A week after Gov. Mike Dunleavy introduced his omnibus fiscal bill — a sprawling plan that calls for a statewide sales tax, tweaks to oil taxes and the complete elimination of corporate income taxes — Alaskans will have an opportunity to let lawmakers know what they think of the plan.
The House Finance Committee is set to hold a public hearing on the bill on Thursday evening, allowing testifiers up to two minutes each to share their views on the measure that would implement a largely exemptionless 2% sales tax that ratchets up to 4% during the summer. House Bill 284 is the governor’s attempt to resolve the state’s ongoing structural budget deficit, specifically aimed at bridging the state’s current financial situation to when oil and gas projects that he hopes will come online in the early to mid-2030s.
Legislators have been broadly unenthused about the bill, noting that while it’s a better-late-than-never attempt by a governor in his final year of office, it is a clumsy plan that needs more work to understand its long-term impact on the state and everyday Alaskans.
Critics have pointed out that it’s designed to shift the cost of government operations from corporations and the wealthy to working-class Alaskans.
That’s because sales taxes in particular hit lower- and middle-income families much harder because they tend to spend a greater portion of their income. A recent report by the Alaska Institute of Social and Economic Research found that a sales tax like the one proposed by the governor would capture about 1% of household income for the state’s lowest-earning families per $100 million raised (his bill proposes about $800 million).
“The wealthiest households would pay five to fourteen times as much in sales taxes as the poorest — but the poorest would lose more as a percentage of their income, particularly under a broader-based tax,” the report explained.
An income tax, the report adds, is the only option in which the wealthiest households would contribute a larger share of their income to balancing the budget than lower- and middle-class households. Dunleavy has not signaled any plans to consider an income tax.
“The income tax options would cost the wealthiest households 35 to 2,000 times as much in dollars as the poorest,” explains the report, calling it one of the only options “that would cost the wealthiest households a higher percentage of their incomes.”
And even if legislators sign off on the bill unchanged, it still wouldn’t become law. The governor has conditioned the bill on legislators also passing a strict spending limit, a periodic review of whether state agencies are still needed and sending a constitutional amendment guaranteeing a large Alaska Permanent Fund dividend to voters.
Rep. Andy Josephson, the Anchorage Democrat who co-chairs the House Finance Committee, said in a special order speech on Monday that the take-it-all-or-get-nothing approach of the governor creates a “very, very challenging” path to passage. He also noted that the initial review of the plan’s numbers isn’t stellar.
“The governor’s overall package does not balance and, in fact, it gets worse in the out years,” he said. “If we’re going to entertain these important subjects, we should at least get the job done in the final analysis as best we can.”
The hearing is set to begin at 5:30 p.m. with sign-ups beginning 30 minutes earlier. Testimony can be taken in person, by emailing house.finance@akleg.gov or by telephone:
Phone: 907-586-9085 (Juneau), 907-563-9085 (Anchorage), 844-586-9085 (toll free)
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Bluesky.
