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Lawmakers' anti-tax pledge could block Walker's fiscal plan -- if they stand by it

  • Author: Nathaniel Herz
  • Updated: September 28, 2016
  • Published November 7, 2015

JUNEAU -- Senior lawmakers have already warned Gov. Bill Walker that they're unlikely to approve any proposals in their next session to help balance Alaska's budget by levying new taxes or by spending money from the Permanent Fund.

Walker's bid to implement such measures faces considerable opposition from the Legislature, which has repeatedly rejected similar politically unappetizing proposals in the past.

But there's one extra wrinkle that will make it even harder for Walker's sales pitch to get traction with five Republican lawmakers: the pledge each has signed committing to "oppose and vote against any and all efforts to increase taxes."

The signers listed as "active" in Americans for Tax Reform's list are Reps. Cathy Munoz of Juneau, Gabrielle LeDoux and Bob Lynn of Anchorage and Mark Neuman of Big Lake, and Sen. Cathy Giessel of Anchorage.

The pledge is sponsored by the national group led by conservative activist Grover Norquist. It claims 48 of the 54 Republican members of the U.S. Senate -- including Alaskans Dan Sullivan and Lisa Murkowski -- as signatories. Another 1,000 state lawmakers are listed in the organization's pledge database.

In Alaska, residents currently pay no state sales, income or property taxes. But Walker said in a news conference Thursday that taxes "most likely" will be a necessary component of a forthcoming fiscal plan to close the gap between the state's $5 billion budget and its $2 billion in annual revenue.

Some moderate Republicans have proposed tax measures of their own, like Homer Rep. Paul Seaton and Fairbanks Sen. Click Bishop. And even Munoz, in response to an Alaska Dispatch News survey in October, said the budget deficit could not be fixed solely by cutting -- the same response given by the other 11 lawmakers who responded.

But in interviews this week, the five signers of the anti-tax pledge all sounded skeptical about straying from their commitment. Most were reticent to speak about the pledge at all.

Lynn said he takes pledges "very seriously," pointing to his 2004 vote against his caucus in support of money for seniors. Caucus leaders stripped him of his committee leadership posts over that vote, which he said was to keep a campaign promise.

He said he originally signed "because I don't like taxes."

"Do you know anybody who likes them, to any degree?" Lynn said.

Asked how he'd balance the budget if taxes were off-limits, Lynn responded, "Obviously, we should cut first." He could not, however, identify a specific area or program that should be reduced.

"We'll work on it," he said. "We'll know what the hell happened at the end of next year."

Munoz, meanwhile, said the state's fiscal position is different from when she signed the pledge before her re-election last year. Asked whether she considered her commitment binding, she responded: "I'd have to think about that."

LeDoux wouldn't directly answer questions about the pledge. She said she's still "digesting this fiscal situation."

"And when I finish digesting it, I'll let you know where I stand," she added.

Giessel said she doesn't remember signing the pledge and wouldn't answer questions about it.

A woman who answered the phone at Americans for Tax Reform referred questions to the organization's communications director, who didn't respond to repeated requests for comment.

The group's pledge was devised by Norquist in 1986 to keep pressure on Congress to uphold President Ronald Reagan's tax plan, which cut the top personal income tax rate to 28 percent from 50 percent while also closing loopholes.

A fact sheet posted on the group's website says that "there are no exceptions to the pledge," adding that "in the unfortunate event of a real crisis or natural disaster, legislators should cut spending in other areas instead of aggravating the situation."

It also remains unclear whether the organization would brand any proposal that would reduce Alaskans' annual Permanent Fund dividends as a "tax."

Regardless, financial experts say that fixing the state's budget gap without taxes or diverting Permanent Fund earnings would require draconian measures.

According to the Legislature's own fiscal analyst, it's impossible to close the $3 billion deficit without generating new revenues. Alaska's payroll is about $1.3 billion, meaning there would still be a $1.7 billion gap if every state-paid worker was fired.

The Walker administration last week unveiled a tentative proposal to restructure the Permanent Fund that Attorney General Craig Richards said would close about two-thirds of the deficit.

The remaining $1 billion gap could be filled by some combination of cuts, taxes, or other measures, though the Walker administration hasn't specified the approach it will use.

Administration officials say legislative approval of the Permanent Fund proposal, and of some type of new revenue measure, is needed by the end of the next legislative session -- or some of the money needed to successfully implement it could end up being spent.

Seaton, the Homer Republican who has proposed a state income tax and a tax increase on oil companies, declined to directly address his colleagues' decisions to sign the anti-tax pledge.

"Everyone makes their own choice," he said. "My choice was to look for solutions."

Neuman, who co-chairs the House Finance Committee, said he couldn't recall details of the pledge and wouldn't use it to guide his decisions about fixing the budget deficit.

But, he added: "I don't think I can support new taxes at this point. Now's not the time to panic."

Neuman said the state has enough money in its savings accounts -- $9 billion in the Constitutional Budget Reserve and more than $5 billion in the Permanent Fund's earnings reserve -- to take more time before deciding how to balance the budget.

"To insinuate that I am kicking the can down the road because I can't take a vote -- I've taken lots of tough votes," he said. "We have enough money to cover our accounts for the next couple of years. Let's take the time to ask people what they think."

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