Alaska Public Media

Gov. Mike Dunleavy’s fiscal plan is taking a beating as lawmakers and the public take a closer look at the proposal. Last week, dozens of Alaskans called into a hearing to voice their particular displeasure with the governor’s proposal to institute a statewide sales tax.

Now, the governor is changing course a bit. In an interview with Alaska Public Media on Friday, Dunleavy offered to put the tax plan on ice for now.

“Let’s all agree. Take more time on the taxes. I’m all in on that,” Dunleavy said. “Let’s get the first several components in law and a constitutional amendment sent out to the people of Alaska.”

In the interview, Dunleavy defended his tax plan, which would hike some oil and gas taxes, modernize corporate income taxes, and, most prominently, create a statewide sales tax of 4% in the summer and 2% in the winter. All of the changes would be temporary, set to automatically repeal in the 2030s, and corporate income taxes would vanish entirely in 2031.

The sales tax would be by far the largest revenue-raiser, bringing in $700 to $800 million annually.

Dunleavy pitched it as an effort to extract more revenue from people who live outside of Alaska. When a panel of economists from the University of Alaska Anchorage’s Institute for Social and Economic Research looked at the options the state has, they found a sales tax, especially one with a higher rate in the summer, would bring in a greater share of its revenue from nonresidents than other options, like an income tax.

The governor also argued that a sales tax would be countercyclical. When gas prices are low, and state oil income is correspondingly low, people might be more willing to travel and spend money in Alaska, he said, pointing to Texas and Saudi Arabia as examples.

“It stabilizes the ups and downs of oil, and so it stabilizes your fiscals,” Dunleavy said. “That’s what this is about.”

But House Speaker Bryce Edgmon, an independent from Dillingham, said it was clear from public testimony that Alaskans were not prepared to pay a sales tax.

“You cannot do broad-based taxes or any significant measures without, No. 1, having the general public somewhat in alignment,” he said at a news conference on Friday.

Without Dunleavy’s tax bill, what’s left in the governor’s fiscal plan?

Whether a willingness to delay tax changes will make the rest of the plan more palatable, however, is uncertain.

The tax bill, filed as House Bill 284 and Senate Bill 227, is by far the most controversial part of Dunleavy’s fiscal plan, but even without it, the remaining elements still face skepticism from leading lawmakers in the state House and Senate.

Those include:

• Capping the growth of state spending at 1% each year, not adjusted for inflation (House Bill 275 and Senate Bill 223)
• Tasking a legislative committee with performing “sunset reviews,” evaluating government agencies every six years and requiring a vote on whether to continue or end the agency’s work (House Bill 274 and Senate Bill 222)
• A multipronged constitutional amendment related to the Permanent Fund, which would combine its two accounts into one, cap the annual draw at 5% and set aside half of that 5% draw for dividends (House Joint Resolution 30 and Senate Joint Resolution 23)

Dunleavy argued that passing those measures would build trust with voters — and potential taxpayers — that tax money would be spent responsibly.

“Once you put in rules to control the spending,” he said, “the spending, if you need it, will then make sense to Alaskans, and it can be controlled.”

He cast the final year of his term as the last chance to get those sorts of measures into state law and the Constitution, even challenging this reporter to a $500 bet that the measures would not pass once Dunleavy left office. (This reporter is not allowed to bet on the news and declined the bet.)

Does any of it stand a chance of passing?

House Speaker Bryce Edgmon said in an interview that he was willing to negotiate with the governor’s team but expressed skepticism about the remaining elements of the plan, including the limit on government spending. Inflation in recent years has run above 2%, and costs in rural communities disconnected from the road system have risen even faster, Edgmon said.

“We have so many needs on the operating side of the budget, the capital side of the budget, that to limit to a 1% increase going forward into time, assuming we continue to grow as a state, bring more residents in that make everything more expensive, that seems unrealistic,” Edgmon said.

Some minority Republicans are also skeptical — House Minority Leader DeLena Johnson, a Palmer Republican, told the Alaska Beacon the measure didn’t go far enough, calling it a “spending beanie” that could easily be overcome with a majority vote and the consent of a future governor.

Another minority Republican, Fairbanks Rep. Will Stapp, said the constitutional amendment setting aside half of the state’s investment income for dividends would be unsustainable, even if the tax plan passed. Dunleavy’s proposal, if it were in effect next fiscal year, would dedicate $2 billion in otherwise unrestricted state funds to dividends.

“I fail to see how enshrining a liability that outstrips the amount of revenue I’m raising in taxation creates anything but more instability and a need for more taxes,” Stapp said at a House Finance Committee meeting on Thursday.

Key senators have also balked at the idea of placing the dividend in the state Constitution, including Sitka Republican Sen. Bert Stedman, who co-chairs the Senate Finance Committee, though Senate President Gary Stevens, Republican of Kodiak, said he believed there was room to negotiate with Dunleavy on the amendment.

In response, Dunleavy fired back at Stapp.

“Representative Stapp is the liability,” Dunleavy said, “because he wants to spend the people’s PFD.”

Dunleavy said the amendment was an effort to prevent lawmakers from balancing the budget by reducing dividends, as lawmakers have for approximately the past decade. That’s akin to a regressive tax, hitting low-income earners the hardest, according to the economists’ presentation.

“It should always be more difficult,” Dunleavy said. “If not, you’re going to end up with what we’ve had here over the decades, spending every single penny we can find.”

Despite their opposition to Dunleavy’s plan, lawmakers do not appear ready to counter the governor’s proposal with one of their own.

For now, Edgmon said he hoped this year’s debates would at least help Alaskans understand that, with dwindling savings and uncertain revenue, why taxes might be necessary to balance the state’s budget in the long term.

“The one message that we hope will emerge from all this is that, look, Alaska, we have a structural deficit,” Edgmon said. “We need new revenues. And so that conversation, I think, is going to be really valuable.”

Sen. Lisa Murkowski said in Greenland Monday that she feels terrible for the anxiety her country inflicted on the Danish territory.

“In just a few sentences and words, trust that has been built since World War II has been eroded and degraded,” she told reporters in Nuuk. “We need to work to rebuild that trust.”

Murkowski was the sole Republican among four senators who took the trip to try to repair the relationship with Greenland after President Trump’s repeated threats to acquire the island.

The trip was part of her initiative to bolster what she calls a trans-Arctic alliance. She was part of another congressional trip to Denmark a few weeks ago.

The Greenland crisis seemed to abate last month, when Trump backed off threats to take the Danish territory by military force. But the visiting senators were asked if they could guarantee the president wouldn’t change his mind.

“The answer is no,” said Sen. Angus King, I-Maine, who led the delegation. “We can only exert our role as a separate and co-equal branch of government. But we can’t guarantee what the president may or may not do tomorrow, let alone two months from now.”

Murkowski said Congress will stand up for Greenland, if necessary.

“But I will also speak to the fact that there are some members of my party who don’t want to be seen as engaging in anything that might be viewed as contrary to President Trump’s initiative or desire, and so who may not be speaking out publicly,” she said.

In private conversations, she said, Republican colleagues have assured her they won’t allow Trump to seize or control Greenland.

“I’m going to encourage them that they need to be more vocal in reinforcing that, because this should not be a partisan issue,” she said. “Respect for the sovereignty of another nation, respect for our NATO allies — that should not be Democrat (or) Republican. It should be just pro-democracy”

The 2026 Winter Olympics kick off in Italy on Friday at 10 a.m. Alaska time with an opening ceremony.

The Games run through Feb. 22 and will feature about a dozen athletes with ties to Alaska.

Here’s what to know about how (and when) to watch them.

But first: Who’s competing?

The athletes with Alaska connections include eight skiers with Alaska Pacific University Nordic Ski Center. They make up half of the 16-skier U.S. cross-country team. On the men’s team: Gus Schumacher, Hunter Wonders, Zanden McMullen and JC Schoonmaker. On the women’s team: Rosie Brennan, Kendall Kramer, Novie McCabe and Hailey Swirbul.

Alaskan Jeremy Swayman is competing on the men’s ice hockey team. Juneau-born Anchorage West High graduate Maxime Germain is on the biathlon team. Also, Alaskan Andrew Kurka is in the Paralympics on the alpine ski team.

There are also two Alaska-based athletes on teams representing other countries. Rosie Fordham is based in Fairbanks but is from Sydney. She’s skiing on Australia’s team. And Anchorage-born Peter Hines is cross-country skiing for his mother’s native country, Slovakia.

How do I know when to watch?

There’s a schedule on olympics.com. It’s a little cumbersome, but the posted times should adjust to whatever timezone you’re in.

If you’re hoping to keep an eye on Alaska athletes, here’s a quick rundown of their first events:

• All 10 skiers with Alaska ties will be competing in Nordic ski competitions. Those start at 3 a.m. Alaska time on Saturday with the women’s 20-kilometer race. On Sunday, the men’s team competes in the same race at 2:30 a.m. Alaska time.

• Team USA’s first scheduled men’s ice hockey game is on Feb. 12 at 11 a.m. against Latvia.

• Team USA’s biathlon team competitions start at 12:05 a.m. on Sunday with a mixed relay.

How do I watch?

There are a few options for watching the Games.

Olympics.com will stream live events and feature some highlights and recaps.

Some TV channels will air events, too, including NBC, CNBC and the USA Network.

The streaming service Peacock will have every event in the Olympics, both streaming live and on-demand. Non-members will have to pay for a subscription as the platform no longer offers free trials to new subscribers.

Are there any watch parties?

The Nordic Skiing Association of Anchorage is partnering with Alaska Pacific University to host an opening ceremony watch party from 10 a.m. to 1 p.m. on Friday at APU’s Earl Brown Theater in Anchorage. RSVP by emailing info@anchoragenordicski.com.

Some bars and restaurants in Anchorage say they plan to screen the Olympics, including Bread and Brew and The Peanut Farm.

Did we miss a watch party? Or do you have questions that we didn’t cover? Email Hannah Flor at hflor@alaskapublic.org. 

If you ask Gov. Mike Dunleavy, a lot of the state’s problems come back to the budget process.

Every year, lawmakers gather in Juneau for four months and spend much of that time debating how the state should spread around its limited funds: how much for education, how much for public safety, and for the last decade or so, how much the Permanent Fund dividend should be.

Meanwhile, much of the state’s revenue depends on the constantly swinging price of oil. Dunleavy says investors who might otherwise bring jobs and new residents to the state have noticed.

“We know that this volatile budgetary process has negatively impacted our ability to recruit investment to the state. It has retarded our GDP growth. It has caused deep fractures within this body and within other relationships, and it leads to uncertainty in funding for critical programs,” Dunleavy told lawmakers and Alaskans in his State of the State speech.

In the days after his speech, Dunleavy filed a series of bills outlining a fiscal plan that he believes would make the budget more stable by boosting revenue and cutting expenses.

It’s a problem Alaska has wrestled with for years: the state spends more than it takes in. Since oil prices crashed in the mid-2010s, Alaska has drawn down billions from its savings accounts, cut government spending and reduced residents’ Permanent Fund dividends in an effort to ensure schools, state troopers, highways, ferries and fish and game management are funded.

Most of the money Dunleavy’s multifaceted plan would raise would come from a sales tax — 4% in the summer, 2% in the winter. The plan would also hike oil taxes, add a new per-barrel surcharge for pipeline corridor maintenance, and capture more money from Outside businesses. It would all be temporary, roughly five to seven years — and in 2031, corporate income taxes would vanish entirely.

On the expense side, it would put a 1% cap on state spending growth every year. That’s not adjusted for inflation. So if inflation runs more than 1%, state spending shrinks. (For reference, the Federal Reserve targets 2% inflation each year; in 2025, inflation was 2.7%, according to the Bureau of Labor Statistics.)

An additional check on expenses in Dunleavy’s plan is what’s known as a sunset review — lawmakers would periodically have to vote to reauthorize various pieces of government.

Dunleavy’s plan would also take Permanent Fund dividends out of the state’s annual budget debates by putting it — and a new formula — into the state Constitution.

“At no point do any of these things add up to get to a balanced budget,” said Neil Steininger, a former Dunleavy budget director who crunched the numbers for the Alaska Political Report, a subscription newsletter.

For one thing, Dunleavy’s plan would fully drain the state’s $3 billion rainy day fund by the end of the 2033 fiscal year, according to Steininger’s analysis — not exactly resolving the state’s budget issues.

For another, Steininger said, the effect of the changes would ultimately make the state’s revenue just as volatile, if not more — exactly what Dunleavy is trying to avoid.

That’s a result of Dunleavy’s proposed formula for dividends, which would take half of the state’s annual draw from the Permanent Fund and split it 50-50 between state services and dividends.

The fact that so much “stable, reliable” investment revenue would be tied to dividends would make the state more dependent on the price of oil, Steininger said.

“That’s a position we’ve been in already,” Steininger said. “That’s actually nothing new. It’s just really cementing that into the Constitution.”

The governor has not held a news conference or granted interviews to discuss his plan since the bills were released, but his office’s projections are substantially rosier.

An updated 10-year plan from his Office of Management and Budget shows a surplus in the early 2030s, peaking at roughly $300 million, before returning to large deficits in the 2035 fiscal year. But the governor’s office still projects the plan would draw down half of the rainy-day fund over 10 years, including a $1.4 billion withdrawal in the coming year.

Dunleavy has argued revenue from things like a boom in oil drilling or a new gas pipeline would help the budget balance in the long term.

“We’re going to be going into what I believe is going to be a more revenue-prosperous era,” he said at a Cabinet meeting before the plan was released.

But that future revenue is speculative, and thus doesn’t show up in state economists’ “cold and sober” revenue projections that lawmakers build the state’s budget around, Steininger said.

“Part of it is because a lot of that stuff will take a long time before it impacts state revenue,” Steininger said. “Even though 10 years feels like a long time … it’s not that long when it comes to trying to get a project permitted, moved and actually delivering revenue to the state coffers.”

Dunleavy’s Department of Revenue presented a newer fiscal model to lawmakers on Thursday, which accounts for revenue from the proposed Alaska LNG project and a new split of oil revenue from the federally-owned National Petroleum Reserve Alaska in the Western Arctic enabled by President Trump’s signature tax- and spending-cut bill.

“That modeling does roughly balance” even after the taxes expire, Department of Revenue Chief Economist Dan Stickel said to lawmakers on Thursday.

So far, the plan has landed in Juneau with a thud. Speaker of the House Bryce Edgmon, a Dillingham independent, said alongside other legislative leaders on Talk of Alaska on Tuesday that he’s not optimistic about its chances.

“The early analysis that we’ve done … would suggest that the governor’s plan, in its totality, would actually increase our problem, it would not lessen it,” Edgmon said.

Even Dunleavy’s traditional allies are skeptical — the Republican House minority leader, Palmer Rep. DeLena Johnson, called his plan “incomplete.”

“I think it’s very difficult to ask your average, hardworking Alaskan to increase their grocery budget” without a serious analysis and reduction of government spending, Johnson said.

But where does that leave state leaders’ search for a solution?

Edgmon and his Senate counterpart said they were intrigued by what they recently heard from a panel of University Alaska Anchorage economists who studied a variety of options at the request of the governor.

Senate President Gary Stevens, a Kodiak Republican, says he was interested in the economists’ conclusion that raising taxes on corporations and oil and gas would have the smallest impact on the state’s economy.

“It’s much more stressful on folks to have a sales tax or an income tax,” Stevens said. “(It’s) easier to accumulate a little higher tax on the industry.”

But in the last year of Dunleavy’s term, Stevens said, it might be too late for this governor to solve the problem.

The House Finance Committee is taking public testimony on Dunleavy’s tax bill, House Bill 284, at 5:30 p.m. Thursday. There’s more information on the Public Testimony Opportunities page at akleg.gov.

WASHINGTON — The U.S. Senate on Wednesday confirmed Aaron C. Peterson of Anchorage to be a federal District Court judge in Alaska.

The vote was 58 to 39, with seven Democrats voting yes.

Peterson is in his mid-40s and was born in Anchorage. He’s an Air Force veteran and has worked at the state Department of Law since 2012. Earlier, he clerked in the Alaska Superior Court, for now-retired Superior Court Judge Michael Spaan.

“Judge Spaan approached his work diligently, with humility and always respecting every litigant that appeared before him,” Peterson said at his Senate confirmation hearing last year. “I took so much away from that clerkship, and I’ve carried those lessons with me every day since.”

Peterson, once he’s sworn in, will be the first judge to go through an advisory committee Sen. Dan Sullivan established to help select candidates for Alaska’s federal court.

He’ll be Alaska’s first new federal judge since U.S. District Court Judge Joshua Kindred resigned amid allegations of impropriety with law clerks and attorneys. Like Peterson, Kindred had the support of both U.S. senators and was nominated by President Trump.

Peterson’s swearing-in will bring the number of judges on Alaska’s U.S. District Court to two. The court still has one vacancy.

A round of vetoes by Gov. Mike Dunleavy last summer have Alaska’s construction industry on edge. Industry groups are pushing state lawmakers to quickly pass an appropriations bill that they say would unlock hundreds of millions of dollars in federal matching funds.

The problem started last year, when lawmakers searched for funds to plug holes in the state budget. To fund the state’s share of a variety of new federal projects, lawmakers voted to take millions from older, stalled-out or completed projects — tens of millions from the Juneau Access Project, $138,000 from the so-called Bridge to Nowhere in Ketchikan, even $766 lawmakers found left over from efforts to explore a bridge over Knik Arm from Anchorage.

“At the end of the day, we’re really just pulling out of the couch cushions the little pennies we can find here and there,” said Rep. Ashley Carrick, a Fairbanks Democrat, during debate on the budget last year.

But then, after lawmakers adjourned, Gov. Mike Dunleavy vetoed those transfers. His office said a lot of the money lawmakers identified had been spent, committed to contracts or was otherwise unavailable.

“We don’t want to put ourselves as a state in a position where we don’t have the match because those funds have already been obligated or are no longer available because they’ve already been spent,” budget director Lacey Sanders told lawmakers last month.

To make up for the vetoes, Dunleavy has requested state lawmakers send him a budget bill that would fund the state’s match with $70 million in unrestricted funds to enable some $700 million in total spending, 90% of which would be covered by the federal government.

But for now, state officials say they have only enough money on hand to meet the state’s share of federal projects through about the end of the fiscal year on July 1.

That has contractors ringing alarm bells.

“You are introducing unnecessary risk and disruption to this process,” the head of the Associated General Contractors of Alaska, Alicia Kresl, said to the House Finance Committee.

For now, Transportation Commissioner Ryan Anderson appears less alarmed. He told lawmakers the state has its match covered for the current fiscal year, though that money runs out around the end of June.

“It’s after July 1, that additional, that we’d be missing out on, so we’re really right now focused on that,” Anderson said.

But not knowing for sure whether that money will materialize after July 1 makes it hard for construction contractors to gather the right supplies and equipment, assemble their workforce and be ready to hit the ground running, Kresl said. So any further delays getting the money out the door could risk much of the progress crews would otherwise make in the 2026 construction season, she said.

“When funding comes late, the construction industries and agencies can shift from planning mode into scramble mode,” she said.

Lawmakers have so far appeared receptive. Leaders of the House and Senate finance committees say they plan to move quickly on a supplemental budget that would provide the matching funds. They have said they’ll likely draw from state savings to do it, requiring a three-quarters supermajority in both the House and Senate.

And Sen. Bert Stedman, the Sitka Republican who orchestrated much of the couch-cushion-shaking last year, says the state’s tight budget this year means they’re looking for more spare change floating around state government.

“Last year was not some aberration, it was not some off-the-cuff idea. It was methodically sought out and well-researched by (the Legislative Finance Division) and both finance committees, and this year will be the same,” he said.

But this year, he said, he’s hoping for a different result.