Rep. Austerman: 'Worst thing' state did was scrap income tax

Posted: Tuesday, March 30, 2010

Scrapping the individual income tax was the "worst thing" Alaska ever did, state Rep. Alan Austerman said Monday.

Austerman, R-Kodiak, said that if the tax had stayed in place, Alaskans may have had a better sense of what it costs to run government. Alaska essentially pays people to live here now, he said, creating a disconnect with what it takes to maintain or improve services and quality of life. Nearly all residents get Permanent Fund dividends, or payouts from the proceeds of the state's oil investment fund.

The income tax is being mentioned amid forecasts of continued declines in state oil production. Oil has been a lifeblood here; growing oil revenues were key to the individual income tax being repealed about 30 years ago. So has federal funding, but there seems a general recognition now that the state won't be able to rely on that as heavily as it has.

Alaska legislators have been questioning whether the state budget is too large, based on available revenues and the state's true needs and whether it's sustainable long term. Austerman is chairing a subcommittee looking at those issues.

"Personally, I think the worst thing we ever did was abolishing the state income tax," he told reporters. "I think if we'd been taking money out of the back pockets of people all along, we would have been able to have a little bit better interaction with the public as to what it costs to do government."

Austerman said his views on the income tax are his own - not the subcommittee's - and that he's not advocating a new tax of any kind now.

Austerman said his subcommittee's work is expected to continue during the interim, with plans to reach out to the public to see what they'd be comfortable with should the state need new revenue sources. He said now's the perfect time to have this discussion, because the state's not in crisis mode and has money in the bank.

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