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A new nonpartisan report by the Institute of Social and Economic Research at the University of Alaska Anchorage has concluded that raising oil and corporate taxes to balance Alaska’s budget likely has the lowest negative side effects for Alaskans’ jobs and income.

The report, eagerly anticipated by state lawmakers and experts, comes as legislators consider ways to balance Alaska’s expenses and revenue over multiple years.

Commissioned by the administration of Gov. Mike Dunleavy, the report was released days after the governor debuted a plan intended to bring Alaska’s expenses and revenue in line.

Since 2015, when oil prices plummeted, Alaska has struggled to balance its budget on an annual basis despite steep cuts to state services. At times, the tug-of-war between services and the Permanent Fund dividend has driven the state to the brink of a government shutdown.

Figures from the Legislative Finance Division, which advises the Legislature on fiscal issues, show state agencies have had their budgets cut by 16.6% when adjusted for inflation since Fiscal Year 2015.

During the same period, lawmakers have passed no significant revenue measures. Dunleavy, who opened his first year in office by proposing massive budget cuts, hasn’t proposed significant reductions in recent years and is now suggesting a statewide sales tax and other revenue measures are needed for the state to keep up with spending.

ISER’s analysis of the situation was keenly awaited by state legislators and other experts, who crowded into a ballroom at Juneau’s convention center on Thursday morning to hear its economists deliver their report.

A 2016 analysis by ISER remains widely consulted in the capitol and was a contributing factor to lawmakers’ decision to begin using the Alaska Permanent Fund as a trust fund two years later. Legislators installed an annual transfer from the fund to the treasury for dividends and services, and it’s now the No. 1 source of general-purpose state revenue for Alaska, accounting for almost two-thirds of the state’s flexible spending each year.

The report released Thursday concluded that Alaska’s unstable fiscal situation has created so much uncertainty that it’s lowered Alaska’s real gross domestic product growth by 2-3% over the past decade, the equivalent of billions of dollars, said Brett Watson, an economist with the Institute of Social and Economic Research and the lead author of the report.

Alaska’s GDP — the value of all goods and services in the state — is about $70 billion and ranks near the bottom of U.S. states in terms of growth over the past decade.

ISER examined 11 different options to balance the state budget, including spending cuts, cuts to the Permanent Fund dividend, income taxes, sales taxes and business taxes.

Raising business and oil taxes would have the lowest negative impact on jobs and income, while cuts to services would have the biggest negative effect on them, the report found.

Reducing the Permanent Fund dividend to balance the budget — which has been the existing legislative policy for the past several years — has similarly large negative effects on income, but smaller negative effects on employment. Poor Alaskans are affected more by a PFD reduction than rich Alaskans, making it the most regressive option.

Among statewide taxes, a progressive income tax would have the biggest negative impact on high-income Alaskans and the lowest negative impact on low-income residents.

Nonresidents would pay 27% of a statewide sales tax with many exclusions — food, utilities, and health care, for example — making it the option with the least direct impact on individual income among broad-based taxes.

Corporate and oil taxes have a lower impact overall, ISER concluded.

Making a sales tax higher in the summer and lower in the winter “shifts the burden toward visitors, reducing the impact on Alaska families by 2-5 percentage points per dollar raised,” ISER concluded.

Dunleavy’s fiscal plan includes a seasonal sales tax as one of its pillars.

ISER also concluded that its models suggest that it is possible to come up with “a budget neutral combination that stimulates growth.”

“For example,” its report states, “coupling a less distortionary revenue source (like property tax) with expansionary spending (like capital project investment) can result in a net increase in total employment.”

Imposing a statewide property tax and a broad corporate tax cut in combination, ISER suggested in a slide presented to lawmakers, would result in increased employment and personal income by 2050, it estimated.

The effect of each tax or cut was examined independently, Watson said, in $100 million chunks.

“You can think about these as items on a buffet, and you kind of scoop from them different serving sizes as you construct a plate that is a state fiscal plan,” he said.

ISER also considered things linearly — economists didn’t try to predict whether Alaskans would react differently if a sales tax went from 5% to 6% instead of from 0% to 1%.

“In reality, it is likely that there are certain important thresholds that if you turn that dial too far, consumers start reacting in more and more aggressive ways to it, but we assume that their reaction is the same, regardless of what the level set is,” he said.

Watson said there is a cost if lawmakers do nothing. In addition to the GDP penalty caused by uncertainty, the state remains vulnerable to what’s called the “Alaska disconnect.”

Imagine, he said, if “something crazy would happen and one of the Silicon Valley tech giants were to announce that they were going to create a Silicon Valley of the north somewhere in Alaska and that they would move 100,000 employees somewhere in Alaska and create this northern hub of tech.”

“It would be absolutely catastrophic from the standpoint of the state of Alaska budget,” he said. “There would be 100,000 new Permanent Fund dividends to pay, the children of 100,000 new employees to educate, more roads to maintain, more state services to provide, without any additional revenue collected for any of those individuals. And so there’s this disconnect now that’s growing between our private sector economy and what goes on in our public sector.”

The Alaska state House’s ethics committee has launched an investigation into whether Homer Republican Rep. Sarah Vance illegally used state resources when she successfully pushed the local newspaper to remove and revise a story.

Vance objected to a Homer News article about a vigil she helped organize after the assassination of conservative activist Charlie Kirk. The article described Kirk’s views as “racist and controversial” and said Kirk promoted conspiracy theories.

Vance accused the paper of “hate-baiting” and raised concerns about the impact of what she called the newspaper’s “partisan spin” on the paper’s financial viability. She listed her objections in a letter on state letterhead that she posted to her official Facebook page.

The newspaper’s owner, Alabama-based Carpenter Media Group, then removed, revised and reposted the story without the reporter’s byline. Carpenter, now the U.S.’s fourth-largest newspaper operator, told the Columbia Journalism Review that the article did not meet its standards.

State law prohibits legislators from using public resources for “nonlegislative” or partisan political purposes.

The House Subcommittee of the Select Committee on Legislative Ethics said it had received “numerous complaints” about Vance’s conduct and that the allegations, if true, would violate state ethics laws. It opened an investigation in November and determined the scope of its review on Jan. 15.

“There is credible information to indicate that further investigation and proceeding is warranted,” reads a portion of a document outlining the investigation obtained by Alaska Public Media.

Two lawmakers serving on the committee — Republican Rep. Kevin McCabe and independent Rep. Alyse Galvin — declined to comment on the investigation.

In an interview, Vance defended the move and said she was asking to have the complaint dismissed.

“I believe that I was acting within my legislative duties,” Vance said.

Vance said she was aware of advisory opinions from the ethics committee covering “many examples of similar instances,” including one that allowed the use of state letterhead for political endorsements.

In a 1984 opinion, the ethics committee said it was not a violation of ethics laws to use official letterhead to endorse a candidate for office. However, lawmakers have significantly tightened state ethics laws since then, including in 1998, when the Legislature explicitly prohibited lawmakers from using state resources for partisan political purposes.

Ethics committee investigations are typically confidential, but Vance waived that protection in the interest of transparency, she said.

“I consider this a form of lawfare, using the ethics committee against me for something that they disagreed with,” she said.

The committee is asking Vance to provide copies of her communications with Carpenter Media, an explanation of the “legislative purpose” of the letter and why it was posted to her official social media account on state letterhead, how the letter was drafted, and what funds were used to draft and distribute it.

Vance’s letter and Carpenter’s response led to an exodus of editorial staff at the company’s three Alaska newspapers, including its top editor in the state, and indirectly to the creation of a new nonprofit online news outlet, the Homer Independent Press.

Vance applauded the new outlet.

“We need local journalism,” Vance said. “People in the community have come together and said, ‘We want a local paper to talk about local issues,’ and I fully support that, because we need that local voice in our small community.”

The City & Borough of Juneau tip-toed toward a federal buyout program for homeowners on View Drive this week, a street that’s been hit the hardest by annual glacial outburst flooding. The city’s asking those residents if they’ll help pay for it.

Eighteen homes line the forested cul-de-sac on View Drive, which extends into the Mendenhall River like a peninsula. They’re located beyond the temporary levee the city built last year, which protected hundreds of homes during the record flood in August. 

The buyout program, through the Natural Resources Conservation Service, or NRCS, would cost roughly $25 million if every household participates. The federal government has offered to cover three-quarters of the cost. The local portion could be around $6 million. 

City Manager Katie Koester spoke about it at a Juneau Assembly finance committee meeting on Jan. 7.

“The project would be a buyout of up to 18 homes on View Drive, and those homes would need to be demoed and turned into parkland in perpetuity,” she said. 

The city sent an informal ballot and letter to View Drive residents on Wednesday, asking if they’d be willing to give up hundreds of thousands of dollars from their home payout to shoulder that local portion. But it’s still unclear how this would work. In exchanges with KTOO, staff from the federal agency and the city explained it differently. 

Tracy Robillard, a spokesperson for NRCS Alaska, said in an email that state governments typically sponsor the 25% cost-share — including in New Jersey and Connecticut, and upcoming projects in New Mexico and South Carolina — where state environmental protection agencies have programs to purchase floodplains. In other cases, city governments have paid the local portion, Robillard said. 

Brett Nelson, Alaska’s watershed program manager at NRCS, said at the committee meeting there is another option.

“The more likely route would be some sort of third party coming up with the 25% local cost share,” he said. 

That third party could be a nonprofit. City staff spoke with the Southeast Alaska Land Trust back in July, but leaders there said they can’t commit millions of dollars in such a short time frame. 

NRCS hopes to offer the buyout before the next flood, expected this summer, Nelson said.

The U.S. Army Corps of Engineers is working on an engineered solution that would protect the whole Valley, but it’s still years away. In the meantime, homes on View Drive are expected to flood again and again. Some residents have said that leaving feels like their only option. 

“That’s an individual decision for those property owners, whether or not to, you know, take their chances and wait for an enduring solution,” Koester said at the meeting. 

If the buyout program moves forward, homes would be appraised at their 2024 value, prior to the flood that year. 

The city is asking residents to submit their informal ballots by Feb. 16, and plans to discuss the results at a Juneau Assembly committee meeting on Feb. 23. 

More than 200 people gathered in the capital city Thursday to speak out against U.S. Immigration and Customs Enforcement, or ICE, following recent killings of two citizens in Minneapolis. 

Juneau resident Denali Marin organized the noon rally outside the courthouse, where protestors brought salt and chanted, “Melt ICE.” 

Marin listed some of the people who have lost their lives at the hands of ICE officers, including U.S. citizens Alex Pretti and Renee Good. Dozens of others have died while in custody in recent months. 

“I want to be very clear about what we’re asking for today, not vague statements, not calls to lower the temperature and not investigations that lead to nowhere,” she said into a microphone on the plaza steps. “Today, I’m calling on our national leaders to act.”

She and other speakers at the event called for leaders to defund ICE and impeach Homeland Security Secretary Kristi Noem. 

On Thursday, seven U.S. Senate Republicans joined Senate Democrats to block a funding bill that would have included $10 billion for ICE. Senators Dan Sullivan and Lisa Murkowski were not among those Republicans; instead they voted in favor of the funding bill. But Murkowski said this week that Noem should resign.

Local advocate Ariel Hasse-Zamudio encouraged attendees to call Alaska’s congressional delegation. 

“Dan Sullivan, Lisa Murkowski, Nick Begich, we need to call them and hold them accountable,” she said. 

Emma Sulczynski, a student at the University of Alaska Fairbanks, took the microphone to urge people to get involved in other ways. 

“There is a nationwide strike — strike on going to school, going to work, and on spending,” she said, referring to the national anti-ICE strike planned for Friday. “You don’t have to do all of these things, but whatever is accessible for you, please stand in solidarity with the brave people in Minneapolis and in the rest of our country who are resisting day and night.”

She also urged people to boycott corporations that support ICE.

In this newscast:

• Juneau’s recycling center is closed again in order to repair damaged critical equipment. And it could be quite a while before the center opens back up again.
• New public art is coming to downtown Juneau this spring. Murals will soon adorn the Marine View building parking garage near the cruise ship docks. It’s part of a project years in the making that teaches artists about the legal and creative sides of murals.
• The City & Borough of Juneau tip-toed toward a federal buyout program for homeowners on View Drive this week, a street that’s been hit the hardest by annual glacial outburst flooding. And the city’s asking those residents if they’ll help pay for their own buyout.
• More than 200 people gathered in the capital city on Thursday to speak out against U.S. Immigration and Customs Enforcement, or ICE, following recent killings of two citizens in Minneapolis.

Listen here:

Murals will soon adorn the Marine View building parking garage near Juneau’s cruise ship docks. 

It’s part of a project years in the making that teaches local artists about the legal and creative sides of murals.

Maddox Rasmussen washed paintbrushes in between sections of a mural he was working on at the Juneau Arts and Culture Center on a recent Sunday afternoon. The Juneau-Douglas High School: Yadaa.at Kalé junior was painting a realistic orca swimming through the tendrils of an ethereal kelp forest. Rasmussen finished the orca’s fin and moved to a section of its body that’s white. 

“I like blending on the palette or on the piece itself,” he said. “So sometimes, if I have leftover blue in a section that I want to be more white, it’ll mess it up.”

Rasmussen is one of 13 artists participating in a workshop to create murals in downtown Juneau. It’s the first time he’s worked on a large project like this. But art is not his only interest: he also swims competitively and works as a lifeguard.

He said it’s been a bit difficult to make time for the project on the weekends while balancing his other interests. He had a swim meet earlier in the day.

“It’s definitely a little hard, because the swim meet lasts all day, so I have to sacrifice the finals to come here,” he said. “But it’s okay.”

Rasmussen’s project is sandwiched between two artists along the wall of the JACC. Every mural has a different style – one artist is experimenting with spray paint and another carved a massive block print. The designs vary from folk art to landscapes and wildlife.

Each mural is 8 feet wide and 4 feet tall. Altogether that’s more than 100 feet-worth of new art for downtown Juneau.

Dezarae Arrowsun is at the helm of the project, which is a collaboration between her business, the Downtown Business Association, the Juneau Arts and Humanities Council and Princess Cruises.

Arrowsun owns Picture This, a custom frame shop in downtown Juneau with a view of the concrete walls of the Marine View parking garage that will be the future home for the murals. She said the idea came from wanting to beautify space downtown outside of her store, and she turned it into an opportunity to teach local artists more about mural making.

“A lot of the things that are very intimidating to artists is the permit process, the legal side of it, contractual side of it, and then site preparation. What do you have to look for as warning signs, those kind of things,” Arrowsun said. “So that’s how we came about this.”

The artists don’t get paid. Instead, they get education and materials, including large sheets of plywood that are treated to withstand the elements. After a year the murals will come down and the artists can either keep or sell their work.

Arrowsun said she put a lot of thought into making sure the murals will last an entire year in the Southeast Alaska elements. She said she wants it to be art for the community as a whole, not just something for tourists.

“I want us in Juneau to appreciate it all winter long, especially when it’s dark and, you know, we need some brightness and some beauty,” she said.

Arrowsun has a three-year contract with the Marine View owners and plans to run the workshop again next year. She said they plan to take applications this September.

Lillian Egan is another artist in the workshop. They work at the Pottery Jungle as a ceramic studio assistant, and have had their art featured around Juneau in the past. They’re painting a landscape with a little bit of fantasy added to it.

“I was thinking of, you know, what it’d be like to be up at Gold Creek, and kind of being the salmon in the river and coming up,” Egan said. “But also being able to be aware of the city in the backdrop and seeing the channel in the distance and stuff, but kind of seeing it from a perspective of, ‘This is what Juneau is.’”

They said it’s been fun to do more community art and they feel the city needs more of it.

“It’s been really cool to find out that it is kind of attainable for people, even in Juneau, to do community art and … have it like, actually support you financially,” they said.

In the future, they want to use their newfound skills to create more art in the community.

“How can I apply that into ways that can help our community more? I don’t know. I think about our recycling center right now, and how could I maybe make a mural like this, but with recycled materials in the future, would be pretty cool,” Egan said.

The murals are going to be installed in late April, with a celebration taking place May 1.