Taxing, spending won't bring back oil wealth
Alaska Older Veterans Report
The tagline of our local pretentious Keynesian crowd is, “We can’t cut our way out of this.” Well my friends, “You can’t tax your way back to the good ole days of $100 oil,” either.
No informed Alaskan can help but conclude that the state has some hard times ahead. But to think you can move the deckchairs around on the Titanic to solve the problem is crazy.
The dilemma for the state is that our future economy will be a zero net sum game. There is just so much money on the table to spend and when you take money out of the private sector and give it to the public sector, all you have done is adversely impacted a different subset of Alaskans.
Unlike the federal government, states have to balance their budget. If you think taking money out of the private sector economy in favor of the public sector is the best choice then you must have your hand in the state’s checking account.
An income tax will be forever and gone forever will be the Permanent Fund dividend once it has been eliminated. You will have a better chance of curing your case of herpes than rolling back an income tax or reinstating the PFD. Make no mistake about it, the PFD will be gone and replaced by a “gift from Juneau” every year from the earnings of the ever-decreasing oil royalties revenue. Instead of the PFD, your “gift” becomes a line item on the annual budget. It will not be guaranteed and will compete with all the special interest lobbyists’ wish list from an ever shrinking pool of revenue.
Believe it or not, there was a day when no PFD check was deposited in your bank account. The day when no PFD arrives out of nowhere in the fall is much closer than you think if we don’t voice our concerns to our elected officials in Juneau now. If you need an income tax to give away tax money, then maybe you don’t have the money to give away. That is a redistribution of wealth at its worst. How hard is that to understand?
And just so you don’t forget about the expansion of Medicaid, that bill will come due in three years and will be an additional expense. The additional 10 percent of administration overhead cost (i.e. more state workers) will be another one of those contractual obligations we “have to pay” forever.
Several bills are currently getting hearings down on Planet Juneau. Inflation proofing is an outdated gesture from the 70s and needs to be sent to the dustbin. A hiring freeze, a hiatus on promotions for 12 to 24 months and never filling the 4,000 funded-but-not-filled state jobs would be a good first step. These actions and many other solutions are spelled out in “Alaskans at the Crossroads” and can be downloaded from the website listed at the end of this article.
These spending cuts would result in reducing the size of the state budget. The goal should be to reduce the budget by a measly 6 to 8 percent per year for three years. The price of oil will most likely, at least, stabilize by then so a long term plan could be formulated. We have the savings to do this without any new taxes or taking the PFD.
The state’s biggest private-sector employers are cutting high paying jobs left and right. I hate to see anyone lose a job because it has happened to me so many times. It happened to me so much that my first order of business when I got a new job was to update my resume. I never believed any job was forever. I was a commercial helicopter pilot for several years. There was a saying about job security: “You are only as good as your last landing.”
Losing a job will hurt but you will survive. Right-sizing the state government is the key to coming through this imminent financial storm. And the last thing we should do is to keep spending like nothing has happened.
Once you have read the report at the website below, you will see many cuts that should be on the table. Property prices are going to fall, school bonds once supported by the state will dry up and things are not going to be pretty. If you think for one minute the working folks are just going to sit silently by while you rob us, then I have a bridge across Knik Arm to sell you. I might even throw in a tunnel to Russia. Just look at the lineup of the group pushing the “tax first and cut never” crowd and you will know all you need to know about whose best interest they have.
There is another group fighting for the working people of the state called United for Liberty who published “Alaskans at the Crossroads”. It is a 96-page detailed white paper that addresses the issues and one of the best of any sources I have read. You can download a pdf at
You can also see a presentation by Consultant Brad Keithley on the budget at
Mike Dryden is a retired Army Major and current Older Persons Action Group, Inc. board member.