On Feb. 17, 2016, I listened to and provided testimony before the House Finance Committee on House Bill 115, a bill designed to address Alaska’s $2.7 billion budget gap. One component of the bill is to enact a progressive income tax, taxing both residents and nonresidents at 15 percent of federal income tax due or $25, whichever is greater. For over two hours, I heard first-hand how entitled we Alaskans had become since the Legislature eliminated the state income tax in1980 and in 1982 distributed the first Permanent Fund Dividend checks.
I commend Reps. Paul Seaton and Neal Foster for their leadership and courage in sponsoring a bill that includes a progressive income tax, which will help provide a comprehensive and sustainable solution to the state’s budget crisis. The price of oil has plummeted. For too long, our legislative budget process has been dictated by fluctuating oil prices over which we have no control. This is no way to run our state’s economy. The state requires a sustainable budgeting approach that will provide predictability for future planning.
I am a second-generation Alaskan. My mother was born in Juneau and I in Anchorage. During the 1970s, I worked low-level jobs and paid a state income tax. The amount was 16 percent of my federal income tax obligation — more than that proposed by HB 115. I believed then, as I do today, that it is my responsibility to pay my fair share to support the infrastructure, and other amenities on which I rely. As a 20-something, I thought eliminating the income tax was a terrible idea. Once gone, I predicted it would be extraordinarily difficult to reinstate when the state’s fiscal circumstances turned for the worse. Given the push back the House Finance Committee heard from many Alaskans, this seems to be the case.
After 37 years of not paying an income tax and 35 years of receiving PFD checks, some Alaskans seem firmly entrenched in the belief that they deserve adequate schools and university, roads and road maintenance, fish and game management, a state ferry system, Medicaid/Medicare benefits, drug and alcohol treatment, state troopers, crime labs, courts and prosecutors, safe prisons, and other benefits from state spending, without paying a cent. Alaska is the only state in the nation that has neither an income tax nor a state sales tax. In addition to the vast number of free services and benefits residents receive, Alaska gives each resident a yearly check for the privilege of living here.
During the hearing, it was clear how many citizens did not appreciate just how fortunate we have been while the price of oil has been high. Many angry individuals blamed the Legislature for the current fiscal crisis and ignored their own responsibility. Some attacked low-income Alaskans who received welfare assistance for relying on government for assistance, failing to recognize irony: Each and every Alaskan today receives numerous benefits from the state government to which they make no financial contribution.
Further budget cuts will not bridge the fiscal gap but will only deepen Alaska’s recession. Since 2014, the Legislature has cut the state’s budget by 40 percent. Whatever feasible budget cuts remain, these cuts will not resolve the budget deficit. Plus, we must not ignore the fact that additional budget cuts will do further harm to Alaska’s economy. Alaska is now seeing the multiplier effects from previous budget cutting. Nine thousand jobs were lost last year. Further budget cuts will only lead to additional employment losses and crush small business development.
Hard times require hard choices. The time has come for all working Alaskans to do some soul searching and ask ourselves why we think we should receive infrastructure benefits and other services and not pay for them. Why do we expect from government what we wouldn’t expect in our personal or business affairs? If we are to help our state grow and prosper, we simply can no longer afford the entitlement attitude. I encourage my fellow Alaskans to make the responsible choice: call or write your legislators to express your support for budget solutions that include paying our fair share, including a progressive income tax.
• Carmen Gutierrez is a lifelong Alaskan who has worked as a criminal defense attorney both for the state and in private practice and has served as Deputy Commissioner for the Department of Corrections. Gutierrez lives in Anchorage.
