Alaska editorial: Governor shouldn't promise property tax rebate to pass oil tax

Posted: Thursday, July 27, 2006

This editorial appeared in the Anchorage Daily News:

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Gov. Frank Murkowski is right about the need to reform Alaska's oil and gas production tax structure. And he is right that election-year politics are getting in the way of legislative action on oil taxes. And he is right that a new tax system would generate billions of dollars in additional revenue in the years ahead.

But he is dead wrong to propose spending much of the anticipated new tax revenue on a new state giveaway program that benefits only some people. The governor told lawmakers last week he would introduce legislation next year to use some of the additional oil tax collections for an annual $1,000 property tax relief check to Alaskans.

Nice touch in an election year, when property owners are growing increasingly grumpy at their annual tax bills. Nice try at bringing public pressure for legislative action. Nice thought to share the wealth.

It's just not the right answer - for a lot of reasons.

The checks would benefit only property-tax payers. A whole bunch of Alaskans love to quote the Alaska Constitution's provision about developing the state's natural resources for the maximum benefit of the people, but it doesn't say anything about distributing the wealth only to property owners.

The governor's residential property tax rebate wouldn't do anything for renters, who comprise more than 35 percent of all Alaska households.

Nor would it do anything to help business-property owners, who face the same rising tax bills as homeowners.

Nor would it do anything for tens of thousands of rural Alaskans who live in communities that long ago decided to collect sales taxes instead of property taxes from their residents - such as Kotzebue and Bethel and many of the larger Native communities in Southeast Alaska.

And what about future years when oil prices are low and there isn't enough money to cover the $1,000 checks? Try taking away the money from people then and see how much they scream.

OK, so maybe this isn't intended to be a program of fairness and equality. Maybe its only purpose is to give a break to homeowners who, we might add on a cynical note, tend to vote at higher rates than renters. In addition to some serious constitutional problems, since when was it decreed that the state's oil revenues should be distributed disproportionately to benefit one specific class of Alaskans?

When former Gov. Wally Hickel talks of the "owner state," we don't think he means the "homeowner state."

Look, let's assume Gov. Murkowski didn't intend this as an election-year ploy. He sincerely believes Alaska needs a new oil tax structure. He understands the economic and political demands for local property tax relief. And he knows that legislators are looking for reasons to vote for his oil tax proposal. But regardless of how he means it, this proposal just looks bad. It's inequitable, and that's reason enough to say no.

If the governor really wants to share the oil money with Alaskans, the way to do it would be to support restoration of state revenue sharing to municipalities. Then each community could decide how best to use the money for its own local needs. Keep it simple, keep it local and keep it fair.

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