Lawmakers begin review of governor's omnibus fiscal plan, spotlighting temporary sales tax and PFD change

Senator Wilikowski said the governor's newly introduced omnibus fiscal bill is 55 pages and contains multiple major revenue changes, most notably a temporary statewide sales tax. "The probably the major component is, the sales tax. It's a 4% sales tax from April 1 through September 30, dropping to 2% for the rest of the year," he told the Senate.

The senator cited the bill's fiscal note and said the sales-tax provision could raise as much as $815,000,000 by 2032. Under the proposal, the base would include goods and many services; food would be taxed except purchases made with WIC or SNAP benefits. Gasoline, diesel and heating oil would be taxed; jet fuel would remain exempt. Wilikowski said the tax would apply to online retail and digital services "such as Netflix, Amazon sales, Etsy sales," and to professional and repair services. The state would collect the tax centrally and return local tax revenues to municipalities, and local exemptions that some municipalities now use would be prohibited.

The bill also proposes corporate and oil tax changes. Wilikowski said changes to apportionment rules would require some out-of-state companies to pay Alaska corporate taxes, a provision he estimated could raise roughly $16,000,000 at peak. He said a separate provision would reduce the core corporate tax rate toward zero by FY2032, which the fiscal note projects would cost the state roughly $540,000,000 per year by that date.

On oil taxation, the governor proposes raising the statutory minimum oil tax from 4% to 6% through 2032 and adding a 15-cent-per-barrel fee intended for pipeline-corridor maintenance. Wilikowski cited a fiscal-note peak revenue estimate for the minimum-tax change; he also warned that some companies can use accounting and apportionment rules to reduce their effective tax below statutory floors, which could make actual revenue lower than projections.

Wilikowski described an overall fiscal trajectory in the fiscal note: combined measures yield multi-hundred-million-dollar revenue impacts in the short term (FY28'FY30) but revenue falls markedly in later years under the proposal. He said the governor is proposing a constitutional change to split a 5% POMV draw on the Permanent Fund 50/50 between government spending and a dividend, with additional contingency language and statutory changes under separate bills.

"To put forward a constitutional amendment to the PFD ... it's gotta get two-thirds approval from both bodies," Wilikowski said, noting he does not see a clear majority in favor of embedding a specific PFD split in the constitution. "I just don't think the support is there."

Senators referred the omnibus bill to the finance and resources committees and said public hearings will be scheduled so lawmakers can examine revenue estimates, exemptions, distribution mechanisms and the bill's contingency language. Committee meetings were described as the next step for detailed fiscal review.

The Senate said it will scrutinize the bill's assumptions about future gas-line revenue and the projected POMV draw, and that further hearings will test how local governments, low-income households and businesses might be affected.

Next steps: the bill will be reviewed in committee and subject to public hearings; senators indicated more detailed fiscal analyses and testimony will be gathered before any floor action.