By MARCUS MOORE
A recent report from the Alaska Institute of Social and Economic Research (ISER), funded by Gov. Mike Dunleavy’s administration at a cost of $90,000, has sparked debate over potential fiscal solutions for the state. The study updates a 2016 analysis and evaluates 11 options to address Alaska’s structural budget deficit, including reductions in spending, adjustments to the Permanent Fund Dividend (PFD), and the introduction of income taxes, sales taxes, or increases in taxes on oil and corporations.
The report concludes that increases in oil and corporate taxes would have the least economic impact, potentially resulting in 40 to 140 job losses per $100 million raised. In contrast, reductions in government spending or the PFD could lead to greater effects, with up to 1,000 jobs lost per $100 million in deficit reduction.
The study acknowledges that PFD cuts are regressive, disproportionately affecting low-income households, as the dividend represents a significant portion of income for some Alaskans. It also examines progressive income taxes, which would result in higher-income individuals paying substantially more—ranging from 35 to 2,000 times the amount paid by lower-income residents.
No wonder conservative voices are pushing back. An editorial in the Anchorage Daily News commended our Republican Gov. Dunleavy for proposing a broad-based tax such as a seasonal sales tax (4% in summer targeting tourists and 2% in winter). However, it highlighted concerns about linking this to a guaranteed PFD, which could maintain a deficit by taxing residents while distributing funds.
Gov. Dunleavy’s omnibus plan, outlined in Senate Bill 227, includes modest adjustments to oil taxes, the elimination of the corporate income tax to encourage business growth, and reliance on major oil and gas projects for revenue increases. The sales tax component, however, is described as regressive in the report. The plan also depends on a constitutional amendment to guarantee the PFD, requiring two-thirds legislative approval.
Democratic Sen. Bill Wielechowski, who has previously advocated for larger PFDs through legal action, commented at a news conference last week: “As I sit here, I’m not even sure there’s 50% approval for anything on the PFD. You’ve got some people who support a much higher PFD. You’ve got some people who support no PFD.”
In early February 2026, Alaska faces a $1.5 billion deficit in the proposed FY2027 budget, with $7.75 billion in spending and limited strategies to address the gap beyond projections on oil prices. Even with revisions to the 10-year plan, annual shortfalls of $200-300 million are anticipated after revenue measures, according to legislative analyst Alexei Painter.
The ISER report notes that inaction has reduced GDP by 2-3% over the past decade due to fiscal uncertainty. Lead economist Brett Watson described an “Alaska Disconnect,” where economic growth can strain the budget by attracting new residents who require services without corresponding broad-based revenue sources. For instance, an influx of 100,000 tech workers would necessitate additional PFD payments, schools, and infrastructure without proportional tax increases.
Remember the 2016 ISER study that helped birth the Percent-of-Market-Value (POMV) draw from the Permanent Fund? It showed similar proposals, PFD cuts regressive, oil taxes low-impact, but back then, we used it to cap draws and fund services without new taxes.
Long time policy and budget commentators like Brad Keithley have analyzed Gov. Dunleavy’s sales tax proposal, noting that 24-26% of revenue could come from non-residents, but it would still burden families unless exemptions are included. Even with adjustments, shortfalls persist, and alternatives like income taxes would primarily affect Alaskans.
The report’s data indicates that wealthier households would pay five to fourteen times more in sales taxes than the poorest, though the latter would lose a higher percentage of their income. It suggests options like seasonal sales taxes to shift 2-5% of the burden to non-residents and eliminating corporate taxes to stimulate economic activity, aligning with elements of Gov. Dunleavy’s plan.
The deep-pocketed elites and their legislative puppets, across both parties, block real reform because they benefit from no personal income tax, a gift from the Permanent Fund’s creation. Meanwhile, they philosophically oppose taxing to fund dividends, seeing PFD cuts as the easy out. But that’s cowardice! True conservatives like Dunleavy fight for the PFD as a return of resource wealth to the people, not government coffers.
Look at the history from Gov. Bill Walker’s 2016 veto slashing the PFD in half amid a $3-4B deficit, to Dunleavy’s 2019 standoff where he vetoed $444M to push for a full $2,910 check, only to get forced into $1,606.
Enough is enough. Dunleavy’s right to sacrifice political goodwill for a plan that stabilizes finances without socialist income taxes. But let’s go further, and axe wasteful programs, protect our oil sector (which funds 90% of unrestricted revenue), and enshrine the PFD constitutionally before the Democrats and RINOs turn it into another entitlement slush fund.
Alaska’s future relies on restrained government spending rather than expanded taxes or distributions.
