Senate Resources just changed Alaska’s oil taxes without the numbers — again

By SUZANNE DOWNING

Feb. 19, 2026 – The Alaska Legislature’s Senate Resources Committee just pulled off a maneuver that ought to worry every Alaskan who still believes fiscal policy should be built on math, not politics.

Senate Bill 227 started as Gov. Mike Dunleavy’s fiscal plan — a sprawling proposal that included a statewide sales tax and modifications to the oil and gas production tax designed to stabilize state finances over the next decade.

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But in the space of one week, Alaskans got something very different.

In a single amendment yesterday, Senate Democrats and committee Chair Cathy Giessel cast aside the governor’s oil-tax language and inserted a brand-new oil tax regime — one built around a gross tax of at least 17.5%  on oil production before costs, on top of the standard 12.5 percent royalty most producers already pay — meaning a total tax and royalty burden of roughly 30% before costs are deducted. The committee zipped it right out of Resources Committee on a 4-3 vote to move the bill to the Senate Finance Committee.

Senators George Rauscher, Robert Myers, and Matt Claman voted no. Senators Cathy Giessel, Forrest Dunbar, Bill Wielechowski, and Scott Kawasaki voted yes.

This is a massive increase above Alaska’s current minimum production tax structure, and even above the gross tax Alaska briefly used under the old ELF regime more than 25  years ago — and it comes at a time when industry costs have been rising, in part because of regulatory burdens that didn’t exist a generation ago.

The fiscal implications of this move are huge and were not adequately vetted. In fact, the committee made no attempt to explain how the taxes would impact the state revenue picture, and took no testimony from experts.

Last year, when we debated Senate Bill 92 and Senate Bill 112 — two other oil-tax proposals — members on the Senate Resources Committee raised serious questions about the need for project-level modeling before adopting major tax changes. At that time, Senator Giessel herself said modeling must happen in Resources before any changes proceed.

This year, during Wednesday’s meeting, she essentially reversed course, saying Resources could punt detailed economic modeling to the Senate Finance Committee after passing the tax rewrite out of Resources.

That’s the equivalent of saying: “We know we don’t have the complete math, but we’re going to let someone else do it later.” Passing a massive tax rewrite without the numbers to help you evaluate shows a lot of gall.

The amendment that passed inserted the new gross tax, but the rest of SB 227 is a grab bag of taxes:

• An income-based “head tax” on Alaska residents, essentially a form of state income tax , which was retained from earlier versions and is now doubled from the governor’s original text (with Sen. Claman pushing to increase it by a factor of ten).

• Sen. Yundt’s S-Corp tax provisions, which reach any S-corporation (including non-oil S-Corps) with profits above $1 million,  not just Hilcorp. We’ve previously noted how that language extends well beyond its ostensible purpose.

This dog’s breakfast is now on the way to the Senate Finance Committee, the last stop before the Senate floor, without any updated fiscal modeling on the new provisions. Well, there’s the speed bump of Rules Committee, chaired by Wielechowski himself.

In committee discussion, Norway came up as an example of a country with a state-owned oil company. Over the years, Wielechowski, what he really wants is a structure more like Norway or Venezuela: A state-owned oil company.

Setting aside the socialist agenda for a moment, we can at least agree that Alaska cannot responsibly overhaul its energy tax code the backbone of its revenue system without updated, credible economic modeling of the proposed tax regime on real projects (Pikka, Willow, and others), and expert analysis of how changes interact with broader energy projects, including the Alaska LNG gasline and export economics.

That modeling should have been in hand before this amendment passed.

As SB 227 now stands in Finance, it reflects a debate that has been rushed, reactive, and with no fiscal analysis. Tax policy of this magnitude should be grounded in rigorous fiscal impact projections. Major tax increases should not be enacted based on political calculus alone. Far-reaching proposals like gross taxes, head taxes, and S-Corp surcharges deserve scrutiny, not surprise floor votes.

In all my years covering Alaska politics, it is difficult to recall a moment when such a massive rewrite of the state’s economic foundation was done with so little modeling, so little transparency, and so much haste. There is plenty of competition for “worst idea out of Juneau,” but this one is making a serious run for the title.

Suzanne Downing is founder and editor of The Alaska Story and is a longtime Alaskan.

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