Fairbanks: Oil Revenue and the Funding Freeze

March 6, 2025

Dear Neighbors,

Today is the 45^th day of the Thirty-Fourth Legislature which means we are just over 1/3 of the way through and it is beginning to heat up-both literally and figuratively. Legislators begin to make the mid-session treks home to have town hall meetings (my Republican colleague Rep. Will Stapp and I already hosted one together), education funding and the state budget approach a crucial vote, new revenue discussions begin and spring is almost here! However, Alaskans will LOSE an entire hour of sleep this week as we begin the observation of Daylight Saving Time and we have already lost millions in federal funding, construction, jobs and healthcare with the new administration in Washington. Check out my latest edition of the e-newsletter below!

Town Hall Weekend Success!

After more than a month in the State Capital, it was time to come home to report on the happenings in Juneau and personally hear more about your concerns and comments directly. I hope to be back at least one more time before the session ends in mid-May and I will post future events. The town hall, Sunday morning coffee chat and the Pizza and Politics legislative events were interspersed between the Fabulous Feminist Auction and a warm tour of the Ice Park after the awards assembly. It reminds me why I am so proud to represent the people of Fairbanks, Fort Wainwright and Badger.

I definitely enjoyed all the ice art while it lasted!

During the town hall, Rep. Will Stapp (R-East Fairbanks) and I fielded many questions regarding our education funding bill that currently is being debated in the State House. It will be up for a debate and a vote next week in the House and then be calendared for hearings in the Senate Education Committee next week. The schedule is posted below. I have been thrilled to work with my Democratic colleague Rep. Maxine Dibert and my Republican colleague Rep. Will Stapp for the last two years as we have worked in a very bipartisan manner to get things done for the district.

Representative Stapp and Senator Kawasaki talking with Constituents during their Town Hall event

In addition to education and budget that dominated most of discussion, we also addressed the importance of new state revenue. As a state grows and Alaskans may demand more different services, we must have the means to pay for these new services through fees or individual taxes or severances on our natural resources and royalties or more funding through the federal government. Most states have a combination of many sources of revenues to pay for services and Alaska is no different, except that we have an enormous Permanent Fund that provides dividends and a larger reliance on the federal government-which is currently in jeopardy with the new administration in Washington. I talk more about that subject later in the newsletter.

How Does Alaska Pay for Services?

Alaska is in dire financial straits and facing an estimated half-billion-dollar deficit. Here is a graphic from the Alaska Revenue Department that outlines where the budget revenue comes from:

An infographic depicting from where Alaska gets its money for the budget

Just a decade ago, oil and gas taxes represented closer to 50-75% of our annual revenue. We were able to save nearly $16-billion, pass balanced budgets and were keeping pace with inflation on fuel, gas, groceries and utilities. SB21 passed the Legislature by one vote in the Senate with the promises of putting a million barrels of oil per day in the pipeline, produce more jobs on the North Slope and ensure that we have a full PFD. None of the promises of these corporate tax breaks to big oil corporations actually came to fruition in the last decade (no surprise to some). In fact, Alaskans have been paying for these oil tax credits through fewer public services and lower PFD’s for the last eight years! With that fact, the Senate Rules Committee has introduced two bills for potential passage.

Senate Bill 112 would reduce the state North Slope oil production per barrel credit by three dollars and prevent oil producers from claiming more in production tax credits than they spend on capital investment. These tax changes could potentially raise the amount of money that Alaska receives from our limited natural resources of oil and gas by hundreds of millions of dollars. According to Senator Wielechowski (D-Anchorage), these tax changes are unlikely to lead to a decrease in oil production.

Senate Bill 113 seeks to change the corporate tax law to include online sales from outside corporations the same way brick-and-mortar businesses are currently taxed. This bill would not raise taxes on local businesses, but rather out-of-state corporations that do business in Alaska via the internet. According to Senator Wielechowski, this tax change could boost Alaska’s revenue somewhere between $20 and $65 million a year.

This graph, with data from the Department of Labor and Workforce Development, shows that AFTER SB 21 passed, employment in the Oil and Gas industry actually decreased as opposed to the promise of increased jobs for Alaskans.

Alaskans Face Sweeping and Illegal Federal Funding Freeze

As I’m sure you’ve heard, on February 11, President Trump issued an executive order to freeze federal funding. The Alaska House Coalition has issued a report analyzing how Alaska specifically will be impacted by this. Their findings are concerning.

Almost 15,000 Alaskans hold federal jobs. Of the 15,000 federal employees who call Alaska home, about 1,400 are “probationary” – meaning they have been in their positions for less than a year. Almost 350 of these employees are Veterans. The federal workers union predicts all federal probationary workers will be laid-off. If this comes to pass, Alaska will lose $89 million in collective wages. These job-losses will also have immediate negative impact on many of our in-state industries. For example, the Fishing Vessel NOAA Ship Oscar Dyson is slated to run a fishery survey this summer but might be losing half of their crew to lay-offs. Fishery surveys are vital to the industry, because they are used to determine catch allocation set for the Bering Sea trawlers-that impact our king salmon that are wasted as by-catch.

NOAA ship Oscar Dyson, it is unclear is this ship will be able to run with the current federal layoffs

The funding freeze will also continue to delay hundreds of millions of dollars in new energy projects. Many of the projects that have been delayed and could be permanently brought to a halt are those working to bring renewable energy to rural Alaska. This would keep Alaska’s villages dependent on diesel, and, in doing so, will keep their energy costs extremely high.

Medicaid spending in Alaska is about $2.75 billion a year, over $2 billion of which comes from the federal government. Without this federal money, the Alaska Medicaid program would be gutted, leaving low-income Alaskans without access to affordable healthcare and very basic needs. Overall, this massive, untargeted and blunt funding freeze will be devastating both to the individuals who lose their jobs or benefits and to the economy of the state as a whole.

You Lose One Hour of Sleep! (not really)

Daylight Saving Time starts this Sunday, March 9. Remember to change your clocks forward by one hour! The rationale behind Daylight Savings Time or DST is that it helps maximize daylight hours by allowing for more sunlight later in the day. Alaska and the United States have been under the constant DST requirements since World War II after Congress made it the standard. While this might sound like a good idea in theory, it does not make sense for Alaska and our own unique sunlight conditions due to our extreme latitudes.

I have once again introduced Senate Bill 102, which seeks to have exempt Alaska from daylight saving time every year and would thus allow Alaska to remain permanently on Standard Time. The change would benefit Alaskans through improved mental and physical health as well as free us from having to change our clocks twice a year. My Senate colleague, Senator Kelly Merrick (R-Eagle River), introduced similar legislation that would prevent the annual clock change and keep Alaska on Permanent Daylight Saving Time if Congress were to pass enabling legislation this next year.

How do you feel about Daylight Savings Time? Follow this link to take our survey and let me know!

Public Testimony Opportunity

The Alaska Legislature will see hundreds of bills, thousands of amendments and take tens of thousands of minutes of public testimony. In the end, the only bill that must be passed by the end of the year is the state operating/capital/supplemental budget and it is usually the last item to pass on the 121^st day of session.

The state budget is around $16-billion and contains everything from troopers, snow removal, airport runway operations and ferry services. The budget also contains funding for local communities to aid in local school districts, for teacher, counselors and school nurses. The budget has funding that is calculated as a share of the oil wealth to each community mostly based on population called ‘revenue sharing’ or ‘community assistance’. It is used as the City of Fairbanks or Borough see fit and to lower property taxes. The budget will also contain billions in funds for roads, rails, runways, wildfire protection, healthcare expenses, disability services and the Permanent Fund Dividend.

Now is just one time that has been set aside to folks to testify on the budget and priorities to the State Senate Finance Committee. Each community will have a specific time to reach members directly and the entire process can be viewed at www.akl.tv. Fairbanks will be heard on Thursday, March 13, at 4:30 pm. Click here to be directed to a full calendar. As always, you can send me any comments regarding the budget that I would be happy to send to the Finance Committee to put on the public record.

-Please call/arrive 30 min. prior to end of allotted time or testimony will close early

-All Off Net callers must hang up immediately after testifying to keep lines open

-Continue to access meeting through akleg.gov

-The hearing may be televised on Gavel to Gavel, please check listings

-Select a spokesperson if you are part of a group with the same message

Submit written testimony to house.finance@akleg.gov by Friday March 14, 2025 at 5:00 PM

Check Out These Events!

My Staff and I are Here for You

I will continue to keep you updated on what I’m working on in Juneau throughout the session. If you have any questions about anything going on in the Capitol or at home, feel free to give me a call or shoot me an email – as always, my staff and I are working for you. We will assist you with the issues important to you and your family.

Working Hard for Fairbanks Families,