Empire Editorial: New taxes will happen, but by whom?

Thursday, April 21, 2016 - 11:39

One way or another, Alaskans will be taxed. The Legislature should decide how much.

On Wednesday, the Senate voted 17-3 to approve Senate Bill 210, which would significantly reduce state funding provided to Alaska’s larger cities. It’s a move intended to reduce the state’s $4 billion budget deficit, but it does nothing but push taxes from the state level to the local level.

The revenue sharing fund was designed in 2008 to distribute $60 million annually to communities. That money came from a $180 million fund, and the fund was intended to be recharged every year with a legislative appropriation.

If oil prices fell (as they have), the fund would gradually disperse less and less money. Right now, unless SB 210 passes, the fund will run out of money within two years. On July 1, 2019, there will be no payment.

If SB 210 passes, the fund will distribute less money - $30 million per year - and it will do so under a different formula. Under the existing formula, Juneau would get $971,914 from a $30 million payout. Under the new formula, it would get about $288,000 less.

When the original fund was fully stocked by the Legislature, the capital city received more than $2 million.

Members of the Senate and House majorities have expressed reluctance to tax Alaskans this year (an election year, no less). However, eliminating revenue sharing will lead to increased municipal taxes to make up the difference.

Juneau isn’t much different from many other Alaska communities that have chipped away at their budgets year after year. There’s not much left to cut if we want to maintain police, schools and roads, so taxing residents more will be the only option.

“It’s always going to be passed down,” said Sen. Dennis Egan, D-Juneau, who voted against SB 210. “Guess who pays? Local people. It’s all passed on.”

If the Legislature were to implement a state income or sales tax, we would feel differently about SB 210. Unfortunately, that’s not likely to happen before the end of the Legislative regular session or an expected special session.

The Senate Finance Committee’s plan to marry Gov. Bill Walker’s and Sen. Lesil McGuire’s bills using the Permanent Fund as a money factory is a good start to fixing the problem, but it only fixes half the problem. There will still be about a $2 billion difference between the state’s spending and its revenue.

Lawmakers have had ample time during the last three legislative sessions to come up with a plan to balance the budget. The message we’re being given is that they’ll finish closing the gap next year.

That is simply unacceptable given how dire the situation currently is.

Hoping that oil prices rise is a gamble, not a plan. Dodging the difficult decision of rolling out new taxes so that municipalities can do it instead is a a passive approach to governing.

The majority of Alaskans we’ve heard from are willing to pay their share to keep government afloat. It would be prudent for the Legislature to do so now while the public feels that way and before Alaska finds itself in an even bigger hole next year.

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