HOUSE FINANCE COMMITTEE January 22, 2026 1:33 p.m. 1:33:14 PM CALL TO ORDER Co-Chair Josephson called the House Finance Committee meeting to order at 1:33 p.m. MEMBERS PRESENT Representative Neal Foster, Co-Chair Representative Andy Josephson, Co-Chair Representative Calvin Schrage, Co-Chair Representative Jamie Allard Representative Jeremy Bynum Representative Alyse Galvin Representative Sara Hannan Representative Nellie Unangiq Jimmie Representative Elexie Moore Representative Will Stapp Representative Frank Tomaszewski MEMBERS ABSENT None ALSO PRESENT Janelle Earls, Acting Commissioner, Department of Revenue; Dan Stickel, Chief Economist, Economic Research Group, Tax Division, Department of Revenue. SUMMARY PRESENTATION: DEPARTMENT OF REVENUE FALL FORECAST 1:33:36 PM Co-Chair Josephson reviewed the meeting agenda. ^PRESENTATION: DEPARTMENT OF REVENUE FALL FORECAST JANELLE EARLS, ACTING COMMISSIONER, DEPARTMENT OF REVENUE, introduced herself and turned the presentation over to a colleague. DAN STICKEL, CHIEF ECONOMIST, ECONOMIC RESEARCH GROUP, TAX DIVISION, DEPARTMENT OF REVENUE, provided a PowerPoint presentation titled "Fall 2025 Forecast Presentation: House Finance Committee," dated January 22, 2026 (copy on file). He reviewed the agenda on slide 2. He moved to slide 4 showing a background of the fall revenue forecast. He advanced to the fall forecast assumptions on slide 5: Fall Forecast Assumptions • The economic impacts of financial and geopolitical events are uncertain; Department of Revenue has developed a plausible scenario to forecast these impacts • Key Assumptions: • Investments: Stable growth in investment markets, 7.60% for remainder of FY 2026 and 7.30% for FY 2027+ • Federal: The forecast incorporates known funding as of December 1, 2025. FY 2028+ assumed to grow with inflation • Petroleum: Alaska North Slope oil price of $65.48 per barrel for FY 2026 and $62.00 per barrel for FY 2027 • Non-Petroleum: Stable economic conditions. 1.7 million cruise passengers, five-year recovery for fisheries taxes, minerals prices based on futures markets • The revenue forecast is inherently uncertain and represents one scenario among a range of many possible scenarios Mr. Stickel elaborated on the slide. // record gold and solar prices. The forecast was based on the futures market // 1:39:54 PM Representative Hannan asked what the average had been for oil for the past six months. Mr. Stickel replied that thus far oil prices were tracking very close to the forecast. // 1:40:43 PM Mr. Stickel looked at total revenue from all sources on slide 6. He noted that state revenue was a three legged stool with petroleum, federal, and investment earnings making up the majority. He moved to slide 7 showing unrestricted state revenue. He reported that 90 percent of the state's unrestricted revenue came from investment earnings and petroleum. Representative Allard asked // Mr. Stickel would follow up. Representative Allard asked for the percentage as well. 1:42:50 PM Mr. Stickel addressed the total revenue forecast on slide 9. // unrestricted general fund (UGF) // designated general funds (DGF), other restricted funds, federal revenue // under federal law all of the // the head tax on cruise ships // all federal revenue coming into the state had to be used for // purposes // total state revenue // $17.8 billion and $15.3 billion for FY 27. Representative Galvin looked at the difference in the federal revenue from FY 27 to FY 27. She observed there was a significant reduction. She assumed it pertained to healthcare. She asked // Mr. Stickel replied that the majority of the presentation focused on UGF. // He deferred to OMB for detail. He relayed that in the past there was some one-time funding for broadband enhancements // 1:45:56 PM Representative Hannan looked at a significant decline in other restricted Mr. Stickel replied // FY 25 was a strong year for market returns // rest of FY 26 and FY 27 return to a more noral rate of return // Co-Chair Josephson // Mr. Stickel agreed. 1:47:41 PM Mr. Stickel move to slide 10 reflecting the changes in the two-year outlook. // The lower oil price outlook was the primary // Mr. Stickel moved to slide 11 // investment revenue was the largest source // investments generated about // petroleum revenue generated // non-petroleum revenues generated // forecasted for FY 26 // 1:50:35 PM Mr. Stickel turned to investments on slide 12. The Permanent Fund was projected to generate $3.8 billion in FY 26 and $4 billion in FY 27. Forecasting slight reductions to the number based on // He moved to slide 13 showing unrestricted investment revenue from the percent of market value (POMV) transfer forecast. The 5 percent calculation was based on the average fund value of the first five of the past six years. 1:52:44 PM Mr. Stickel looked at unrestricted petroleum revenue on slide 14. At current price // total tax revenue would be at or below the minimum tax floor // oil and gas production tax was forecast at $316 million in FY 26 and $285 million in FY 27. // petroleum corporate income tax // petroleum property tax was $134 million in FY 25 and forecast at $143 million in FY 26 and $144 million in FY 27. He moved to royalty revenue in the bottom portion of the table. // 1:55:09 PM Co-Chair Josephson asked about the mineral bonuses, rents, and interest. He asked if it did not include // He generally saw // Mr. Stickel noted that it was only related to oil and gas and did not include any mining royalty. Co-Chair Josephson asked what pertained to hard rock minerals. Mr. Stickel answered it was a significant number // over $100 million per year // He could follow up with details. Co-Chair Josephson declined the additional information and understood the number was somewhere over $100 million. Mr. Stickel addressed unrestricted non petroleum revenue on slid 15. // offset by increased revenue expectations // He looked at the mining license tax that brought in $42.7 million in FY 26 and was expected to bring in $62.4 million in FY 27. // He looked at program receipts. The division had worked with OMB over the interim // any program receipts that were surplus // previously were unrestricted // a little over $60 million // 1:59:22 PM Representative Hannan asked about the large passenger vessel gambling tax. She was surprised it was not bringing in more, especially due to an increase in cruise ship passengers. // Mr. Stickel replied that it was a tax on the income earned by casinos and gambling operations. The revenue had been growing in recent years // the revenue source had typically exceeded the division's expectations. He thought it would level off // Representative Hannan noted that it did not grow in relation to the number of passengers. // Mr. Stickel replied that the revenue source had grown // He pointed to page // of the Revenue Sources Book // the revenue had taken off after the COVID-19 pandemic // 2:01:58 PM Representative Stapp looked at unrestricted revenue // He thought it was likely restricted. Mr. Stickel // how they were classified in the fall forecast. Prior to the // the entire amount of the payments were treated as a pass through to communities but it did not // the passage of the big beautiful act // the reality the monies would be used // 25 percent going to the Permanent Fund // Representative Stapp noted there was a different state statute // 9.6 would use the approach in state statute // Mr. Stickel turned to slide 14 and discussed the $9.6 million of Natural Petroleum Reserve-Alaska (NPRA) // Representative Stapp had a hard time understanding how the number had been derived. Mr. Stickel replied // any bonuses from ongoing lease sales // annual rent payment // a portion of the Colville River Unit // shared 50 percent with the state. He believed Representative Stapp was referring to large revenue in the future resulting from Willow field coming online // 2:06:01 PM Representative Stapp asked if the state was taking money from communities // Mr. Stickel deferred any further questions to the Department of Law // Co-Chair Josephson stated there were smart people on both sides of the issue // the local people were not going to be silent on the topic // Mr. Stickel could speak to the change in the revenue forecast. Anything related to litigation he would defer to DOL. Co-Chair Josephson asked if // suggested the state was providing a service for a fee. He asked if it was the reason there were receipts // Mr. Stickel answered that program receipts was a large category in the state budget. It was not his area of expertise. // the Division of Motor Vehicles (DMV) collected about $70 million annually for motor vehicle registration and licensing fees. // provide the service. There was a surplus // the amount required was // 2:08:56 PM Co-Chair Josephson asked for verification that there was someone on a large passenger vessel // Mr. Stickel answered that // tracked the time in state water // factored into the calculation. There was not a DOR official standing on the boat // 2:09:46 PM Mr. Stickel turned to slide 17 showing petroleum detail: changes to the long-term price forecast. // generate the price forecast on December 5 // the FY 26 forecast was reduced // the longer term forecast // the change in the forecast reflected an anticipation // He moved to slide 18 showing petroleum detail: nominal brent forecasts comparison as of January 21, 2026. The current futures market was mostly unchanged since the time the division prepared its forecast in the beginning of December. // typically the lines were clustered close together and the slide reflected a difference from past years. // uncertainty in risk premium // some of the analysts were more bullish on the forecast over years // as demand growth remained strong. Historically in the // were wrong // felt comfortable with the range // 2:14:18 PM Mr. Stickel advanced to slide 19 showing what would happen to revenues if prices were different than the forecast. // FY 27 forecasted (UGF) revenue not including the Permanent Fund transfer was about $2.2 billion // He moved to slide 20 showing petroleum detail: changes to North Slope petroleum production forecast. // FY 30 started to show the impacts of Willow and Pikka coming online // over 650,000 barrels per day in // firming up the timeline around Pikka and Willow 2:17:06 PM Mr. Stickel moved to slide 21 showing petroleum detail related to North Slope allowable lease expenditures. // continued to ramp up on major developments like Pikka and Willow // forecasting the high water mark // operating expenditures were $3.1 billion in FY 25 // Co-Chair Josephson noted that the investment was there even though there had been articles highlighting cuts to employees in the industry. Mr. Stickel replied // Representative Hannan asked how long the capital expenditure reductions could be paid out // Mr. Stickel responded that for the net profits portion of the tax // to the extent a company had income and revenues from work on the North Slope // if the company was a new entrant and did not have sufficient revenue // it would earn a carryforward tax expenditure // could be carried forward // at a certain point they began declining 2:21:39 PM Representative Hannan considered a historic revenue // on the North Slope // could stretch out for another decade for taxes owed. Mr. Stickel replied affirmatively. // about $6.4 billion of the $8 billion was applied to the tax calculation // became carryforward lease expenditures // Co-Chair Josephson asked if they could go below the floor // gvr (gross value reduction) // Mr. Stickel answered // per taxable barrel for new oil // Co-Chair Josephson noted that the committee may hear something about the issue that evening [during the governor's State of the State address]. Representative Stapp looked at the graph on slide 21 // 2:24:46 PM Mr. Stickel asked Representative Stapp to rephrase the question. Representative Stapp asked why the projection showed // companies in the outyears. Mr. Stickel // net profits calculation // relatively low oil prices and relatively high spending // investments and significant inflation // lower value // 4 percent gross tax would be higher than the net profits tax // Representative Stapp asked how long the foreseeable future was. Mr. Stickel replied // 10 year revenue forecast. 2:26:31 PM Representative Bynum referenced the statement relatively low oil prices. He asked for detail. Mr. Stickel answered that he had been comparing to a period of $100 per barrel oil prices // Representative Stapp asked if there was any benchmark to help understand values //. $60 per barrel // Mr. Stickel responded that each company // in the aggregate the division expected around $64 per barrel // very close to the level // other companies that would not exceed // it depended on how much the companies were investing // 2:28:57 PM Representative Stapp looked at the range of 60 to 100 // 10 plus years. Mr. Stickel answered that the division forecast tax liability for every company // the number published in the Revenue sources book was an aggregate // companies paying at, below or above the minimum tax floor. Representative Stapp asked for an indicator that would change the calculus. Mr. Stickel replied that it included oil price, oil production, spending, and transportation cost. 2:30:45 PM Co-Chair Josephson asked for a repeat of the four variables. Mr. Stickel replied price, lease expenditures, production. transportation cost. He moved to slide 22 and discussed North Slope transportation costs. // the average transportation cost in FY 25 was // the number would be stable and declining in the 10-year forecast. 2:32:50 PM Mr. Stickel looked at slide 23 titled "State Petroleum Revenue by Land Type." // applied to everything in the state // the state received all royalty // for NPRA currently 50 percent was shared with the state // would increase to 70 percent // Co-Chair Josephson asked if the state received a 5 percent royalty on private land. Mr. Stickel asked // Co-Chair Josephson asked about the Gulf of Mexico // Mr. Stickel // Representative Hannan directed a question to the acting commissioner. She asked for an update on the status of the oil tax audits // Acting Commissioner Earls answered that the department was working with // on the audits. They were not complete. Representative Hannan asked if there would be 7 or 5 years of audit information. Acting Commissioner Earls believed it went back to 2018. Representative Hannan stated she would ask the auditor the same question. She asked about an expectation completion timeline. Department of Revenue did not have any information on it at the time. Co-Chair Josephson thanked the presenters. He reviewed the schedule for the following day. ADJOURNMENT 2:38:35 PM The meeting was adjourned at 2:38 p.m.