Gov. Mike Dunleavy has introduced a bill in the State Senate that aims to enact a statewide sales tax as part of a larger plan that seeks to curtail state spending and guarantee a 50/50 split between the Permanent Fund Dividend and funds for state government operations.
Dunleavy sent the legislation – SB 227 – to the legislature on Jan. 26, along with a transmittal letter that lays out his intentions.
GOV. DUNLEAVY’S TRANSMITTAL LETTER
Under the authority of Article III, Section 18 of the Alaska Constitution, I am transmitting a bill relating to a comprehensive fiscal plan.
For too long, Alaska’s economic growth has been stymied by uncertainty and volatility. We are one of the few states that depend so heavily on a single commodity, subject to daily price swings, to fund state government. This bill is one part of a comprehensive fiscal plan to stabilize state finances, limit spending growth, share responsibility among Alaskans, major industries, and nonresidents, attract investment, and restore rules-based payment of the annual Permanent Fund Dividend.
Alaska needs a better path than a simple “tax-and-spend” approach: raising taxes just to support government growth. Alongside this bill, I am proposing a one-percent spending cap to rein in growth and avoid unnecessary increases in the burden on Alaskans. The plan also includes a Government Sunset and Reauthorization process designed to review agencies on a consistent schedule to measure their performance and determine if they are meeting the needs of Alaskans.
Finally, one of the most important features of this plan is a proposed constitutional amendment to implement the 50/50 split between the Permanent Fund Dividend and funding state government operations, returning to a rules-based system for paying Alaskans’ annual dividend.
This bill contains a seasonal sales tax set at four percent from April 1 to September 30, and at two percent from October 1 through March. All who benefit from Alaska’s public services – residents, workers, and visitors – will share in supporting those services.
The sales tax sunsets in 2034, as Alaska’s fiscal position improves. The bill also temporarily raises the minimum tax floor for oil and gas production from four percent to six percent. It returns to four percent in 2032 or the calendar year following average daily throughput reaching 650,000 barrels per day. Additionally, this bill contains a $0.15 per barrel surcharge to fund operations and maintenance costs related to the Trans Alaska Pipeline Corridor. Finally, this bill implements a market-based sourcing rule for corporate income tax and the corporate income tax is eliminated in 2031. These changes are intended to encourage investment in Alaska.
Alaska has prosperous years ahead. Starting in Fiscal Year 2033, Alaska is projected to see higher revenue due to expected increases in pipeline throughput and the Alaska LNG Project. This comprehensive plan is designed to bridge the next seven years by stabilizing state finances, limiting spending growth, restoring a rules-based PFD, and sharing responsibility through targeted, time-limited revenue measures that support investment and predictability.
I urge your prompt and favorable action on this measure.
Sincerely,
Mike Dunleavy, Governor
2 Comments
The lazy jerk Dunleavy is at it again! More of his fraud, waste and abuse. He has done nothing but damage to this state and there is np damage control.
The lazy jerk Dunleavy is at it again! More of his fraud, waste and abuse. He has done nothing but damage to this state and there is no damage control.