Out There

The Alaska Disconnect

Posted in politics by Pete on April 9, 2017

What a great name for a band!  I completely agree with this editorial from Mike Navarre, mayor of Seward.  I remember learning about this very thing in our Alaska History course with Joan Antonson way back in 2001 or 2002.  In case that link gets broken eventually, here is a copy of the editorial.

In debating the state’s fiscal future amid a $3 billion annual budget gap, many Alaskans talk about how more state-supported public services should “pay their own way,” or at least get closer to covering the costs. The users should pick up more of the tab, they say, not the state treasury.

While user fees make sense, such as state park cabin rentals, fishing licenses, driver’s licenses and motor fuel taxes, we need to accept — and apply — that same “pay their own way” reasoning to economic development.

The cold-hard-cash fact is that unless economic development produces more barrels of oil, any new economic activity and its accompanying jobs and students and subdivisions can be a loser for the state treasury. But we can fix that as part of an overall state fiscal plan. Probably not all in one year, but it is fixable.

New jobs are great for people who get hired, for retail and service shops that get additional businesses, and for communities with property taxes and sales taxes to collect the revenues needed to pay the costs of more students, street maintenance, police and fire protection.

But lacking any broad-based state tax, such as income or sales or property tax, the state gets the bills for its share of more students, more roads, more demand on public services, but little to no additional revenues to pay the bills. That’s particularly true as more businesses are establishing themselves outside the jurisdiction of the state corporate income tax code.

With oil, the state collects production tax and a royalty share and property tax and corporate income tax. But what about a new widget factory? An ore smelter? A server farm for cloud computing? A new big box store? Likely sizable property and sales taxes for cities but likely squat for the state. 

It’s our own fault. We didn’t need the money, so we let the problem grow for 40 years.

Our problem has a name: The Alaska Disconnect. A 2003 report from the Institute of Social and Economic Research at the University of Alaska Anchorage explained the problem: “In most states economic development that brings new jobs and payroll generally pays its own way from the perspective of the public treasury. Because of the Alaska Disconnect, economic development in Alaska does not pay its own way — economic development makes the fiscal gap bigger rather than smaller. The notion that economic development alone can close the fiscal gap is unfounded.”

Also in 2003, in a report for the Alaska Permanent Fund Corp., a group of the fund’s investment advisers made the same point: “Moreover, the state’s revenue structure is such that each additional basic sector job added to the economy … costs more to state finances than what it generates. … The state must also eradicate the growth-inhibiting incentives of the ‘Alaska Disconnect,’ where new non-oil-producing employment is a net drag on state finances.”

As Alaskans discuss and debate, argue and agitate for their favorites pieces — and least favorite pieces — of a long-term, balanced state fiscal plan, don’t dismiss a broad-based state tax, such as income or sales, just because the thought of taxes causes you more stress than coming up short on overhead space for your carry-on bag.

Rather than dismissing tax talk, think about what it means not to have a broad-based tax, especially as Alaska looks to expand its economy beyond oil, looks to reduce our near-total dependence on oil dollars, and looks to attract new investment and jobs for younger Alaskans.

The Alaska Disconnect is a self-inflicted illness. We can solve this one on our own. The cure isn’t painless, but it is long lasting and creates a healthier economy.

We Alaskans have become addicted to a painless system of representation without taxation, and it is destroying our state as we would rather blow up the government, education, and medicaid, than pay an eminently sensible income tax.  The current income tax proposed by the Alaska State House would be the 4th lowest income tax in the 50 states.

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politics today – personal power over serving others

Posted in Uncategorized by Pete on October 19, 2012

Politics is important.  We need to pay attention, be informed, and vote for people who will help lead our country where it should go.  Tons of people don’t vote today, and this is especially true in Alaska, and even more so in the villages of bush Alaska like Kasigluk.  Why?

I think partly because articles like this and this are essential.  You can turn on the presidential debates like we did here on our XM radio, and really gain very little useful and true information as to the candidate positions on the important issues.  Because the most important issues may or may not be discussed (while frivolous or largely symbolic issues grab headlines), and because even when they are discussed the candidates so often speak in duplicitous half-truths or even out and out lies.  Example from the first link above (CAPS are my insertion of the actual truth and I crossed out the lies):

ROMNEY: “As a matter of fact, oil production is down 14 percent this year FROM 2010 TO 2011 on federal land, and gas production was down 9 percent. Why? Because the president cut in half the number of licenses and permits for drilling on federal lands and in federal waters.” OF THE MORATORIUM ON NEW OIL DRILLING IN THE GULF AFTER THE APRIL 2010 BP OIL SPILL, AND BECAUSE ALMOST ALL NEW GAS DISCOVERIES ARE BEING MADE USING NEW AND CHEAPER “FRACKING” TECHNOLOGY ON PRIVATE LANDS.

Obama appeared to make similarly false statements, like about implementing a pathway to citizenship for illegal aliens when in fact such a pathway does not exist at this time.  And Romney was clearly dissembling when he accused Obama of bringing down the auto industry, when in face Obama’s plan that Romney publicly opposed then and now saved much of the domestic auto industry.  

What if we had a candidate who could only be honest, like Jim Carrey in the 90s movie “Liar Liar.”  Yes, he would probably get killed on election day, but man would it be refreshing.  

I remember when republican Frank Murkowski defeated democrat Fran Ulmer here in Alaska in the governor’s race in 2002 or so and it was largely because he painted her as someone who wanted to implement an income tax and “steal” people’s PFD (permanent fund dividend – the state was in a budget crisis at the time due to low oil revenue).  Those were just fear mongering out and out lies, but they got him elected, with signs that said “Vote Frank Murkowski – Protect your PFD.”  Murkowski was a millionaire with a banking background, while Ulmer was an educator.  Guess which one had a lot more to lose from an income tax and would prefer to fund government using the permanent fund?

After his victory Murkowski called together the “Conference of Alaskans,” 55 bipartisan leaders and ordinary citizens to meet and agree on a way out of the budget crisis.  I actually taped the proceedings that were aired live.  Their initial conclusion was that the most fair way to help balance the state budget was an income tax that would kick in only if oil revenues stayed down and reserves ran out.  The Republicans freaked out and descended on the conference, and within 24 hours the conclusions were changing.  From the Juneau Empire, The Conference of Alaskans eventually “recommended spending some permanent fund earnings on state government, but also said the Legislature should consider balancing that with other sources of revenue, including a personal income tax and other broad-based taxes.  Another conference recommendation is that permanent fund dividends be guaranteed in the state Constitution.”

Murkowski and republican majority in the legislature pushed for the POMV plan, using more of the permanent fund earnings for government spending, and even a statewide sales tax, but never touched the income tax idea.  Anyway, all this to say that Murkowski ended up showing what was obvious from the start – he was much more of a threat to the PFD payouts than Ulmer ever was, despite his campaign signs to the contrary.

All of this leads me to this article in Time magazine by Michael Grunwald, which is unfortunately blocked behind a pay wall which most of us don’t pay.  But it basically details how the republicans were in disarray after Obama’s victory over McCain, and how they came together to plan stategy, and decided that everything hinged on denying Obama the bipartisan, “reaching across the aisle and working together” Washington DC that he sold to the voters.  By saying no.  To everything.  Here are some quotes lifted from the paper copy of the article in front of me.  “”We’re not here to cut deals and get crumbs and stay in the minority for another 40 years,” Cantor said.”  And “A few weeks later, [Pete] Sessions began his presentation at a House Republican leadership retreat in Annapolis, Md., with an existential political question:  “If the purpose of the majority is to govern…What is our purpose?”  The answer was not to promote Republican policies, or stop Democratic policies, or even make Democratic bills less offensive to Republicans.  “The purpose of the minority is to become the majority,” Sessions wrote.  “That is the entire conference’s mission.”  And they decided they would get there by saying no.

So if Obama had a plan to end world hunger and war forever by lowering taxes on everyone in the country by ten cents, they would vote no.  From an add-on to the article:  ““If he was for it,” former Ohio Senator George Voinovich explained, “we had to be against it.”  And “Republicans recognized that after Obama’s big promises about bipartisanship, they could break those promises by refusing to cooperate. In the words of Congressman Tom Cole, a deputy Republican whip: “We wanted the talking point: ‘The only thing bipartisan was the opposition.’ ”

This is so so so nauseating to me.  Shouldn’t you vote for each proposal on it’s own relative merits?  Not how your party tells you to vote.  Not in the way that will most hurt the opposition.  Vote in the way that most represents the people of your district (all of them), and in the way that most serves the people.  I know I’m hopelessly naive, but this is how we all want it to work, right??  And to me it is what Obama represented and what he actually tried to do.  This (“party of no” stonewalling) sort of garbage is why people hate politics.  Why they don’t vote.  And this specific instance is why I and hopefully many others won’t vote for a republican for national office for a long while.  I’ll show the party of no the voter of NO, and I hope most of the country is with me.  Throw the GOP out!!  (Where’s my paper bag??  About to hyperventilate!)  Honestly this gets me waaay too worked up and my mind goes in many irrational directions at once (get the pitchforks!  Light the torches!  Get a rope!  Get lots of rope!  Off with their heads!!!).

I’m an independent.  I have voted for people from both parties, and even a couple of 3rd party candidates, for local office, for president, etc.  I actually voted for the old George Bush, the W Bush, AND Obama.  I know, weird.  Anyway, I’m just trying to give context to my anger at the republicans for this “strategy.”  I’m not saying this as a hard-core democrat, I’m saying it as a normal, free thinking person and someone who tries to be a conscientious voter.  The republican “party of no” strategy actually succeeded in hurting Obama politically because he couldn’t get much accomplished.  But the GOP clearly put their own personal power ahead of working together for what was best for the country.  For 4 years.  That is reprehensible.

Now, I’m not so naive to think that dems have *never* engaged in this type of hyperpartisanship, putting themselves before those they are elected to serve.  Of course they have, countless times at various levels over the years.  We’re all screwed up.  But this is a recent example, on the biggest political stage there is.  And it was just wrong.