Representative Andi Story presenting to the House Education Committee, Screengrab courtesy of Gavel Alaska and KTOO
NOTN- A bill heard at 8 A.M this morning would overhaul how public schools are funded by changing how students are counted for state aid.
House Bill 261, rewrites large portions of the state’s public school funding statutes.
“We force school districts to budget in such an irrational way.” Said Representative Andi Story, “This backwards budgeting consumes a great deal of valuable time to reshuffle numbers, from personal experience this causes great pain in the community.”
In the full text of House Bill 261, available on The Alaska State Legislature Website, the measure is intended to stabilize school funding particularly through enrollment declines.
The biggest change in the bill is how Alaska calculates average daily membership, or ADM, which is the student count used to determine state education funding.
According to the Alaska Department of Education and Early Development, the ADM is a count of enrolled K-12 students taken for 20 days ending the last Friday in October of each year, the ADM is adjusted due to a few factors including school size, district cost, and special needs.
Under the bill, districts would generally receive funding based on the higher of their most recent student count or a three-year average.
“Alaska should create a 3 year averaging approach statewide to replace the current Hold Harmless Provision.” Story said during her presentation.
The Hold Harmless Provision currently protects school funding if their ADM drops by 5% or more each year, which allows the previous year’s student count to be used as a base to mitigate a drop in funding.
“It could also provide districts with greater stability and planning.” Story said, “As districts would not be so concerned about unexpected changes in enrollments at the October count period. About 19 states use an approach that either averages, combines or provides the better of multiple years of student counts.”
The bill also alters how districts are funded following school consolidations or closures, it would allow temporary offsets to soften funding losses over a period of several years.
The bill would also restrict districts from reopening schools too quickly after consolidation.
HB 261 also changes or revises how special education funding is calculated, particularly for students who require intensive services.
Using the above 3 year count, districts that identify additional students requiring intensive services midyear would be eligible for retroactive funding.
The bill applies to school districts statewide and does not directly increase the base student allocation, which is the per-student dollar amount set separately by the Legislature.
The ferry Tustumena is seen July 20, 2021, in southwestern Alaska. (James Brooks photo)
By: James Brooks, Alaska Beacon
The ferry Tustumena is seen July 20, 2021, in southwestern Alaska. (James Brooks photo)
After more than a decade of planning, design and false starts, the state of Alaska is once more attempting to build its first new mainline ferry in decades.
On Jan. 23, the Alaska Department of Transportation and Public Facilities began advertising for shipyards interested in building a replacement for the Tustumena, which sails between Homer, Kodiak and Unalaska on the longest, most remote state ferry route in the United States.
The new ship must be built in the United States and is expected to cost well over $325 million, based on a prior estimate provided by the state to the federal government and inflation since that 2022 projection.
The current bid listing states only that the “engineer’s estimate is greater than $100,000,000.”
The final operational requirements include a 330-foot-long ship with a range of 4,000 nautical miles, and a capacity of 250 passengers and 28 crew plus 58 vehicles.
A computer-generated mockup of the new Tustumena replacement ferry is seen in an undated image published by the Alaska Department of Transportation and Public Facilities. (DOT image)
The federal government is expected to pay for the majority of the project, which has been a state priority since 2013.
The Tustumena, variously nicknamed “Rusty Tusty” and “Trusty Tusty,” entered service in 1964.
The years and the rough seas of the North Pacific have taken their toll: In 2012, age-related problems sidelined the ship for months, cutting Kodiak off from the state road system. After an extended stay in drydock, it returned to service, but the experience caused the state to begin planning and designing a replacement.
Plunging oil prices and vanishing state revenue caused legislators and then-Gov. Bill Walker to slash the state’s budget, which put the replacement project on the back burner, and the Tustumena remained in service.
In 2016, part of the ship’s hull cracked badly enough that the Alaska Marine Highway System stopped sailing it in strong storms.
Subsequent repairs allowed the ship to return to full service, but the state renewed its efforts to replace the Tustumena. In late 2018, just as Walker was leaving office, the state signaled that it would soon begin soliciting bids for a replacement ship.
“The request for proposals will be issued in January 2019 and a ship builder should be selected by June-July 2019,” DOT said at the time.
Gov. Mike Dunleavy, who entered office in December 2018, froze the Tustumena replacement project and similar large-cost state projects as part of a new round of cost-cutting, and in his first years, he significantly cut the budget of the state ferry system, precluding it from going out to bid. By the end of 2021, the Dunleavy administration had relaxed its position on the Tustumena and named it a priority.
Ferry system officials said they would start a new bidding process in 2023, but that never came to pass. Plans for new bids in 2024 and 2025 also never came about.
In the meantime, the ship and its propulsion system were repeatedly redesigned, and the Tustumena is now intended to use a diesel-electric drive capable of cruising at 15 knots in moderate, 8-foot seas during the winter, with a maximum speed of 18 knots.
Eric Phillip, the boardwalk foreman for Kongiganak, Alaska, surveys infrastructure damage caused by Typhoon Halong, Oct. 18, 2025. The Alaska Organized Militia continues coordinated response operations in support of the State Emergency Operation Center following the 2025 West Coast Storm as the mission focus, pursuant to Governor Dunleavy’s declaration of disaster, shifts from lifesaving to life sustainment and stabilization of communities and survivors. (Alaska National Guard photo by Staff Sgt. Joseph Moon)
By: Corinne Smith, Alaska Beacon
Eric Phillip, the boardwalk foreman for Kongiganak, Alaska, surveys infrastructure damage caused by Typhoon Halong, Oct. 18, 2025. The Alaska Organized Militia continues coordinated response operations in support of the State Emergency Operation Center following the 2025 West Coast Storm as the mission focus, pursuant to Governor Dunleavy’s declaration of disaster, shifts from lifesaving to life sustainment and stabilization of communities and survivors. (Alaska National Guard photo by Staff Sgt. Joseph Moon)
The Trump administration has denied Alaska’s request for full reimbursement for disaster relief efforts immediately following last October’s devastating Western Alaska storms, despite the Dunleavy administration’s claim that the federal disaster declaration meant the state would be fully reimbursed.
Gov. Mike Dunleavy arrives in Bethel after visiting the storm-damaged villages of Kipnuk and Kwigillingok on Oct. 17, 2025. (Photo by Eric Stone/Alaska Public Media)
That leaves the state on the hook for millions of dollars for disaster recovery, however the full amount is still unknown.
The state’s request for federal support for 100% of disaster relief efforts in the first 90 days after the storms hit was denied on Dec. 20, according to a spokesperson for the Alaska Division of Homeland Security and Emergency Management on Thursday.
The state appealed the denial on Jan. 15, and asked for a 90% federal cost reimbursement, but has not yet gotten a response from the Federal Emergency Management Agency.
“We have not heard back from FEMA on approval or denial and there is no timeframe requirement,” said Jeremy Zidek, public information officer for the division, by email.
A spokesperson for Dunleavy’s office did not respond to a list of questions, but confirmed the appeal on Friday. “An appeal has been filed and the administration will await the federal government’s decision,” said Jeff Turner, Dunleavy’s communications director.
In the meantime, the federal government is reimbursing Alaska’s disaster recovery efforts at roughly 75%, leaving the state to cover 25% of its costs, with some exceptions for certain relief programs, Zidek said.
Following the West Coast storm disaster in October, Dunleavy quickly declared a state disaster emergency. On Oct. 22, his office announced that the Trump administration approved the state’s request for a federal disaster declaration, and the state’s full costs would be covered immediately following the storms.
“President Trump was deeply concerned with the wellbeing of Alaskans who lost their homes and livelihoods to this historic storm,” Dunleavy said in a statement along with the announcement. “I want to thank him and his administration for approving the disaster declaration because now Alaskan families have local, state and federal support for rebuilding their lives in the months ahead.”
“The federal disaster declaration authorizes a 100 percent federal cost share for all categories of relief assistance for the next 90 days,” the statement said.
Dunleavy’s office did not respond to questions about his previous statement or whether his office had communication from the Trump administration about why the request was denied.
Alaska’s Republican U.S. congressional delegation applauded the federal disaster declaration and Trump’s support for the Western Alaska disaster response last year. All three members said through spokespeople Friday that they support the state’s appeal.
U.S. Sen. Lisa Murkowski has been actively engaged with FEMA and state officials throughout the disaster relief efforts, said her communications director, Joe Plesha, in a statement on Friday. “Alaska’s vast geography and many rural communities make disaster response more challenging and recovery efforts significantly more costly,” he said. “She supports the state’s appeal and will work to secure the maximum amount of federal support available to Alaskans who have suffered so much from this devastating storm.”
A spokesperson for U.S. Sen. Dan Sullivan, Amanda Coyne, said the senator has advocated for the 100% federal cost share, as well as organized a delegation of FEMA and other Trump administration officials to visit Western Alaska.
“Given the severity of the storm and its devastating impacts on communities in Western Alaska, Senator Sullivan believes an increased federal cost share is warranted,” Coyne said. “He will continue strongly advocating with FEMA and other senior officials in the Trump Administration for an increased federal cost share as the state’s appeal goes through the process.”
A spokesperson for Alaska’s lone U.S. Representative, Nick Begich III, said on Friday that he supports the appeal and will continue to advocate for those impacted by Typhoon Halong at the Congressional level. “Our office is in communication with the Administration to ensure recovery efforts in Western Alaska remain a priority,” spokesperson Silver Prout wrote.
Western Alaska storm recovery is ongoing
The Western Alaska storms and particularly ex-Typhoon Halong brought record-breaking winds and flooding — damaging thousands of structures, roads, boardwalks, airports and other critical infrastructure. It prompted the state’s largest mass evacuation of residents from their homes to other villages, Bethel and Anchorage.
Evacuees of Kipnuk and Kwigillingok wait to board an evacuation flight from Bethel to Anchorage on Oct. 15, 2025 (Photo by Corinne Smith/Alaska Beacon)
While some Western Alaska residents are continuing to rebuild through the winter, other residents who evacuated to Anchorage are living in temporary housing. As of Thursday, the Alaska Division of Homeland Security and Emergency Management reports that 471 residents are still sheltering in hotels in Anchorage.
The state is administering public assistance programs, which reimburse costs of repairing public infrastructure and utilities, as well as provide individual disaster assistance, in partnership with other agencies, including FEMA.
FEMA has awarded $31.2 million in individual assistance to date, Zidek said.
More than 2,000 residents have been awarded state individual assistance, and 1,794 households have registered for federal assistance from FEMA.
Those applications for state and federal assistance are still open until Feb. 20.
State disaster relief funding under debate
The state’s disaster relief funding is a point of ongoing debate among lawmakers and the governor, as they kick off discussion of Dunleavy’s proposed $7.75 million budget and its $1.5 billion deficit.
Last year, legislators approved $23.3 million in state disaster relief funds, but Dunleavy vetoed $10.3 million of that sum last summer, leaving $13 million in the budget. In November, following the federal government shutdown, Dunleavy announced a state disaster to help provide food aid, transferring $10 million to the state’s disaster relief funding from the Department of Environmental Conservation’s Village Safe Water and Wastewater Infrastructure program.
This year, the governor has requested an additional $40 million in the state’s supplemental budget, which is a routine ask for additional money to pay the state’s bills for the previous year.
Sen. Bert Stedman, R-Sitka, a co-chair of the Senate Finance Committee, didn’t mince words about the governor’s back and forth with disaster spending. “Ill-advised and foolish,” he said. “It makes no sense what he did to me, frankly, and it’s embarrassing for him, his veto.”
But Stedman said he hopes the state’s federal appeal is approved, and expects legislators to pass the governor’s request for the additional $40 million. “Obviously, 100% is better than 90 and 90 is better than 75,” Stedman said of the federal cost share. “So that’s pretty much a given there. But we will fund the disaster request as the governor puts it on the table, through next week’s amendments.”
Sen. Jesse Kiehl, D-Juneau, also a member of the Senate Finance Committee, commended the governor for his record on disaster response, and echoed hope for the appeal to move forward. “There’s no question in my mind that this is exactly what the federal disaster relief programs exist for. So I think the governor’s request was the right thing, and if it came back at less than full funding from the feds, that’s the wrong call,” Kiehl said.
Kiehl described the state’s fiscal picture, with rising costs and ongoing debates on how to raise more revenues, as “bleak.” “So there isn’t cash just sitting around for disaster assistance,” he said. “We have to step up for western Alaska financially. That’s going to stink, but we have to do it, as far as I’m concerned.”
A typical cost share between the federal government and a state for disaster relief efforts is a 75% federal and 25% state cost split.
“We have dozens of federal declared disasters we are currently working on that have the 75/25 cost share structure,” said Zidek, with agency. “Large disasters are occasionally given a modified cost share structure adjustment, but it is not guaranteed. When we have a large disaster, we ask for modification to reduce the amount of state funding needed because as managers of state funds it is the responsible thing to do.”
Rep. Kevin McCabe, R-Big Lake, reads a document entitled “Alaska’s Fiscal Options” while listening to a presentation by the Institute for Social and Economic Research of the University of Alaska Anchorage on Thursday, Jan. 29, 2026, at Centennial Hall in Juneau. (James Brooks photo/Alaska Beacon)
A new nonpartisan report by the Institute of Social and Economic Research at the University of Alaska Anchorage has concluded that raising oil and corporate taxes to balance Alaska’s budget likely has the lowest negative side effects for Alaskans’ jobs and income.
The report, eagerly anticipated by state lawmakers and experts, comes as legislators consider ways to balance Alaska’s expenses and revenue over multiple years.
Commissioned by the administration of Gov. Mike Dunleavy, the report was released days after the governor debuted a plan intended to bring Alaska’s expenses and revenue in line.
Since 2015, when oil prices plummeted, Alaska has struggled to balance its budget on an annual basis despite steep cuts to state services. At times, the tug-of-war between services and the Permanent Fund dividend has driven the state to the brink of a government shutdown.
Figures from the Legislative Finance Division, which advises the Legislature on fiscal issues, show state agencies have had their budgets cut by 16.6% when adjusted for inflation since Fiscal Year 2015.
During the same period, lawmakers have passed no significant revenue measures. Dunleavy, who opened his first year in office by proposing massive budget cuts, hasn’t proposed significant reductions in recent years and is now suggesting a statewide sales tax and other revenue measures are needed for the state to keep up with spending.
ISER’s analysis of the situation was keenly awaited by state legislators and other experts, who crowded into a ballroom at Juneau’s convention center on Thursday morning to hear its economists deliver their report.
A 2016 analysis by ISER remains widely consulted in the capitol and was a contributing factor to lawmakers’ decision to begin using the Alaska Permanent Fund as a trust fund two years later. Legislators installed an annual transfer from the fund to the treasury for dividends and services, and it’s now the No. 1 source of general-purpose state revenue for Alaska, accounting for almost two-thirds of the state’s flexible spending each year.
The report released Thursday concluded that Alaska’s unstable fiscal situation has created so much uncertainty that it’s lowered Alaska’s real gross domestic product growth by 2-3% over the past decade, the equivalent of billions of dollars, said Brett Watson, an economist with the Institute of Social and Economic Research and the lead author of the report.
Brett Watson of the Institute for Social and Economic Research of the University of Alaska Anchorage delivers a presentation about Alaska’s fiscal options on Thursday, Jan. 29, 2026, at Centennial Hall in Juneau. (James Brooks photo/Alaska Beacon)
Alaska’s GDP — the value of all goods and services in the state — is about $70 billion and ranks near the bottom of U.S. states in terms of growth over the past decade.
ISER examined 11 different options to balance the state budget, including spending cuts, cuts to the Permanent Fund dividend, income taxes, sales taxes and business taxes.
Raising business and oil taxes would have the lowest negative impact on jobs and income, while cuts to services would have the biggest negative effect on them, the report found.
Reducing the Permanent Fund dividend to balance the budget — which has been the existing legislative policy for the past several years — has similarly large negative effects on income, but smaller negative effects on employment. Poor Alaskans are affected more by a PFD reduction than rich Alaskans, making it the most regressive option.
Among statewide taxes, a progressive income tax would have the biggest negative impact on high-income Alaskans and the lowest negative impact on low-income residents.
Nonresidents would pay 27% of a statewide sales tax with many exclusions — food, utilities, and health care, for example — making it the option with the least direct impact on individual income among broad-based taxes.
Corporate and oil taxes have a lower impact overall, ISER concluded.
Making a sales tax higher in the summer and lower in the winter “shifts the burden toward visitors, reducing the impact on Alaska families by 2-5 percentage points per dollar raised,” ISER concluded.
Dunleavy’s fiscal plan includes a seasonal sales tax as one of its pillars.
ISER also concluded that its models suggest that it is possible to come up with “a budget neutral combination that stimulates growth.”
“For example,” its report states, “coupling a less distortionary revenue source (like property tax) with expansionary spending (like capital project investment) can result in a net increase in total employment.”
Alaska Gov. Mike Dunleavy opens a presentation by the Institute for Social and Economic Research of the University of Alaska Anchorage on Thursday, Jan. 29, 2026, at Centennial Hall in Juneau. (James Brooks photo/Alaska Beacon)
Imposing a statewide property tax and a broad corporate tax cut in combination, ISER suggested in a slide presented to lawmakers, would result in increased employment and personal income by 2050, it estimated.
The effect of each tax or cut was examined independently, Watson said, in $100 million chunks.
“You can think about these as items on a buffet, and you kind of scoop from them different serving sizes as you construct a plate that is a state fiscal plan,” he said.
ISER also considered things linearly — economists didn’t try to predict whether Alaskans would react differently if a sales tax went from 5% to 6% instead of from 0% to 1%.
“In reality, it is likely that there are certain important thresholds that if you turn that dial too far, consumers start reacting in more and more aggressive ways to it, but we assume that their reaction is the same, regardless of what the level set is,” he said.
Watson said there is a cost if lawmakers do nothing. In addition to the GDP penalty caused by uncertainty, the state remains vulnerable to what’s called the “Alaska disconnect.”
Imagine, he said, if “something crazy would happen and one of the Silicon Valley tech giants were to announce that they were going to create a Silicon Valley of the north somewhere in Alaska and that they would move 100,000 employees somewhere in Alaska and create this northern hub of tech.”
“It would be absolutely catastrophic from the standpoint of the state of Alaska budget,” he said. “There would be 100,000 new Permanent Fund dividends to pay, the children of 100,000 new employees to educate, more roads to maintain, more state services to provide, without any additional revenue collected for any of those individuals. And so there’s this disconnect now that’s growing between our private sector economy and what goes on in our public sector.”
Representative Sara Hannan, Andi Story and Senator Jesse Kiehl (from left to right) at Thursday evening’s Town Hall.
NOTN- Juneau residents turned out Thursday evening for a legislative town hall at the Mendenhall Valley Library with Juneau’s delegation.
State Senator Jesse Kiehl and Representatives Sara Hannan and Andi Story met with constituents to share updates from the current legislative session and hear directly from the community.
“Mostly, the reason we’ll do this is to hear your questions or hear your comments. By golly, we need to hear from you. You’re who we work for.” Said Kiehl Thursday morning.
Attendees asked about a range of issues facing Juneau and the state including disaster response, Representative Andi Story assured constituents that the legislature is speaking with Alaskaa ‘s congressional delegation to come up with long-term mitigation plan for glacier lake outburst floods.
“Everyone’s living with a lot of stress, it’s emotionally draining when its your home.” Story said, “We know August is coming around, we’re trying to repair the HESCO barriers, we are trying to do what we can.”
Most prevalent was the budget, and more specifically, the Governor’s recently proposed fiscal plan, currently making its way through the legislature.
“What we have to do is have a balanced budget.” Story said, “We don’t have to pass any policy at all, but every year we have to come together to provide a balanced budget to meet our constitutional budget requirement.”
The Governor’s sweeping fiscal plan includes Alaska’s first statewide sales tax in more than four decades. The proposal would create a year-round sales tax, 4% in the summer and 2% in the winter, running through 2034.
“It would add on top of local sales tax, and it would override any local sales tax decisions.” Kiehl said, “So Juneau voters just voted to take sales tax off of food. This will put sales tax back on all food, that’s an issue.”
If adopted the tax could potentially raise over 800 million dollars a year by the early 2030s.
The plan also includes a constitutional amendment to set a “50-50” Permanent Fund Dividend, which would amount to roughly $3200 per recipient.
“What the governor used to propose, was just take more than we can sustain out of the earnings reserve. Great, big draw.” Kiehl said, “So I applaud the Governor for saying, okay, that old idea of his doesn’t work. His proposal takes that cap, and it says we’re going to draw 5% we’re going to split it 50-50, between public services and PFDs. but you can only do that if we spend even less on services than we do now.”
Kiehl said the Governor’s proposal could underfund schools and building maintenance.
“The state’s going to crumble and fall down if we do that, the math doesn’t work.” He said,”Could we protect a dividend? Yeah, but the simple fact is, we’re not gonna get the votes to raise taxes to increase the PFD from where it’s been. We should stabilize the PFD, but if we’re talking about adding taxes to Alaskans and Alaska businesses, we’re not going to do that to pay out a bigger check than we’ve been paying.”
Representative Hannan hinted at an opportunity for residents to publicly testify at a Senate Finance meeting next Thursday, this has yet to be confirmed on the Alaska State Legislature website.
The meeting took place in person and was live-streamed on Facebook.
A road sign marks the road towards the Lower Kuskokwim School District offices and the Bethel High School. October 9, 2023. (Photo by Claire Stremple/Alaska Beacon)
While Alaska school districts are seeing improvements in kindergarten to third grade students’ reading proficiency, which officials credit to the Alaska Reads Act, some districts are struggling to access state managed funds for a federal grant program aimed at supporting literacy programs, teacher development, and student learning.
School districts awarded CLSD grants in 2025
Alaska Gateway School District
Aleutians East Borough School District
Anchorage School District
Bering Strait School District
Bristol Bay Borough School District / Chugach School District
Copper River School District
Cordova City School District
Dillingham City School District
Galena City School District
Iditarod Area School District
Kake City School District
Kashunamiut School District
Kenai Peninsula Borough School District
Kodiak Island Borough School District
Kuspuk School District
Lake and Peninsula Borough School District
Lower Yukon School District
Mount Edgecumbe High School
North Slope Borough School District
Northwest Arctic Borough School District
Petersburg Borough School District
Pribilof School District
Southeast Island School District
Yakutat School District
Yukon Flats School District
Yukon–Koyukuk School District
Lawmakers with the House Education Committee heard from two district superintendents about the successes and challenges of the Comprehensive Literacy State Development grant program — which in 2024 awarded $50 million to Alaska schools over five years.
In 2025, roughly half of Alaska’s districts, or 27 school districts, qualified for these grant funds administered through the Alaska Department of Education and Early Development, according to the department.
The program is aimed at advancing literacy for children from birth through 12th grade students, including pre-literacy skills, reading and writing. The program focuses on districts with disadvantaged children, including those living in poverty, English language learners and students with disabilities.
While all Alaska districts are required by state law to implement the Alaska Read’s Act, the policy did not come with additional state funding, said Rep. Rebecca Himschoot, I-Sitka, co-chair of the education committee, in an interview on Monday. She said some districts are struggling to fund the kindergarten through third grade reading initiatives. “I would like to see us supporting schools so that everybody gets the support they need to implement the law the way it was written,” she said.
The program isn’t new, but it has more money and it’s funding more districts now. In 2019, nearly one third of Alaska districts were awarded $25 million over five years, according to DEED.
“The literacy grant is a really powerful tool that is going to help the districts that it’s in, a lot,” Himschoot said. “I’ve heard a lot of gratitude from superintendents about having this opportunity for those who have it, but we did hear about some bumps in the rollout of it.”
District officials’ testimony prompted Himschoot to send a list of questions to DEED about how the grant is managed.
Michael Robbins, superintendent of the Bristol Bay Borough School District, which serves approximately 135 students, said the grant has been crucial for implementing the Alaska Reads Act, particularly supporting teachers’ training professional development, which helps retention. “The grant supports training, coaching and leadership development grounded in research-based instruction, including the science of reading,” he said.
“It creates consistency across classrooms in schools, helps prevent problems before they grow, and ensure that limited resources are utilized where that matters most,” Robbins said.
But Robbins said in implementing the grant, districts need more “clear, timely and reasonable guidance around allowable use of grant funds” from DEED.
He said the district would like to use the money for professional services vendors to provide training to teachers, and funding to attend conferences. “The approval process has been particularly cumbersome as some districts have had to resubmit their application multiple times, which takes valuable time from our grant leaders and administrators, as well as delaying the implementation of important activities,” he said.
Officials with DEED did not attend the legislative hearing, but department spokesperson Bryan Zadalis said by email on Monday that the department recognizes the importance of clear guidance, which is communicated through multiple channels including webinars and office hours. “DEED also aligns state-level guidance with federal updates as they are released to ensure accuracy and compliance, which can at times require sequencing information rather than issuing it prematurely,” he said.
In addition, Robbins, who formerly served as the superintendent of the Ketchikan Gateway Borough School District, said that that district did not qualify for grant funding. “The need was there, but the resources are not,” he said. “We need to find ways for all districts and all students to have access to the same level of support and opportunity.”
Robyn Taylor is superintendent of the Petersburg School District which serves approximately 420 students, and was awarded $350,000 per year through the grant program. She testified to lawmakers and echoed the need for equity in supporting reading programs across Alaska’s school districts. She said Petersburg still continues to have challenges with implementing the Alaska Reads Act, which she called “a real tension.”
“In Petersburg alone, between FY 25 and FY 26 we eliminated one of our three elementary reading interventionist positions, positions that were directly supporting Reads Act implementation and student outcomes,” she said. She said the district was told that CLSD funds were for supplementing programs not replacing funding.
“(The) restriction makes it difficult to use this grant to maintain positions or systems that are already working but are no longer financially sustainable under current funding structures,” she said.
Taylor and Himschoot both emphasized that districts who did not qualify for funding need support with the administrative work to apply. They said some schools should have easily qualified for the funding, but didn’t in part because they lack proper documentation of their students’ need for free or reduced school meals, which is one of the federal poverty guidelines. “It’s not that they don’t have kids in need,” Himschoot said. “It’s that they haven’t been identified through the paperwork, because they don’t have the capacity in their district to go chase that down.”
Zadalis said the grant process is a competitive one. He said the primary source of education funding is through the state’s funding formula, but districts may also access state or federal funding through other grants focused on literacy efforts.
Taylor said Petersburg students are making gains in reading proficiency, and the district is committed to continuing improvements beyond the grant cycle. “What we are asking for is greater flexibility, clearer and earlier guidance,” she said. “And increased trust in districts to make decisions that reflect local context and student needs.”
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.
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.
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.
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.
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.”
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.
