You’ve heard a lot of talk about tax-and-spend Democrats. Now, courtesy of Gov. Mike Dunleavy and Rep. Ben Carpenter, we know what a tax-and-spend Republican looks like.
In a bid to pay for the mega-Permanent Fund dividend checks that have become the lodestar of populist Republican lawmakers in Alaska, first Carpenter and now Dunleavy have sunken to new depths: proposing that we collect taxes from Alaskans with one hand — and a substantial bureaucracy — while signing PFD checks and shoveling money out the door with the other. It’s quite a feat.
It’s also not a very conservative proposal, although tax proponents surely have their talking points in order. They’ll have quite a task. Imposing a sales tax would be another drag on a state economy that’s already “at or near the bottom” in key economic indicators, and which has had the weakest post-pandemic economic recovery of any U.S. state. It would raise prices that have already ballooned because of inflation and increased transportation costs — which, especially in rural communities, are already far from affordable. And it would do so with no guarantee to Alaskans that Gov. Dunleavy and legislators will succeed in putting in place the other pieces of a long-term fiscal plan. And without concrete measures to place guardrails on lawmakers’ tendency to spend past their means, Alaskans can have no confidence that we won’t be back to huge deficits in short order.
The sales tax will likely be sold as necessary to pay for education, appealing to residents’ good-hearted support for their children’s future. Conveniently missing from that rationale is the fact that the Senate has already drawn up a budget that would increase school funding well beyond the House version — without the $600 million deficit of the House’s irresponsible budget.
How did the Senate do it? Simple: By setting the PFD at a reasonable $1,300 rather than the astronomical sums that mega-PFD proponents will burn the state down to fund. Viewed in that light, it’s clear that the motivation for the proposed tax is to fund a big check, not schools — which is underscored by the fact that a 2% sales tax would raise an amount, $741 million, very close to the difference between between the House and Senate’s proposed PFD allocations, about $850 million. And many Alaskans, particularly those in rural communities, will pay that check right back to the government over the course of the year in the higher costs for material goods. The situation will be worst in villages off the road system, where prices are highest and making ends meet is already a huge challenge. A new tax doesn’t make sense for Alaskans, and it sure doesn’t make sense for Alaska businesses. The only people it might make sense for would be those in the new multimillion-dollar bureaucracy set up to collect the tax — and the politicians who would take credit for the big PFD check that made that bureaucracy necessary.
That these tax measures are being shopped to legislators late in the session, after previous declarations that the people should vote on any new revenue measures, an irresponsible notion to begin with, shows that their proponents are not serious about the task of balancing Alaska’s budget. “But wait,” you might sarcastically ask yourself after hearing that the governor now supports a sales tax, “We can’t have our cake and eat it too?”
It was easy to see at the beginning of the legislative session that mega-PFDs were incompatible with a balanced budget; indeed, this has been true for almost a decade. Another item Dunleavy formerly claimed was a prerequisite to major budget changes such as taxes was a tightened spending cap; this too has been casually cast aside in the name of a supersized PFD. He should put that energy into passing a spending cap that includes the PFD before asking Alaskans to finance these mega-budgets.
We’ll be the first to admit that Alaska lawmakers have a difficult job in crafting a balanced budget that provides the services Alaskans want without spending from savings, particularly as the oil revenue that has historically buoyed the state has fallen to a shadow of its former self. In fact, that reality is all the more reason to exercise spending restraint, including spending on the PFD. But a sales tax to fund a mega-PFD isn’t responsible, and it sure isn’t conservative. With some of the biggest budgets Alaska has ever seen — a huge fraction of which is set aside for government checks that require throwing a wet blanket onto the already struggling Alaska economy — Gov. Dunleavy, Rep. Carpenter and the other big-PFD advocates have cemented their place in the Alaska political pantheon as tax-and-spend Republicans. Is that the legacy they want?