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House Education Committee Tackles Funding Woes: Waive H-1B Fees to BSA Increases

Todd M Lindley
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House Education Committee Tackles Funding Woes: Waive H-1B Fees to BSA Increases

The House Education Committee convened for a session that blended celebration of educational innovation with urgent legislative action. The meeting spotlighted Alaska’s 2026 Teacher of the Year, Pete Daley, and his groundbreaking “Girls in Welding” program before delving into three key pieces of legislation: House Joint Resolution 39 (HJR39), House Bill 261 (HB261), and House Bill 374 (HB374). These bills, while distinct in focus, are interconnected threads in a broader effort to stabilize Alaska’s public education system amid declining enrollment, rising costs, and persistent teacher shortages. HJR39 addresses international teacher recruitment by easing H-1B visa fees, HB261 seeks to provide fiscal predictability through reformed student counting methods, and HB374 proposes a direct infusion of funds via an increase in the Base Student Allocation (BSA).

The session’s narrative underscores how these bills are not isolated fixes but complementary measures: HJR39 supports workforce stability by facilitating foreign teacher hires, HB261 enhances budgeting certainty to aid retention and planning, and HB374 provides the raw financial resources needed to implement both.

Part 1: HJR39 – Waiving H-1B Visa Fees for Teachers

The committee’s swift handling of House Joint Resolution 39 highlighted a targeted approach to Alaska’s teacher shortage crisis. Sponsored by Representative Galvin (NA-Anchorage), HJR39 urges the federal government to waive the $100,00 H-1B visa fees for teachers in the state, a move designed to make it easier for school districts to recruit qualified educators from abroad. In a state where teacher turnover hovers at 28%—far above the national average of 8%—this resolution addresses a critical gap in the workforce pipeline.

During the brief discussion, Co-Chair Himschoot (NA-Sitka) noted that no amendments had been received and public testimony had already been heard in a prior session. With no further inquiries from members, Co-Chair Story (D-Juneau) moved the resolution forward, and it passed without objection, accompanied by individual recommendations and an attached fiscal note.

This resolution’s passage underscores the interconnectedness of the day’s legislative agenda. Alaska’s rural and urban districts alike struggle with recruitment, as evidenced by later testimonies on funding shortfalls leading to staff cuts.

In essence, HJR39 acts as a recruitment booster shot for a system bleeding talent. Its relation to the other bills is clear: stable funding (HB374) and predictable budgeting (HB261) are futile without enough teachers to staff classrooms. As Rep. Galvin implied, the resolution builds on prior discussions, positioning it as a proactive step in a holistic education strategy.

Part 2: HB261 – Reform Student Count Method for Funding

Shifting to more complex funding mechanics, the committee devoted significant time to HB 261, sponsored by Co-Chair Story. This act aims to enhance education funding predictability by allowing districts to choose between a three-year average or the previous year’s student count for funding calculations. In a state grappling with enrollment declines—down 3% statewide—and growth in pockets like Mat-Su and Kenai Peninsula, HB261 seeks to mitigate fiscal volatility, enabling better budgeting, teacher contracts, and retention.

Co-Chair Story explained the bill’s origins in a 2015 recommendation from the Governor’s Education Task Force. Districts would select their count by July 1, providing certainty for March teacher contracts. Using hypothetical examples, she clarified the three-year average (e.g., 2022-2024 counts for FY26) versus the previous year (2025). This choice benefits stable or declining districts with the average, while growing ones opt for the recent count.

Key discussions revealed proposed amendments for a forthcoming committee substitute (CS). To address growth concerns raised by Rep. Elam (R-Nikiski), Story suggested authorizing immediate funding for significant fall influxes above a set percentage. She also announced grandfathering “hold harmless” provisions for districts currently benefiting, a Task Force recommendation. Intensive student counts—costing $43 million initially—would use the previous year but include a February 15 “true-up” to fund new arrivals, avoiding double-counting fears.

She removed a $5.8 million alternative school funding provision, citing fiscal climate, suggesting a separate bill. On staffing, she noted mid-year student moves force districts to absorb costs, as contracts prevent teacher transfers. Elam requested a 10-year impact snapshot, which Story committed to pursuing, encouraging districts to run their own numbers.

As Story emphasized, “These costs are happening right now in districts,” shifting burdens back to the state aligns with HB374’s funding boost. Without HB261, even increased BSA might not prevent mid-year shortfalls, underscoring the bills’ interdependence.

Part 3: HB374 – Boosting the Base Student Allocation to Prevent Cuts and Closures

The meeting’s crescendo focused on House Bill 374, sponsored by the committee, proposing a $630 BSA increase to $7,280 per student. Presented by Representative Himschoot (NA-Sitka), the bill addresses inflation-eroded funding, with the current $6,650 BSA equating to just $4,711 in FY11 dollars. Himschoot invoked the constitutional “shall” for public schools, noting last year’s $700 hike—only $20 above prior one-time funding—fell short of the $1,800 needed for purchasing power parity.

Rising costs dominate: Anchorage’s property insurance up 42%, liability 139%, health benefits 33%; Sitka’s energy 45%. New mandates like the Reads Act add burdens, with Kuspuk spending $403,000 on interventions and tutoring. Himschoot highlighted education’s people-driven nature, with 88% of budgets on wages/benefits, and turnover costing $20,000-$30,000 per teacher, plus unquantifiable learning losses.

Enrollment drops—3% statewide, steeper in some districts—exacerbate fixed costs for facilities and insurance. Himschoot calculated the $630 based on the mean deficit of the five largest districts: Anchorage ($90M), Mat-Su ($22M), Fairbanks (surplus after cuts), Juneau ($11.8M), Kenai ($8.6M). This won’t fully close gaps but prevents deeper cuts.

Principal David Nogg reported a $142.4M-$146.8M statewide deficit from 43 districts, forcing his school to cut teachers, an assistant principal, and electives, shifting to a six-period day. “This isn’t hyperbole; it’s a devastating reality,” he said, urging BSA support. Principal Elizabeth Kwame warned Sterling Elementary’s closure would consolidate 110 students into classes of 30, harming vulnerable learners. “Without additional funding, schools like mine are set to close.”

Committee dialogue addressed formula flaws (Rep. Elam) and accountability (Rep. Schwanke (R-Glenallen)). Himschoot agreed on long-term fixes but stressed immediate BSA action: “What is the opportunity cost of doing nothing?” Rep. Dibert (D-Fairbanks) shared Fairbanks’ struggles—six closures, 40-student classes—while Rep. Eischeid (D-Anchorage) questioned if flat funding improves outcomes, with Himschoot replying, “I think it’s common sense.”

A public hearing is set for March 11 at 5:00 PM, with a joint session with the State Board of Education at 8:00 AM.

HB374 anchors the trio: its funding directly enables HB261’s predictability and HJR39’s recruitment. Without it, reforms falter amid deficits, as testimonies showed. The bills collectively combat out-migration, retain talent, and sustain programs.

By easing teacher imports, stabilizing counts, and increasing funds, they form a cohesive response to fiscal pressures, ensuring schools remain open and effective. As Himschoot noted, inaction risks losing families and educators, threatening the state’s future.

Structural Chokepoints in Alaska K-12 Part 3: Reform Recycling 

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Structural Chokepoints in Alaska K-12 Part 3: Reform Recycling 

By Michael Tavoliero

The 2009 Alaska Education Plan and the 2018 Alaska Education Challenge look, on paper, like serious efforts to rethink K–12. The Plan billed itself as the state’s “first blueprint for public education,” promising a vision to guide spending and give citizens a basis for accountability. The Education Challenge, adopted nine years later, promised to “transform our public education system” around three commitments: increasing student success, supporting responsible and reflective learners, and cultivating safety and well‑being. 

Together, they represent years of summits, committees, and “action plans” involving hundreds of Alaskans and millions of dollars. What neither document ever does is grapple with the three structural chokepoints: statutory school‑board terms and election timing that insulate boards from meaningful voter course correction; the PERA carve‑out that locks districts into a single, mandatory bargaining framework; and APOC’s campaign‑finance regime, which tilts the playing field toward permanent insiders and makes grassroots challenges procedurally hazardous. 

Repeating the same blind spot 

The 2009 Plan promised a “basis for accountability to the public,” inviting Alaskans to “participate in the goal‑setting process and own the results.” It organized its work around “World‑Class Schools,” “Community, Culture and Family,” and “Student Health and Safety,” aimed at college‑ and career‑ready graduates, strong school–family partnerships, and safe learning environments. 

Alaska’s Education Challenge echoes this, repeating the mission of “an excellent education for every student every day,” highlighting achievement gaps and low test scores, urging Alaskans to “demand great schools,” and outlining strategic priorities—amplifying student learning, modernizing the system, and inspiring tribal and community ownership—through 13 recommendations and example action plans. 

Both documents focus on goals, outcomes, and programmatic strategies—early learning, standards alignment, personalized learning, trauma‑engaged practice, professional academies, and statewide collaboration—while never acknowledging that the legal structures of governance, labor, and political participation may be the main barriers to achieving those goals. The state invites citizens to “own the results” while leaving them almost no lawful way to change the system that produces those results. 

Accountability without power 

Both the 2009 Plan and the Education Challenge constantly invoke “accountability,” telling the public they can “measure performance against these goals,” rely on “multiple measures” of success, and adjust course. Yet both documents assume “the public” can hold school boards responsible without admitting that board timing, staggering, and ballot placement are locked in statute and beyond local revision. Even as the Education Challenge promotes “systemic collaboration” and “self‑governance compacting,” it never addresses the core question of who sits on the governing body and when they are accountable to voters. 

Flexibility on a fixed cost base 

The 2009 Plan praises “alternative pathways to student success,” early childhood programs, and “world‑class schools” with flexibility to meet individual needs, while the Education Challenge pushes “personalized learning,” “modernization,” and “enabling resources,” so districts can adapt. All of this assumes districts can meaningfully reconfigure their largest cost driver: labor. Yet the PERA carve‑out denies K–12 boards the choice other political subdivisions have over bargaining frameworks. They cannot opt out, adopt a different statutory model, or change it by charter or local initiative. Neither document acknowledges that its vision for flexible, modern schools sits on top of a wage and bargaining structure locked behind a one‑way statutory door. 

Participation scripted from above 

Both the 2009 Plan and Alaska’s Education Challenge lean heavily on the language of partnership and engagement. The Plan insists, “Choice without knowledge has no meaning.” The Challenge celebrates “unity and collaboration,” tribal and community ownership, and parents and educators as co‑authors of a better system. But genuine ownership requires more than listening sessions; it requires the power to organize, fund, and sustain campaigns that can unseat incumbents and change policy. 

Here, APOC’s campaign‑finance regime becomes decisive. Neither document mentions its impact on who can realistically participate. They speak as if all stakeholders share equal procedural footing, while the finance framework ensures that those best positioned to “own the results” are the institutions most aligned with the status quo. 

Exhibit A and Exhibit B 

If the 2009 Plan is Exhibit A in Alaska ignoring its own legal architecture, Alaska’s Education Challenge is Exhibit B. The Challenge frankly acknowledges achievement gaps, low test scores, absenteeism, and the need for trauma‑engaged schools, and offers detailed action plans, strategic “crosswalks,” and even self‑governance compacts with tribes. Yet it never asks whether the current school‑board election structure lets communities replace boards that resist change, whether a one‑size‑fits‑all labor framework can support truly local, culturally responsive schools, or whether APOC’s rules make it too costly and risky for ordinary citizens to challenge entrenched interests. 

In that sense, the Education Challenge does not fix the 2009 Plan’s blind spots; it perfects them, expanding the vocabulary of commitments and phases while leaving the three chokepoints untouched and inviting Alaskans to “pioneer” a new system without giving them the legal tools to change the old one. 

Previous in Series

Structural Chokepoints in Alaska K-12 Part 1: The Myth of School Choice

Structural Chokepoints in Alaska K-12 Part 2: Constitutional Tension

House Labor and Commerce Debates HB 350: Proposed Income Tax on High-Revenue S-Corps and LLCs

Todd M Lindley
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House Labor and Commerce Debates HB 350: Proposed Income Tax on High-Revenue S-Corps and LLCs

During Monday’s House Labor and Commerce Committee meeting, lawmakers discussed HB350, a measure sponsored by Representative Fields (D-Anchorage) that would impose a state income tax on S-corporations and LLCs generating over $25 million annually in taxable income. The bill sparked debates on tax equity, economic competitiveness, and the state’s outdated fiscal framework, reflecting broader concerns about funding public services.

Evan Anderson, staff to Rep. Fields, provided a recap, explaining the bill targets “qualified entities” like S-corps and LLCs taxed as partnerships, which currently do not pay state income taxes despite significant revenues. “This bill would impose a 9.4% state income tax on qualified entities with more than $25 million in annual taxable income,” Anderson stated.

Fields elaborated on the rationale, highlighting the growth of S-corps since Alaska repealed its income tax in 1980. He pointed to Hilcorp as an example of a successful S-corp that benefits from the current system. “Hilcorp has invested hundreds of millions, billions of dollars in development. They’ve done a great job getting gas out of Cook Inlet,” Fields acknowledged. However, he argued the tax code is “way outdated” and fails to reflect modern business structures. “I don’t think when the legislature eliminated the income tax, they foresaw Hilcorp, and we’re going to have other S-corps come in here,” he said, emphasizing the need for “greater parity” in taxation for large corporations.

The discussion revealed committee members’ mixed views on fairness and impacts. Representative Sadler (R-Eagle River) noted Hilcorp’s outsized role: “Hilcorp has the largest; I probably assume that revenue wise they’re doing the most under an S-corp, so Hilcorp would be the biggest payer of taxes under this bill.” Fields agreed but stressed long-term planning: “They would right now, but I want to look ahead.”

Representative Coulombe (R-Anchorage) raised concerns about equity and potential deterrents to investment. ” I am not sure that the problem is funding core services; it’s managing our core services. They’re not being managed well, and it’s very expensive,” she countered, suggesting the bill might penalize companies like Hilcorp that have committed heavily to Alaska. Fields responded by advocating for incentives like royalty modifications in Cook Inlet to encourage production, while modernizing the code: “We have to modernize our tax code around S-corps and C-corps.”

Fields framed HB 350 as a step toward sustainability: “I introduced the bill because I don’t like people criticizing Hilcorp. I support Hilcorp; I think they do great work.” He called for balancing competitiveness with revenue needs, noting Alaska’s low overall tax burden but reliance on oil.

As the state faces budget gaps projected at $300–500 million for FY27, HB 350 could reshape corporate taxation. Critics worry it might drive businesses away, but proponents see it closing loopholes in a system unchanged since the 1980s.

Shelley Hughes: Real Solutions, Real Support, and a Campaign Built for Alaska

GUEST CONTRIBUTOR
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Shelley Hughes: Real Solutions, Real Support, and a Campaign Built for Alaska

By Shelley Hughes, 2026 Candidate for Alaska Governor and Former Alaska State Senator

Originally published February 17, 2026, by the Alaskans for Hughes campaign.

As the first round of campaign finance reports are released, I want to speak directly to Alaskans about what this campaign is—and what it is not.

From the beginning, my focus has been on Alaska: building a serious campaign team, meeting Alaskans in every region of our state, and developing real, workable policies to address the challenges we face. This campaign is about real solutions, not soundbites.

While some campaigns have focused on fundraising more than anything else in this first stretch and have chosen to measure success by dollars raised, I believe leadership is measured by trust earned, ideas developed, and time spent listening to the people we seek to serve. I’m very proud of my fundraising results, but I have invested my energy traveling the state, sitting down with families, workers, business owners, and community leaders, and putting forward detailed action plans for Alaska.

That work is reflected in the long-form policy videos we have already released, with more to come in the months ahead.

That work was also reflected at the recent Alaska Young Republicans State Convention, where I was ranked first among Republican candidates for governor in their straw poll. In other informal polls, I’ve also placed at or near the top, and in more rigorous polling, as one of the top three Republicans to make it onto the November ballot. This support confirms what I am hearing across Alaska: Republicans are ready for a governor who is prepared, grounded, and focused on results.

Our campaign is also being run the Alaska way—stretching every dollar and powered by an incredible team of volunteers who believe in this mission. History shows that in Alaska, the candidate who raises or spends the most money does not always win. Senator Dan Sullivan was outspent five-to-one in 2020 and prevailed. More recently, in the 2024 congressional race, early reports showed Mary Peltola raising more than $2 million compared to just over $300,000 for Nick Begich, and she ultimately outspent him by a massive margin—yet Alaskans chose leadership and vision over fundraising totals. Alaskans vote for substance, not spreadsheets.

I am running for governor because Alaska deserves serious leadership, real plans, and a governor with a proven track record of getting things done. Together, we will build a stronger Alaska, a place where opportunities abound and Alaskans can live affordable and rewarding lives.

I also bring real experience to this effort. Over the course of my legislative races, I have raised hundreds of thousands of dollars in support of my work, and I understand what it takes to build a strong, competitive fundraising operation. As this campaign transitions into its next phase, we are well positioned to do exactly that. Despite the fact that my senate resignation was right before the holidays, we are off to an excellent fundraising start. Things will only ramp up from here!

I’ve made a deliberate choice to spend my early months focused in Alaska—not in D.C., not dialing for dollars outside the state. Our problems won’t be solved by outsiders or from a fundraiser thousands of miles away; they’ll be solved by leaders who show up, listen, and do the work.

That said, this campaign does need support to continue growing and to compete all the way through Election Day. I will be coming to communities across the state for fundraisers and events, and I invite you to attend, get involved, and contribute if you are able. If you’d like to know when I’ll be in your area, please contact the campaign and we will connect you with your regional chair.

This resonating message is why our campaign is building momentum—the future we are working toward is what Alaskans want. Fence-sitters won’t choose the next governor; those who are willing to take a stand will. I respectfully request that you take a stand with me and for a strong Alaska.

This op-ed was voluntarily submitted by the Alaskans for Hughes campaign and not solicited by Must Read Alaska. All gubernatorial candidates are welcome and encouraged to submit articles for publication. Must Read Alaska unequivocally supports the election of a conservative candidate to the Office of Governor but does not endorse a particular candidate.

No Major Homeless Camps in Anchorage for First Time in Over a Decade

Natalie Spaulding
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No Major Homeless Camps in Anchorage for First Time in Over a Decade

According to a recent press release from Anchorage Assembly Chair Christopher Constant, Anchorage has eliminated major homeless encampments in the city for the first time in over a decade.

Chair Constant stated that he personally drove to the once long-standing homeless encampment sites to verify for himself whether or not they had been cleared. He stated: “I drove the Bowl myself. I went to the sites that, for years, defined our homelessness crisis. What I found was amazing: the large, entrenched encampments are gone.”

The press release lists 17 sites where large encampments used to be, but which have been cleared. According to Chair Constant, “Visible, entrenched encampments no longer define our parks and public lands.” He highlighted the following actions that helped achieve this long overdue clean-up:

  • Expansion of year-round shelter capacity
  • Hotel-to-housing conversions recognized nationally by HUD
  • Opening of facilities such as 56th Avenue and Linda’s Place
  • Development of recovery housing at Willow Commons
  • Deployment of Healthy Spaces teams for rapid response
  • Expansion of AFD and APD mobile behavioral health intervention units
  • Strengthened by-name coordination through the Anchorage Coalition to End Homelessness
  • Major behavioral health investment by Southcentral Foundation
  • $4 million investment by the Alaska State Legislature for homeless shelters

Come summertime, Must Read Alaska will visit the 17 sites and follow-up on their conditions. Are Alaskan taxpayers funding a lasting solution or merely a band-aid?

Register for free or sign in to discuss this important issue in the comments!

Chair Constant_ Anchorage Has No Major Homeless Encampments for the First Time in a GenerationDownload

Treg for Governor Campaign Raises $880,309

Natalie Spaulding
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Treg for Governor Campaign Raises $880,309

This article was originally published as a press release by the Treg for Governor campaign on 2/18/26.

Anchorage, Alaska – Treg Taylor’s campaign for Governor today announced a fundraising total of $880,309.

The campaign reported hundreds of supporters from across Alaska. Donors include mechanics, nurses, roofers, snow plowers, teachers, entrepreneurs, and small business owners, a coalition that reflects the depth and breadth of Taylor’s support.

Eighty-nine percent of the funds raised came from Alaska donors, underscoring strong in-state backing.

“I’m humbled and grateful for every Alaskan stepping up to support this campaign,” said Taylor. “This campaign is about moving Alaska forward on day one as governor by creating real opportunity for Alaskan families and the next generation. I’m deeply appreciative that this message is resonating with Alaskans across our state. As a father of six, this is personal for me because if we want our children to build their futures in Alaska, we need to get the economy moving, lower costs, and make Juneau work again. As Attorney General, I fought crime, I fought Biden, and I fought for Alaska’s future and won. That’s the fight I’ll bring as Governor as we build Alaska together.”

The historic fundraising performance signals powerful early momentum as the race begins to take shape.

About Treg Taylor
Treg Taylor’s story is Alaska’s story. Raised by a single mom, he learned early that you step up, you fight, and you protect what matters. After putting himself through college working two jobs, one at night, Taylor built a respected legal career in Alaska’s public and private sectors. He served as Deputy Attorney General in 2018 and was appointed Attorney General in 2021.

As Attorney General, Taylor has fought crime, fought Biden, and fought for Alaska and won. He has defended Alaska’s energy jobs, protected parents’ rights, upheld the Second Amendment, and stood up to D.C. when it threatened Alaska’s way of life.

Taylor and his wife, Jodi, have been married for 27 years. They are small business owners raising their six children as 4th generation Alaskans. He is running for Governor to ensure Alaska is affordable, safe, energy and resource dominant, and fiercely independent for generations to come.

For more information, visit tregforak.com

Must Read Alaska unequivocally supports the election of a conservative candidate to the Office of Governor but does not endorse a particular candidate.

Sullivan Writes Letter to Alaskans Highlighting Tax Cuts

Natalie Spaulding
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Sullivan Writes Letter to Alaskans Highlighting Tax Cuts

Senator Dan Sullivan recently wrote the following letter to his constituents:

Dear Alaskan,

Tax season can be a frustrating time, but as Alaska’s U.S. Senator, I have worked to make it a little less stressful by ensuring that hard working Alaskans can keep more of what they earn and that our small businesses have the certainty they need to grow and create jobs. I want to outline the federal legislation we’ve enacted to help you keep more of your hard-earned money this tax season and in the years ahead.

In 2017, I voted for the Tax Cuts and Jobs Act, which reduced taxes for families and businesses, created a 20 percent small business deduction, and included provisions to encourage American corporations to bring profits back to America rather than holding them in foreign countries with lower tax rates. These pro-growth reforms simplified the tax code, strengthened American competitiveness, helped drive unemployment to a 50-year low, and supported sustained economic growth.

This past summer, we built on this historic tax relief and passed the Working Families Tax Cuts Act (WFTCA). This bill prevented a massive tax hike that would have hit nearly every Alaskan this year. Many parts of the 2017 Tax Cuts and Jobs Act were set to expire–higher individual tax rates, a smaller standard deduction, and a major tax increase on small businesses. Without action, the average Alaskan would have paid thousands more in taxes, and almost 59,000 small business owners in our state would have seen a 25 percent increase in their tax bills. The WFTCA stopped that from happening by making these lower rates and deductions permanent.

For individual taxpayers, the bill permanently doubles the standard deduction and includes an additional 5% deduction. Since most Alaskans use the standard deduction, this change directly lowers taxable income for most families. The Dependent Care Flexible Spending Account (FSA) increases to $7,500 and the Child Tax Credit also increases to $2,200 per child–helping families facing high child care and living costs. Independent economists estimate that the WFTCA will increase take-home pay for an average family of four by more than $7,000 a year.

Now, for the first time, a substantial amount of tip income–up to $25,000 a year–is no longer subject to federal taxes. This is a meaningful change for thousands of Alaskans working in restaurants, hotels, bars, lodges, and tourism jobs, allowing them to keep more of the money they earn during our busy seasons.

The same principle applies to overtime. Many Alaskans depend on overtime to pay bills, especially in industries where the work can be intense and unpredictable. The WFTCA exempts up to $12,500 of overtime pay from federal taxes each year, putting more take-home pay into the pockets of construction workers, mechanics, electricians, law enforcement officers, firefighters, first responders, and countless others who work extra hours.

The WFTCA also reduces the tax burden that many seniors face on their Social Security benefits, creating a new federal tax deduction of $12,000 for retired couples–and $6,000 for individuals. This change helps ensure seniors keep more of what they earned over a lifetime of work.

For Alaska’s business owners, the WFTCA provides stability and long-term certainty. It permanently extends the 20 percent small business deduction, ensuring that local businesses–from fishing operations to retailers to construction firms–aren’t hit with a sudden tax increase. The bill also allows businesses to immediately expense the full cost of new equipment and machinery, reducing barriers to investment in a state where upfront costs are often high.

The bottom line is this: if you are a working Alaskan, or someone running a small business, this bill helps you. It prevents a major tax increase, keeps more of your paycheck in your pocket, supports Alaska families, and strengthens the private-sector economy that Alaska depends on.

If you would like more information about how specific provisions might impact you or your business, please reach out to my office at 202 224-3004 or visit www.sullivan.senate.gov. We are happy to help.

Sincerely,
Dan Sullivan
United States Senator

House Finance Committee Advances FY27 Budget Closeouts for Six Key Departments

Todd M Lindley
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House Finance Committee Advances FY27 Budget Closeouts for Six Key Departments

The Alaska House Finance Committee reviewed and advanced closeout reports for six state agencies on Friday, marking the first tranche of deliberations on the FY27 operating budget. The reports, covering the Departments of Law (DOL), Health, Family and Community Services (DFCS), Administration (DOA), Corrections (DOC), and Transportation and Public Facilities (DOT&PF), largely adopted Governor’s proposals with targeted adjustments, reflecting a focus on fiscal alignment, infrastructure investments, and vulnerable populations.

Alexander Schroeder, staff to Rep. Josephson (D-Anchorage), explained the budget action (BA) reports, highlighting comparisons between FY26 Management Plan, House Committee Substitute 1 (HCS1), Governor’s requests, and subcommittee recommendations. “If you see blue text across a row, it means there was a change from the Governor’s request,” he noted, emphasizing modifications or additions.

Starting with the Department of Law, Schroeder presented a closeout that adopted all five Governor-proposed items without subcommittee additions. Key changes included a $500,000 decrement in interagency receipts for uncollectible funds in Civil Division litigation, and increments totaling $33,400 all funds ($6,100 UGF and $27,300 interagency) for IT classification study implementation in Administrative Services and Legal Support. Net: +$6,100 UGF and -$462,100 other funds from adjusted base.

Dr. Erin Page, staff to Josephson, handled Health and DFCS. For Health, the overall budget rose $460 million (12.1%) from FY26 adjusted base, with $78 million UGF increase (7.3%), driven by Medicaid. Governor items included a $10 million UGF decrement for behavioral health rates (offset by FY26 supplemental carryover), $43 million UGF for Medicaid provider payments, $11.3 million UGF for eligibility systems upgrades, and $3.7 million UGF for a virtual contact center to cut backlogs. Subcommittee added $625,000 UGF for private duty nurse (PDN) rates, projecting $30 million annual Medicaid savings. “We should see it almost immediately,” Page said of PDN impacts, estimating $84,000 daily savings for eight patients.

DFCS saw a $5 million overall decrease (1%) from adjusted base, mainly federal receipts alignment, with $3.2 million UGF increase (1.1%). Governor actions: $474,000 UGF grants transfer from Health for youth residential services, plus small classification adjustments. Subcommittee added $1.5 million UGF to Children’s Advocacy Centers (CACs) offsetting Victims of Crime Act cuts, and OCS workforce stabilization for HB 151 compliance, plus intent on kinship placements.

Caroline Hamp, staff to Rep. Calvin Schrage (NA-Anchorage), outlined DOA: $349.1 million total, <1% all-funds increase from HCS1, driven by IT classification. Relative to Governor, -$567,700 interagency via deleting vacant Deputy Commissioner and Chief of Operations positions. Adopted Governor proposals like Shared Services deconsolidation. Narrative flagged DOA’s partial noncompliance with FY26 intent on AlaskaCare health plan rates, projecting $18.5-$26.3 million lapsed funding reliance despite a “stair-stepped conservative approach.” Also emphasized public broadcasting neutrality and deconsolidation data collection.

Hunter Meacham, staff to Rep. Hannan (D-Juneau), presented DOC: $523.4 million total, accepting Governor requests fully. Highlights: $20 million UGF for personal services/inmate transport, $3.1 million UGF for medical staff, $1.7 million for community residential centers. Intent to quantify community/regional jails costs for FY28 discussions. “It articulates what we haven’t had—what the total cost is,” said Rep. Hannon. $29.7 million UGF change from CS1.

Tim Clark, staff to Hannan, closed with DOT&PF: $678 million total, 0% change from Governor amended. Accepted all items: ~$400,000 across funds for IT classification, $7.9 million UGF restorations for maintenance (offset by $3.5 million deleted positions from reorganization). Key: Alaska Marine Highway System (AMHS) to multi-year language funding for federal grant flexibility. “At first glance, it may appear the agency is being cut, but it is only being moved,” Clark cautioned. $156 million difference from CS1; Stapp noted apparent 33% slash due to AMHS shift, seeking UGF breakouts.

Fiscal Stability Assessment: These closeouts signal cautious stability amid rising demands. UGF increases (e.g., Health’s 7.3%, DFCS’s 1.1%) target Medicaid growth and vulnerabilities, offset by savings like PDN’s $30 million potential and federal alignments avoiding “hollow authority.” Decrements (Law’s -$462,100 other funds, DOA’s -$567,700) and efficiencies (DOT&PF reorganizations) curb excesses, while intent language ensures accountability (e.g., DOC jails costing, DOA health plan compliance). Overall, balanced adoption of Governor items with minimal additions suggests fiscal prudence, though unresolved metrics (e.g., kinship rates, deconsolidation data) warrant monitoring. A late PFD query by Stapp equated $118 million (DOT-like) to ~$160 per person, highlighting trade-offs in a resource-constrained budget.

Education Tax HB 152 Aims to Bridge Fiscal Gap Amid Cost-of-Living Concerns

Todd M Lindley
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Education Tax HB 152 Aims to Bridge Fiscal Gap Amid Cost-of-Living Concerns

The House State Affairs Committee revisited HB 152, sponsored by Rep. Alyse Galvin (NA-Anchorage), which proposes an “education head tax” to address Alaska’s persistent structural fiscal deficit. The bill, in its fifth hearing, combines a flat $150 annual head tax on wage earners with a tiered 4% income tax on earnings above $150,000 for single filers or $300,000 for joint filers. Amid discussions on amendments and fiscal modeling, committee members weighed the measure’s potential to generate $300-350 million annually against the state’s high cost of living and local tax burdens.

Rep. Galvin opened by contextualizing Alaska’s revenue challenges: oil now contributes only about 30% of state funds, down from 90%, with Permanent Fund earnings at around 40%. “We need broad-based revenue,” she asserted, highlighting equity for nonresident workers in high-wage sectors like oil and gas. The bill closes the “S Corporation loophole,” ensuring pass-through owners pay the 4% on excess income.

Staffer David Jiang estimated the bulk of revenue from the tiered component, with the head tax adding a smaller share. Rep. St. Clair (R-Wasilla) questioned the “education tax” label, prompting Galvin to explain its intent to fund public education transparently. “And I just want us to be mindful that sometimes it’s helpful for folks to understand why we have a bill in place, especially like this. And I thought that the language of education tax would help people understand. The reason that I am having the nerve, the courage, Or the crazy head to come forward with a tax. Is that I know? We’ve got a problem. And gosh darn it, we haven’t had another solution yet to fix it. We should have by now, but we haven’t. And so here I am,” Galvin stated, referencing a planned $500 million draw from the Constitutional Budget Reserve (CBR) amid higher returns elsewhere.

Chair Carrick noted that pairing HB 152 with her royalty dividend bill could eliminate next year’s deficit, potentially creating a surplus, but emphasized the need for deeper analysis. She requested modeling for a $100,000 threshold, which Jiang suggested could yield over $600 million if lowered to $75,000, factoring in projects like Pikka and Willow.

Rep. Holland (NA-Anchorage) advocated a virtuous cycle linking taxation to education investment, proposing phased implementation and a digital wallet to minimize federal tax leakage on Permanent Fund Dividends (PFDs). Jiang clarified constructive receipt doctrine: “The federal government treats income as taxable when it’s under taxpayer control. The distinction is if the head tax or the four percent flat tax were automatically applied to whatever the tax amount is without any choices to pay DMV fees, hunting fishing license fees. That amount that is going towards state taxes wouldn’t be taxed federally… the remaining balance as it is current day would be taxed federally… if you had a $1,000 PFD, paying that $150 head tax, is not going to be taxed additionally on the federal level, but $850 would go on to be taxed federally. If that option were to be expanded to include hunting and fishing license fees, DMV fees, then that whole amount would go under federal taxes… there’s no state taxes that are levied on the PFD. It’s just federal.”

Equity and burden concerns dominated. Rep. Vance (R-Homer) highlighted Alaska’s 5% total tax burden versus the 11% U.S. average, but stressed 25-30% higher costs—utilities 57% above national, food 27%, transportation 17%. “A tax of any form is going to be a burden,” she said, citing her district’s high taxes in Homer and Seldovia with perceived fewer services. She opposed statewide income tax per her mandate but urged ROI analysis and in-state modeling, criticizing ISER’s lack of local data.

Vice Chair Story (D-Juneau) addressed purchasing power disparities: “$150 buys more in Juneau than Skagway or Haines,” and warned of inaction’s costs—lost services, recruitment woes, economic deterrence. Galvin reiterated federal bars on nonresident-only taxes and tied stability to workforce retention, noting $127 million in public employee recruiting/training.

Rep. Himschoot (NA-Sitka) praised Galvin’s courage, noting 13 of her 21 communities self-tax, resisting added burdens for unserved areas. She floated a 25% summer sales tax with winter rebates via PFD, emphasizing quality-of-life intangibles amid rising costs pushing “breaking points.”

Chair Carrick sought local tax comparisons—e.g., a $152,000 family in Bethel (10% sales tax) versus Fairbanks or Anchorage—and queried state offsets for high local rates. Galvin cautioned legal complexities: “A broad-based tax is a broad-based tax,” avoiding jurisdictional entanglements. She stressed constitutional mandates for education and roads, plus improved bond ratings from stable revenue.

Vance scrutinized the DOR fiscal note’s 70 new positions and FY 2030 cost spike, urging updates for 7-10,000 new workers in North Slope/LNG projects and seasonal seafood declines (81-82% nonresident, low-wage). Jiang cited Labor Department data: oil/gas 40.5% nonresident, wages hitting the 4% threshold; seafood below.

Carrick affirmed HB 152’s substantive dent in deficits but noted it doesn’t guarantee local relief or upfront investments. Amendments are due Monday, with potential action Thursday.

This hearing underscores Alaska’s fiscal crossroads: balancing revenue needs against affordability in a high-cost state.

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