Helping America Navigate a New Energy Reality

As Oil Money Melts, Alaska Mulls First Income Tax in 35 Years

By on 26 Dec 2015 in news, notable posts

Randall Hoffbeck, the Alaska state revenue commissioner, listened to residents’ comments about Gov. Bill Walker’s budget at an East Anchorage town-hall meeting this month.

(NY Times) ANCHORAGE — Oil money no longer pays the bills here. The governor, facing a profound fiscal crisis, has proposed the imposition of a personal income tax for the first time in 35 years. State lawmakers, who recently moved into a palatial new office building here, where they work when not toiling in the far-off Capitol in Juneau, are now seeking less costly digs.

And a state budget that was a point of Alaskan pride — and envy from around the nation — lies in tatters as revenue that flowed from selling crude oil from Prudhoe Bay over the past four decades has been swept away.

With oil prices down along with oil production, the state is facing an Alaska-size shortfall: Two-thirds of the revenue needed to cover this year’s $5.2 billion state budget cannot be collected.

Many Alaskans are not old enough to recall times this bad. This is the nation’s least-taxed state, where oil royalties and energy taxes once paid for 90 percent of state functions. Oil money was so plentiful that residents received annual dividend checks from a state savings fund that could total more than $8,000 for a family of four — arriving each autumn, as predictable as the first snowfall.

Gov. Bill Walker, an independent, is proposing to scale back those dividends as he seeks to get Alaska back on a stable financial footing with less dependence on oil. “It will move us back to where we were before,” he said in an interview. “We can do it.”

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