No-fee lunch
by Tom Sullivan
“Alaska is the only state in the union besides New Hampshire without sales or income tax,” writes Alana Semuels in The Atlantic. The Granite State funds itself with one of the highest property taxes in the country, through excise and corporate taxes, and through fees. Lots of fees. The Last Frontier has $50 billion in its savings account and cannot pay its bills.
Alaska has funded nearly 90 percent of its operations for years with oil revenues, but, “For every $5 drop in oil prices, the state loses $120 million, according to Randall Hoffbeck, Commissioner of the Alaska Department of Revenue.” Now, things are getting tight:
“People are used to paying little or nothing for their government services,” Hoffbeck said. “It’s just going to be a change of mindset.”
But don’t expect that to happen without much wailing and gnashing of teeth. Facing a roughly $4 billion dollar deficit this year on a $6 billion annual budget leaves lawmakers in quite a pinch. To use an outdated phrase, shaving silver off the edges of quarters won’t solve the problem. There are only so many places to save pennies, and pennies don’t add up to billions. Touching the Alaska Permanent Fund that writes dividend checks to every state resident each year is a non-starter:
To an outside observer, it might be obvious that a state that doesn’t ask its residents to pay any taxes and is now experiencing a giant budget deficit should just stop writing residents checks, or at least use some of the earnings from its $50 billion in the bank to pay its bills. Since the Permanent Fund is projected to continue to make more and more money from its earnings, the state could still spend a portion of earnings and keep the reserve fund well-endowed. Or the state could put a cap on the yearly amount of Permanent Fund dividends (the amount of the dividend is currently calculated by a formula based on the average of the Fund’s income over five years).
But Alaskans are fiercely protective of their checks, and of their state’s savings. This might be the most tight-fisted state in the union.
Citizens of this proud, conservative state like getting something for nothing. And politicians don’t dare ask them to start paying for that no-fee lunch. “At some point in time, we’re going to have to have broad-based taxes,” says Hoffbeck. “We’re going to have to fund ourselves like everybody else does.”
Except everybody doesn’t. We seem prepared to strip America to the walls looking for places to cut pennies before we’ll own up to our responsibility and tax ourselves for what we get and to maintain it. Highways, water systems, good schools, endless wars. We expect them. We demand them. We just refuse to pay for them, and then blame the deficits on the poor. Or else on waste, fraud, and abuse, the inexhaustible zero-point energy of conservative pseudo-economics.
Or to clean up after ourselves. Barack Obama is in Alaska this week talking about climate change and the need to do just that:
I have come here today, as the leader of the world’s largest economy and its second-largest emitter, to say that the United States recognizes our role in creating the problem, and we embrace our responsibility to help solve it.
Don’t hold your breath waiting for the personal responsibility crowd to accept any.