There will be a fourth special session of the Legislature Oct. 23 and it will deal with taxes, according to a memo from Governor Walker’s legislative director.
Darwin Peterson contacted all 60 legislators with this note:
Dear Legislators,
I hope you’re all having an enjoyable interim and getting lots of quality family time. There has been a lot of talk about a special session in October. It has been and remains the Governor’s intent to call the Legislature into a special session this fall on the subject of revenue. The Governor has talked to both the Senate President and the Speaker about timing for a special session and has settled on Monday, October 23rd as the best time to convene the Legislature in Juneau for the 4th special session. An official proclamation will be forthcoming, but I wanted to give you all as much notice as possible.”
House Minority leader Charisse Millett responded: “I appreciate the Governor giving us a long lead time for his 4th special session call, however, if the Governor is advocating for new or increased taxes on Alaskans, and Alaska businesses. I believe the 4th special session will not have a positive outcome. We still need to have a honest conversation about the size of government, and continue to make smart reductions, and eliminate wasteful spending before reaching in Alaskans wallets.”
The session is scheduled for immediately following the Alaska Federation of Natives annual convention in Anchorage, which ends Oct. 21.
The governor is likely to bring a sales tax proposal to the Legislature since his income tax proposal failed during regular and special sessions earlier this year.
House Majority Leader Bryce Edgmon welcomed the opportunity to work on taxes:
“The facts are that low oil prices are likely for the foreseeable future and we currently have less than one year’s worth of savings to fund essential state services like public education and public safety. That means it is time for all of us to put aside politics and come together to find a sustainable fiscal solution for Alaska,” the Democrat from Dillingham said. “The members of the Alaska House Majority Coalition are prepared to go back to work to finish what we started earlier this year when we passed a full fiscal plan that included new revenue to fill the budget gap. I am concerned that if action is not taken this fall the politics that inevitably spring up during an election year will get in the way of real and comprehensive fiscal solutions next year.”
However, there are billions of dollars in reserves that could hold the state for years to come if the governor would trim the budget. He has been unwilling to make those cuts and has sought higher taxes since taking office in 2014.
Walker is persistent if nothing else. Perhaps if showed a willingness to cut spending in a meaningful way it might motivate the Senate to look at new revenue possibilities. He personably cost every Alaskan over a thousand dollars last year when he vetoed that amount of the PFD. And none of that money was spent on government cost. . At the same time he spent tens of millions of public money pushing a gas pipeline that will not be built in his lifetime. And may never be built. He is a big spender that wants to put the cost of big Govt on the bqcks of ordinary Alaskan residents. It is quite incredible that he is calling a special session and argues that since it is not an election year the legislature can do its work unemcumbered by a fear of voter reprisals. Hell, the legislature is thinking of nothing but the next election. How can the Governor be so obtuse?
Thank goodness he is about to be handed his hat and sent back to Valdez. The state cannot afford him any longer. The Unity party is a failed experiment. Time to move on.
Suzanne, When walker gave the address to Alaskans a year ago about how giving him half the PFD was a great idea, he also said that he was going to be fiscally responsible himself. In particular, he said that if he did not have buyers and financing for his pet gas line to nowhere project by September 1, 2018 … then he would cancel the project.
Well, September 1, 2017 is tomorrow. What does Walker have to say for himself? Can he show us the money tomorrow? Or if not, is he going to shut the project down? Or … what?
Seems like this is an issue Must Read Alaska would want to investigate.
A sales tax will be harmful in many different ways. It would be challenged to the AK Supreme Court and I say successfully as long as they continue to pay the Dividend. There is only one way out of this mess: End the Dividend and start a very low income tax and head tax as a “grand compromise”. Beef up the social programs if needed for the less fortunate but end the stupid Dividend!
“A sales tax will be harmful in many different ways.”
Please explain how a sales tax is harmful.
Everyone should have skin in the game when it comes to financing our government.
1. It makes our State less competitive in the retail sector – driving more commerce out of state.
2. It impacts lower income earners more significantly than persons with higher incomes.
3. It reduces the ability of Cities and Boroughs to assess their own sales tax.
We had an income tax before the oil money came. We got rid of it in order to implement the Dividend. Now the Dividend must end in order to prevent high levels of new taxes. I am proposing a 1% State Income Tax. And a $100/year “head tax” to capture some income from seasonal workers.
I think we have to first try reducing the operating budget using honest accounting. Funding sources have been shifted around but overall spending on operations continues at levels we saw when oil prices and oil production were much higher. Discussing and negotiating new taxes before the most costly programs are reduced to reflect current realities, and before at least some programs and enterprises are eliminated will continue to be a waste of time and money. The question is how much government can our economy now afford. The state has over 100 economists and Economics instructors/professors on the payroll but so far as I know not one has been asked to look at how much government our gross state product can provide absent spending of one-time reserves. We seem to be very likely to exhaust what we saved for a rainy day even before the rain has actually begun to fall. Quite apart from unemployment rates, we have the lowest adult workforce participation rate in the US; that does not suggest an income tax to me.
I honestly believe a state income tax would be good for our state. We have so many seasonal workers, and workers on the slope that live out of state and only set foot in the state at work and at the airport in Anch returning to and from. Every other state I have lived in had an income tax. Maybe a tax refund with interest for true Alaskans. So many people don’t live here and contribute almost nothing to our economy.
Bravo Ms. Crowden. One must also note the out of state processors buy most, if not all their supplies outside. Their employees live on those supplies and their income leaves with them.
Also it should be pointed out that money paid for state taxes is deducted from federal taxable income.
The “head tax” should also be considered.
It’s my belief, practice and understanding that a taxpayer must forego the standard deduction in order to deduct federal taxes in calculating income for Internal Revenue Code purposes. For a married couple that’s around $16,000, and expected to soon be $20,000. So if a taxpayer has no other deductions then the arithmetic is that in foregoing the standard deduction in order to deduct a state income tax the first $20,000 of state income tax cannot be deducted; only the tax paid to the state above that first $20,000 in taxes paid. The majority of Alaskans take the standard deduction and would pay less than $20,000 in state income tax initially.
On another of your points, I fail to see how a state income tax would cause processors (fish processors?) to source their supplies in-state if in fact you are correct in asserting that they now purchase most or all of their supplies elsewhere.
In my view a state income tax is a loser from every standpoint. I paid a state income tax in Alaska but back then the pay differential between Alaska wages and wages Stateside was so great that the Alaska income tax seemed of little consequence. That pay differential has now evaporated. Let’s hope that state policy begins to swing toward helping and encouraging every adult Alaskan to enter the workforce, hopefully in producing goods and services the world wants to buy.
“1. It makes our State less competitive in the retail sector – driving more commerce out of state.”
45 states have a sales tax.
“2. It impacts lower income earners more significantly than persons with higher incomes.”
So, let’s exempt groceries and pharmacy. Everyone has an opportunity to pay a sales tax, or refrain from purchasing additional goods. People with jobs will buy more items and pay more tax.
“3. It reduces the ability of Cities and Boroughs to assess their own sales tax.”
Cities and boroughs can assess taxes anytime they choose. A state sales tax isn’t relative to this statement.
I would like to point out to all those individuals who want an income tax or a head tax. The State of Alaska will gladly accept your check, so feel free to contribute to the State every month by writing a personal check to the Alaska State Treasury, they will gladly accept your money.
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