Republicans in the Alaska Legislature voted down a new funding source for public school programs Jan. 22 as they sustained Gov. Mike Dunleavy’s veto of Senate Bill 113.
The vote on overriding the governor was 35-25, 10 votes short of the 45 needed for an override.
Speaking after the vote, Senate President Gary Stevens and Speaker of the House Bryce Edgmon said the action is a sign that the Alaska Legislature will struggle to pass a long-term state fiscal plan this year.
All of the “no” votes came from Republicans in the House and Senate minority caucuses.
If SB 113 had been enacted, the bill would have shifted some corporate income tax payments from other states to Alaska by requiring companies to pay based on the location of their sales, not the location of their server farms or offices.
The result was expected to be between $25 million and $65 million per year in new revenue for the Alaska treasury, and the bill called for much of that money to go to programs that help young children learn how to read and to career-technical education programs that teach Alaskans non-college trades.
Dunleavy vetoed the bill last fall, saying he was unwilling to approve any tax measure that was not part of a comprehensive, long-term plan intended to balance state revenue and expenses.
Under the Alaska Constitution, that veto needed to be taken up during the first five days of the regular session if lawmakers wanted to override it.
Legislators against the override offered a variety of reasons — worries about costs that might be passed to consumers, concern about the lack of regulations needed to implement the change and doubts that the bill would actually send its proceeds to education.
Among those voting no were several legislators, such as Republican Sen. Rob Yundt, of Wasilla, who had strongly supported the bill last year.
Republican Rep. Kevin McCabe, of Big Lake, said, “I don’t think the tiny amount of revenue we’re going to garner from this bill is worth overriding the governor’s veto.”
Ketchikan Rep. Jeremy Bynum, another Republican who voted in favor of the bill in May and then voted against the veto override, said the tax change was incomplete and lacked regulations “to give certainty to those that are working in this state.”
A variety of legislators spoke in favor of the override, none was more impassioned than Sen. Bill Wielechowski, an Anchorage Democrat.
He noted that dozens of states across the country have adopted similar legislation by wide, bipartisan margins and demonstrated that there is no price difference in online sales to states that have adopted similar bills and those that have not.
The change in taxes would fall on large, non-Alaskan companies who do their business online, Wielechowski said. Many of those are located in the Lower 48 or China.
“If you think we should be collecting revenue from Chinese corporations before we ask Alaska residents to start paying tax, you should vote yes on this bill,” he said.
After the override vote failed, Stevens and Edgmon said they expect SB 113 to return in a new form this session.
Dunleavy’s office drafted the original version of what became Senate Bill 113 in 2021 but never introduced it.
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