Alaska
‘No perfect tax regime’: Alaska lawmakers list concerns over Dunleavy’s sales tax proposal
Gov. Mike Dunleavy’s proposed sales tax could clash with existing revenue measures in cities and boroughs across the state, lawmakers said during a House Finance Committee hearing on Thursday.
It was just one of a series of concerns raised on both sides of the political aisle during the first hearing on Dunleavy’s fiscal plan for balancing the state’s budgets in the long run.
The sales tax, which is the primary means by which Dunleavy is proposing to increase state revenue, would levy a 4% tax on purchases between April and September and 2% for the remainder of the year.
Dunleavy’s fiscal plan comes in the final months of his eight years as governor, after several years in which he proposed balancing the state’s budget with hundreds of millions in annual draws from state savings.
Several lawmakers pointed out that even though Dunleavy projected his sales tax would raise up to $800 million annually, his plan could still leave Alaska with annual budget deficits in the long run because of his proposal to insert the Permanent Fund dividend into the state constitution and guarantee an annual payout that could cost the state more than $2 billion annually.
Dunleavy’s plan was explained to lawmakers by Acting Revenue Commissioner Janelle Earls, Acting Tax Division Director Brandon Spanos, and revenue department Chief Economist Dan Stickel. Neither the revenue department nor the tax division have had permanent heads for months.
“There is no perfect tax,” Dunleavy’s revenue officials said repeatedly as they fielded questions from lawmakers. It was their answer when asked about the difference in impacts between a sales tax and an income tax; when asked about the impacts of the state tax on communities with existing local sales taxes; and the impacts on rural villages.
“There is no perfect tax regime. We wish we weren’t here talking about this either, but that’s the situation,” said Spanos.
Nils Andreassen, executive director of the Alaska Municipal League, spoke to lawmakers about the potential conflicts between Dunleavy’s proposal and existing local taxes.
“We should probably unpack ‘perfect,’” Andreassen said. “I think what we mean when we say there’s no perfect tax is that at some point somebody pays the tax.”
“There’s no tax that doesn’t impact somebody,” he said. “Are there ways to mitigate some of those impacts? Yes.”
Impacts on communities with local sales taxes
More than 70% of Alaska residents live in parts of the state that lack a sales tax, including in Anchorage, which funds local services primarily through property taxes. But the number of jurisdictions in Alaska with some form of a sales tax exceeds 100.
In parts of the Kenai Peninsula Borough, for example, the combined borough and city tax is 6%. In Ketchikan, the combined borough and city tax reaches 8% in the summer. The City of Kodiak levies a 7% sales tax.
Many of those communities have implemented exemptions for their local taxes in an effort to curb their burden, including carve-outs for senior citizens and caps on the total tax that must be paid from single transactions.
Dunleavy’s proposal would eliminate communities’ ability to implement unique exemptions by transitioning that authority to the state.
The elimination of local exemptions has the effect of going against voter decisions, said Andreassen. In Juneau, residents only recently approved a provision that eliminates sales tax applicability on food.
“Voters contribute to local decision-making when it comes to those exemptions, and the state is saying right now in this proposal, ‘All of what voters asked for in those communities will go away based on our new list of exemptions,’” Andreassen said.
The exemptions proposed by Dunleavy cover medical services, purchases made with food stamps and similar assistance programs, interstate commerce, internet access, sales to the state or the federal government, state licenses or permits, investments, jet fuel, insurance premiums, home sales and rent, among others.
But the tax would apply to most goods purchased by individual Alaskans, such as groceries, fuel and cars.
Under the governor’s proposal, the effective tax rate in 36 Alaska communities would be at least 9%, rising to 13% in some places — which would be among the highest in the nation, said Andreassen.
Rep. Andy Josephson, an Anchorage Democrat who co-chairs the Finance Committee, said that “at some point, the tax rate gets so large that it acts as a deterrent for local economies.”
During the hearing, Department of Revenue officials did not provide data or modeling on the impacts of a statewide sales tax on communities that already levy local sales taxes.
Spanos said the sales tax is “the regime that the governor believes is the best for the state.”
“Certainly we have concerns and the governor would like to not have a tax as well, but that’s not the situation we’re in. We have a fiscal crisis that needs to be resolved, and the governor feels this is the best solution for this time,” said Spanos.
Department of Revenue officials said lawmakers could propose new exemptions to the tax if they saw fit, but Josephson said Dunleavy had not given him indications that he was open to changes to his bill.
“You made it sound like we were welcome to engage in those sorts of adjustments. But I just haven’t experienced that,” he told Earls. “What I’ve experienced is, ‘I’ve got to vote for this bill the way it is,’ and I just don’t know how much allowance the Legislature has to go at it alone and make changes.”
Earls said the plan was “open to some conversation.”
“I can’t speak to exactly what the governor would accept, but I think it’s a conversation to be had,” she said.
Impacts on rural Alaska
Rep. Nellie Jimmie, a Democrat from Toksook Bay, said the proposal would place an undue burden on communities in her district, which includes many Western Alaska villages.
If the tax were in place, Jimmie said, residents who lost their homes and most of their worldly belongings in villages ravaged by storms last year would face the burden of many purchases that would not be exempted from the sales tax, like snowmachines. Costs associated with rebuilding the houses would be exempted, but not the costs of filling a new home with belongings.
That comes on top of highest-in-the-nation prices for food and fuel.
“How is a statewide sales tax meant to be equal when rural Alaskans face much higher costs for the same basic necessities, especially after a disaster?” Jimmie asked.
Earls said she’s “heard that concern from others.”
“I’m not exactly sure how to answer every single individual Alaskan,” Earls said.
The Department of Revenue did not provide any specific modeling on the impacts of the tax on rural Alaska communities, where commodity prices are higher.
“It sounds like a sales tax is equal,” said Rep. Neal Foster, a Democrat from Nome who co-chairs the Finance Committee, “but when you have the cost of milk and cost of fuel and cost of groceries and everything higher up in rural Alaska, that same gallon of milk is really being taxed more.”
“It is not OK,” Jimmie concluded.
Sales tax vs. income tax
Alaska is the only state in the country without a broad-based tax, having eliminated its income tax four decades ago amid a flood of new oil revenue. Andreassen said that the Municipal League supports adoption of a broad-based tax, but favors an income tax over a sales tax.
Rep. Alyse Galvin, an Anchorage independent, said Dunleavy’s proposed sales tax, when compared with an income tax, would have a disproportionate impact on households with limited means. That assertion was supported by data collected by researchers at the University of Alaska Anchorage, who were paid by Dunleavy’s office to review various fiscal plan alternatives.
Asked whether the governor had considered an income tax, Earls said that the sales tax was preferred because it would collect revenue from non-residents and tourists spending money in Alaska.
Galvin argued that an income tax would better capture funds from non-resident workers, who according to recent data make up more than a fifth of the state’s workforce.
“A lot of Alaskans think that it’s not right that people come up here to work and take the very best, highest-paying jobs, and yet they don’t put in to Alaska,” said Galvin.
Rep. Jamie Allard, an Eagle River Republican, countered that imposing an income tax would drive away military retirees like her who chose to reside in Alaska precisely because their military retirement benefits are not taxed by the state.
Department of Revenue officials did not immediately provide any data to the committee detailing the difference in revenue that could be raised from non-residents through a sales tax versus an income tax.
“As was stated earlier, there is no perfect tax. Any tax is going to have negative downsides,” said Stickel, the department’s chief economist. “That’s true of a sales tax. It’s true of an income tax.”
Enshrining the dividend in the constitution
Dunleavy’s tax plan, which also includes raising new revenue from the oil industry, eventually calls for phasing out the new sales tax, along with the state’s existing corporate income tax. At the same time, his plan calls for enshrining the Permanent Fund dividend in the state constitution in perpetuity and paying out dividends through a new formula that allocates roughly $2 billion annually to the payouts in the foreseeable future.
Some lawmakers said that even at the peak of Dunleavy’s proposed new revenue streams, the state budget will be strained, leaving no room to address the maintenance backlog of state-owned facilities, such as university and school buildings.
“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,” said Rep. Will Stapp, a Fairbanks Republican.
“So why do we need this proposal, and what is the purpose of this proposal, when the proposal spends more money than it raises?” asked Stapp.
Stickel said that several things would have to happen for the governor’s plan to produce balanced budgets in the long run: New oil fields would have to yield significant revenue, the Permanent Fund would have to keep growing, and a yet-to-be-constructed natural gas pipeline would have to begin sending income to the state within five years.
Even if all those things were to happen, the budget would be balanced only if government spending growth were strictly limited in future years, giving lawmakers almost no leeway to increase spending on the maintenance of state-owned buildings.
“There is actually nothing in this plan that will create stability in capital investment in the state, building things, having people working through that building of things, and making life easier for those people by us building things and doing things and maintaining things,” said Rep. Jeremy Bynum, a Ketchikan Republican. “This plan does absolutely nothing for that, that I can see. What it does is it taxes my community to ensure that we’re enshrining a PFD.”
The governor’s fiscal plan has caused many lawmakers in Juneau to wonder: It is worth imposing new taxes to continue paying out Permanent Fund dividends?
By several estimations, Alaska could avoid implementing new broad-based taxes in the coming years if it halted the dividend payments altogether or reduced their size substantially.
It boils down to a question, Andreassen said: “At what point do you pay more in tax than you get in an increased dividend?”
The Department of Revenue did not provide data showing how Dunleavy’s proposed dividends, which would amount to more than $3,000 annually per eligible Alaskan, would compare with the new tax burden at different levels of income.
Bynum also said that Dunleavy’s plan negates one of the main reasons he has given for proposing it. Dunleavy has said that Alaska has the highest revenue volatility in the country, and that making the state’s revenue less dependent on oil, a global commodity, will improve the state’s business climate. But in the long run, Dunleavy is calling for the elimination of the new revenue measures he is proposing, and a return to dependence on oil and gas revenue to fund government services.
“We’re saying we want to have stability by imposing a sales tax because oil revenues are volatile. Then on the other hand we’re saying, ‘Just wait seven years and we’re going to go back to that volatility,’” said Bynum.
Implementation
The Dunleavy administration expects that overseeing the new statewide sales tax would require hiring over 60 new state employees in the revenue department at an annual cost of $10 million.
Andreassen listed a series of technical deficiencies in Dunleavy’s bill that he said made it “unenforceable” without significant changes.
Even if those changes were made, he warned lawmakers that implementing the statewide sales tax as proposed would bring with it significant costs for Alaska’s cities and boroughs.
“This isn’t going to be cheap for local governments to respond and implement,” said Andreassen. Changes would include altering city and borough codes, laying off existing tax collection staff, and transforming local budget processes.
“We just want you to be mindful as you move forward about the complexity of unwinding what is currently a fairly efficient and effective system at the local level,” said Andreassen.
In exchange for living in what is perhaps the country’s most beautiful state, Alaskans sometimes have to do without: professional sports teams, Trader Joe’s and, well, sunlight for half the year. But we make up for it with the Iditarod, reindeer sausages and chasing the aurora borealis. In other words, we often have to make our own fun. And by “fun” I mean “beer.” Those words are interchangeable, right?
Beer is a big part of life for Alaskans. We hike with it, camp with it, boat with it, cook with it and pair it with foods like the stuffiest of sommeliers. We throw it monthly birthday parties like the First Tap events at Broken Tooth Brewing Co. (otherwise known as Bear Tooth Theatrepub and Moose’s Tooth Pub & Pizzeria), complete with national musical acts like Modest Mouse, Clinton Fearon, and Norah Jones. We even occasionally do yoga with it (at downtown’s Williwaw Social). In other words, we take it everywhere and we take it seriously.
Beers from the state’s biggest brewery, Alaskan Brewing Co. based in Juneau, might already be in your refrigerator if you live in one of the 25 states where it’s available. Established in 1986 by Marcy and Geoff Larson, it was the 67th independent brewery to open in the country. With a steady line of signature brews, including their most recent “Wildness” beer, it’s the most well-established of all the state’s breweries. Expect seasonal specialties that incorporate ingredients like cranberries, raspberries, locally roasted coffee, locally grown white wheat from the Matanuska-Susitna area and even Alaska spruce tips. Ubiquitous around Alaska, this is our Papa Beer, if you will (I’ll show myself out).
But Alaskan Brewing is just one out of the more-than 50 breweries, distilleries, meaderies and cideries in the state (for an excellent list visit brewersguildofalaska.org). And while almost half of them are in Anchorage or within a short drive of our state’s largest city (including the relatively populous communities of Girdwood, Eagle River, Palmer and Wasilla), some of our most remote ports of call and tiniest towns are also in on the brewing action (I’m looking at you, Cooper Landing Brewing Company in Cooper Landing, population 231).
The ever-expanding Denali Brewing Co. in Talkeetna (population 997) may be a small-town hero, but it’s anything but small. Their four signature beers — Mother Ale, Chuli Stout, Single Engine Red and the ever-popular Twister Creek IPA, as well seasonal brews like Slow Down Brown and Flag Stop Milepost #3 — are year-round mainstays of summer barbecues and winter bonfires around the state.
This brewery is also home to the more recently established Alaska Cider Works, Alaska Meadery (featuring “Razzery,” a mead made with raspberries, sour cherries and apples) and Denali Spirits (featuring vodka, gin, whiskey, and “smoke” whiskey), because when you’ve fermented one, why not ferment them all?
(Denali Spirits’ canned cocktails, especially their blueberry mojito, have been so popular in Anchorage that at one time there was a Facebook page largely dedicated to tracking them down. Luckily, supply has since caught up with demand.)
Some breweries are even more remote. Ports of call and island hopping here can be one way to get your fill of hops. Breweries can be found in Ketchikan (Bawden Street Brewing Co.), Kodiak (Kodiak Island Brewing & Still, Double Shovel Kodiak Cidery, and Olds River Inn), Homer (Homer Brewing Co. and Grace Ridge Brewing Co. for beer, and you can also check out Sweetgale Meadworks & Cider House for hard cider and locally sourced meads featuring ingredients like nagoonberry), Sitka (Harbor Mountain Brewing), Seward (Seward Brewing Co. and Stoney Creek Brewhouse), Valdez (Valdez Brewing and Growler Bay Brewing), and Skagway (Klondike Brewing Co. and Skagway Brewing Co.).
Of course, many trips to Alaska begin and end in Anchorage. And if, during your travels, you’ve foolishly left some beers untasted, you can make up for lost time in our state’s biggest city which boasts — let’s face it — a ridiculous number of exceptional craft breweries.
Downtown’s Glacier Brewhouse specializes in oak-aged English and American West Coast-style beers, 13 of them, from blondes to stouts. Beneath the floor of the Brewhouse is a “Wall of Wood” comprised of casks of special release beers that are conditioned in oak barrels once used to age wine and bourbon. The history of the oak imparts “mother tongue” flavor characteristics, like vanilla and coconut, into these limited edition brews. Opt for one of these unique beers or choose from their flagship choices like raspberry wheat, oatmeal stout, imperial blonde, Bavarian hefeweizen or a flight that includes them all.
Down the street is 49th State Brewing Co., which expanded into Anchorage from its original location in Healy, at the edge of Denali National Park and Preserve. If you are unable to visit their flagship location, where you can sip beer while playing bocce or horseshoes on the lawn, you can catch up with them here. There’s a unique selection that includes beers like Smok, a smoked lager, as well as seasonal offerings like the Tiger’s Blood Sour, an homage to shave ice described as ”ferociously fruity.” Or there’s “Apple Fritter Ale,” with hints of cinnamon, icing, caramel, and vanilla. This location also boasts some of the best views in Anchorage and an expansive outdoor rooftop patio.
Just about all of the full-service restaurants in downtown Anchorage proudly feature some variety of Alaskan beers. In the heart of downtown, Humpy’s Great Alaskan Alehouse prides itself on a huge selection of beers, both international and local. Tent City Taphouse offers a diverse and carefully curated list of 24 rotating local brews, including their house beer, Tent City Tangerine IPA brewed by Glacier Brewhouse. Tent City regularly hosts “Taste of the North” beer dinners featuring Alaskan brewers. One, in collaboration with Grace Ridge Brewing Company, featured smoked salmon canapes with Black Pepper IPA, classic beef Wellington with an Oystercatcher stout and roasted honey lamb chops with a Winter Cranberry Ale.
If you have transportation around the city, treat yourself to a brewery tasting-room tour. Found in unassuming little side streets in the more industrial areas of Anchorage, some of our best beers can be sipped and savored at the source. Finding these funky little spots can feel like being invited to a secret party. And it’s a glimpse into Anchorage’s most authentic beer culture.
In midtown, Onsite Brewing Co. has unique, small-batch brews in a funky relaxed environment. Further south, King Street Brewing Co., Turnagain Brewing, Cynosure Brewing, Magnetic North Brewing Company, Brewerks, and one of our newest, Ship Creek Brewing Company are all within a stone’s throw of one another. If you’re lucky, you might run into one of Anchorage’s popular food trucks parked outside, so you’ll have something to wash down with your flights. Depending on the day, you might find reindeer sausages, pad Thai, cheesesteaks or pupusas. On the weekends, Anchorage Brewing Company features a top-notch in-house pop-up restaurant, called Familia, with a rotating menu featuring local Alaskan ingredients.
One of the newest and furthest south breweries, while still in the Anchorage bowl, is Raven’s Ring Brewing Company, which is a brewery/winery and meadery. From a traditional IPA to a Concorde grape wine called Grape Juice to a rotating Vintner’s pour like Sweet Peach Jalapeno mead, this ambitious operation is challenging the notion that you can’t please everyone.
Other Anchorage points of interest for non-hoppy but still home-grown adult beverages include Anchorage Distillery, Zip Kombucha, Double Shovel Cidery and Hive Mind Meadery.
If your travels are over and you still haven’t had your fill, check out the Silver Gulch Brewing & Bottling Co. inside Terminal C at the Ted Stevens Anchorage International Airport on your way out of town. An offshoot of the flagship Silver Gulch brewery in Fox, Alaska (about 10 miles north of Fairbanks), this location has a bar and restaurant, and a retail shop carrying growlers of their own brews as well as those of other Alaskan brewers and distillers. Last-minute souvenir shopping never tasted so good.
Before you start your great Northern beer safari, bear in mind that tasting rooms often have limited and varying hours, so always double-check before planning a visit.
Whether your travels take you to fine-dining restaurants, low-key alehouses or even rustic cabins in the woods, make like an Alaskan and fuel your adventures with one of our beloved, home-grown brews. When in Alaska, drink as the Alaskans do.
Mara Severin is a food writer who writes about restaurants in Southcentral Alaska for the Anchorage Daily News.
WASHINGTON — The U.S. Coast Guard announced Thursday that the first two Arctic Security Cutters will be homeported in the State of Alaska. Anticipating delivery of the first Arctic Security Cutters by the end of 2028, the Coast Guard has begun planning to ensure necessary infrastructure and support are in place to receive two icebreakers. Ensuring these vessels are supported by trained and ready crews, and ready homeport facilities including housing, will be essential to delivering full, enduring operational capability required to meet emerging Arctic security challenges.
“Homeporting these two Arctic Security Cutters in Alaska is a decisive step forward in securing America’s Arctic frontier,” said Secretary of Homeland Security Markwayne Mullin. “I want to thank President Trump for his bold leadership and vision in directing this critical investment, as well as Senator Sullivan and the entire Alaskan Congressional delegation for championing the funding that made these icebreakers possible. These vessels will deliver the enduring operational presence our nation needs to protect sovereignty, deter foreign adversaries, and safeguard vital resources for the American people..”
The homeporting of the first two Arctic Security Cutters in Alaska builds on the historic expansion of the Coast Guard’s icebreaker fleet and underscores an unprecedented investment in the Arctic. This announcement marks a national milestone in U.S. Arctic capability, following contract awards for up to 11 Arctic Security Cutters. Fueled by $3.5 billion in funding in the Fiscal Year 2025 Reconciliation Bill and facilitated by a groundbreaking Memorandum of Understanding (MOU) between the United States and Finland in October 2025, the acquisition of Arctic Security Cutters will fulfill President Trump’s directive to rapidly deliver America’s newest icebreaker fleet.
“Homeporting Arctic Security Cutters in Alaska underscores the United States’ leadership as a maritime power in the Arctic,” said Adm. Kevin E. Lunday, commandant of the Coast Guard. “By strategically positioning these state-of-the-art icebreakers in Alaska, the Coast Guard will maximize our ability to defend our northern border and approaches, while reinforcing America’s maritime dominance in a crucial region of strategic importance.”
Through contract awards to Rauma Marine Constructions Oy of Rauma, Finland, Bollinger Shipyards Lockport, L.L.C., and Davie Defense, Inc. of Vienna, VA, the U.S. will immediately benefit from our Finnish partners’ icebreaker expertise while coordinating the onshoring of that expertise and shipbuilding to the United States. Under the MOU, Finland will construct up to four ASCs for the U.S Coast Guard. U.S. shipyards will build and deliver up to seven additional ASCs. Delivery of the first Arctic Security Cutters is expected by the end of 2028.
Arctic Security Cutters will form the backbone of a revitalized U.S. icebreaker fleet, strengthening American maritime dominance in the Arctic. Fielding specialized capabilities, these icebreakers will defend U.S. sovereignty, secure critical shipping lanes, protect energy and mineral resources, and counter foreign malign influence in the Arctic region. A robust icebreaker fleet will enable the Coast Guard to control, secure and defend U.S. Alaskan borders and Arctic maritime approaches, facilitate maritime commerce vital to economic prosperity and strategic mobility, and respond to crises and contingencies in the region.
Acquisition of Arctic Security Cutters supports the Coast Guard’s ongoing modernization, through which the Service is transforming into a more agile, capable and responsive fighting force.
Memorandum on ASC Homeporting
###
Alaska
‘We never forgot her’: Friends, family of longtime Alaska teacher gather for 100th birthday celebration
ANCHORAGE, Alaska (KTUU) – Phyllis Sullivan has certainly led a life worth celebrating.
Born in 1926, Sullivan moved to Alaska with her husband and three children in 1959 to teach, first in the village of Kwethluk in Western Alaska and later at Wendler and Mears Middle Schools in Anchorage.
All the while, she left strong impressions with countless students and acquaintances, some of whom gathered in the basement of Anchor Park United Methodist Church in Anchorage Saturday to celebrate Sullivan’s century of life.
“Education has been the primary thing in her entire life,” her son Dennis Sullivan said. “She’s always been a school teacher and she’s been one of the sweetest people in the entire world.”
As a slideshow featuring vintage photos from her life and time in Alaska played, Phyllis, wheelchair-bound but high in spirit, stopped to chat with every new person who entered the room, some of whom she hadn’t seen in years.
“It’s impressive that this many people are here,” she said. “That’s very encouraging. Makes me think maybe I did something right along the way.”
Aside from family members, most visitors were there because of the impression Phyllis Sullivan left on them during her many years in the classroom.
“She gave us this one assignment: to memorize a poem,” former Mears student Tina Arend recalled. She said Phyllis Sullivan was her 8th grade English teacher.
“And when she gave us the assignment, she said, ‘I’ve had students come back many, many, many years later and recite the poem to me.’ And we actually still remember the poem,” Arend said of her and her husband, who was also in attendance. They both went on to become teachers at Mears as well.
Matthew Nicolai, whom Phyllis Sullivan taught in Kwethluk, has similarly fond memories.
“The Bureau had ordered that teachers do corporal punishment for speaking Yup’ik,” Nicolai remembered. “Even though we spoke Yup’ik, she never did that, never cracked our hands. Other teachers did, but not her. That’s why we never forgot her.”
In addition to teaching, Phyllis Sullivan also found time to open her home to those in need. She and her husband once took in a family with seven kids who had been displaced by flooding in Fairbanks in 1967.
“It touched our heart because they bought us a lot of stuff that we needed because we lost a lot of stuff during the flood,” David Solomon, one of those seven kids, said. “We stayed there for over three years.”
Phyllis Sullivan said she is enjoying life and is doing fine.
“My mother made it to 103,” she said. “So, I’ve got a while yet.”
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