House coalition plays a dangerous game

The theatrics in Juneau are entertaining, but a game of chicken is still a game of chicken and in the end the real question is: Who is going to be left holding the yucky end of the stick when the ongoing imbroglio over how best to close the state's yawning $2.5 billion fiscal gap blows up?

When the dust settles, who will get to wear the outcome like an albatross in the next election?

With a looming July 1 government shutdown that would put 18,000 state workers on the street, and the clock tick, tick, ticking on the special session in Juneau, Alaska Gov. Bill Walker understandably is antsy.

Walker, who opposed reduced dividends and a statewide tax before he supported them, came from nowhere to offer a compromise budget deal with a head tax based on income — but no income tax —  to break the House-Senate budget deadlock. The Democrat-led House coalition rejected it before the ink was dry.

[Gov. Walker's 'compromise' offer moves state lawmakers no closer to a budget deal]

"We don't think that the plan proposed by the governor protects Alaska's fiscal future," Anchorage Rep. Gabrielle LeDoux, one of only three Republican House big shots in the coalition – and apparently its new, de facto boss – told the Alaska Dispatch News.

Again, keep in mind that when Democrats — and Republicans who dress up like Democrats — start yakking about Alaska's this or Alaska's that when it comes to fiscal matters, it is code. Alaska, to them, is government, not us lowly hoi polloi.

With Walker's plan kaput, the two chambers remain defiantly at loggerheads over an income tax Alaskans do not seem to want. The House coalition, anxiously waiting for the Senate to blink because of the potential shutdown, perhaps is gambling that this is its once-in-a-political-lifetime shot, a do-or-die moment to gloriously reinstate an income tax. The left, always giddy at the prospect of income redistribution, has been begging the tax fairy for such a levy since Alaska's income tax was ash-canned in 1980.

Democrats and their fellow travelers believe government has been cut enough; that it is just the right size. To keep it that way, the House plan includes a hefty income tax; a laughable spending cut; an oil tax increase; a restructuring of the Permanent Fund to fund government; and, a $1,250 dividend. Thumbing its nose at compromise, the coalition demands Senate approval en toto.

The Senate's GOP majority, sensing most Alaskans are not all adither about an income tax; that it could wreak havoc in an economy already tiptoeing through a recession, is not buying in, saying such a levy is unnecessary.

Rather than an income tax, it, instead, would make sizable spending cuts over three years, implement a workable spending cap, take a rational approach to oil tax credits, restructure the Permanent Fund, cap the Permanent Fund dividend at $1,000 and draw on savings to plug the small gap that would remain.

[Senate has the sensible plan for Alaska]

Which chamber is right? When it comes to the income tax, the answer is easy. The Senate. The last thing Alaska needs now is a tax that would drain $700 million from paychecks so government can remain the same size.

While some of us — forgive my blasphemy — have no problem with reduced Permanent Fund dividends because the fund, after all, was established to underwrite government, not Hawaiian vacations, others object. Strenuously. Gregg Erickson, a smart guy who knows something about economics, is one of them.

"Both chambers' restructuring proposals reduce the PFD, thereby inflicting another dose of recession-caused misery on Alaskan households," he wrote in an email. "And it's sure to provoke an initiative or referendum. Better by far that they leave the PFD and PF structure untouched for another year. If they truly need extra revenue for FY 18, take it with a straight appropriation from the PF earnings reserve."

He makes good points. While an income tax would bleed the economy of an estimated $700 million, the reduced dividend might lead to another $1 billion, give or take, being siphoned off. It amounts to a double tax on some Alaskans and a ferocious economic whuppin' by any calculation.

That aside, the Senate, overall, is the adult in the room when it comes to the dueling fiscal plans and it appears to be sticking to its guns. The House coalition appears to be working to protect government; the Senate, to protect Alaskans.

Without  resolution, there soon may be a lot of unhappy people out of work. Make no mistake, the House's income tax-or-nothing approach, is, and will be, the root of the problem. How would that play out in the next election? What would unions, workers and Alaskans in need of state services think if government shuts down because of House recalcitrance?

The end of that particular stick may be yucky, indeed.

Paul Jenkins is editor of the AnchorageDailyPlanet.com, a division of Porcaro Communications.

The views expressed here are the writer's and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com.