Walker told a news conference on Wednesday he believed his proposals would win the support of the broader Legislature when it reconvenes in Juneau next month, partly because of “the severity of the situation we are in”.
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With oil prices hovering around $40 a barrel, Alaska is facing a deficit of more than $3 billion next year and into the foreseeable future.
“It’s aligning the dividend to the success of the state economy as opposed to the success of the financial markets”, said Alaska Attorney General Craig Richards, a member of the Alaska Permanent Fund Corp. board.
Overall, the fiscal plan released by Walker would dramatically broaden the tax base and transform how government is financed, including elimination of some oil and gas tax credits. The plan would change how dividends are calculated and mean lower checks, at least initially – 2016 payouts would be about $1,000 less than this year’s. “This will balance the budget”.
– A 2 percent increase on the top mining tax bracket ($12 million).
The administration estimates it could withdraw about $3.2 billion annually to fund the state budget while still allowing the state’s savings to grow.
The tourism piece pertains to the cruise ship passenger tax.
His proposal includes budget cuts, increases in various taxes and using the fund that provides annual checks to most Alaskan to generate a stream of cash for state government.
The governor’s deputy chief of staff, John Hozey, offered that advice to reporters in a briefing when he described the alcohol tax proposal as a plan to add a 10 cent fee for every drink sold.
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.
It’s not just individual Alaskans being asked to pony up; businesses in Alaska also would be asked to pay more in taxes. Earnings from it are used every year to provide a check to Alaskans as their share of the state’s oil wealth. That’s down to about 75 percent, the state Revenue department says.
“If they have another way of getting to the same end result, we’ll certainly listen closely”, Walker said.
State Revenue Commissioner Randy Hoffbeck said lawmakers are welcome to suggest substituting more budget cuts for about $400 million in proposed new and increased taxes. Over the past decade, which included the Great Recession, the check has been as low as $845.
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It’s why his administration is calling Walker’s plan the “Permanent Fund Protection Act”.
