By REP. KEVIN MCCABE
In the intricate web of Alaska’s legislative manipulations, Senate Bill 113 is an emblem of both fiscal ambition and political paralysis.
Introduced in February by the Senate Rules Committee, the bill proposes a modification of Alaska’s corporate income tax system, supposedly tailored to the digital age. Yet despite clearing both the Senate and House more than three months ago, SB113 lingers in a procedural black hole where it is enrolled — but inexplicably withheld from transmission to the governor.
Why has SB113 not yet been transmitted to the governor?
At its core, the bill replaces Alaska’s outdated “cost of performance” standard with “market-based sourcing,” requiring companies to apportion sales to Alaska if the market resides here.
For highly digitized businesses, the three-factor apportionment is replaced by a single sales factor. Proponents say this captures untaxed digital profits without raising tax rates, aligning Alaska with dozens of other states and allegedly yielding tens of millions annually.
Buried in House Bill 57 is a provision that directs the revenue from SB113 into education grants, specifically “reading proficiency incentive grants” under AS 14.30.773.
That language is blatantly unconstitutional, since Article IX, Section 7 of the Alaska Constitution prohibits dedicated funds except for a few narrow exceptions. The Legislature cannot earmark corporate tax receipts for education or anything else without violating the state’s most basic fiscal guardrails. So, the next question which must be asked is what happens if SB113 is vetoed and not overridden?
Do Democrats intend that the “reading proficiency incentive grants” not then be funded? Anotherl question: Since this clause of HB57 is unconstitutional, is the whole bait-and-switch between the two bills simply a political stunt to claim the democrats found “new money” for schools?
Critics rightly point out that SB113 acts as an “internet tax” that could inflate costs for Alaskans reliant on online goods. My “no” vote was part of a 14-member Republican bloc standing against it. Yet the votes tell the story. SB113 passed the Senate 16-4 and the House 26-14, with effective dates approved 32-8.
No major amendments slowed its course, and by May the bill was ready for routine transmission. However, as of Aug. 19, its status remains “AWAIT TRANSMIT GOV.” Other bills have moved, but not this one.
The delay’s opacity demands scrutiny, especially since Alaska’s Constitution, Article II, Section 16, requires a three-fourths vote to override a veto on any revenue-raising bill. That is 45 of 60 legislators, far more than the standard two-thirds. This threshold suggests this stall is not clerical but a calculated and intentional move by Democratic leadership to buy time, line up votes, and increase pressure for a veto override.
Gov. Mike Dunleavy has made it clear he will not sign education-linked revenue measures that lack real reforms to fix the education system and the poor student outcomes. That makes SB113 a prime veto candidate. Which is precisely why Democrats appear to be holding it back. By delaying transmission, they can compress the timeline, placing any veto closer to the first five days of the 35th Legislature in January. That maneuver would guarantee full attendance, maximize pressure, and give them their best chance of cobbling together the 45 votes needed to override.
This delay is legislative gamesmanship, pure and simple, and Alaskans should see it for what it is. And perhaps we would if the news media and reporters cared enough to ask a few simple questions.
This is just another example of time compression being used as a weapon in Juneau. Alaskans pay the price. In the Bush and in the villages, where few brick-and-mortar options exist, families rely on online services. SB113 would most likely mean higher prices. Proponents call it “fairness” and say it makes tech companies pay their fair share, but will it? Or is it just another attempt to squeeze more money out of Alaskans to fuel government spending?
As SB113 gathers dust in the offices of Senate leadership, the main question echoes louder: why has this bill not been transmitted to the governor? Transparency is imperative. Without it, the delay looks less like procedure and more like partisan gamesmanship.
Alaskans deserve constitutional legislation, transparency, and answers, not more games and gridlock in Juneau.
And where is the media?
Rep. Kevin McCabe serves in the Alaska Legislature on behalf of District 30.
Kevin McCabe: Putting Alaska’s students first in 2026
Kevin McCabe: Alaska’s education crisis demands reform, not just more money
Kevin McCabe: Why Alaska needs an Agriculture Department — and why the Legislature overstepped