Update:
Here's the story headed for tomorrow's paper. Kassel is here in Anchorage, for his son's hockey games. I told him of the latest numbers over his cell phone. He's thinking recount. ...

(Remember the 2006 Dillingham primary, when they decided the winner by coin flip?)

Anyway, the story:

The closest race of this fall’s election drew even tighter Friday night, as Rep. Mike Kelly’s lead on Democratic challenger Karl Kassel narrowed to a single vote.
Kelly, a Fairbanks Republican trying for his third term in the Legislature, has 5,000 votes.
Kassel: 4,999.
The what-ifs were already creeping into Kassel’s mind Friday night, as he learned the latest count.
“It’s pretty frustrating to miss by such a close margin, but I could probably explain 50 different ways that I could have gotten one more vote,” he said.
It might still be out there — in the mail.
The state will count any absentee ballots that voters mailed from outside the United States by Election Day, as long as they arrive by Wednesday.
The Fairbanks race was one of several close contests in the Legislature on election night. But as the Division of Elections continued to count the remaining absentee and questioned ballots, other frontrunners began to pull ahead while Kelly’s lead continued to shrink.
Kelly belongs to a slim majority in the state House. He’s also an ally of Gov. Sarah Palin, and last summer joined other Republican legislators in a lawsuit that sought to freeze lawmakers’ abuse-of-power investigation of Palin. Note: I should also note that Kelly was a champion of Palin's oil tax plan.
Palin endorsed Kelly in the race through radio ads, the candidates said.
Kelly isn’t expected to serve as chairman of any committees, but he would be a member of the powerful House Finance Committee, which drafts the state budget. Even if he lost based on late-arriving absentee ballots or a recount, Republicans would keep control of the House.
“Certainly we don’t want to lose his race, but you know if we did, it doesn’t change the actual organization other than who’s going to be the finance member,” said incoming House Speaker Mike Chenault, R-Nikiski.
Over in the Senate, a coalition of 10 Democrats and three Republicans will be in control next year, a makeup that held solid after Friday’s ballot counting.
This week the Kelly-Kassel race in Fairbanks District 7 emerged as the contest to watch.
In August, Kelly criticized a popular plan to give Alaskans $1,200 each to pay for rising energy bills, calling such aid “morphine and welfare payments” and saying the money would be better spent on projects like a Susitna River hydroelectric dam or a road to Nome.
Kelly also wrote a letter to the Fairbanks Daily News-Miner last year calling for Alaska Republicans dogged by corruption accusations — including U.S. Sen. Ted Stevens, U.S. Rep. Don Young and state Sen. John Cowdery, to retire or resign for the good of the party.
He said party chief Randy Ruedrich should step aside.
Asked if that hurt his party support, Kelly gave a long pause.
“I can’t comment on that, I don’t really know what impact that has on the overall situation,” he said. “The Republican Party’s certainly in crisis right now, and that’s about all I’ll say at this point.”
Kassel said he plans to call for a recount.
“With just one, I think it is probably appropriate to double check,” he said.

Original post:

From Kyle Hopkins in Anchorage --

The closest race in the state Legislature just tightened into a virtual tie, with Fairbanks Republican Rep. Mike Kelly now just a single vote ahead of Democratic challenger Karl Kassel.

Kelly began the day 32 votes head. But another 512 votes arrived in Steese & Fox district, putting the count at 5,000-4,999 in favor of Kelly.

If Kelly loses, the Republicans will still hold a slight majority in the House.

"Certainly we don't want to lose his race, but you know if we did, it doesn't change the actual organization other than whose going to be the finance member," said incoming House Speaker Mike Chenault, R-Nikiski.

Note: This post has been corrected to include the right number of votes counted today in District 7. Fairbanks election workers report that they've finished counting for the day, so the only votes let to be counted in this race would be absentee ballots arriving from overseas early next week.