Solving Alaska’s growing shortage of state revenue is similar to that old adage: Don’t go grocery shopping when you’re hungry, you’ll make too many wrong choices.
That’s when it’s important to make a list and stick to it. No impulse buys. Shop smart when walking down the grocery store aisles.
Think of shopping for taxes the same way.
It’d be easy for the state to snatch the flashy items off the grocery shelf, overfilling its cart with the tax equivalent of carbohydrates and high-fructose corn syrup. The foods that may taste good at the moment but which lead to long-term health problems.
With low oil prices pulling down state revenues, with federal funding cutbacks dumping responsibilities and costs on the state, and with a public that all too often wants easy answers, Alaska’s elected leaders and candidates in next year’s election will be looking for ways to fill the cart of state services while not overdoing it on taxes to pay the bills.
And one of the easiest taxes to fill the cart is more money from the oil industry. They’re among the biggest companies operating in the state, certainly the biggest taxpayers, and their deep pockets in Texas are within easy reach of changes in Alaska’s oil production tax.
Certainly, changes in the state’s oil tax structure should be on the shopping list. Think of them as protein-rich food. The companies make good money in Alaska, and no long-term state fiscal plan adds up without more revenue from oil production.
But state officials should be careful to understand the consequences of any tax changes. Alaska has pretty much put all its revenue eggs in the one basket of oil production, and piling too much weight could break those eggs.
That means thinking through any tax changes, dismissing predictable industry whining but paying attention to credible, independent research that measures Alaska’s tax take against other oil company investment opportunities around the world.
The state shouldn’t raise taxes because it can, or because it wants to fill the state treasury next year, but rather because it will increase revenues long term. Think of it as planning a menu ahead of time and not having to go back to the store so often.
The industry knows it’s going to end up in any shopping cart of a balanced state budget. What worries companies is that they are the only pocket Alaskans reach into when they need more money.
Which is why legislators next year, along with the next governor, need to walk down the aisle of other corporate and business taxes, and individual taxes too.
A good first step in that shopping trip would be if Gov. Mike Dunleavy would sign this year’s legislation to modernize the state’s tax laws so that out-of-state digital businesses that make money selling to Alaskans pay corporate income taxes to the state.
Motor fuel taxes — by far the lowest in the nation — also should be on the shopping list, along with a tax to receive something from all the out-of-state workers who take wages out of Alaska. That would be a personal income tax — easy to say, hard to pass.
This isn’t about taxing simply to spend more; this is about collecting enough revenue to meet the needs of the public for schools, roads, universities, law enforcement and every other service people expect.
This is about being smart shoppers for a balanced diet of taxes.
Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal public policy work in Alaska and Washington, D.C. He lives in Anchorage and is publisher of the Wrangell Sentinel weekly newspaper.
