Governor expected to propose statewide sales tax, oil tax hike in final State of the State address Thursday
- Mark Sabbatini
- 44 minutes ago
- 3 min read
Proposal for next several years also reportedly seeks to cut corporate income tax, boost PFD to $3,600 by changing management of Permanent Fund
By Mark Sabbatini
Juneau Independent
A statewide sales tax that would be higher during peak tourism months and higher oil production taxes, along with a reduction in corporate income taxes and a cap on state spending increases, are expected to be part of a fiscal plan proposed by Gov. Mike Dunleavy in his final State of the State address Thursday night.
The plan also calls for a constitutional amendment that would alter the management of the Permanent Fund and establish a formula resulting in a dividend of approximately $3,600, beginning in 2028, according to a summary first published on Tuesday by The Alaska Landmine. Lawmakers balanced last year’s budget by shrinking the PFD to $1,000 — the lowest ever when adjusted for inflation — and some leaders say a similar amount is likely this year due to low oil prices.
Dunleavy, during a portion of a state Cabinet meeting open to the press Wednesday, confirmed he plans to introduce a seasonal sales tax. Rep. Calvin Schrage, I-Anchorage, co-chair of the House Finance Committee, said in an interview Wednesday that while he is not familiar with all of the specific financial details reported by the Landmine, the policy proposals listed are consistent with information he’s received from the governor’s office.
The Landmine report, for instance, citing unnamed “multiple sources,” states the sales tax would be 2% from October to March and 4% from April to September, and would expire in 2032. The report states an estimated $765 million would be generated — enough to add more than $1,100 to PFDs based on last year’s total payout of $685.3 million.
Dunleavy, in a question-and-answer period with reporters at the Cabinet meeting, did not detail specifics of his proposed tax.
“There will be a temporary, seasonal sales tax concept put forth for discussion with the Legislature,” he said.
The governor’s speech in the House Chambers is scheduled to begin at 7 p.m Thursday. He said “it could be a long one” given the agenda he plans to discuss, including the fiscal plan and bills.
Among the other provisions reported by the Landmine include raising the minimum oil production tax floor to 6% instead of 4%, reducing the corporate income tax to 2% instead 9.4% over a seven-year period, and a 1% statutory spending cap. All are proposals that have been advocated in some form in recent years by state lawmakers.
Dunleavy acknowledged all is not rosy with the state’s outlook as he prepares to propose new taxes on residents who just got a record-low PFD.
“That's why we're putting a (fiscal) plan in for five years because we're going to have what we think is a difficult time with revenue for five years,” he said.
He also spent Wednesday’s press conference highlighting what he considers his administration’s accomplishments, promising a fact-checked booklet of them published in roughly two weeks.
The governor, in his final year in office as he nears the end of two consecutive terms, opened the floor to his Cabinet members during Wednesday’s meeting. Each department head spent a few minutes citing what they considered highlight accomplishments and thanking Dunleavy for his leadership.
Many of the claims by Cabinet members are subject to interpretation or fuller context. Alaska Department of Labor and Workforce Development Commissioner Cathy Muñoz stated employment is at an all-time high, but a recent report from her department shows a decline in growth is expected to continue this year due to outmigration and Trump administration cuts.
“We are creating more jobs. Should we do better? Absolutely, keep going. The list goes on,” Dunleavy said.
Attorney General Steve Cox said the state is seeing its “longest sustained period of overall crime reduction in decades” with violent crime, sexual assault and property crimes “all at 10-year lows.” Reports note the state still has one of the nation’s highest violent crime rates. James Cockrell, the commissioner of the Alaska Department of Public Safety, said since 2018, there has been a decrease in crime of about 42%.
“We didn't say we have the best crime rate in the nation,” Dunleavy said. “We said we are affecting it and driving it down.”
Dunleavy, who during the Cabinet meeting noted there are naysayers who’ve been constantly critical of his agenda, said he’s proud of an administration that has made progress over the last several yearsfilled with difficulties such as the COVID-19 pandemic, numerous natural disasters and turbulent times nationwide.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
