Camel’s nose: Alaska Senate Democrat majority has a surprise tax package to raise cash for state spending

Facing what is believed to be a $500 million budget shortfall, the Alaska Senate Rules Committee, led by Democrat Sen. Bill Wielechowski, has introduced two bills aimed at addressing the state’s revenue desires by increasing taxes on businesses and oil. Senate Bill 113 will tax profits on out of state companies that do business in Alaska through the internet. Senate Bill 112 proposes a tax increase on every barrel of oil produced.

The push for revenue was forecasted earlier this week by Sen. Cathy Giessel, who said that without revenue for the state, more Alaskans would commit suicide.

These taxes are in addition to the Yundt Tax that Sen. Rob Yundt of Willow introduced last week to target one company: Hilcorp.

SB 113 changes Alaska’s corporate income tax structure to capture more from the digital economy. Under current tax laws, online sales from out-of-state corporations are not addressed. The proposed legislation adopts a system already in place in at least 36 other states, which taxes businesses based on the customer’s location rather than the business’s physical location.

SB 113 introduces a single sales factor to determine tax liabilities for highly digitized businesses operating in Alaska.

“This legislation will not raise taxes for Alaskans or local businesses,” said Senate Rules Chair Senator Bill Wielechowski, D-Anchorage, without explaining why those companies will not just pass the costs to consumers. “It simply ensures that major out-of-state corporations benefiting from our economy contribute just as local businesses do. This establishes a level playing field for all entities operating in Alaska.”

According to one estimate, this could generate between $25 million and $65 million annually in new state revenue.

SB 112 focuses on reforming Alaska’s sliding-scale per-barrel oil production tax credits. This bill makes major changes that undo the work of Senate Bill 21, which passed in 2013.

Under the SB 21 system, these credits provide major North Slope oil producers with tax discounts based on oil prices. Wielechowski says this costs Alaska billions of dollars.

The proposed reform reduces the credit range from $8–$1 per barrel to $5–$1 per barrel.

But it’s not really a credit. It’s a deduction. Right now, the oil producers can deduct $8 per barrel. Wielechowski wants to claw back most of it. This issue has been litigated and debated for years.

Additionally, SB 112 introduces an investment match requirement, which says tax credits are only granted when they align with qualified capital expenditures that the state approves of.

“For years, the size of the per-barrel credit system has cost the state billions of dollars without delivering tangible benefits,” said Sen. Wielechowski. “This simple change ensures that tax credits are granted with accountability and a clear return for Alaskans while continuing to support investment in our oil fields.”

SB 112 has been referred to the Resources Committee and the Finance Committee for further deliberation, while SB 113 has been directed straight to the Finance Committee, which will speed its passage.

The bill will most certainly impact investment and won’t raise what its proponents predict.

Alaska is in the 11th year of tax stability, which has led to the development of Willow and Pikka, North Slope projects expected to boost oil production by 30% by the year 2032.

With these new revenue bills, Wielechowski likely eliminates himself as a viable candidate for governor in 2026.