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Let’s work for a better Alaska

  • Author: Sara Hannan
    | Opinion
  • Updated: January 17
  • Published January 19

Rep. Sara Hannan, D-Juneau, on the first day of the legislative session on Tuesday, Jan. 15, 2019 at the Alaska State Capitol in Juneau. (Loren Holmes / ADN)

Lawmakers from across Alaska will gather this week in Juneau to do the people’s business. The men and women you elected will consider and debate the merits of various bills and resolutions, including a budget for the next fiscal year.

Some Alaskans look at a budget and they see nothing more than numbers on a page representing revenue and spending. It’s unfortunate, but too many Alaskans don’t associate those budget numbers with the vital state services that most Alaskans have deemed essential and worthy of public support. Christy NaMee Eriksen, a constituent of mine, said in her “Love Letter to Alaska” video, “the budget is not just an allocation of funds, it’s about sentiment. It communicates values, ideals, and limits. When I read the governor’s budget, I don’t see numbers, I see people.” These are powerful words.

Gov. Mike Dunleavy has put his name on two budget proposals in the past year. Both budgets included plenty of cuts to essential services, with nary a word about the revenue needed to “keep Alaska open for business.” The governor’s most recent budget proposal seeks to drain most of what’s left in our only remaining savings account to fill the $1.5 billion shortfall. At the same time, it funds the dividend at a level the state can’t afford and leaves important services and programs without adequate resources. Frankly, I believe Gov. Dunleavy is playing to a small but vocal constituency that diminishes the value of government. I adamantly disagree. I am thankful for all the things state government does to make this a great place to live, work and raise a family.

In looking at the data, listening to the experts and talking with my constituents, I am convinced the time is now for the state of Alaska to diversify its revenue stream and stabilize its spending. This includes reinstating a state income tax, revising the oil production tax and changing the statutory Permanent Fund dividend calculation.

During last year’s long and difficult budget debates, Alaskans made it clear they want a state government that provides a wide range of services. Vibrant communities and successful economic development require adequate and stable investments in K-12 and university-level education, highway and ferry system infrastructure, public safety, fish and game management and much more.

In 2017, the bipartisan Alaska House Majority Coalition put forward a full fiscal plan that would have ensured stable and diversified funding for the state of Alaska. The plan passed the House of Representatives, but the members of the Senate Majority, which included then-Sen. Mike Dunleavy, refused to consider the plan and let it die in favor of short-term and ultimately unsustainable spending from savings.

The full fiscal plan that passed the House in 2017 included a progressive income tax to generate more than $700 million a year, with nearly 20% of its revenue coming from nonresident workers. A second measure would have increased the state’s net oil production revenues by eliminating the overly generous $8 per-barrel tax credit and reducing the tax rate to a fair level. Unfortunately, these provisions were stripped from the final version of the bill, resulting in the continuation of a flawed oil tax structure that shortchanges the people of Alaska in favor of continued concessions to the hugely profitable oil industry.

I’m well aware that I am advocating measures unpopular with many Alaskans. No one wants to pay an income tax, and meaningful changes to our oil tax structure are always an uphill battle. But if these two measures had passed the Legislature in 2017, they would have placed Alaska on a clear path to growth, prosperity and sustainability.

Delay in doing what must be done has greatly increased the urgency for lawmakers to act. We now face a deficit of more than $1.5 billion and there is no indication that next year our finances will be any better. We are up against a wall. If an income tax bill is passed this session, it will take two years before any revenue is realized. It is painfully obvious that if we want to fund a level of government that ensures the state’s potential as a thriving, safe, and attractive place to live, then we must establish new and sustainable revenue streams as soon as possible.

I am making it my priority for the 2020 legislative session to finish the job the House started in 2017 and push for a sustainable fiscal plan. The plan I envision is not radical. In fact, Alaska had a state income tax until 1980 and it is not uncommon for oil-rich nations and regions to make changes to their tax regime when necessary.

The Alaska we want to live in is within our grasp, but it will take hard work to make it happen. My sleeves are rolled up and I am ready to work. I hope that every member of the House and Senate is prepared to do the same. We know the Alaska we want and must have a plan to pay for it.

Rep. Sara Hannan, D-Juneau, is a member of the Alaska State House representing District 33.

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