On September 30, Governor Mike Dunleavy (R – Alaska) vetoed Senate Bill 113. The bill would have amended current law to require internet-based companies to pay Alaska corporate income taxes based on the location of their sales rather than the location of their offices. Thirty-six other states already have similar laws. This would level the playing field for businesses physically located in Alaska which pay corporate income taxes.

 “The governor’s veto puts local brick-and-mortar businesses that [also] pay rent and local property taxes… at a disadvantage relative to Amazon. It makes no sense if you want actual business investment in your state,” says Representative Zack Fields (D – Anchorage), who represents Downtown Anchorage. 

The Dunleavy administration itself expressed support for the content of SB 113 when former Revenue Commissioner Lucinda Mahoney testified to the Legislature’s fiscal policy working group in 2021. She said that Dunleavy specifically supported the internet tax.

Ironically, according to his veto statement, the governor is waiting for a comprehensive fiscal plan, like the one created by that previous fiscal policy working group. Dunleavy now says he cannot allow standalone tax measures like SB 113 to go into effect.

“That’s a ridiculous statement on multiple levels,” says Fields, “The obvious way to move forward is to make incremental improvements and negotiate one bill at a time within a single subject like this bill.” Dunleavy has been in office for seven years and has made no headway in solving Alaska’s fiscal problems. Instead, he points fingers at others and vetoes bills that help.

The estimated $65 million in additional revenue from SB 113 would have supported career and technical education as well as reading programs in our elementary schools. So, this veto is yet another cut to public school budgets. And why? All to benefit large out-of-state internet-based companies like Amazon.

“What Amazon does is they actually copy successful products manufactured in America, and then they outsource them from China. So, Amazon’s business model is to aggressively undercut and destroy jobs in America. That’s just how they operate, and that negatively affects a wide range of businesses,” Fields explains.

Fields: “So why on earth would we give them a tax advantage? When Amazon’s business practices are leading to vacant storefronts and economic malaise in Alaska? It makes no sense.”

The bill passed with a combined total of 42 votes out of 60 in the House and the Senate. If SB 113 were a simple policy bill, it would take 40 votes to override the veto; however, because it is a revenue bill with a specific appropriation to support public education, the override number is 45. Getting three folks to support an override who did not support the bill in the first place is a heavy lift.

The Legislature will have five days once reconvening in January to take up a possible override.

Representative Andrew Gray (D – Anchorage) represents the U-Med district in the Alaska State House. He also hosts a political podcast called the “East Anchorage Book Club.” This article is based on a recent episode with Rep. Zack Fields.