In December, Gov. Bill Walker released his budget proposal. On the surface, it's based on what appear to be laudable goals: 1) create more jobs, 2) pay off some long-term expenses, and 3) provide for greater public safety. But along the way, the governor forgot about the working Alaskans who are the engine of our economy, instead opting to put the oil industry ahead of everything from services for seniors to public education.
Gov. Walker proposes an unjust payroll tax that lays the bulk of the cost on lower and middle-class Alaskans with an income cap so the wealthiest pay a fraction of what the rest of us pay. What's worse, the governor wants this tax for only three years, applying it to our $1.6 billion deferred maintenance costs. While we must address this backlog, a short-term tax kicks the can down the road when what we really need is a comprehensive, sustainable fiscal plan to climb out of our recession.
What's most striking about this budget is Gov. Walker's desire to appease oil company shareholders above all else. He wants to put our dwindling credit rating at further risk by bonding to pay oil companies $900 million in oil tax credits ahead of the statutory deadline. All while ignoring the statutory PFD requirement and telling Alaskans the dividend will be cut by $800 million again this year. Cutting the dividend is one of the most regressive and economically stagnating ways we can "fund" government. This trickle-down proposal to burden the poor the most and the rich the least has never worked anywhere in this country, and it surely will not work here.
Last year, the House Majority took hard-fought steps for a plan that would set us on a strong economic path. Those efforts were thwarted by Senate Republicans who continue to say the only solution is to cut our way out of this recession. But economists are unanimous in observing that continued cuts to the budget will only make our situation worse.
There is a better way to budget that puts Alaskan families back to work, brings the economy out of recession, strengthens our public safety, and provides for a quality education for Alaskans, pre-K through university. This is how you build a sustainable future.
First, we must continue to push for a comprehensive and sustainable fiscal plan. Without one, legislators will burn through the Permanent Fund Earnings Reserve account (where your PFD comes from) and leave the state bereft of savings, dragging us deeper into recession and threatening the long-term viability of the Permanent Fund. A fix cannot be temporary, and it must be fair. We should include a modest income tax generating $200 million to $300 million, and it should ensure that the wealthy pay their fair share.
We need to make the Permanent Fund dividend part of the Alaska Constitution, but also allow for an appropriate and measured use of earnings. Doing so, we ensure that future generations will have the benefits of owning Alaska's resources. If not, the dividend program and your constitutional shareholder right of our resources will be stripped away as this governor, Senate Republicans and future elected officials dig deeper into the coffers.
We must also ensure that those who extract our resources pay a fair price for them and the infrastructure our state provides, which ensures a safe and productive work environment. A comprehensive, sustainable fiscal plan now will guarantee a prosperous future for Alaska.
Second, we need a robust capital budget to fix our roads, repair our buildings, and create jobs and new development opportunities. At 7.2 percent, Alaska continues to have the highest unemployment rate in the nation. To put Alaskans back to work, we must stabilize our economy, so businesses have the confidence to invest instead of wondering when Alaska will have another recession or if state leadership will continue to favor one industry over all others. Over the past three years, the capital budget has been stripped of most projects, spending the bare necessity to bring in federal dollars. If, as the governor proposes, we are going to use nearly $1 billion of our bonding authority, let us pass a strong capital budget and also use those bonds to take care of a substantial portion of our deferred maintenance backlog and kick-start our jobs sector.
Third, we must be able to maintain our current healthy industries. Alaska tourism is strong. In Southeast Alaska, the Alaska Marine Highway System is vital to continue that success. But for the past three years, Senate and House Republicans have wanted to dismantle it. We need to maintain our infrastructure so visitors have safe and reliable access to this beautiful state.
Commercial fishing has seen tremendous success. Alaska has a world-class fishery with vital salmon runs in Bristol Bay, crab fisheries in the Bering Sea and a wealth of fishing on the Kenai for sport fishermen. Continuing the Republican mantra of "cutting our way out of recession" will dismantle essential services and damage our commercial fishing, subsistence fishing and sport fishing economies.
Lastly, we need to expand our economic base. We can be a catalyst for advancing clean and renewable energy. Like other states across the country, cultivating our clean energy industry will make Alaska more attractive to investors, and diversify our economy in a way that reduces energy costs across Alaska. By updating state energy efficiency targets, implementing renewable energy procurement goals and leveling the playing field so private investors have access to the same avenues as those interested in extraction, we can grow our renewable energy economy, not at the expense of the oil and gas industry, but along with it.
I ask the governor to rethink his priorities. Go back to those Alaskan principles he campaigned on and fought for in his first three years as Governor. Alaskans deserve elected officials that say "no" to corporate welfare, "no" to unfair taxation and "yes" to a budget and fiscal plan that puts working Alaskans' needs first.
Sen. Tom Begich, D-Anchorage, has represented District J, East Anchorage in the state Legislature since 2017.
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