Gov. Bill Walker and his top aides tried to make the case for enacting a new tax to a group of business and political leaders Friday.
The state must figure out a more sustainable way to pay for services, Walker said.
He spoke at a breakfast hosted by the nonpartisan think tank Commonwealth North in Anchorage.
“It’s not fun to roll out stuff involving the word – I don’t know how many ways you can disguise the word tax – but we just say it the way it is. It’s a tax,” Walker said. “We’re at the point where we can no longer be the only state in the nation that doesn’t have a broad-based tax.”
Walker has proposed a tax of 1.5 percent on wages and self-employment income. There would be a limit. No one would pay more than twice what they receive in an Alaska Permanent Fund dividend.
Revenue Commissioner Sheldon Fisher said the tax would help stabilize the state’s economy. It would raise an estimated $320 million.
Fisher said that while there are more opportunities to reduce the cost of government, the state has already made deep cuts.
“When we talk about rightsizing government – when people talk about it – my argument is going to be that we need to be talking about the programs we have,” Fisher said. “It’s easy to kind of say, you know, ‘State government is bloated, the departments are bloated, we know we can – they can do this more efficiently.’”
Walker’s chief of staff Scott Kendall said the lack of a broad-based tax creates what he called the “Alaska disconnect.”
He said that’s when growth in military or private-sector jobs lead to higher government costs without providing revenue to pay for the costs.
“The F-35s coming to Fairbanks – phenomenal for Fairbanks, phenomenal for North Pole – at the end of the day will actually cost the state money: more public safety, more schools for kids, more wear and tear on the roads,” Fisher said. “That’s the Alaska disconnect.”
Kendall said industries – including the oil industry – will wonder whether they will have to bear the burden until the state has taxes that rise with growth.
A special session on the tax bill and a second measure to increase jail times for offenses is scheduled for Oct. 23 in Juneau. Walker could add more items to the special session agenda.
- Walker also proposed process changes. Lawmakers' per diem payments would stop if they don't pass a budget in the 90-day session set by state law. Their salaries would also be delayed. Another change would shift the state to a two-year budget.
- Alcohol and Marijuana Control Office Director Erika McConnell recommended that the control board revoke the manufacturer's license.
- An Alaska-based coalition wants the Permanent Fund Corporation to drop all of its fossil fuel holdings
- The tax credits are scheduled to be paid off fully in 2025. Walker and the Department of Revenue are proposing paying them off by 2019 at a discount.