The governor held a press conference this past Thursday to discuss the need for new revenue measures to balance the budget. I, too, see the need for additional revenue, and it was encouraging to hear the governor also recognizes this need. Proposals to generate revenue have been discussed for years. Governor Walker introduced a suite of bills to generate revenue during his term as governor, but the legislature failed to adopt them. The need for revenue has continued to be discussed in recent years, but no substantive action has been taken.
The challenge has always been, and continues to be, finding a proposal or group of proposals that the majority of the House and Senate and governor can agree on. Some legislators favor using a greater portion of the permanent fund earnings to fund the government, while others support an income tax and still others prefer a sales tax. There are also discussions of changes to the oil and gas tax structure to increase revenues, a spending cap and even cuts to corporate income tax to incentivize development.
As you can see, there is no shortage of ideas. I look forward to continuing to work with my colleagues on a fiscal plan that works for Alaska. I will support a revenue package that is fair to the rural residents of Alaska.
New Revenue Proposals
There are a number new revenue bills introduced this session, as well as an incoming sales tax bill from the governor. Each bill description includes a relevant news article about the respective bill:
HB 142, STATE SALES AND USE TAX, (Rep. Ben Carpenter): Enacts a 2% statewide sales tax without exemptions.
HB 153, OIL AND GAS PROPERTY TAX (Rep. Cliff Groh): Increases oil and gas property tax from $2 to $3 per $100 in value.
HB 156, INCOME TAX (Rep. Alyse Galvin): Reinstates state income tax with a $20 head tax for every Alaskan, and taxing 2% of annual income for Alaskans earning above $200,000.
SB 114, OIL & GAS PRODUCTION TAX; INCOME TAX (Senate Rules): Oil and gas tax reform bill which lowers the oil per barrel tax credit from $8 to $5, address the corporate tax loophole for S-corporations, and "ringfence" production tax credits to specific projects.
SB 122, APPORTION TAXABLE INCOME; DIGITAL BUSINESS (Senate Rules): Brings Alaska’s tax apportionment system into the 21st century. SB 122 implements a “market-based” methodology where sales will be considered to happen in Alaska when the market for the sales is in Alaska and mandates that the state will only use the sales factor in tax apportionment for highly digitized businesses.