Government

Juneau residents might have to pay sales tax again on food and utilities, despite approving a local exemption during last fall’s municipal election. 

That’s because Gov. Mike Dunleavy recently proposed a statewide sales tax as part of his fiscal plan meant to stabilize the state’s finances. 

At a community town hall event Thursday evening, Juneau’s three state lawmakers weighed in on the governor’s plans and other topics at play this legislative session. Democratic Juneau Sen. Jesse Kiehl said the governor’s sales tax proposal, as written, would override Juneau’s local exemptions.

“The governor’s proposal would be to override that and to allow no variation,” he said. “I think that’s a bad choice, especially because it impacts people with a sales tax who struggle most to get by.”

Dunleavy’s proposed sales tax – Senate Bill 227– would follow a seasonal structure, set at 4% from April through September and 2% for the remainder of the year. That would be on top of Juneau’s existing 5% sales tax on most items. If passed, the state sales tax would expire in 2034 and provide between $735 million and $815 million of revenue to the state each year.

The governor’s proposal might sound familiar, because this past municipal election, the Juneau Assembly proposed implementing a similar seasonal sales tax at the local level to take advantage of the 1.7 million cruise passengers that come to town each summer. While voters shot that down, they did approve an exemption for essential food and residential utilities from local sales tax. 

Kiehl said he thinks a moderate state income tax would be a fairer way to raise additional revenue for the state while not disproportionately affecting low-income residents. At the town hall meeting, Democratic Juneau Rep. Sara Hannan agreed. She said Alaska needs to stabilize its revenue with its expenditures. 

“A state sales tax on top of local sales tax makes things really burdensome,” she said. “But right now, this is the first time we’ve been able to get the governor to use the word tax and not choke, so that’s a step forward.”

Some Alaska Senate leaders have said they’re skeptical the governor’s plans will pass the Senate this year. Leaders in the state House similarly said they’re not optimistic Dunleavy’s plans will pass this year, which is his last as governor. The House Finance Committee plans to hear public testimony on the tax proposal at 5:30 p.m. Thursday, Feb. 5.

KTOO’s Jamie Diep contributed to this report. 

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.

While Alaska school districts are seeing improvements in kindergarten to third grade students’ reading proficiency, which officials credit to the Alaska Reads Act, some districts are struggling to access state managed funds for a federal grant program aimed at supporting literacy programs, teacher development, and student learning.

Lawmakers with the House Education Committee heard from two district superintendents about the successes and challenges of the Comprehensive Literacy State Development grant program — which in 2024 awarded $50 million to Alaska schools over five years.

In 2025, roughly half of Alaska’s districts, or 27 school districts, qualified for these grant funds administered through the Alaska Department of Education and Early Development, according to the department.

The program is aimed at advancing literacy for children from birth through 12th grade students, including pre-literacy skills, reading and writing. The program focuses on districts with disadvantaged children, including those living in poverty, English language learners and students with disabilities.

While all Alaska districts are required by state law to implement the Alaska Read’s Act, the policy did not come with additional state funding, said Rep. Rebecca Himschoot, I-Sitka, co-chair of the education committee, in an interview on Monday. She said some districts are struggling to fund the kindergarten through third grade reading initiatives. “I would like to see us supporting schools so that everybody gets the support they need to implement the law the way it was written,” she said.

The program isn’t new, but it has more money and it’s funding more districts now. In 2019, nearly one third of Alaska districts were awarded $25 million over five years, according to DEED.

“The literacy grant is a really powerful tool that is going to help the districts that it’s in, a lot,” Himschoot said. “I’ve heard a lot of gratitude from superintendents about having this opportunity for those who have it, but we did hear about some bumps in the rollout of it.”

District officials’ testimony prompted Himschoot to send a list of questions to DEED about how the grant is managed.

Michael Robbins, superintendent of the Bristol Bay Borough School District, which serves approximately 135 students, said the grant has been crucial for implementing the Alaska Reads Act, particularly supporting teachers’ training professional development, which helps retention. “The grant supports training, coaching and leadership development grounded in research-based instruction, including the science of reading,” he said.

“It creates consistency across classrooms in schools, helps prevent problems before they grow, and ensure that limited resources are utilized where that matters most,” Robbins said.

But Robbins said in implementing the grant, districts need more “clear, timely and reasonable guidance around allowable use of grant funds” from DEED.

He said the district would like to use the money for professional services vendors to provide training to teachers, and funding to attend conferences. “The approval process has been particularly cumbersome as some districts have had to resubmit their application multiple times, which takes valuable time from our grant leaders and administrators, as well as delaying the implementation of important activities,” he said.

Officials with DEED did not attend the legislative hearing, but department spokesperson Bryan Zadalis said by email on Monday that the department recognizes the importance of clear guidance, which is communicated through multiple channels including webinars and office hours. “DEED also aligns state-level guidance with federal updates as they are released to ensure accuracy and compliance, which can at times require sequencing information rather than issuing it prematurely,” he said.

In addition, Robbins, who formerly served as the superintendent of the Ketchikan Gateway Borough School District, said that that district did not qualify for grant funding. “The need was there, but the resources are not,” he said. “We need to find ways for all districts and all students to have access to the same level of support and opportunity.”

Robyn Taylor is superintendent of the Petersburg School District which serves approximately 420 students, and was awarded $350,000 per year through the grant program. She testified to lawmakers and echoed the need for equity in supporting reading programs across Alaska’s school districts. She said Petersburg still continues to have challenges with implementing the Alaska Reads Act, which she called “a real tension.”

“In Petersburg alone, between FY 25 and FY 26 we eliminated one of our three elementary reading interventionist positions, positions that were directly supporting Reads Act implementation and student outcomes,” she said. She said the district was told that CLSD funds were for supplementing programs not replacing funding.

“(The) restriction makes it difficult to use this grant to maintain positions or systems that are already working but are no longer financially sustainable under current funding structures,” she said.

Taylor and Himschoot both emphasized that districts who did not qualify for funding need support with the administrative work to apply. They said some schools should have easily qualified for the funding, but didn’t in part because they lack proper documentation of their students’ need for free or reduced school meals, which is one of the federal poverty guidelines. “It’s not that they don’t have kids in need,” Himschoot said. “It’s that they haven’t been identified through the paperwork, because they don’t have the capacity in their district to go chase that down.”

Zadalis said the grant process is a competitive one. He said the primary source of education funding is through the state’s funding formula, but districts may also access state or federal funding through other grants focused on literacy efforts.

Taylor said Petersburg students are making gains in reading proficiency, and the district is committed to continuing improvements beyond the grant cycle. “What we are asking for is greater flexibility, clearer and earlier guidance,” she said. “And increased trust in districts to make decisions that reflect local context and student needs.”

School districts awarded CLSD grants in 2025

• Alaska Gateway School District
• Aleutians East Borough School District
• Anchorage School District
• Bering Strait School District
• Bristol Bay Borough School District / Chugach School District
• Copper River School District
• Cordova City School District
• Dillingham City School District
• Galena City School District
• Iditarod Area School District
• Kake City School District
• Kashunamiut School District
• Kenai Peninsula Borough School District
• Kodiak Island Borough School District
• Kuspuk School District
• Lake and Peninsula Borough School District
• Lower Yukon School District
• Mount Edgecumbe High School
• North Slope Borough School District
• Northwest Arctic Borough School District
• Petersburg Borough School District
• Pribilof School District
• Southeast Island School District
• Yakutat School District
• Yukon Flats School District
• Yukon–Koyukuk School District