Notes from the Alaska Fiscal Cliff: The Alaska Republican Establishment shows its true colors

A piece yesterday from often-times Alaska Republican Party mouthpiece Must Read Alaska may say more about the priorities of establishment Alaska R’s than anything else. SeeSheldon Fisher: ‘We owe the credits’ to oil companies,” https://goo.gl/tc79BP.

In an extended effort to paint the current Administration as an unreliable trading partner Must Read attempts to use Alaska’s oil tax credit program as an example of where the current Administration has “stiffed” those to whom it has obligations. The oil tax credit program contemplates that the state will reimburse certain producers for certain types of expenditures.

But Must Read’s attack entirely misses the mark. Alaska is in full compliance with its statutory payment obligations to recipients of the oil tax credit program. It has made and continues to make payments on the timeframe and at the levels required by the statutory provisions in place since the program began. While the Administration (and legislature) haven’t accelerated payments as some recipients (and Outside bankers) would like, it hasn’t “stiffed” (or another Must Read claim, become “delinquent” to) anyone under the program.

The irony?

In its effort to overdramatize the false claims of some oil companies and their bankers Must Read appears intentionally to overlook a massive group that the Governor (and legislature) actually have “stiffed.” The state’s citizens.

This past session the legislature passed and the Governor signed an appropriations bill that intentionally underfunds the state’s annual Permanent Fund Dividend (PFD) — a direct statutory obligation to the state’s citizens — by more than 50%. The state’s statutory default — which economically speaking is a tax on Alaskans — has been diverted to state government.

In overreaching to claim that the Administration has “stiffed” those that haven’t been, and ignoring Alaska’s citizens who actually have been stiffed, Must Read shows its true colors.

Those it favors to the point of making up false arguments? Certain oil companies, their suppliers and bankers.

Those it ignores? Average Alaskans.

By overplaying the first and ignoring the second Must Read shows which side of the divide they are on — and it’s not the side of average Alaskans.

That is consistent with the side taken also these past two years by the establishment R’s in the Alaska Senate.

As we have explained elsewhere, in passing proposals the past two years permanently to cut the PFD and voting this year with the Governor and House to do so through the appropriations process, the Alaska Senate R’s repeatedly have sided with those in the state’s Top 20% income bracket (and some of the state’s large businesses tied to elevated government spending levels) against the Remaining 80%. See, e.g., “The Alaska Senate’s REAL deal,” https://goo.gl/8C7JZF.

And it’s not just middle and lower income Alaskans that are being caught in the Alaska Senate R’s — and now, Must Read’s — class war.

According to unrefuted economic studies from last year by the University of Alaska Anchorage’s Institute of Social and Economic Research, taxing the PFD at the level pursued by the Alaska Senate R’s:

  • “Has the largest adverse impact on the economy [of all the new revenue options] per dollar of revenues raised,” https://goo.gl/ZxR1Hw at A-15;
  • Is “by far the costliest measure for Alaska families,” https://goo.gl/ivf9D2 at 1; and
  • “[W]ill likely increase the number of Alaskans below the poverty line by 12–15,000 (2% of Alaskans),”https://goo.gl/iuTjv2 at 14.It doesn’t have to be this way.

Let that sink in for a moment. The headline analysis of the Alaska Senate’s proposal: “Largest adverse impact on the economy.” “By far the costliest measure.” “Will likely increase the number of Alaskans below the poverty line” by 2% of the state’s total population.

Must Read closes its piece by urging that accelerated oil tax payments should be included in this year’s budget:

[Revenue Commissioner Sheldon] Fisher and the Office of Management and Budget are in the final stages of budget preparation. Gov. Walker must present to the Legislature his FY19 budget by Dec. 15, a budget that will be debated and signed during his re-election cycle. … While he travels back to Alaska from China, his budget people may want to hammer out a plan for paying those [so-called] delinquent tax credits ….

Our hope is the opposite.

Especially given the state’s fiscal situation, we hope that Governor Walker — and the legislature — continue to maintain spending across the board to no more than statutorily required levels.

Despite Must Read’s special pleading, that means continuing to pay oil tax credits at no more than the statutorily required level — not the accelerated levels being sought by some oil companies, their suppliers and Outside bankers.

And that also means paying Alaskans what is due them under the state’s existing statutes — 50% of the earnings from the Permanent Fund.

That is the simple test that we believe should be used to measure the Governor’s and legislature’s actions this coming session — whether they live up to the state’s statutory obligations.

We certainly will oppose — and frankly, be aghast at — any effort by the Governor and legislature to pay certain special interests more than required by the statutes, while continuing to default on those same statutory obligations to all Alaskans.

We are somewhat surprised the Alaska Republican establishment is so blatant about wanting something else — but it appears that it is.

Originally published at bgkeithley.blogspot.com on November 9, 2017.

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Brad Keithley

Brad Keithley

Managing Director of Alaskans for Sustainable Budgets and owner, Keithley Publishing, LLC. For more, go to bgkeithley.com.