As the Executive President of the Alaska AFL-CIO, the state’s largest labor organization, I have watched our number of members drop by 3,000 in the last year and a half. In that same time frame, Alaska has lost around 9,000 jobs, so about a third of those jobs came from our ranks. They are evenly split between public sector and private sector workers, in nearly every field imaginable, all around the state.
The legislature has cut more than 40 percent of the state budget over the past couple years, and we are without a decent capital budget. Maintenance on our aging infrastructure is on hold, with over a billion dollars worth of work backlogged due to lack of funding. Continual cuts won’t cause prosperity, but instead put us on a path of anemic growth and unnecessary uncertainty. The AFL-CIO has many members in the building trades who have left their families behind to work Outside until work picks up in Alaska.
One important question is if enough has been cut and if we have a “right-sized” budget. Brian Fetcher, OMB’s policy analyst, concludes that, after considering inflation, population growth, and special circumstances, Alaska’s state-only spending is only about 7 percent higher than the US average. The size and cost of Alaska’s government is not disproportionate to other states, nor has it changed significantly since before oil began to flow.
We have a $3 billion budget deficit. Every other time in our short state history when we have been challenged fiscally, we’ve been saved by rebounding oil prices. But nearly every economic analyst says it won’t happen this time. Being reliant on just one volatile revenue stream – oil – is no way to pursue a sustainable plan. We absolutely need to diversify our revenue.
We also have an environment where many of our citizens don’t believe they have any obligation to personally contribute to support the government services they receive. Only six other states have no income tax. Only four other states have no state sales tax. We are the only state that has neither. The reddest of red states, other than Texas and Wyoming, have both state income and state sales taxes. We also have the lowest gasoline tax of any state. Our property taxes rank as 23rd highest, solidly in the middle of the pack.
To those who fear Alaskans will leave if a broad-based tax is passed, I have one question: where will they go?
Alaskans enjoy the lowest individual tax burden of any citizen in any state. On top of that, the state has cut every man, woman, and child a dividend check each year. Even if SB26, HB115, and HB60 (the motor fuels tax) pass, we will still be the lowest taxed citizens in the entire country when you factor in that an average family of four will receive $5000 in PFD checks annually. Not only have we paid zero state taxes, we’ve essentially had a net negative contribution to state finances.
I applaud the House’s effort to offer up a complete plan – a plan that is forward looking, that will take Alaska away from this volatile, unpredictable roller coaster, and towards a balanced, diverse, and responsible plan. On the other hand, a budget plan that calls for another $750 million in cuts and leaves us with an ongoing structural deficit is a recipe for more job loss in all sectors and is completely antithetical to an economic recovery.
What kind of Alaska do you want for your children and grandchildren? I want a plan that doesn’t leave our senior citizens on the margins, that considers the needs of our children and adequately prepares them for careers here in Alaska, that has enough resources to keep us safe and our roads plowed, that helps to grow our economy, and that has good jobs with decent benefits that support families.
Alaska legislators — it is certainly not a hard math problem. The solutions are right in front of you. However, I know the politics of it are hard. But it’s high time to do the right thing; we can’t afford to wait.
Vince Beltrami is executive president of the Alaska AFL-CIO. These comments are excerpted out of his testimony to the House Finance Committee on May 3. For the full testimony, go to http://www.akaflcio.org/legislative-happenings/.
