Although Alaska is experiencing another painful trough in the oil price cycle, it is only temporary in nature and should not be used to permanently sandblast the shine off of Alaska. To go there would cause a rapid exodus of Alaska’s voluntary private sector causing a Detroit-style death spiral.
The responsibility for our hemorrhaging $3.8 billion state deficit lies squarely on Juneau’s shoulders that has more than doubled the size of state government since 2006 under the fairy dust assumption that oil prices would remain boosted to their lofty heights and not cycle up and down as they always do with the ebb and flow of supply and demand.
Public unions, hundreds of 100 percent state funded non-profits, and various other government dependent groups have surrounded our state legislators in Juneau in a budget Alamo and have demanded they surrender to new taxes without making any meaningful cuts in state spending.
Only the free market sets the price for a barrel of oil. When prices go up, oil companies tend to drill more and hire more employees. Conversely, when oil prices plummet, they lay off excess employees and streamline their operations to ride out the low price cycle. The big three oil producers in Alaska have been doing just that. The public sector refuses to do so. Yet, cut we must — to near a pre-bubble 2006 spending level adjusted for population growth and inflation (around $4.1 billion). Any politician can spend someone else’s money and get perpetually re-elected, yet it’s in the streamlining of government in the face of staunch organized opposition where true leaders are born.
Elected leaders tend to forget that they were elected to serve the non-government sector, not the government sector. It’s the public sector that supports the private sector, not the other way around. We are a people with a government, not a government with a people.
Governor Bill Walker and Senator Lesil McGuire/GCI have both sponsored plans to tax the private sector to pay for excess government rather than to cut back to a sustainable level. The biggest tax would be on your PFD check — Alaska’s way of providing a mineral rights dividend because our statehood compact restricts private ownership of mineral rights. For instance, the lion’s share of a $2000 PFD check could be hoovered up into state coffers leaving you with a paltry $300-500. Governor Walker has also proposed a plethora of other new creative taxes including a gasoline and a state income tax. His administration has evidently not researched the massive fleeing of labor and private investment capital that always results when a state drops an income tax on them — like dropping a wolf into a herd of caribou.
If we cut the state budget to sustainable amount ($4.5 billion is this year’s target goal with some more cuts needed next year), we do not need to sandblast the shine of Alaska’s economy and punish Alaska’s poorest with a PFD tax. Governor Walker would not need to tax everything that drives, floats, or flies, nor hire a small army of tax collectors.
Tax and spend socialism is the dark utopian model of the past. Individual freedom and limited government are the sunrise of the future. Alaska’s state motto is, “North to the Future.” Will Alaska continue to march “North to the future” or will it backslide into the insatiable bureaucratic model that has collapsed many economies in the past? It’s all up to you — the grassroots voter and taxpayer. The Juneau Alamo is under heavy siege by an army of public lobbyists. Your voice must penetrate that siege. Rest assured that if they falter now, we the voters will remember the budget Alamo. This fall’s election will be their San Jacinto.