In a speech and in a series of tweets, Walker announced the proposal that is part of what is called the New Sustainable Alaska Plan.
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However, if the state keeps drawing down its savings like it is and makes no changes, Walker says the dividend would end in 2020.
The governor’s plan would shift the state away from a direct reliance on oil revenue and the boom-and-bust cycle of oil prices.
– Increases in alcohol and cigarette taxes.
The state benefits from the oil wealth with 90% of legislative money coming from oil industry.
Meanwhile, Senate Republican leaders called for further budget cuts before increasing taxes on Alaskans.
The state is heavily dependent on oil revenue. Officials have been warned the state’s bond rating could be lowered if it doesn’t do more to address the deficit.
With the state’s budget crisis nearing a breaking point, Van Vactor argued the proposal was unavoidable. Revenues will cover only 40% of the state’s costs, he wrote. Mr. Walker, who cut about $1 billion, or 20% from the budget, in the current fiscal year said cutting more “becomes more challenging”. Alaska’s last income tax was repealed in 1980.
The new tax would generate about $200 million, according to estimates provided by Walker’s office. He said every Alaskan will find something in the plan they dislike, and he’ll take any heat that comes with that.
House Finance Committee co-chair Steve Thompson, R-Fairbanks, said he doesn’t want to ask Alaskans to pay an income tax unless it’s absolutely necessary.
“We looked at that one, we looked at it for quite a while”, said Walker during a press conference.
The Manager of the General store in Nunapitchuk says people in her town could not support the additional financial burden of an income tax.
The move is meant to aid an economy with a multibillion-dollar budget deficit brought on by steadily falling oil prices. The Republican-turned-independent governor also recommended some oil tax and credit changes. That fund generates billions of dollars in annual investment income that isn’t similarly restricted.
Earnings generated from the fund are used for inflation-proofing and paying the annual dividends. That payment was made to 645,000 people and was the largest ever.
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While permanent fund earnings can be used for the state budget, legislators have been loath to go there for fear of being accused of “raiding” the fund.
