In a series of hearings this week within the Alaska State Capitol, public-school advocates from across the state presented hours of impassioned and often emotional testimony in favor of a bill that will sharply increase Alaska’s funding for public schools.
But a pair of cold-blooded financial hearings also showed that the request may have to compete with the Permanent Fund dividend and aid for aging state buildings.
In December, Gov. Mike Dunleavy proposed a $7.7 billion state budget for the fiscal year that starts June 1.
That spending would require the state to spend $1.5 billion from savings, and it isn’t too dissimilar from what the governor has proposed in each of the past two years.
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In each of those years, the Legislature took the governor’s plan and slashed his proposed Permanent Fund dividend in order to avoid spending from savings.
The Legislature’s preferred dividend formula is called the 75-25, for the way it takes the annual transfer from the Alaska Permanent Fund to the state treasury, then divides it, 75% for services, and 25% for dividends.
“The last two years, the Legislature has put forward the 75-25 dividend and been able to have a balanced budget. This year, that is probably not enough,” Alexei Painter, director of the Legislative Finance Division, the Legislature’s budget analysis wing, told the Senate Finance Committee this week.
The problem is twofold: Lawmakers are preparing to spend more, and oil isn’t giving the state as much revenue as it used to.
When it comes to oil, the problem is one caused by success. State tax law allows oil companies to lower the amount they pay in production taxes through a deduction based on their operating expenses.
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ConocoPhillips is spending hundreds of millions of dollars to develop the Willow project on federal land, and it can deduct its expenses from taxes it would otherwise pay this year. That makes it a money-loser for the state treasury in the next few years.
The nearby Pikka project is being developed by another company, which doesn’t currently produce oil. That company, Australia-based Santos, will be able to apply its deductions to future oil production, so even though the North Slope will be producing more oil, the state won’t be earning more money.
In the state Capitol, House Bill 69, an education-funding increase proposed by members of the state House, is expected to cost at least $300 million above what the governor has proposed spending on education. An official estimate isn’t yet available.
Add the cost of that legislation to already-expected cost increases, and there’s not enough money to go around, Painter told the Senate Finance Committee, then reiterated his comments to the House Finance Committee on Thursday.
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“Simply switching the dividend to 75-25 is not going to be enough to balance the budget this year. You’re going to have to either find other budget reductions, reduce the dividend further or explore other revenue options. You can’t just do that one thing and it’s solved, which has worked the last two years,” he said.
To date, no legislators have introduced any legislation proposing to significantly change state taxes. During the first six years of his administration, Dunleavy has vetoed every tax bill to reach his desk, and legislators have never overridden any of his vetoes.
Painter also warned both committees that the governor’s proposed budget doesn’t include enough to keep up with maintenance at state facilities.
Alaska has a maintenance backlog of more than $2 billion, and many state buildings were built during the oil boom of the 1970s and 1980s. That leaves many of them overdue for replacement or repair.
The problem may be worse than official reports indicate, Painter said, offering the Fairbanks Pioneer Home as an example.
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That building has a deferred maintenance list of a few million dollars, but it also needs a new roof and doesn’t meet federal standards for accessibility by handicapped people.
Replacing the building would cost $115 million, he said.
In the House Finance Committee on Thursday, Rep. Will Stapp, R-Fairbanks, asked Painter what would happen if average oil prices finished $10 below what the state is expecting in the coming years.
That would widen the expected deficit by $350 million to $400 million, Painter replied.
“Have you done any modeling on the 99-1 yet?” Stapp asked, jokingly referring to a dividend formula that would leave just 1% of the annual Permanent Fund transfer for dividends.
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“I don’t even think that would cover the costs of running the PFD program,” Painter said.
I never thought I’d be the person writing this letter, but after this winter, I think I might be done with Alaska. I was born here, grew up here, raised my family here, and never imagined living anywhere else. I defended Alaska to the haters. I rolled my eyes at people who retired to Arizona. I told myself long winters are worth it because summers are the best.
But this winter broke something in me. It was so long, dark, icy and relentless. By the time spring finally arrived, I felt angry that winter took so much out of me and that I spent months feeling trapped by weather, darkness and road conditions. Angry that I’m getting older and still structuring my life around surviving winters instead of enjoying my life. And at the time I’m writing this, this spring has sucked! My heat is still coming on every day. I’m still wearing my puffer jackets!
Part of me wonders if it’s not really about the winter at all. I’m divorced and my two kids are grown and doing their own thing, both staying in Alaska for now. For the first time in my life, nothing is really anchoring me to a place. And if I’m being honest with myself, in addition to feeling trapped by the weather, I’m bored with it here. The dating scene feels impossibly small. Every time I open a dating app, it’s the same people. Half the time I already know them, or know someone who dated them (and broken up with them for a good reason!).
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So I’m sketching out plans to move somewhere warmer, bigger and completely unfamiliar. I think I want to know what life feels like somewhere else while I’m still young enough to enjoy it. I really feel this is a moment for a big change.
The problem is that nobody seems supportive. When I bring it up, people act like I’m having a midlife crisis. Friends tell me I’ll regret it. Family members remind me that the kids are here. Other Alaskans give me the usual speech about how the Lower 48 is generic. It’s gotten to the point where I almost don’t talk about it anymore because I’m tired of defending myself.
But all the resistance has me questioning myself and whether moving is a legitimate and logical step, or whether I’m just exhausted from a hard winter and romanticizing a different life. How do you know the difference between running toward something and simply running away?
Wanda says:
You’re asking whether you’re running toward or away from something — essentially if you’re taking a positive step or being reactive. Those aren’t mutually exclusive. Sometimes we leave both because we’re exhausted by what we’ve been carrying, and also because we are moving toward something new at the same time.
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Every reason you listed for staying in Alaska has changed. You raised your children here? They’re grown. You had a marriage here? That chapter is closed. You tolerated winters for the sunny payoff? Nailed it: This spring has sucked.
Now you’re primed for a reset, and questioning how you want the near term and future of your life to unfold is not a crisis, it’s taking action. And it’s way more productive than floating along season to season in a fog of monotony, settling for an unfulfilling existence. Your friends and family may genuinely believe they’re protecting you from a mistake, but they’re also protecting their own worldview. Your decision to leave can feel like an implicit criticism of their choices.
But this isn’t a committee decision, and you’re a grown woman capable of major decisions, who absolutely should explore life’s possibilities without defending it to everyone you know. So go explore. Visit places. Rent before you buy. Spend a winter somewhere else. Gather information instead of arguments. And know that no matter where you land, you can always come home again — even if it’s just for a long visit in the middle of summer.
Wayne says:
This isn’t a midlife crisis that can be glossed over with a motorcycle, lip filler, a 20-something boyfriend (who probably went to high school with your kids — yikes), or kicking off your Cowgirl Era with a hat, boots and a two-week Nashville dive bar tour.
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This is an existential crisis with your health and happiness at risk. And you’ve faced it thoughtfully, sat with it thoroughly, and are now making the best decisions selfishly. Good for you! You can’t fault your family and friends for also being selfish and wanting you to stay in AK. Of course they don’t want their mom and friend moving far away. But you’ve got to mute that noise and focus on what’s best for you.
Yes, Alaska life is special, but it sure isn’t easy. And we don’t get medals for stubbornly battling through decades of winters. What we do get is some sweet and fleeting summer moments followed by more winters. You know that, and it’s not enough for you anymore.
Most people would totally understand an 18-to-20-year-old Alaska kid taking off to see what else is out there in the world. What, we’re supposed to stop being interested in new experiences once we hit a certain age? And we’re expected to stick around someplace forever just because we’ve always been there?
It’s time for you to go. See what life feels like when you’re not scraping ice off your windshield in May. See how much fun you can have with new people in new places. It’s exciting, it’s living, and you deserve it.
[Wayne and Wanda: Is it the winter blues I can’t shake off, or something more?]
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[Wayne and Wanda: Rebuilding my social life after a divorce]
[Wayne and Wanda: My relationship is poised for big steps, and I’m anxious]
Shares in Alaska Air Group(ALK 1.16%) rose by 12.7% in an excellent week for airline stocks. The move comes as the sector climbs a wall of worry driven by soaring jet fuel prices stemming from the closure of the Strait of Hormuz. While the market’s prior concerns are understandable, there’s growing anecdotal evidence suggesting that airlines, including Alaska Air, might emerge from the period in better shape than many expect.
This week’s airline updates
Southwest Airlines(LUV 0.83%) CEO Robert Jordan gave a presentation at the Bernstein 42nd Annual Strategic Decisions Conference, and his remarks surprised the market. It’s no secret that jet fuel prices have soared, and that’s challenging airlines’ profitability. Still, it doesn’t appear to have affected end demand, with Delta Air Lines previously telling investors that strong demand in the first quarter was continuing into the second quarter, even as it raised prices.
Today’s Change
(-1.16%) $-0.54
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Current Price
$46.05
Key Data Points
Market Cap
$5.1B
Day’s Range
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$46.04 – $47.84
52wk Range
$33.03 – $65.88
Volume
162.4K
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Avg Vol
4.5M
Gross Margin
13.76%
That positive trend, with Southwest’s Jordan telling investors that Southwest had participated in seven consecutive fare increases with “no drop off in demand at all.” Jordan went on to note that “I’m becoming increasingly bullish that we will be able to cover these fuel increases with revenue increases,” and also believes that “the industry will retain a much higher percent of the fare increases that would be typical historically.”
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What it means to Alaska Air
Given that Alaska competes with Southwest on some routes and is suffering from rising jet fuel prices, the news from Southwest is particularly relevant. For example, in its recent first-quarter earnings report, Alaska’s management said higher fuel costs would impact earnings per share (EPS) by $0.70 in the first quarter and by more than $3 in the second quarter.
Image source: Getty Images.
These are significant numbers from an airline that analysts expect to report a $0.77-per-share loss in 2026 and then $6.32 in EPS in 2027. However, if Alaska can offset fuel costs with higher prices, then those estimates might need a positive revision.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Alaska Air Group, Delta Air Lines, and Southwest Airlines. The Motley Fool has a disclosure policy.
(Bethel, AK) –Wednesday, the Ninth Circuit Court of Appeals issued a favorable opinion for the State of Alaska in ConocoPhillips Alaska v. Alaska Oil and Gas Conservation Commission (AOGCC), agreeing that State laws requiring disclosure of oil well data are not preempted by federal law.
“Alaska relies heavily on our resources and resource development,” said Acting Alaska Attorney General Cori Mills. “We are also stewards of those resources for the citizens of Alaska. Alaska’s law both allows resource development now, and encourages further development and exploration in the future. We’re pleased that the Ninth Circuit recognized that federal law has not overridden Alaska’s balanced approach.”
The Alaska Oil and Gas Conservation Commission regulates oil and gas operations throughout Alaska, including within the National Petroleum Reserve–Alaska (NPR–A). Under Alaska law, companies need permits from the AOGCC to drill and must submit well data. The AOGCC is required to keep well data confidential for 24 months.
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ConocoPhillips drilled several wells on lease holdings within the NPR–A and submitted data to the AOGCC. When the 24-month period expired, the AOGCC notified ConocoPhillips of the upcoming well data disclosure. ConocoPhillips sued in federal court to stop the disclosure process claiming that the Naval Petroleum Reserves Production Act, the federal law allowing private exploration in the NPR–A, preempted Alaska’s 24-month disclosure law. The federal district court found Alaska law preempted, and the AOGCC sought appellate review by the Ninth Circuit Court of Appeals.
On appeal, the Ninth Circuit agreed with the AOGCC. The federal Production Act does not preempt state law. The Ninth Circuit therefore reversed the district court’s holding to the contrary.
“The Alaska Oil and Gas Conservation Commission is pleased with the court’s decision upholding Alaska law,” said AOGCC Commissioner Jessie Chmielowski in a declaration filed in the litigation court. “Alaska’s balanced approach to well data confidentiality leads to increased exploration activity, not less. Alaska law allows for a two-year confidentiality period on exploration well data to leverage a company’s investment in drilling. Thereafter, making the data public has incentivized exploration on the North Slope. Placing well data in the public record allows competing companies to evaluate different exploration concepts or interpretations based on seismic data that, without well data, are just educated guesses.”
