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Fast Money & Foreign Objects
As Oil Money Melts, Alaska Mulls First Income Tax in 35 Years
By KIRK JOHNSON
DEC. 25, 2015
Randall Hoffbeck, the Alaska state revenue commissioner, listened to residents' comments about Gov. Bill Walker's budget at an East Anchorage town-hall meeting this month. CreditJoshua Corbett for The New York Times
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- elected in 2014 on a “unity ticket” with a Democrat as his lieutenant governor, defeating the Republican incumbent, Sean Parnell — a perceived betrayal for which many Republicans have not forgiven Mr. Walker.
But he also has some powerful allies.
“We’ve had it awfully good for a long time, and if we want to protect that, we’re going to have to make some hard choices,” said Ronald Duncan, the president and chief executive of GCI, a telecommunications company that is one of the state’s largest non-oil businesses.
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Gov. Bill Walker, with his wife, Donna, and grandchildren, Walker Linderman and Mera Hobson, at the Governor's Open House in Juneau this month.CreditMichael Penn/The Juneau Empire, via Associated Press
Mr. Duncan is organizing a group to push for hard choices with a statewide publicity campaign that will start next month. The campaign, aimed at residents as well as the Legislature, is still being shaped, Mr. Duncan said. But his enthusiasm for the governor’s message in recent weeks — that residents will have to be less reliant on oil companies and pick up more of the burden themselves, as they did in the past — was clear. Mr. Duncan said he thinks a broader economic recession is inevitable next year if Alaska’s budget is not stabilized.
“I’m a fan of what the governor has done here,” he said. “The fact that he has relatively good approval ratings in the general population is helpful in that regard. The place in the state where the governor has absolutely horrendous approval ratings is in the Legislature.”
Republican leaders said the governor’s plans would be given fair consideration. The speaker of the House, Mike Chenault, has conceded that some new revenue stream is probably unavoidable. In a deep first wave of budget cuts this year, Alaska eliminated almost all capital spending. But that was easy, Mr. Chenault said, compared with the road ahead.
“We can’t cut our way out of this,” Mr. Chenault, a gravel-voiced construction company executive, told a business group at a recent breakfast meeting.
The president of the State Senate, Kevin Meyer, a Republican who is also an employee of the oil giant ConocoPhillips, said that he thought deeper budget cuts were still necessary and that residents would accept new taxes only when they were convinced that the old pattern of state spending — wasteful and inefficient, in his view — had been wrung out of the system.
With little power, Democrats have supported the idea of raising some new taxes, but argue that the governor’s plan would disproportionally hit working-class Alaskans.
Which sectors of the state are hurt, or spared, will also be on the table when the Legislature returns to Juneau in January. Mr. Walker’s income tax plan, for example, would primarily hit urban Alaska, where most jobs are. A sales tax, by contrast, which some lawmakers favor, would hurt rural areas more because prices for most items are already higher in remote areas.
The energy industry’s main lobbying group has vowed to fight Mr. Walker’s proposal to collect $100 million in new taxes on oil and gas companies, while reducing by $400 million the tax credits they can claim. But at a recent town-hall event in Anchorage on the budget crisis, it was clear that the energy industry has some image problems, even up here.
“Alaska was a great state before oil came to town,” Evan Beedle, 54, an unemployed former school bus driver and technician, told state officials at the meeting. “I remember when neighbors were neighbors and doors were unlocked — now it’s just a skirmish for the dollar.”
Mr. Beedle continued, “I realize now that we have become dependent on oil.”
- http://www.nytimes.com/2015/12/26/u...laska-mulls-first-income-tax-in-35-years.html
