GUEST COMMENTARY: Spending cuts, not tax hikes, will restore fiscal balance
With two weeks to go before a potential government shutdown, the state legislature appears no closer to writing a budget or narrowing the $3 billion deficit than when the special legislative session began. Both sides are sticking to their stories.
There is agreement on dipping into the Alaska Permanent Fund. But Gov. Bill Walker and the Democratic-led House coalition still insist on raising your taxes. The Republican-led Senate still wants to cut spending and impose a hard cap to restrain future excesses.
The Senate has much the better end of this debate. Here’s why.
The House and the governor are so afraid of their own tax increase that they hid behind school children when they approved it, calling it an “education tax,” even though the revenues would not be limited to education spending.
That amounts to carrying the water for the big spenders, tax hikers and government unions.
Walker’s stair-step “compromise” proposal would impose a de facto income tax, but he won’t call that an income tax either.
The Senate, on the other hand, voted decisively against an income tax in the regular session. Its members owned their decision, and there isn’t any reason to think they will act differently in the special session. Nor should they.
There’s also no reason to believe Alaskans will get behind the idea. A recent poll found 58 percent of state residents oppose an income tax.
But instead of bowing to this reality, Walker offers vague platitudes about a “broad-based tax” while refusing to call it what it really is.
The reason is simple: He’s in trouble politically, and spelling out how he wants to increase taxes will increase that trouble.
Walker now ranks in the bottom five when it comes to popularity among governors, with a 53 percent disapproval rating. Part of his popularity problem is the hit he took last fall for cutting in half the Permanent Fund dividend. That experience should serve as an object lesson for the governor as he and his allies once again ponder ways to take more money out of Alaskans’ pockets.
Like virtually every other state that finds itself in dire fiscal straits, Alaska has a spending problem, not a revenue problem. That’s why the response to the current crisis should be judicious spending cuts in the current budget, coupled with a real spending cap — lower than the one imposed in 1982 — that will help prevent the problem from arising again.
Whatever happens in Juneau, Alaskans will be forced to bear the consequences of past budget mismanagement through diminished services, a reduced dividend check, an income tax, or some combination of those options. But instead of implementing policies that perpetuate a bloated bureaucracy, we should reinforce good government and set Alaska up for future economic growth.
In fact, an income tax would make the problem worse, as Adam Millsap, a research fellow at the Mercatus Center at George Mason University told the state Senate Labor and Commerce committee in April.
“States experience slower per capita income growth following the adoption of an income tax,” he told the lawmakers.
Raising taxes won’t solve the problem.
The governor is right about one thing. The state’s revenues should match up better with the state’s spending. He’s just wrong about which needs to change.
Jeremy Price is Alaska state director of Americans for Prosperity. He lives in Anchorage.