Last week, the Alaska House approved a draft of the state operating budget for the next fiscal year. On Monday, the Alaska Senate approved another version. Lawmakers still have to combine those two bills in a compromise approach, but there’s something more important out there: They have to figure out how to pay for that budget.
The state is running a $3.7 billion deficit courtesy of low oil prices, and the Legislature could simply use some of the $8.2 billion Constitutional Budget Reserve to fill that deficit.
That’s a shortsighted solution, and we hope lawmakers will not turn to the CBR as a budgetary shortcut. Spending from savings doesn’t solve the problem. It just pushes it to another day.
The Legislature has made some severe cuts to state operations — the Senate’s budget bill cuts $571 million, the House’s budget cuts about $69 million more than that — but cuts alone will not fix our budget situation.
We must raise revenue, not just cut the budget. We must tax ourselves.
Gov. Bill Walker has proposed an array of taxes that spread the burden across every Alaskan. We do not like that we must be taxed, but we accept it. Alaska can no longer rely on oil to fund basic services including education, health care and police. We must find another solution.
The biggest piece of that solution will come from the earnings of the Alaska Permanent Fund. The Legislature is considering three proposals that use those earnings to fund basic services.
Note that we’re talking about the earnings here, not the Permanent Fund itself. The $50 billion fund will remain untouched.
Dividends are paid from those Permanent Fund earnings, and if the Legislature approves a plan to use those earnings for public services, you can expect your dividend to drop, possibly as low as $400 or $500.
That’s unfortunate, but the alternative is worse.
Gunnar Knapp, director of the University of Alaska Anchorage’s Institute of Social and Economic Research, told the Legislature earlier this year that for every $100 million it cuts from the budget, 1,260 Alaska jobs will be lost. That figure includes state jobs directly cut and those lost indirectly.
If we can avoid those kinds of losses, sacrificing a portion of our dividend is worth it. The livelihoods of our friends and neighbors are at stake.
Some lawmakers have said they are concerned about the economic effects of taxes. The economic effects of not having taxes will be worse.
For almost 34 years, the dividend has been a windfall for Alaskans. It is a gift, not an obligation. If someone came up to you on the street and said she would give you $500, no strings attached, just for being Alaskan, you’d be thrilled.
Unfortunately, even with budget cuts, Permanent Fund spending will not be enough to fill the deficit. That is where taxes come in.
The Alaska Legislature must be willing to levy taxes, and we must be willing to accept them — if we want a balanced budget.
Gov. Walker has proposed a series of taxes that spread the tax burden across industry and individual. No one person or economic sector assumes an undue share of the load. There is room to improve aspects of those taxes —at the Empire, we’re concerned that the alcohol tax would mean you could buy Alaskan Amber cheaper in Oregon than here in Juneau — but the overall structure is sound.
Even though it is an election year, the Alaska Legislature must have the courage and drive to do what is unpleasant but necessary.
Please, tax us.
–The Juneau Empire, March 15, 2016