Opinion: Taxes are the only way to boost Alaska’s economy

Opinion: Taxes are the only way to boost Alaska’s economy

The state needs a new revenue stream.

The U.S. economy is strong. People are working and businesses are profiting. Nice for the states that are doing good things for their residents, businesses and communities with the additional tax dollars.

Alaskans should note that some states are boosting spending to deal with rising sea levels caused by climate change.

Florida’s new Republican governor has proposed investing $2.5 billion to protect the Everglades. Louisiana’s Democratic governor wants to spend $55 million in state surplus revenues and about $300 million in oil royalty revenues for coastal and levee improvements.

On a broader front, the strong economy is helping states tackle long-term problems, including education funding.

West Virginia’s Republican governor has proposed using $150 million in surplus revenues to stabilize the state’s public employee health insurance program, which is stressing under rising medical costs. He also proposes a pay raise for teachers.

[Opinion: Pulp fiction won’t grow the economy]

“You had a state that was in real trouble,” Gov. Jim Justice was quoted in The Wall Street Journal on Feb. 1. “Today, the numbers are phenomenal,” he said of the improving economy that has boosted West Virginia sales and income tax revenues by 14 percent in the first six months of the fiscal year.

Republican governors in Mississippi and Idaho want to use healthier tax revenues to boost teacher salaries.

Combined tax revenues for all 50 states grew 7 percent last year, compared to the previous year, according to S&P Global Ratings.

[Economy to take a hit, no matter the budget outcome]

Washington state sales tax revenues, which are up significantly in a growing economy, provide about half of the state’s total tax dollars. The Democratic governor has proposed spending $1.1 billion for orca recovery and salmon-habitat preservation, intended to benefit the state’s ecosystem and improve water quality.

The list continues of other states and how their residents are benefitting from strong economies and diversified income streams for the public good.

Alas, we have but two streams in Alaska — one stream we cannot control, and one we bicker over incessantly. The actual Alaska economy adds only a trickle to that flow.

[Health insurance costs strain school districts’ budgets]

The Alaska Department of Revenue in December forecast approximately $5.2 billion in unrestricted general fund dollars for the fiscal year that begins July 1. Of that, about 58 percent would be the annual draw on Permanent Fund earnings, as established by legislators last year. Almost 33 percent would be oil revenues. Coming in at a trickle would be 9 percent from all other taxes in total collected from businesses and individuals fortunate enough to live in a state that equates taxes to the plague.

Alaskans can’t control oil prices, so there is little we can do about that revenue stream.

Alaskans can’t do anything to boost Permanent Fund earnings other than fighting over the account, so the only thing we could do to that revenue stream is screw it up — either by taking too much from the fund and watching it decline in value, or pushing to invest in bad ideas because we think we know more than Warren Buffet.

[Juneau legislators express concern about state jobs leaving town]

That leaves the only thing under our control, the trickle of general tax dollars. If we really want to build a better state, what about contributing to that effort with something from our own pockets and from the pockets of non-resident workers and visitors.

Without some form of general taxation, it doesn’t matter how much we diversify Alaska’s economy with new jobs, new businesses, new products, new anything. Unless that new something produces a barrel of oil, there’s little to nothing new coming into the state treasury to pay for public services.

It’s not only a disconnect, as economists have called it for years, it’s delusional — a delusional diversification. Nothing more for schools, troopers, roads or public health, no matter how Alaska may diversify and grow in the years ahead.

Options include a statewide sales tax, a personal income tax, and a change to our state corporate tax to bring it into the 21st century by applying it to the popular business structures of limited liability companies (LLCs), S corporations (non-publicly traded corporations) and other such businesses that exist tax-free in the state.

Until Alaskans are willing to discuss taxes, truthfully and free of political slogans, that revenue trickle will never amount to enough to make a difference in the future of our state. And economic diversification will not do anything to pay for the public services we need.

• Larry Persily is a longtime Alaska journalist and was deputy commissioner of the Alaska Department of Revenue from 1999-2003. My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire.

More in Opinion

Have something to say?

Here’s how to add your voice to the conversation.

Alaska Senate Majority Leader Gary Stevens, prime sponsor of a civics education bill that passed the Senate last year. (Photo courtesy Alaska Senate Majority Press Office)
Opinion: A return to civility today to lieu of passing a flamed out torch

It’s almost been a year since the state Senate unanimously passed a… Continue reading

Eric Cordingley looks at his records while searching for the graves of those who died at Morningside Hospital at Multnomah Park Cemetery on Wednesday, March 13, 2024, in Portland, Ore. Cordingley has volunteered at his neighborhood cemetery for about 15 years. He’s done everything from cleaning headstones to trying to decipher obscure burial records. He has documented Portland burial sites — Multnomah Park and Greenwood Hills cemeteries — have the most Lost Alaskans, and obtained about 1,200 death certificates. (AP Photo/Jenny Kane)
My Turn: Decades of Psychiatric patient mistreatment deserves a state investigation and report

On March 29, Mark Thiessen’s story for the Associated Press was picked… Continue reading

(Juneau Empire file photo)
Opinion: Alaska House makes the right decision on constitutionally guaranteed PFD

The Permanent Fund dividend is important to a lot of Alaska households,… Continue reading

Alaska Attorney General Treg Taylor in a profile picture at the Department of Law’s website. (Alaska Department of Law photo)
Dunleavy wants a state sponsored legal defense fund

On Friday, the Senate Judiciary Committee held its second hearing on a… Continue reading

Juneau School District administrators and board members listen to a presentation about the district’s multi-million deficit during a Jan. 9 meeting. (Mark Sabbatini / Juneau Empire file photo)
Opinion: The twisted logic of the Juneau School Board recall petition

The ink was hardly dry on the Juneau School District (JSD) FY… Continue reading

A crowd overflows the library at Juneau-Douglas High School: Yadaa.at Kalé on Feb. 22 as school board members meet to consider proposals to address the Juneau School District’s budget crisis. (Mark Sabbatini / Juneau Empire file photo)
My Turn: The last thing Juneau needs now is a divisive school board recall campaign

The long-postponed and necessary closure and consolidation of Juneau schools had to… Continue reading

U.S. Sen. Lisa Murkowski, R-Alaska, delivers her annual address to the Alaska Legislature on Feb. 15 as Senate President Gary Stevens and House Speaker Cathy Tilton watch. (Mark Sabbatini / Juneau Empire file photo)
Opinion: Sen. Lisa Murkowski has a job to finish

A few weeks ago, Sen. Lisa Murkowski told CNN’s Manu Raju she… Continue reading