“Again we are looking at a way to provide fiscal certainty, connect the economy to the state services received, get significant fiscal certainty. But we will continue to have the question of increased revenue or reduced services as we go forward.”
– Pat Pitney, Director of Management and Budget, answering questions in the House Finance Committee, admitting that the $325 million the Walker Administration seeks to gain in a payroll tax will cover only half of the fiscal gap she anticipates the state having on an ongoing basis.
In other words, this is just a start. The Walker Administration will be back for more next year.
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So far as I know there is no one in the Walker Administration who believes this current income tax proposal is anything more or anything less than a foot-in-the-door launch of a much more aggressive, far-reaching income tax. My understanding is that someone on the House Finance Committee demanded and received an assurance of some sort. One fellow says that the socialists in the Alaska Democratic Party, a large component perhaps, feel they’ve been tricked in that the PFD amount has been reduced from the formula two years in a row yet there is no income tax.
I don’t sit by the phone waiting for the call, but if Governor Walker or his Juneau adviser called me to ask what I think they should do I would say that on or before December 15 a balanced 2019 budget with no new taxes should be released. That Walker budget should have honest and real operating budget reductions, something Alaskans have yet to see since Walker’s election in 2014. I continue to strongly believe that a state income tax would both prolong and exacerbate the economic softness currently under way in Alaska.
While you are waiting for your call, I will predict that if Lord Walker believes himself cornered on the balanced budget issue, he will propose tapping the undistributed income of the Permanent Fund to cover whatever the bureaucracy wants. There is no way this crew will ever propose cuts intended to shrink government to a sustainable level.
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