News-Miner opinion: Alaska’s fiscal foundation has long rested on the twin pillars of oil revenues and the Alaska Permanent Fund. While these sources have served the state well in the past, recent developments underscore a need to diversify revenue streams to ensure the state’s long-term economic stability.
The state’s Spring 2025 Revenue Forecast projected oil prices at $68 per barrel for the upcoming fiscal year. Alaska North Slope crude closed at $80.42 per barrel on Jan. 15 of this year and it’s followed a downward trend since, closing Thursday at $66.29 per barrel. The numbers highlight the volatility that is inherent in relying heavily on oil revenues. Compounding this issue, the Alaska Permanent Fund recently reported a $2 billion loss due to market fluctuations triggered by global trade disputes and tariffs, further emphasizing the risks of dependence on unpredictable revenue sources.
Given these financial uncertainties, it would be a wise time for the Alaska Legislature to consider alternative revenue avenues. One area ripe for conversation is the state’s mining tax structure. Currently, large mines pay a flat $4,000 plus 7% of net income over $100,000, a rate that pales in comparison to the 25% net production value tax levied on oil and gas producers. Raising mining royalties — which have not been significantly adjusted in decades — could provide a fairer and more stable contribution to state coffers. As Alaska Beacon and other sources have noted, even a modest modernization of the mining tax structure could bring in tens of millions in new revenue without harming responsible resource development.
Additionally, Alaska stands out as one of the few states without a statewide sales tax or personal income tax. While the idea of introducing such taxes may be contentious — especially in a state where “tax” is treated as a four-letter word — the reality is that our current revenue model is outdated and increasingly risky. Implementing modest taxes, carefully structured to minimize burdens on lower- and middle-income Alaskans, could provide a more sustainable fiscal foundation. States across the country have managed to balance growth with tax responsibility; Alaska should not shy away from this discussion any longer.
Exploring innovative revenue sources is also crucial. Gov. Mike Dunleavy has proposed leveraging carbon markets by renting underground storage spaces for carbon sequestering and establishing carbon offset programs. While the earnings potential from such initiatives remains uncertain and requires careful regulation, these ideas represent a willingness to think beyond the oil barrel and the stock ticker. And that’s what the state needs to be open to — talking about and considering new revenue ideas.
The hard truth is that Alaska’s economy has changed, but our revenue system hasn’t kept pace. Oil production is a fraction of what it was in the 1980s. The Permanent Fund, while still robust, cannot be expected to cover every budget shortfall, especially when markets are rocked by global instability. Meanwhile, demand for public services — from schools to public safety to infrastructure maintenance — continues to grow, and those demands will not stop any time soon.
This discussion deserves the Legislature’s full and undivided attention — and now is not that time, given the current budget debate. One smart step would be for the governor to call a special session this summer dedicated solely to debating new revenue sources. While the Legislature could call itself into session, a call from the governor would demonstrate a clear recognition of the seriousness of the situation. Ultimately, it would be up to the Legislature to pass any new revenue measures into law — and then hope the governor agrees and does not veto the final changes. A focused special session would give Alaska the best chance to forge real solutions rather than kicking the can down the road yet again.
Alaska’s economic future hinges on our willingness to adapt and diversify. By reassessing our tax structures, investing in new industries and embracing innovative revenue ideas, we can build a more resilient, stable fiscal framework for generations to come. Now is not the time for panic — but it is time for action.
If we want Alaska to thrive, we must rethink how we fund the future.
