Statewide sales tax gets almost no support during first public testimony on Dunleavy’s fiscal plan
- Mark Sabbatini
- 3 hours ago
- 5 min read
2 of 31 people tell House committee a sales tax may be worth considering, but not as proposed by governor; income tax widely preferred, along with higher corporate and oil taxes
By Mark Sabbatini
Juneau Independent
Gov. Mike Dunleavy’s proposed statewide sales tax ran into overwhelming opposition from Alaskans during the first legislative hearing featuring open public testimony on his fiscal plan.
A total 31 people testifying during a House Finance Committee meeting Thursday night included one person supporting the concept — but not as proposed by Dunleavy, since it strips control of local sales taxes from municipalities — and one person who said a sales tax makes sense if it applies only to non-residents. One person said he is undecided on the bill as introduced by the governor.
Everyone else spoke against the proposed statewide sales tax, which would be 2% from October to March and 4% from April to September. The tax — projected to raise $735 million during the first year after being enacted in mid-2027 and $815 million by fiscal 2032, after which it would be repealed — is the dominant revenue portion of a six-year plan unveiled by Dunleavy during his final year in office.
"I oppose a statewide sales tax," said Roz'lyn Grady-Wyche, an Anchorage resident, who like nearly all other participants offered her testimony online. "I support restoring oil taxes. I support a progressive income tax and I oppose eliminating corporate taxes. Sales taxes don't hit corporations first. They hit families. They raise the cost of groceries, diapers, gas and school supplies. They force working people to choose between food, rent, medicine and keeping the lights on, while large companies continue to receive tax breaks. That is not fiscal responsibility. That is shifting the burden downward."
Among the key concerns of municipal leaders who testified is Dunleavy’s proposal would have the state collect both local and state sales taxes, and then return the local share — and prohibit local governments from enacting exemptions on local taxes.
Juneau Mayor Beth Weldon, the first member of the public to testify at Thursday’s hearing, noted voters approved exempting food and utilities from local sales taxes during last October’s election — and they soundly rejected a seasonal sales tax proposal with higher rates during warmer months as sought by Dunleavy.
"That vote demonstrates two things," she said. "First, our residents are paying attention to tax policy, and second, they value having the ability to make local decisions in local circumstances. Juneau has long supported the idea that the fairest statewide revenue tool is an income tax. We believe it asks residents to contribute based on ability to pay."
Another Juneau resident, Alex Wertheimer, in addition to echoing the general favoring of an income tax instead of a sales tax, said the temporary nature of the provisions in Dunleavy’s plan is a concern. In addition to the sales tax lapsing, an increase in oil taxes is also temporary and corporate income taxes would end starting in 2031. The governor has stated his plan is to get Alaska through a difficult multi-year period until new oil and other natural resource projects begin generating significant revenue for the state.
"Unfortunately, the governor's plan is flawed and actually contradictory to his statement that Alaskans deserve a stable, rules-based fiscal system that avoids the boom-and-bust cycle that comes with a budget based on the price of oil," Wertheimer said. "Instead, it proposes a plan for short-term relief through tax revenue, then blind faith in the volatile and uncertain revenue streams in the future from oil and gas extractions."
The high cumulative rate of local and state sales taxes was a concern of some residents and officials. Jila Stuart, finance director for Haines Borough, noted voters approved an increase that will make the summer rate 7%, so Dunleavy’s plan would make that 11%.
"Currently sales tax pays for 30% of all general fund services, and it pays for 45% of our police protection and public works," she said. The voter-approved hike "was done largely in response to increased need for funding for our local school district as state support has decreased in recent years."
The strongest support for a sales tax — with modifications to the one proposed by the governor — was expressed by Barbara Haney, a former Fairbanks Assembly member.
"I think looking at a sales tax statewide is actually quite appropriate when you consider the other option is an income tax," she said. "If those are your two options you are much better off with a sales tax than an income tax. The wealthy can always find ways to avoid income taxes, but it's pretty doggone difficult to avoid a sales tax. If you're really poor and you're getting a PFD or you're on welfare you're not going to pay sales taxes anyway.
Jim Hazlett, a Wasilla resident, said a statewide sales tax is "not a bad idea if we're smart enough to charge it to non-residents," he said, adding verification could be possible via ID’s such as a driver’s license.
However, he also said an income tax makes more sense, especially since a just-issued state report that found almost 23% of non-federal jobs in Alaska were held by out-of-state residents in 2024
The undecided verdict on Dunleavy’s fiscal plan was declared by Miguel Ramirez, a retired military combat veteran and former Assembly candidate in Fairbanks. Ramirez did suggest "our governor has been pushed back into pushing this bill because our Legislature since 2013 hasn't been smart about money," and "the PFD should have never been touched to run the state government."
Thursday night’s hearing was announced as a chance to offer testimony about all aspects of Dunleavy’s proposed plan. But Rep. Neal Foster, a Nome Democrat who is one of the three co-chairs of the House Finance Committee, announced at the beginning the intent was to limit comments to the sales tax portion only because the committee didn’t have time to hear a review of other parts of the plan during a hearing earlier in the day.
That didn’t go over well with Rebecca Logan, CEO of the Alaska Support Industry Alliance, who said she was aware of several people planning to testify remotely who hung up after hearing that announcement.
"I just think it's disrespectful to businesspeople who don't know that you did that during the day to make the changes when they've already called in," she said.
Foster said a continuation of the committee’s review of the proposed plan and public testimony is scheduled to continue next week. Committee leaders on Thursday also relented as the hearing progressed and let people comment on other aspects of the plan.
A key non-tax portion of Dunleavy’s proposal is legislation and a constitutional amendment that would guarantee residents an annual dividend from the Alaska Permanent Fund, and divide half of the fund’s spendable earnings between PFDs and state government. Douglas Goering, a Fairbanks resident who was the last person to testify at Thursday night’s hearing, offered a different proposal than others mentioned by suggesting PFDs be income-adjusted.
"I think rather than creating a new taxation agency, if we could look at some sort of a progressive payout of the Permanent Fund Dividend that would not harm rural residents, would not harm low-income or even medium-income residents, but would only affect higher-income residents that can most afford that sort of thing," he said.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
