Budget & Taxes (Revenue)

This bill modifies how natural gas projects are taxed in Alaska and establishes a new fund to support affordable heating fuel. It also changes the calculation for local contributions to public school funding, allowing districts to offset significant enrollment declines over time. Additionally, the legislation updates reporting rules for pipeline projects, adjusts the maximum price of natural gas for inflation, and creates a municipal impact grant program. The bill specifically targets the Alaska Gasline Development Corporation and aims to balance state revenue from energy projects with protections for local communities and school budgets.

This bill modifies Alaska's property tax system to exempt certain natural gas pipeline infrastructure from state and local property taxes before commercial operations begin. It establishes a new alternative volumetric tax based on natural gas throughput to replace some property tax revenue, directing those funds to municipalities that previously relied on property taxes from the pipeline projects. The legislation defines qualified pipeline property to include major components of Alaska liquefied natural gas projects, in-state natural gas pipelines, and integrated carbon capture and storage facilities. Municipalities are restricted from taxing this qualified property during the ramp-up period, and the bill clarifies how local contribution calculations should exclude certain revenue streams. The changes aim to provide tax relief to energy infrastructure developers while creating a new revenue source for local governments.

HB 350 proposes a new 9.4% state income tax on businesses structured as sole proprietorships, partnerships, LLCs, or S-corporations (referred to as "qualified entities") with taxable income exceeding $25 million in a single year. The tax applies only to income above this threshold, calculated using federal C-corporation rules while disallowing most federal tax credits or deductions. It excludes businesses already taxed under other state provisions and takes effect for tax years beginning January 1, 2026. This bill would create a new tax obligation for large pass-through entities, distinct from existing corporate tax structures.

HB 283 allocates $36.4 million from Alaska's constitutional budget reserve fund to support Medicaid services under the Department of Health for the 2025-2026 fiscal year. It also allocates $70.15 million for transportation projects, including highway maintenance, aviation programs, and federal matching funds, through the Department of Transportation and Public Facilities. The bill uses existing state reserve funds to supplement current agency budgets without new tax revenue. This is a routine budget adjustment for ongoing state operations, not a new policy.

SB 135 changes how Alaska distributes tax revenue from fisheries business and landing taxes to municipalities. It increases the share for unified municipalities/unorganized borough cities from 50% to 60% and for cities within boroughs from 25% to 35% of collected taxes. Boroughs receive 60% of revenue from outside cities and 35% from cities within their boundaries. Newly incorporated boroughs (post-1987) get phased-in percentages over three years, and the bill requires municipalities to use these funds for harbor facility maintenance and improvements.