House Republican budget leaders have put down their fiscal axes and have finally begun discussions of how to raise revenues and close the budget gap. Unfortunately, it doesn't appear all ideas will be included in the debate.
The House on Monday (March 18) passed a state budget that includes $100 million in cuts. If enacted, ... residents would notice reduced regional highway maintenance, winter road closures, the end of restaurant health inspections and the closure of ... state parks. The reality is that the different regions of Alaska depend on the state for a variety of services and these cuts would be felt on various levels by many, if not all, ... residents. The measure now goes on to the Senate.
The state is projected to have a $1 billion spending gap next year, and $100 million in cuts won't do much to remedy that. The Constitutional Budget Reserve that legislators have depended on to fill the spending hole for years now will run dry in mid-2004, so time is running out to find a way to keep the state operating within its means.
Meanwhile, the House is turning its attention to possible ways to increase revenue going into state coffers -- better known as taxes. But House Finance Co-chairman Eldon Mulder said his committee plans to look at a plan that will center on a 3 percent sales tax, and that he doesn't believe the committee has enough Republican support for discussion of an income tax.
That's too bad, and a disservice to Alaskans, as there are several proposals revolving around income taxes out there ready to be included in the discussion. Gov. Tony Knowles opened the Legislative session by proposing a package centered around an income tax plan that would raise about $350 million. The governor's plan called for residents to pay state taxes based on how much federal tax they pay, which means those who pay more federal tax would pay more state tax. Conversely, those who pay less to the feds would pay less to the state. In addition, the bipartisan Fiscal Policy Caucus also has proposed a tax plan that includes about $360 million generated by income taxes. The tax would be based on a flat percentage of income.
However, if the committee leadership has its way, those options won't even be discussed, which is too bad. Without going through the committee, it is still possible for an income tax bill to surface, but it's a much harder road.
These two income taxes proposals may or may not be the answer for Alaska's fiscal future, but they certainly warrant being included in the discussion. Without looking at the pros and cons of all possibilities, how can Alaskans be certain the best solution has been found?
-- The Fairbanks Daily News-Miner
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