Don’t be snookered!
Fear can set you up and be a cause of really bad decisions!
We face inevitable economic change even with our State’s savings set aside for this very crisis. An increasing number of Alaskans (the majority) are understanding the formidable challenge. We are not likely to eliminate another $3.5 billion deficit without redefining entitlements. We also cannot hope to impose enough taxes to avoid the reforms that WILL happen as oil revenues decline. Don’t let fear cause you to accept taxes and cuts that will ultimately make things worse. Don’t be snookered!
Yes, there are plenty of reasons to fear! State spending benefits virtually all Alaskans. Consider potential losses to yourself, your family, and your friends if State spending goes away. How many have health care paid by the State? … How many Teachers and Health Care Providers?… How many construction and maintenance projects funded by the state… How many contracts to provide state services?… How about loss of retail sales?… The logical, natural tendency, of course, is to justify and defend the spending you, or those close to you, benefit from. It is easy to call for budget cuts; it’s very difficult to apply them without causing real pain. The most sophisticated response to fear of cuts is to employ professional lobbyists to advocate for critically needed funds, but that will not work for everyone, and ultimately, all bets are off, because the budget equation will inevitably be balanced. In the end, we cannot spend what we do not have! Innovation must drive the decisions ahead, not guilt and fear.
Don’t be snookered into believing you are getting a “free ride” because Alaska has no State income or Sales taxes! Nonsense! Revenue from development of natural resources is constitutionally set aside for the “maximum benefit of Alaskans”, a lot of money goes directly into the Alaska State checkbook instead of thru Alaskan’s checkbooks. We are not like other states. Comparing Alaskan’s taxes to other states can be manipulative to falsely play on Alaskan’s guilt. In fact, you can argue that you are paying MORE than the equivalent of other state’s taxes by counting your ‘share’ of natural resource development that pays directly for government. Unrestricted GF petroleum revenue divided by the number of AK households is arguably your families ‘share’ of tax equivalent investment. This annual ‘share’ is in the neighborhood of $5000 in 2015 and was $15,000 in 2014 when oil was higher. Lack of Alaskan’s “skin in the game” is NOT the fundamental problem. The fundamental problem is that it is too easy for us to allow spending of commonly owned money.
Also, don’t be snookered into believing you should approve a cap on your permanent fund dividend (PFD) or that you should allow the dividend to be allocated based on public need. The PFD is ultimately a product of the same “maximum benefit” standard imposed by the Alaska Constitution. The permanent fund has two purposes. One purpose is to get cash dividends (the PFD) back to Alaskans without government bias — the other is to help directly fund government — to be appropriated by the elected legislature via the budget process. The dividend portion is an individually ‘owned’ benefit just for being an Alaskan that is best thought of as private property. Owned property can be invested, donated, or wasted with no strings beyond individual principles and general legality — the ‘American dream’. IT IS NOT WELFARE any more than any other investment dividend or inheritance!
Our challenge will ultimately met by reducing State spending to match projected revenue. If we try to use personal income tax to fill the gap, evidence shows we will actually ultimately further reduce revenue. If we raid PFDs, we violate a constitution fundamental principle. We cannot allow ourselves to be duped into agreeing to a personal income tax or a raid of PFDs because of false guilt.
Rep. Wes Keller represents House District 10 in the Alaska House of Representatives.