My Turn: Spending caps must precede new state, local taxes

Posted: Thursday, January 10, 2002

Before talking about new state revenues or even budget cuts, we need every local government paying for a material part of local government. Asking people in Juneau to pay property taxes for Juneau schools, and then pay a statewide tax for schools in Gustavus and Galena where there are no property taxes would be unfair. Furthermore, we don't want Gustavus and Galena seeing our tax money the way Alaskans see federal spending here - "it helps the local economy so why worry if the program is no longer needed or the project is too large?"

Spending caps must precede new taxes. Otherwise, once new taxes are implemented the budget will increase when oil prices next rise. Then when oil prices fall again the government will increase taxes instead of cutting spending. The caps need to apply to both normally appropriated General Fund and total spending, including supplementals, disaster declarations, inter-agency receipts, litigation settlement money, bond funds, non-GF earnings, enterprise funds and other accounts that have held agencies harmless from the spending reductions claimed in the past, and allowed total state spending to now amount to about $12,000 for every Alaskan.

An income tax is the least appropriate tax for AK, particularly while the PFD program exists. Having one state agency divide $1 billion each year among every man, woman and child, and then creating a new agency to tax workers based on what they produce so that $250 or $300 million of the $1 billion could be recovered would make no sense. I can't think of a better way to ruin an economy than to penalize production and then hand out rewards without regard to effort and initiative.

The Fiscal Policy Caucus explained the extraordinary size of government simply by saying Alaska is large. They didn't ask how much state government our economy can afford.

All industries are not equal in economic contribution or enduring taxes. When we had a personal income tax our private sector produced lumber, pulp, canned salmon and other value-added goods. Moving to Alaska meant a huge salary increase. Today our private sector is typified by the service industries, and except for government, wages are lower than in the Lower 48. For instance, into the mid-1990s Alaska exported several shiploads of lumber and pulp weekly. Today we export no pulp and perhaps two or three shiploads of lumber yearly. Shiploads of lumber may have allowed a state income tax at one time but a snapshot of today's economy is a Hershey bar bought by a tourist at Kmart - best taxed by a sales tax. We should tax consumption rather than production when we produce so little, and that makes more sense than putting an income tax on that fellow selling Hershey bars at Kmart.

Tomas Boutin is a forester who has lived in Juneau for about 20 years.

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