Alaska Senate leaders signaled Tuesday that they were open to considering new revenue measures this year to help stabilize the state’s looming budget deficit.
“We haven’t addressed revenue for decades,” Sen. Lyman Hoffman, a Bethel Democrat, told reporters. “I think it’s high time the Legislature looks at raising new revenues if we want to accomplish the many things that we want to do. If not, I don’t see a clear path forward to balancing not only this year’s budget, but next year’s budget.”
Budget analysts predict that without additional revenue, the state could face a $500 million shortfall during the coming year, even without increasing the state’s education budget — a top priority for leaders of both the House and Senate.
Hoffman, who has served in the Legislature for more than 38 years, said “the state of Alaska is probably facing its largest fiscal problem in 30 years.”
He said the fiscal crisis is driven in part by the Legislature’s efforts this year to significantly increase education funding, a task lawmakers have not undertaken in more than a decade. A bill backed by House leaders would increase the state’s education budget by around $150 million in the coming fiscal year compared to the current one, and hundreds of millions more in the following two years.
Hoffman said the Senate majority had already discussed new revenue measures during a retreat before the beginning of the session.
“I’m glad to report that new revenues are on the Senate’s list of things that need to be addressed this year,” he said.
Rep. Andy Josephson, an Anchorage Democrat who co-chairs the House Finance Committee, said the House majority had not collectively discussed new revenue measures.
“I suppose we would entertain other revenue measures, but we’re also very aware that this governor vetoed a tobacco tax bill, he vetoed a Turo tax bill,” said Josephson. “So I think the 21 of us don’t want to just chase windmills and pursue things that simply aren’t going to happen.”
Gov. Mike Dunleavy in December proposed a largely status quo budget with a projected deficit of $1.5 billion. He has not introduced new revenue measures this year.
In 2023, Dunleavy introduced legislation to allow the state to bring in revenue from carbon sequestration. The law has yet to yield income for the state. He signaled two years ago that he would introduce a sales tax in the final weeks of the legislative session. But he never introduced the measure.
Senate President Gary Stevens, a Kodiak Republican, said the Senate majority has not discussed a sales tax or an income tax. Instead, both Hoffman and Sen. Bill Wielechowski, an Anchorage Democrat, pointed to possible measures that could increase taxation of oil and gas companies in the state by hundreds of millions annually.
“I think there are things that can be done which would have very little impact on investment, very little impact on Alaskans, and would help us solve our budget deficit,” said Wielechowski.
Those include a reduction in the per-barrel tax credits given to oil companies, and an amendment to the state’s tax code to apply corporate income tax on certain private corporations, including Hilcorp Alaska.
Sen. Robert Yundt, a freshman Republican from Wasilla who serves in the minority, on Monday introduced legislation meant to ensure the state’s corporate income tax is applied equally to companies in the state.
Stevens said his caucus was “really pleased” to see that legislation introduced by Yundt and said the Senate would be “moving forward” with that bill.
A similar measure considered by the Senate — and ultimately abandoned — last year would have increased taxation on Hilcorp, one of Alaska’s top-producing oil companies, by over $100 million.
In a written statement, Yundt said he introduced his bill because he thinks all companies should be “treated and taxed exactly the same — which, unfortunately, is not currently happening.”
“This legislation has the ability to create the even playing field that will benefit both industry and residents alike,” Yundt said.
Sean Maguire reported from Juneau and Iris Samuels from Anchorage.