With the August primary looming, Parnell's opponents say the governor should have known better. They say this proves he is not the man for the job.
Just a few months before the primaries, candidates running for governor say the signs were all there. Republican gubernatorial candidate Ralph Samuels says Parnell's appointment is a clear violation of Alaska's constitution.
"Everybody knew that you can't go get a job in the administration, and this was a wink and a nod," Samuels said. "Other governors have done it but that doesn't make it right. And everybody knows it -- all the legislators know it, and certainly the governor knew."
Samuels and Ethan Berkowitz, who's running in the Democratic primary, believe Parnell is pushing the blame to the Department of Law.
"The fact that he went to go talk to a lawyer about it from the beginning shows he was concerned about whether he was doing was legal or not," Berkowitz said.
Sullivan took responsibility for the incident at a press conference Friday.
"That's a mistake that I apologize for, and we are making sure those kinds of things don't happen," Sullivan said.
Dahlstrom says she decided to resign after a legal memo that says an Alaska court may not agree with Sullivan's advice.
"Do I like this? No. Would I wish this to happen? No," Dahlstrom said. "But it is what it is, and once I made a decision based on certain facts, and once the facts were different and things changed, then I had another decision to make."
Parnell says Dahlstrom's actions were voluntary. In the meantime, he says he's working to set the right example, and wants lawmakers to propose legislation to clarify the law.
"The public needs to have confidence that everything we do in these offices is done in good faith, that it's done consistent with law as it's known," Parnell said. "Until we have clarification, I'm not going to hire other legislators for newly created positions, even though that's been a long-standing practice. I just think it's better to err on the side of caution there."
According to Dahlstrom, her plans for the future are unknown.
Republican candidate Bill Walker issued a statement as well, saying that the whole situation "defies common sense" and that he is not surprised by the outcome.
Samuels says it's also interesting that former state Sen. Gene Therriault took a state job in the same way, resigning from the Legislature last summer to become Parnell's energy advisor.
Contact Megan Baldino at firstname.lastname@example.org and Christine Kim at email@example.com