Alaska Gov. Mike Dunleavy has vetoed his ninth bill of the year, canceling Alaska lawmakers’ efforts to help fund public schools by rewriting a portion of the state’s corporate tax code.
Senate Bill 113, passed by the Alaska House and Senate in May by a combined vote of 42-18, would have required internet companies to pay corporate income taxes based on the location of their sales, not the location of their server farms or offices.
That shift, already enacted by 36 other states, would have required companies like Netflix and Hulu, which do not have any in-state business presence, to pay corporate taxes based on sales to Alaskans. That shift was expected to generate between $25 million and $65 million per year for the state treasury once fully implemented.
In this year’s legislation which increased the state’s per-student public school funding formula, lawmakers included provisions that directed much of the anticipated corporate income tax proceeds to vocational and technical instruction, as well as grants intended to help elementary school students improve their reading.
Without the tax bill vetoed by the governor, those programs will not receive additional money.
In a message accompanying his veto on Sept. 28, Dunleavy said he will not approve any tax measures unless they are part of a larger plan intended to bring state income and expenses into line over the long term.
Dunleavy said he wants to see a “truly durable fiscal plan” that includes “not only revenues but also clear guardrails: spending limits, statutory and regulatory reviews, and policies that make Alaska the most competitive state in the nation for investment and new business growth.”
Dunleavy called SB 113 “a simple tax bill that does not consider the comprehensive fiscal approach outlined above.”
The Legislature could override Dunleavy’s veto, which would require 45 votes when lawmakers reconvene for the regular session in January, but that’s a level of support larger than the bill received when it originally passed.
Anchorage Sen. Bill Wielechowski sponsored SB 113 in the Senate and lambasted the governor’s decision in a written statement.
“SB 113 was a common-sense, bipartisan solution to help close our revenue gap without costing Alaskans or Alaska businesses a penny,” Wielechowski said. “The governor had the opportunity to stand with Alaska families, students and communities — but instead, he chose to side with tech corporations that profit from Alaskans and utilize our infrastructure, while paying nothing back to our state.”
SB 113 was the last bill awaiting gubernatorial action this year. Of 33 bills passed by the House and Senate this year, Dunleavy vetoed nine, or 27%, the highest proportion since statehood. Legislators overrode two of Dunleavy’s vetoes during a special session in August.
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