By putting a statewide sales tax on the table, Sen. Kevin Meyer, R-Anchorage, has signaled to his majority caucus that it’s time to consider finding new revenue to balance the state budget. That move follows Gov. Bill Walker’s proposal that included a state income tax. Either way, credit our independent governor with fully defining the meaning of an owner state.
When Walker declared his candidacy for governor in April 2013, he told reporters, “Alaska has gone from an owner state to an owned state, and we have no one to blame but ourselves.” One thing he was referring to was SB21, the new oil tax law that the Legislature had just passed. He believed it compromised the state’s resource development interests.
Reestablishing the personal income tax wasn’t part of Walker’s agenda back then. The decline of oil production did loom big on the long-term budget picture, but oil was selling for $100 per barrel. So the only tax issue people were discussing was SB21, which had replaced ACES, the bipartisan tax law put into place in 2007.
Lyda Green was the Senate President when ACES became law. The conservative Republican was also the architect of the Senate working group which was comprised of all nine Democrats and four Republicans.
Green opposed ACES and could have prevented it from coming to the floor for a vote. We should be thankful she didn’t. Because after the bipartisan coalition in the Senate passed it, oil prices peaked and it generated a huge windfall for the state. Some of the tax revenue boosted capital expenditures, which helped soften the impact of the Great Recession. But mostly it put billions of dollars into the budget reserves the Legislature relied on to balance the state’s budget since 2012.
When elected to his first full term in 2010, Gov. Sean Parnell had made it a priority to rewrite ACES because he believed its high progressive tax rates were responsible for the rapid decline in oil production. However, his efforts were blocked in the senate by the working group. So ACES continued to fill our back accounts for two more years.
It wasn’t until a new Republican majority took over the senate in 2013 that SB21 passed. And it remained a contentious partisan issue until a voter effort to repeal it failed the following August.
My objective isn’t to revive the debate between SB21 and ACES. Even under the new law, had prices stayed high, the tax revenue coming in would have let Alaskans continue to enjoy the fruit of our state owned oil patch while hoping the pipeline might once again be flowing full.
Instead we’ve got a problem and Walker is asking for the same kind of bipartisan effort that served the state well less than a decade ago. He needs it. Even though he considers himself a traditional Alaskan Republican, the legislative majority doesn’t see him that way because he ran as an independent and beat their party’s incumbent. Plus, like at the national level, raising taxes has never been on any GOP platform.
But in a way, Walker began laying the foundation for solving the state’s fiscal woes when he and Byron Mallott, the Democratic Party nominee for governor, joined forces on what they called the Alaska First Unity ticket. Many political observers believed Mallott made that move to avoid running against Parnell in the GOP primary. But as Mallott said the day they made their historic announcement two years ago, their vision for Alaska “overlapped so much that there was little differentiation between us.” And he hasn’t become just a ceremonial punch line like other lieutenant governors. As Walker told the Empire just before Christmas, they have been very actively working together to solve Alaska’s problems.
Like the Senate’s bipartisan working group that served the state well for six years, Walker and Mallott are reminding us that ours is a government of the people, by the people, and for the people. That means neither political party owns the state. We do.
As owners of the oil patch we’ve gotten plenty of good returns through the annual Permanent Fund Dividend checks. It’s helped keep us the least taxed state in the nation for decades.
Those days are in the past now. But as any farmer knows, you still own the farm and the debt to operate it when crop prices plummet. So it’s time to set aside our differences and become true owners of our state by paying some taxes to keep it running.
• Rich Moniak is a Juneau resident and retired civil engineer with more than 25 years of experience in the public sector.