2025-10-15                     Senate Journal                      Page 1452
SB 113                                                                                                                        
Letter dated September 27 was received:                                                                                         
                                                                                                                                
Dear President Stevens:                                                                                                         
                                                                                                                                
Under the authority vested in me by Article II, Section 15, of the                                                              
Alaska Constitution, I have vetoed the following bill:                                                                          
                                                                                                                                
         SENATE BILL NO. 113                                                                                                    
         "An Act relating to the Multistate Tax Compact;                                                                        
         relating to apportionment of income to the state;                                                                      
         relating to highly digitized businesses subject to the                                                                 
         Alaska Net Income Tax Act; and providing for an                                                                        
         effective date."                                                                                                       
                                                                                                                                
The state’s fiscal outlook has deteriorated in the face of decreasing oil                                                       
prices and ongoing reductions in federal spending. In response to the                                                           
state’s fiscal condition, several tax proposals have been introduced                                                            
during this legislative session. However, a truly durable fiscal plan                                                           
must include 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.                                                                                                                

2025-10-15                     Senate Journal                      Page 1453
Equally important is the need to evaluate all current state spending and                                                        
government functions – not only for efficiency, but for their relevance                                                         
and long-term impact. Any serious effort to stabilize Alaska’s fiscal                                                           
future must also focus on diversifying our economy and creating new                                                             
industries, which in turn broadens the economic base for potential                                                              
revenue. This bill is a simple tax bill that does not consider the                                                              
comprehensive fiscal approach outlined above.                                                                                   
                                                                                                                                
In addition, a component of this bill raises serious constitutional                                                             
concerns because it singles out a class of highly digitized out-of-state                                                        
businesses engaged in electronic commerce and imposes a less                                                                    
favorable tax system on them. States are prohibited from                                                                        
discriminating against interstate commerce. Additionally, by singling                                                           
out electronic commerce, the bill may run afoul of the federal Internet                                                         
Tax Freedom Act, which requires that states not tax e-commerce less                                                             
favorably than similar industries not engaged in e-commerce.                                                                    
                                                                                                                                
For these reasons, I will not sign standalone tax measures without a                                                            
complete fiscal framework. I could foresee incorporating the elements                                                           
of this bill, which would withstand constitutional scrutiny, into a                                                             
comprehensive fiscal approach this coming year. I agree that Alaska                                                             
needs to stabilize its finances, and I plan on having a robust discussion                                                       
this upcoming session on a sustainable fiscal plan, complete with                                                               
elements outlined above, but it must protect Alaskans, and provide the                                                          
resources to run government in a responsible manner, and survive                                                                
constitutional scrutiny.                                                                                                        
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Mike Dunleavy                                                                                                                   
Governor