NOTN- A bill introduced in the Alaska Senate would repeal the state’s voter-approved 90-day limit on regular legislative sessions, arguing the restriction has failed to improve efficiency and has instead led to longer, more costly extended and special sessions.
“This bill repeals a law that was in place, it was a citizen’s initiative.” Said Senator Cathy Giessel, “This table certainly, understands more than anyone the complexity of the issues we face, and adjourning mandatorily by 90 days is unrealistic.”
Senate Bill 34 would eliminate a statute that shortened regular legislative sessions from up to 121 days to 90 days. The bill does not establish a new session length, allowing the Legislature’s flexibility to meet for the full duration allowed under the Alaska Constitution.
In a sponsor statement, the bill argues that the 90-day limit has proven “impractical”.
Since the measure took effect, lawmakers have completed their work within 90 days only a handful of times.
“The Alaska Legislature has completed its work within that timeframe on only three occasions.” The statement reads, “Two of these instances occurred in the early years of the measure’s adoption, and the third took place during the COVID-19 pandemic in 2020. However, these instances were exceptions, not the norm, and have highlighted the inherent flaws of the 90-day restriction.”
In most years, the Legislature has exceeded the 90-day limit and continued work through extended sessions or special sessions, sometimes well beyond the original constitutional limit of 121 days.
The statement says 90 day sessions have not reduced costs or improved productivity. Instead, it argues the deadline has contributed to rushed decision-making, repeated extensions and added expenses associated with convening additional sessions.
SB 34 does not automatically lengthen legislative sessions, but would remove the legal restriction.
“And with that the legislature can adjourn anytime it wants if it gets its business done.” Said Senator Lyman Hoffman.
Jonathan Kreiss-Tomkins is seen on Jan. 17, 2026, in Sitka, Alaska, in this photo provided by Kreiss-Tomkins. (Handout photo)
By: James Brooks, Alaska Beacon
Jonathan Kreiss-Tomkins is seen on Jan. 17, 2026, in Sitka, Alaska, in this photo provided by Kreiss-Tomkins. (Campaign handout photo)Jonathan Kreiss-Tomkins is seen on Jan. 17, 2026, in Sitka, Alaska, in this photo provided by Kreiss-Tomkins. (Handout photo)
Former state legislator Jonathan Kreiss-Tomkins, a Democrat from Sitka, is running for governor, he said Tuesday.
Kreiss-Tomkins, frequently known as “JKT,” served in the Alaska House of Representatives between 2013 and 2023. He becomes the 16th candidate and third Democrat to enter this year’s gubernatorial election.
Incumbent Gov. Mike Dunleavy is term-limited and unable to run for a third term.
In Alaska, the top four vote-getters, regardless of political party, advance from the August primary to the November general election. In November, Alaskans use ranked-choice voting to name their preferences.
Kreiss-Tomkins said he’s running because Alaska has big problems and he’s interested in solving them.
“I really enjoy working with people from diverse backgrounds and different viewpoints and perspectives to try to forge compromise and get things done,” he said.
While in the Legislature, Kreiss-Tomkins was a member of the bipartisan, bicameral fiscal working group that in 2021 drafted a plan intended to bring the state’s finances in line over the long term.
Though that plan was never enacted, its components resemble the fiscal plan introduced this year by Gov. Mike Dunleavy.
“We’re in a perpetual budget uncertainty,” Kreiss-Tomkins said, identifying the state’s fiscal situation as his No. 1 issue.
Since oil prices plunged in 2015, legislators and governors have struggled to balance Alaska’s budget on an annual basis, occasionally bringing the state to the brink of a government shutdown.
“We’re living and dying by the price of oil, and we have a structural budget deficit, so the state’s finances are not especially in order, and that is, I think, probably the highest-order problem,” Kreiss-Tomkins said.
He said Dunleavy hasn’t been able to work across party lines and hasn’t been successful with the Legislature. Kreiss-Tomkins contrasted that with his own experience as a member of a Democratic-independent-Republican coalition majority in the state House.
“I feel like we need that same spirit in the executive branch, and if we could have a governor and an executive with that approach and mindset … there’s a tremendous amount of good that we can get done for Alaska,” he said.
Kreiss-Tomkins said the campaign season will show how he differs from the other two Democrats in the race: former state Sen. Tom Begich, and current state Sen. Matt Claman.
When it comes to the number of other candidates in the race, Kreiss-Tomkins said it’s not a bad thing for Alaskans to have so many choices.
“Seeing so many people willing to run sort of reflects the importance of the election and the gravity of the problems facing Alaska,” he said, adding that he expects “some winnowing of the field as time goes on.”
Cars drive aboard the Alaska Marine Highway System ferry Hubbard on June 25, 2023, in Haines. (Photo by James Brooks)
By: James Brooks, Alaska Beacon
Cars drive aboard the Alaska Marine Highway System ferry Hubbard on June 25, 2023, in Haines. (Photo by James Brooks)
Alaska’s state ferry system is at risk of a partial or total shutdown this summer due to the failure of the federal government to issue a key annual grant.
“Currently right now, we have a shortfall in our budget,” said Dom Pannone, director of program administration and management for the Alaska Department of Transportation and Public Facilities, to members of the Senate Finance Committee during a Monday morning hearing.
Money from the Federal Transit Administration’s rural ferry program pays for almost half of the Alaska Marine Highway System’s operating expenses, but the administration failed to open its annual grant process in fiscal year 2025, which ended Sept. 30.
The ferry system’s budget runs according to the calendar year. Last spring, the Alaska Legislature and Gov. Mike Dunleavy budgeted $171 million for the 2026 ferry budget. Of that, almost $78 million was supposed to come from the rural ferry program.
Without that money, the system could be forced to tie up its ships in midsummer, at the peak of the state’s annual tourist season.
“Right now, we have a federal chaos problem,” said Sen. Jesse Kiehl, D-Juneau and a member of the Senate Finance Committee.
Ryan Anderson, commissioner of the state DOT, said his agency is “looking at several options” to prevent a shutdown of the ferry system.
If a federal grant isn’t delivered, DOT would make significant changes to the summer ferry schedule, which is slated for release in May.
Anderson said the state could “dispose of the Matanuska,” the state’s oldest active ferry, which has been tied up dockside as a “hotel ship” because of maintenance costs.
The ferry Kennicott, coming out of drydock, or the Columbia, another old mainline ferry, could be tied up as a hotel ship instead of the Matanuska, he said.
On Monday, neither DOT officials nor state legislators could say why the Federal Transit Administration has failed to make grants available.
“What is going on in Washington, D.C.? That’s always a tough thing to work with,” Anderson said.
U.S. Sen. Lisa Murkowski, R-Alaska, secured almost $1 billion in the 2021 Infrastructure Investment and Jobs Act bill for the rural ferry program, which was written in a way to steer much of the money to Alaska.
By text after Monday’s hearing, Murkowski spokesman Joe Plesha said the Federal Transit Administration told her office it will release the FY26 ferry grants this spring, but did not give a timeline. “We are directly engaged with the FTA and working to advance the release of this grant funding as soon as possible,” Plesha said.
When Murkowski got the ferry language signed into law, it was the first time the federal government had significantly funded operational expenses for Alaska’s ferry system.
“In this particular case, it can actually pay for the operations of those (ferry) vessels,” Anderson said, noting that includes operating costs like crew and fuel. That billion dollars was to be spread across five years, and the program disbursed more than $252 million nationwide in FY22, $170 million in FY23 and $194 million in FY24.
Alaska received more than five-sixths of the total distribution in that time, something that allowed Gov. Mike Dunleavy to divert state dollars to other parts of Alaska’s annual budget.
Alaska DOT estimates that about $410 million remains available for the federal government to disburse.
In each of the three prior grant years, it took between 152 and 199 days from the time the grant application period opened to the time the grant was awarded.
That timeline means that even if federal transit officials were to open the grant process tomorrow, a decision might not be made before the arrival of the summer ferry schedule in May.
Dunleavy and the Legislature could extend the timeline by changing the ferry system’s budget calendar so that it starts July 1 along with all other state agencies, but if there’s still no federal money, that would just extend operations until January 2027, and then the system would face a $150 million cliff instead of a $78 million one.
Sen. Bert Stedman, R-Sitka, said that finding “backfill” money will be difficult in either case.
“Our budgets are getting tighter and taking away the flexibility the (finance) committee has to backfill some of these holes, and this particular hole could be significant, pushing $80 million,” he said.
The ferry funding issue could persist even if the federal transit authority resumes paying grants, because its ferry operations program is set to expire this year.
“What happens when that grant money is gone?” asked Sen. Mike Cronk, R-Tok.
“This year, the surface transportation reauthorization is up for renewal,” Anderson said. “This, we understand, is part of that discussion: Will the rural ferry program continue over the next subsequent four years?”
Anderson said that even if Congress renews the program, the current Alaska-favorable rules might be rewritten.
“Other states are very interested in this program as well because they have a lot of similar challenges,” he said. “Nationwide, there’s support for a program such as this. The questions that are out: How will the rules be rewritten, and how competitive will the program be? That will be the challenge.”
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.
