By Larry Persily
In a repeat performance of recent years, the upcoming legislative session will focus on the budget, public services and the amount of the Permanent Fund dividend, said Skagway’s two legislators.
The governor’s proposed budget for the fiscal year that will start July 1 does not include the dramatic deep cuts to public services that he offered a year ago. But same as a year ago he proposes a full Permanent Fund dividend, estimated at more than $3,100, as calculated under a 1982 formula in state statute.
Starting in 2017, the Legislature has appropriated what it believes the state can afford for the dividend — $1,600 the past two years — rather than the full amount, while Gov. Mike Dunleavy continues to stick with his winning 2018 campaign pledge of the larger PFD.
Mostly because of the large dividend, the governor’s proposed budget shows a deficit of about $1.5 billion. Permanent Fund earnings provide more than half of the state’s general fund revenues, with oil taxes and royalties coming in second.
The legislative session will convene Jan. 21.
“We’ve got to talk about revenue. There has to be something else,” and that includes a review of oil taxes, said Rep. Sara Hannan, a Juneau Democrat who represents Skagway and Haines.
Alaskans need to find a compromise, a “political hybrid solution” of new revenues and an affordable dividend, Hannan said.
The governor, however, is not willing to support taxes. “Governor Dunleavy will not be proposing new or higher taxes in the upcoming session, and has said on many occasions he does not support new taxes without a vote of the people,” Dunleavy’s deputy communications director, Jeff Turner, wrote in an email, which the Anchorage Daily News reported Dec. 31.
Sen. Jessie Kiehl sees differently than the governor. “There has to be a (new) revenue piece” to the budget, said the Juneau Democrat, whose district also includes Skagway and Haines. “We need to talk seriously about that.”
A personal income tax “makes the most sense,” the senator said. Alaska had an income tax from 1949 to 1979. Oil-wealth politics pushed the Legislature and governor to abolish the tax in 1980.
Not only is there strong opposition around the state to an income tax, 2020 is an election year, making it less likely that a majority of lawmakers would vote for a new tax.
Though he supports restoration of an income tax, Kiehl acknowledges “it’s the hardest to get politically.”