Walker’s tax proposals land with thud in Alaska Legislature

  • By Becky Bohrer
  • Thursday, May 26, 2016 9:22pm
  • News

JUNEAU, Alaska — Gov. Bill Walker’s newly repackaged tax proposals have landed with a thud in the Alaska Legislature, with criticism over having all the pieces rolled together and questions about the overall impact.

Rep. Les Gara, D-Anchorage, said rolling them into one package is almost like a recipe to fail, since someone might support one piece but not another. Sen. Mia Costello, R-Anchorage, asked Revenue Commissioner Randall Hoffbeck why bother with this, noting the package would only address a small portion of the estimated multibillion-dollar state deficit.

Every bit helps, Hoffbeck said, adding that Walker “wanted to spread the burden of balancing the budget in as many ways as he possibly could.” Hoffbeck said legislators could break the pieces out again during the special session but treating them as a package provides an opportunity to consider them as a whole.

ADVERTISEMENT
0 seconds of 0 secondsVolume 0%
Press shift question mark to access a list of keyboard shortcuts
00:00
00:00
00:00
 

The package, as proposed, would raise about $345 million by fiscal year 2019, when all the pieces are fully implemented.

The biggest piece of Walker’s plan for addressing the deficit calls for structured, annual draws from Alaska Permanent Fund earnings to help pay for state government. That’s addressed in a separate bill pending during the special session.

The measure and the tax proposals were all introduced separately during the regular session. During the regular session, there was some reluctance among legislators to vote for a tax increase on one group without knowing whether other taxes would go forward.

The House Finance Committee’s Friday meeting agenda suggested an interest in breaking out some of the tax pieces, featuring yet-to-be-introduced separate bills related to mining, fisheries and motor fuels taxes.

Here is a look at Walker’s tax proposals, based on information from the Revenue Department.

—INCOME: This would be 6 percent of the amount in taxes you pay the federal government; for people who itemize, it would be deductible from the federal income tax. The department says up to 30 percent of Alaskans will have no liability.

The department estimates it would raise $100 million in fiscal year 2018 and $205 million the following year, gradually increasing. It’s the largest tax piece and perhaps the most contentious.

The department has requested $500,000 to begin planning for how to implement the tax and expects to request additional implementation funds later. Alaska’s previous income tax was repealed in 1980.

—MOTOR FUELS: Tax rates would rise for highway, marine and jet fuel and aviation gas. Highway fuel taxes would double to 16 cents a gallon and represent the first increase to that tax rate since 1970. Someone driving 12,000 miles a year in a vehicle getting 20 miles to the gallon would pay an extra $48, the department says. The increases would generate an additional $43 million annually.

—CIGARETTES AND TOBACCO: The tax on a pack of cigarettes would rise by $1 and a new tax would be levied on electronic smoking products. Alaska would have one of the highest cigarette tax rates in the country, the department says.

The department estimates additional annual revenue of $25 million to $30 million over the next few years and says about $2 million would go toward tobacco education and cessation efforts.

—ALCOHOL: Proposed increases equate to 10 cents per drink and would give Alaska the highest alcohol tax rate in the country “by a substantial margin,” according to a department presentation. The increase would raise around $40 million a year with about half going to an alcohol and drug abuse fund, the department says.

—MARIJUANA: The bill would expand applicability of the current marijuana tax, allowing for it to be assessed on retailers selling pot that’s not from a licensed grower or on illegal grow operations. This wasn’t one of Walker’s initial proposals but incorporated from a House bill. The department can’t say how much money it might raise.

—MINING AND FISHING: The proposed mining tax changes would generate about $7 million annually initially, while the fishing industry tax increases would raise about $18 million to start.

The fisheries taxes, while generally paid by processors, are likely to be passed on to fishermen, the department said.

More in News

Kenai City Hall is seen on a sunny Thursday, June 5, 2025, in Kenai, Alaska. (Jake Dye/Peninsula Clarion)
Kenai to vote for mayor, city council candidates in upcoming election

There are no ballot propositions being considered in this year’s election.

Kenai Peninsula Borough School District logo. Photo courtesy of Kenai Peninsula Borough School District
6 candidates on school board ballot

This year’s election will take place on Oct. 7.

Soldotna City Hall is seen on Wednesday, June 23, 2021 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Parker, Carey running unopposed for Soldotna City Council

Soldotna voters will decide on annexation proposition.

The entrance to the George A. Navarre Admin Building in Soldotna, Alaska. (Photo by Brian Mazurek/Peninsula Clarion)
11 candidates on Kenai Peninsula Borough Assembly ballot

This year’s election is set for Oct. 7.

Soldotna Mayor Paul Whitney cuts a ceremonial ribbon for the Soldotna Field House during its grand opening in Soldotna, Alaska, on Saturday, Aug. 16, 2025. (Jake Dye/Peninsula Clarion)
Soldotna Field House welcomes public during grand opening

The field house will open on Sept. 2 for regular operations.

President Donald Trump greets President Vladimir Putin of Russia as they met at Joint Base Elmendorf-Richardson in Anchorage, Alaska, on Friday, Aug. 15, 2025. (Doug Mills/The New York Times)
Trump and Putin put on a show of friendship but come away without a deal

ANCHORAGE — President Donald Trump and Russian President Vladimir Putin reached no… Continue reading

A sockeye salmon rests atop a cooler at the mouth of the Kasilof River on Monday, June 26, 2023, in Kasilof, Alaska. (Jake Dye/Peninsula Clarion)
Northern Kenai fishing report: Sockeye good; coho arriving in local rivers

On the Kenai River, a record-breaking run of sockeye salmon has now crossed 4 million fish counted.

Protesters in support of Ukraine line the Sterling Highway in Soldotna, Alaska, on Friday, Aug. 15, 2025. (Jake Dye/Peninsula Clarion)
Kenai Peninsula protests Putin’s Alaska visit

Protests were held Friday in Homer and Soldotna in concurrence with several others across the state.

A man fishes in the Kenai River on July 16, 2018, in Soldotna, Alaska. (Peninsula Clarion/file)
Kenai River bag limit for sockeye salmon increased through the end of the year

The bag limit for sockeye was set to decrease to three per day and six in possession on Aug. 16.

Most Read

You're browsing in private mode.
Please sign in or subscribe to continue reading articles in this mode.

Peninsula Clarion relies on subscription revenue to provide local content for our readers.

Subscribe

Already a subscriber? Please sign in