Pennsylvanians who have had enough of the budget chaos in Harrisburg might take some solace from their fellow Americans in Alaska.
For decades, the nation’s largest state has been the envy of taxpayers everywhere. Flush with cash from oil production, Alaska does not levy a personal income tax or a sales tax. Alaskans also receive annual payouts from a fund generated by oil royalties and energy taxes. Those payments were several hundred dollars per person in the 1980s, growing to more than $2,000 last year.
But crude oil prices are now at a seven-year low, and the industry is no longer delivering the revenue it did. Now Alaska faces the same political reality as other states — how to get taxpayers to cover the cost of services. Right now, Alaska has a budget deficit that is $3.5 billion and growing.
The Juneau Empire, which covers the capital, reports that Gov. Bill Walker, an independent, is on a collision course with the Republican-controlled House and Senate. He wants to slash payouts from the oil fund and impose the state’s first income tax in 35 years. Republican leaders want to cut spending.
Taxpayers in other parts of the country, such as Pennsylvanians who pay the state’s 6 percent sales tax and 3.07 personal income tax, may be tempted to say smugly, “Welcome to America.” But that doesn’t address the new budget plight of the 49th state.
Alaska did not err in relying so heavily on revenue from a single industry. If anything, it just wasn’t prepared for the day when its fiscal sugar daddy would go away.
First Published: January 2, 2016, 5:00 a.m.
