formula, to investigating chronic absenteeism, to student performance and accountability measures, and policy changes sought by the governor like open enrollment and reading incentive programs. They are slated to deliver their recommendations at the start of the next legislative session in 2027. 

Tobin said task force members have made visits to schools in Fairbanks, the Matanuska-Susitna, Anchorage and Kenai Peninsula boroughs, and have plans to visit Skagway, Juneau, Bethel and Western Alaska. 

Republican leaders of the Senate and House minority caucuses did not respond to interview requests on their priorities for education. 

Veto override for additional education funding still in question

Lawmakers could also take up another veto override vote within the first five days of the session. Last year, lawmakers passed a corporate tax bill tied to online sales in Alaska that could generate up to $65 million in revenue that would go to fund career and technical education and K-12 reading improvement programs. Dunleavy vetoed it in September. 

Whether lawmakers will take up the override vote next week is unclear. At least 40 of 60 legislators are needed to override the governor’s veto within the first five days of the legislative session. 

In August, lawmakers narrowly overrode the governor’s budget veto of last year’s education funding increase by a vote of 45 to 14.

Tobin and Story, as education committee chairs, said the override vote and restoring additional education dollars is essential, especially for reading, and funding programs instituted by the Alaska Reads Act.  

House Speaker Rep. Bryce Edgmon, I-Dillingham, said via text that the Majority caucus is meeting to discuss legislative priorities this weekend. “Protecting education and public safety items in the budget along with other core services will be a priority in an environment that will be fiscally constrained,” he said. 

Edgmon did not confirm whether an override vote would take place, as of Thursday.

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Mary Peltola, barrier-breaking ex-Alaska congresswoman, is challenging Dan Sullivan in Senate race

U.S. Rep. Mary Peltola, D-Alaska, speaks on Jan. 4, 2024, at a town hall meeting on the possible Albertsons-Kroger grocery merger. The meeting was held at the Teamsters Local 959 headquarters in Anchorage. Peltola said on Tuesday she has not decided whether to support her party's likely candidate, Vice President Kamala Harris. (Photo by Yereth Rosen/Alaska Beacon)
U.S. Rep. Mary Peltola, D-Alaska, speaks on Jan. 4, 2024, at a town hall meeting on the possible Albertsons-Kroger grocery merger. (Photo by Yereth Rosen/Alaska Beacon)

AP-Democratic former U.S. Rep. Mary Peltola said Monday that she would challenge Republican Sen. Dan Sullivan in this year’s midterm elections, vowing to shake up the establishment to make life more affordable for Alaskans.

“Life is difficult here, and we know that we have to take care of each other,” Peltola said in a video announcement.

Peltola, who is Yup’ik, was the first Alaska Native to serve in Congress. She won special and regular elections in 2022, defeating a field that included Republican former Gov. Sarah Palin. In 2024, she lost to Republican Nick Begich, who had also run in 2022.

Peltola’s time in Congress was marked by tragedy. Her mother died in 2023, and her husband died in a plane crash later that year.

Peltola focused on local concerns in her announcement, saying Alaska’s future depends on fixing the “rigged system in D.C. that’s shutting down Alaska, while politicians feather their own nests.”

She said the salmon and migratory birds that once filled the freezers of Alaska Native subsistence hunters are now harder to find, forcing families who live far from the state’s limited road system to rely on grocery stores for pricey staples, driven up by high transportation costs.

“It’s not just that politicians in D.C. don’t care that we’re paying $17 for a gallon of milk in rural Alaska,” she said. “They don’t even believe us. They’re more focused on their stock portfolios than our bank accounts.”

Although Democrats are hopeful about picking up seats in this year’s midterms, Alaska could prove to be difficult political terrain. Sullivan, a former state attorney general and natural resources commissioner, defeated the state’s last Democratic senator in 2014.

The Republican National Committee said Peltola became “a rubber stamp for the far-left the second she got to Washington.”

“Alaskans saw through her empty promises then showed her the door, and she’ll lose to Dan Sullivan who fights for Alaskans every day,” RNC spokesperson Nick Poche said in a statement.

While serving in Washington, Sullivan has been involved in military and resource development issues, and he was endorsed by then-President Donald Trump in the 2020 election.

“Senator Sullivan has spent years delivering real results for Alaska: historic investments in our state’s health care, major funding for our Coast Guard, helping protect those who can’t protect themselves and policies that are finally unleashing Alaska’s energy potential,” his campaign spokesperson, Nate Adams, said in an email to The Associated Press.

“His opponent,” Adams said, “served a term and a half in Congress where she didn’t pass a single bill. Alaskans deserve a senator with a proven record of getting things done, and the contrast couldn’t be clearer in this race.”

Peltola has long touted her ability to work across party lines, such as supporting the large Willow oil project on Alaska’s North Slope. She angered some Democrats in 2024 when she refused to endorse then-Vice President Kamala Harris in the presidential race won by Trump.

Peltola said Alaska’s Republican congressional delegation used to ignore partisanship and do what was right for the state, such as backing public media and disaster relief, and even invoked Republican former Sen. Ted Stevens.

“It’s about time Alaskans teach the rest of the country what Alaska First and, really, America First looks like,” Peltola said.

Alaska has open primaries and ranked choice voting in general elections. The top four vote-getters in the August primary regardless of party affiliation will advance to the November general election.

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