Anchorage chamber, FEDC issue support for broad-based revenue
Two influential Alaska business organizations are endorsing use of a portion of Permanent Fund earnings to help support the state budget along with broad-based taxes. Both also said they support continued reductions in state spending.
On the tax question, one group, the Anchorage Chamber of Commerce, said it supports a state sales tax, while a second organization, the Fairbanks Economic Development Corp., or FEDC, did not specify a tax but endorsed the concept of a broad-based tax.
Both groups put out press releases, FEDC on Dec. 18 and the Anchorage Chamber on Dec. 22.
Gov. Bill Walker has proposed a broad restructuring of state finances, including the Permanent Fund and the annual citizen dividend payment, as well as new taxes on businesses and a state personal income tax.
The Legislature will consider the governor’s proposals as it deals with a massive state revenue shortfall caused by sinking oil prices and revenues.
In its press release, the Anchorage chamber said it did a survey of its 900 members.
“The main message from our membership is that the highest priority needs to be placed on solutions to the state’s financial situation,” said Bruce Bustamante, president of the Anchorage chamber. “We are aware that there will be many issues in front of the Alaska Legislature, however the financial situation warrants the highest level of action first.”
The chamber did not go into detail on a mechanism for tapping Permanent Fund earnings but mentioned “percentage of market,” in the press release, which means the “percentage of market value” concept commonly used by major U.S. endowments where the annual payment to a recipient organization, such as a university, is a percentage of the total market value of the endowment at a point in time.
A state lottery was also mentioned by some Anchorage chamber members, but not the array of specific industry or business taxes now being proposed by Walker.
There were some mentions in the survey responses to other taxes, but “our members did not point to any specific business or industry taxes, or changes in tax credits, as the solution to the financial problem in the survey,” Bustamante said.
In Fairbanks, the FEDC urged the state’s political leaders to work together to solve the fiscal challenge.
“Achieving long-term fiscal stability, affordability and sustainability for the state will require a mix of continued cuts to government spending and increased revenues including use of state investment earnings,” the FEDC said in its statement.
On new revenue sources, the organization’s board said, “Providing the state revenues sufficient for it to operate and invest effectively in and for the public interest is critical to Alaska’s future fiscal health. The board (of FEDC) believes that in addition to increases in user fees, implementing some form of broad-based statewide taxation and the use of some portion of Permanent Fund earnings to fund state government must be considered.”
Reducing the level and scope of spending must also be addressed, FEDC’s board said: “Achieving a smaller, more efficient and more sustainably affordable state government is critical to Alaska’s fiscal health.”
Anchorage chamber members also endorsed continued reductions in spending.
“The Anchorage Chamber of Commerce members highly support reducing the state budget significantly in order to work toward sustainability,” the chamber said in its press release.
In an interview, Bustamante said his members at the Anchorage chamber felt strongly that new revenue sources should be considered only after spending reductions.