(a) Except as provided by (b) of this section, the state and a municipality may only dispose of forfeited, surplus, or recovered but unclaimed firearms and ammunition by

(1) public sale not limited to firearms dealers;

(2) trade-in for credit in the purchase of a firearm;

(3) donation as provided by the regulations of the department or the ordinances of the municipality making the donation; or

(4) transfer to a state or municipal law enforcement agency.

(b) If state or federal law prohibits the sale of a particular surplus firearm under (a)(1) of this section, the department or municipality that is disposing of the surplus firearm shall

(1) sell the surplus firearm to a firearms dealer who has the appropriate federal license to buy the surplus firearm;

(2) donate the surplus firearm under (a)(3) of this section; or

(3) dismantle the surplus firearm, destroy those surplus firearm parts that cause the sale of the surplus firearm under (a)(1) of this section to be prohibited, and dispose of the other parts of the surplus firearm under (a) of this section.

(c) If a department disposes of a surplus firearm under (a)(2), (3), or (4) of this section, the department shall submit to the legislature each year during the legislature's review of the department's budget a report that lists the surplus firearms that the department has disposed of under (a)(2), (3), or (4) of this section during the previous calendar year. The report must include a description of each surplus firearm and, for each surplus firearm disposed of under

(1) (a)(2) of this section, the value of the firearm purchased and the value received for the surplus firearm; and

(2) (a)(3) or (4) or (b)(2) of this section, the identity of the governmental agency, the organization, or the individual to whom the surplus firearm was donated or transferred.

(d) All money collected from the disposal of surplus firearms may be used to fund gun safety education programs in the state.

(e) Notwithstanding AS 09.50.250 or another provision of law, the state, a municipality, and the officers, agents, and employees of the state or a municipality, are not liable to any person, including the purchaser of a surplus firearm or part of a surplus firearm, for personal injuries or damage to property as a result of the sale of a firearm or a part of a firearm under (a) of this section, unless the state or municipality conducts the sale with gross negligence or recklessness.

(f) In this section,

(1) “department” means a department of state government listed in AS 44.17.005(2) - (15);

(2) “firearm” does not include a firearm that has been used in a homicide;

(3) “surplus firearm” means a firearm or ammunition that is forfeited, surplus, or recovered but unclaimed.