The Morning Headlamp—Walker’s “self-healing” plan

Self-healing? In an interview with the Juneau Empire, Gov. Bill Walker emphasized that despite accelerating economic concerns facing Alaska, the state is still capable of fixing itself. When asked what will happen if the legislature does not follow his proposed budget, Walker warned that “Our ability to self-heal becomes much, much more challenging.” Headlamp would disagree that Walker’s budget plan is the only solution to Alaska’s fiscal crisis. A different plan that fixes Alaska’s budget woes, without raising taxes or capping the Permanent Fund dividend checks, is the sustainable budget model developed by Dr. Scott Goldsmith of the University of Alaska Anchorage Institute of Social and Economic Research (ISER). Dr. Goldsmith’s plan calls for unrestricted general fund spending of $4.5 billion, or lower, over the long run while only adjusting for population and inflation growth. The plan is a smart way forward because it creates fiscal certainty for the business world, while also inflicting minimal harm on the private sector. Headlamp encourages ALL Alaskan policy makers to carefully consider Dr. Goldsmith’s plan, and be ready to use the earnings from the Permanent Fund to avoid placing a large financial burden on the average Alaskan household.

All eyes on Alaska. Governor Walker appeared on CNBC’s “Closing Bell” defending his position on major tax hikes in Alaska. During the interview, Walker noted that $425 million in cuts from oil exploration credits are also on the table this session. Headlamp worries these proposed cuts are short sighted, and would substantially reduce Alaska’s ability to increase oil and gas production. This wasn’t the only national attention Walker’s budget proposal garnered as Fox News also examined the fiscal crisis facing the state.

A tough sell. Sen. Kevin Meyer, R-Anchorage, said in an email this week to 14 state senators that “in light of the taxation legislation package recently submitted by the governor, it seems a statewide sales tax should also be part of the discussion.” This isn’t the first time Alaska has wrestled with the idea of a sales tax. House Bill 293, which floated around the Legislature in 2003, proposed a 3 percent statewide sales and use tax. The measure would have brought in $120 million in the 2004 fiscal year and about $300 million each year after that, the Anchorage Daily News reported in 2003. It also included a 12-cent increase in Alaska’s gasoline and motor fuel tax, which would have brought in $40 million more. Headlamp is glad all solutions are being considered as legislators tackle the state’s fiscal crisis, but an increased tax on motor fuels should not be considered, nor should other taxes, until state government undergoes considerable downsizing. Furthermore, vastly increasing gasoline motor fuel taxes would punitively harm Alaskans who are already struggling to get by.

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First Reads

Walker: Alaska can ‘self-heal’
Juneau Empire, Charles L Westmoreland, January 3, 2016

2015 full of ups and downs for Alaska: State budget crisis topped negatives, military moves positive in turbulent year
Fairbanks Daily News Miner, January 1, 2016

Drop in oil prices rocks producer states, triggers historic tax hike plan in Alaska
Fox News, Brooke Singman, January 1, 2016

Alaska Senate president considering state sales tax
Alaska Dispatch News, Annie Zak, January 2, 2016

Alaska governor: Unless oil hits $110, we need a tax hike
CNBC, Anita Balakrishnan, December 30, 2016

What others say: Predictions for things to come in 2016
Peninsula Clarion, January 3, 2016

 

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