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The Alaska budget cuts are not only to the University. Deep cuts across the board with services Governor Dunleavy feels are unnecessary taking the biggest hit

The Alaska budget cuts are not only to the University. Deep cuts across the board with services Governor Dunleavy feels are unnecessary taking the biggest hit (public health, university, public ferry transportation). However, according to Alaska's constitution the government must come up with a balanced budget. They have failed to do so since revenue shortfalls began. The previous governor used a stopgap measure of using the only part of the PFD that isn't constitutionally protected. His actions are akin to digging through your neighbors couch cushions for change. The money that was used isn't for running the government. But, since it wasn't constitutionally protected like the actual fund the legislators took what they wanted to avoid making hard choices. The media focusing on Dunleavy wanting to pay residents what is constitutionally granted is a distraction. Alaska is in dire financial straits. Without severe budget cuts or a way to dramatically increase revenue Alaska will be bankrupted. For clarity, the Permanent Fund (the investment fund), is constitutionally protected and fed by oil revenue. The Permanent Fund Earnings Fund (that PFD checks are paid from) is not constitutionally protected and is what politicians raided.

AWildC182 7y ago
While this may be true, Alaska, unlike almost all other states, basically operates without any income or sales taxes. They depend almost entirely on oil revenue and property taxes which obviously isn't sustainable long term. https://www.bankrate.com/finance/taxes/state-taxes-alaska.aspx https://www.bankrate.com/finance/taxes/state-taxes-alaska.as...
- cynicalkane 7y ago
  Property, income, and sales taxes are all part of the cost of living and doing business. Raising property taxes won't hurt the general public any more than raising the other two. Taxes aren't a menu where you need a little of column A and a little of column B, just because. It's all money coming from the economy in some form and the important part is what you're incentivizing or disincentivizing. In fact, there's a minor but respectable economic school of thought that property taxes should be greater than 100% of all taxes, and the excess should be redistributed to the disadvantaged. Property taxes disincentivize hoarding and wasteful use of valuable property, which is A Good Thing.
  - AWildC182 7y ago
    Sure, but the issue isn't the fact that property tax is the sole source of tax, it's that oil absolutely dwarfs everything else in the state budget. They have property taxes but they don't really cover anything.
  - deleted 7y ago
    [deleted]
  - 8ytecoder 7y ago
    Different taxes affect different people differently. Sales tax primarily hits poor people for example - there’s only so much the rich can spend their money on. Bracketed income tax can be made to have low impact for lower income while boosting revenue. Property taxes tax the permanent residents but misses out the opportunity of, let’s say, taxing the tourists. Those are all levers. There was a recent article on economist that compared the tax models of California and Texas. One has a progressive income tax but crippled property tax and the other has no income tax but a steady property tax. Everything from the risk to revenue and the impact it has on the people vary so much. Neither is good in a way. The best system will use all three in the right proportion.
    - zzzzzzzza 7y ago
      tourists can still end up paying for property taxes. They occupy physical space. Best system is a pure land value tax. You can sprinkle in pigovian taxes to taste.
    - dragonwriter 7y ago
      > Property taxes tax the permanent residents but misses out the opportunity of, let’s say, taxing the tourists. Tourists pay real property taxes because those taxes are factors into accommodation prices, and into the prices of goods and services sold to tourists.
      - writepub 7y ago
        > those taxes are factors into accommodation prices Citation needed. Accommodation pricing is typically set by supply and demand. Which is why, last minute hotel deals at steep discounts are a thing. > Tourists pay real property taxes Then states/counties should be recovering delinquent property taxes from them
- tastyfreeze 7y ago
  Agreed, it is not sustainable. Alaska put themselves in this situation by growing government whenever oil prices were high without any regard to oil prices dropping. There was an opportunity to build Alaska wealth without taxes but I feel the time has passed. If Alaska had instead taken the 75% share of oil revenue allocated to government and invested it the same as the people's portion they wouldn't be in this situation. The entire historical debacle just illustrates in vivid color how horrendous politicians are at managing money. Edit: 75% for government not 25%. 25% is for the dividend fund.
  - omegaworks 7y ago
    >The entire historical debacle just illustrates in vivid color how horrendous politicians are at managing money. This is not true everywhere. Norway has a sovereign wealth fund that is doing quite well. Libya was once the most prosperous African nation before the US demolished their government. Sovereign wealth funds are an effective management strategy for the resource curse, if western nation backed multinational corporations don't find a way to seize control of it and/or block you from accessing the global marketplace.
    - seanmcdirmid 7y ago
      From what I heard, it’s own people got tired of Ghadaffi’s crap and revolted, but let e know if that is just western media bias.
      - ljf 7y ago
        Check out the Adam Curtis documentary/social commentary film 'Bitter Lake' for more on this
    - tastyfreeze 7y ago
      An Alaska wealth fund is what I had alluded to. It would have been a prudent investment in the wealth of Alaska. But, that didn't happen when the money was there. Now, there isn't the necessary time or money to build a wealth fund. Maybe the pain of the coming cuts will be enough to encourage building a fund for the future. I haven't seen anything that makes me think it will but, I can dream. It is really good to read that there is at least one country that built a wealth fund to provide for the government and citizens.
- audiometry 7y ago
  ouch. Would expect Alaska is boned — all the shale-related production is cheaper to produce and closer to consumers than Alaskan stuff.
- hollerith 7y ago
  If it is unsustainable, then how come New Hampshire hasn't been forced at some point during its 200-year history to adopt an income tax or a sales tax?
oeoeo00 7y ago
“Raided.” They “raided” a fund generated by public effort to pay for public services. I mean what is this, an Indiana Jones movie? The tone of the general public towards these things says to me the anti-government propaganda messaging is working as intended. Divide and conquer.
rovolo 7y ago
I think that you're underselling the size of the PFD relative to the state budget when you say "akin to digging through [the] couch cushions for change". Here's a comparison of the numbers: // (expected - actual) * valid applicants // ($2,300 - $1,100) * 666,047 PFD withheld 2017: $ 687M Total state revenue 2017: $1,018M Also, these statements are in conflict: > the PFD that isn't constitutionally protected > pay residents what is constitutionally granted [pfd_applicants] https://pfd.alaska.gov/Division-Info/Annual-Reports https://pfd.alaska.gov/Division-Info/Annual-Reports [pfd_projections] https://en.wikipedia.org/wiki/Alaska_Permanent_Fund#Annual_individual_payout https://en.wikipedia.org/wiki/Alaska_Permanent_Fund#Annual_i... [state_budget] http://www.tax.alaska.gov/programs/programs/reports/AnnualReport.aspx?Year=2017#program40170 http://www.tax.alaska.gov/programs/programs/reports/AnnualRe...
- tastyfreeze 7y ago
  The phrase was meant to illustrate that the fund isn't for the legislators to spend regardless of its size. It is the people's money. The whole thing looks like the Grasshopper and the Ant. The ant(people) established investments to benefit themselves and their descendants. The grasshopper(legislators) spent damn near every penny of oil revenue. Now the grasshopper has stolen part of the ant's cache and is begging for more. You also cut my quote in a bad spot. There are two parts of how Alaska residents get a check. There is an investment account that by constitution gets 25% of oil revenue to invest. Part of investment gains are rolled back in to the investment account. The other portion are put in the earnings fund that checks are paid from. The earnings fund is not constitutionally protected. Correction, the amount of a check is in statue not constitution. The fund itself is in constitution. [PFD Statutes] https://pfd.alaska.gov/LinkClick.aspx?fileticket=KRSQ6VCpO_Q%3d&tabid=495&portalid=6 https://pfd.alaska.gov/LinkClick.aspx?fileticket=KRSQ6VCpO_Q...
  - rovolo 7y ago
    Sorry for clipping out the 'neighbors' bit, but my point is that "stopgap measure", "couch cushions for change", and "is a distraction" imply that the size of the PFD is insignificant compared to state revenue. Or, the PFD size should at least be considered sacrosanct. Rereading your comment though, it's clear that you're mainly focusing on the legislators not dealing with the budget to your satisfaction. Closing the deficit caused by low oil prices/production will require more revenue or lower expenditures. However, I would note that governor Walker made a "hard choice" increasing revenue from the PFDs given that it caused voter outrage with people such as yourself. All of the money the legislature manages is the "people's money" since the government should be answerable to, and working for the residents of Alaska. --- Tangent, reading the statutes, it's painful to be reminded that Alaska was the first state in the US to pass a constitutional amendment denying marriage to gay people. > AS 25.05.013. Same-sex marriages. > (a) A marriage entered into by persons of the same sex, either under common law or under statute, that is recognized by another state or foreign jurisdiction is void in this state, and contractual rights granted by virtue of the marriage, including its termination, are unenforceable in this state. > (b) A same-sex relationship may not be recognized by the state as being entitled to the benefits of marriage. (§ 2 ch 21 SLA 1996)

AWildC182 7y ago

While this may be true, Alaska, unlike almost all other states, basically operates without any income or sales taxes. They depend almost entirely on oil revenue and property taxes which obviously isn't sustainable long term. https://www.bankrate.com/finance/taxes/state-taxes-alaska.aspx https://www.bankrate.com/finance/taxes/state-taxes-alaska.as...

cynicalkane 7y ago
Property, income, and sales taxes are all part of the cost of living and doing business. Raising property taxes won't hurt the general public any more than raising the other two. Taxes aren't a menu where you need a little of column A and a little of column B, just because. It's all money coming from the economy in some form and the important part is what you're incentivizing or disincentivizing. In fact, there's a minor but respectable economic school of thought that property taxes should be greater than 100% of all taxes, and the excess should be redistributed to the disadvantaged. Property taxes disincentivize hoarding and wasteful use of valuable property, which is A Good Thing.
- AWildC182 7y ago
  Sure, but the issue isn't the fact that property tax is the sole source of tax, it's that oil absolutely dwarfs everything else in the state budget. They have property taxes but they don't really cover anything.
- deleted 7y ago
  [deleted]
- 8ytecoder 7y ago
  Different taxes affect different people differently. Sales tax primarily hits poor people for example - there’s only so much the rich can spend their money on. Bracketed income tax can be made to have low impact for lower income while boosting revenue. Property taxes tax the permanent residents but misses out the opportunity of, let’s say, taxing the tourists. Those are all levers. There was a recent article on economist that compared the tax models of California and Texas. One has a progressive income tax but crippled property tax and the other has no income tax but a steady property tax. Everything from the risk to revenue and the impact it has on the people vary so much. Neither is good in a way. The best system will use all three in the right proportion.
  - zzzzzzzza 7y ago
    tourists can still end up paying for property taxes. They occupy physical space. Best system is a pure land value tax. You can sprinkle in pigovian taxes to taste.
  - dragonwriter 7y ago
    > Property taxes tax the permanent residents but misses out the opportunity of, let’s say, taxing the tourists. Tourists pay real property taxes because those taxes are factors into accommodation prices, and into the prices of goods and services sold to tourists.
    - writepub 7y ago
      > those taxes are factors into accommodation prices Citation needed. Accommodation pricing is typically set by supply and demand. Which is why, last minute hotel deals at steep discounts are a thing. > Tourists pay real property taxes Then states/counties should be recovering delinquent property taxes from them
tastyfreeze 7y ago
Agreed, it is not sustainable. Alaska put themselves in this situation by growing government whenever oil prices were high without any regard to oil prices dropping. There was an opportunity to build Alaska wealth without taxes but I feel the time has passed. If Alaska had instead taken the 75% share of oil revenue allocated to government and invested it the same as the people's portion they wouldn't be in this situation. The entire historical debacle just illustrates in vivid color how horrendous politicians are at managing money. Edit: 75% for government not 25%. 25% is for the dividend fund.
- omegaworks 7y ago
  >The entire historical debacle just illustrates in vivid color how horrendous politicians are at managing money. This is not true everywhere. Norway has a sovereign wealth fund that is doing quite well. Libya was once the most prosperous African nation before the US demolished their government. Sovereign wealth funds are an effective management strategy for the resource curse, if western nation backed multinational corporations don't find a way to seize control of it and/or block you from accessing the global marketplace.
  - seanmcdirmid 7y ago
    From what I heard, it’s own people got tired of Ghadaffi’s crap and revolted, but let e know if that is just western media bias.
    - ljf 7y ago
      Check out the Adam Curtis documentary/social commentary film 'Bitter Lake' for more on this
  - tastyfreeze 7y ago
    An Alaska wealth fund is what I had alluded to. It would have been a prudent investment in the wealth of Alaska. But, that didn't happen when the money was there. Now, there isn't the necessary time or money to build a wealth fund. Maybe the pain of the coming cuts will be enough to encourage building a fund for the future. I haven't seen anything that makes me think it will but, I can dream. It is really good to read that there is at least one country that built a wealth fund to provide for the government and citizens.
audiometry 7y ago
ouch. Would expect Alaska is boned — all the shale-related production is cheaper to produce and closer to consumers than Alaskan stuff.
hollerith 7y ago
If it is unsustainable, then how come New Hampshire hasn't been forced at some point during its 200-year history to adopt an income tax or a sales tax?

oeoeo00 7y ago

“Raided.” They “raided” a fund generated by public effort to pay for public services. I mean what is this, an Indiana Jones movie? The tone of the general public towards these things says to me the anti-government propaganda messaging is working as intended. Divide and conquer.

rovolo 7y ago

I think that you're underselling the size of the PFD relative to the state budget when you say "akin to digging through [the] couch cushions for change". Here's a comparison of the numbers: // (expected - actual) * valid applicants // ($2,300 - $1,100) * 666,047 PFD withheld 2017: $ 687M Total state revenue 2017: $1,018M Also, these statements are in conflict: > the PFD that isn't constitutionally protected > pay residents what is constitutionally granted [pfd_applicants] https://pfd.alaska.gov/Division-Info/Annual-Reports https://pfd.alaska.gov/Division-Info/Annual-Reports [pfd_projections] https://en.wikipedia.org/wiki/Alaska_Permanent_Fund#Annual_individual_payout https://en.wikipedia.org/wiki/Alaska_Permanent_Fund#Annual_i... [state_budget] http://www.tax.alaska.gov/programs/programs/reports/AnnualReport.aspx?Year=2017#program40170 http://www.tax.alaska.gov/programs/programs/reports/AnnualRe...

tastyfreeze 7y ago
The phrase was meant to illustrate that the fund isn't for the legislators to spend regardless of its size. It is the people's money. The whole thing looks like the Grasshopper and the Ant. The ant(people) established investments to benefit themselves and their descendants. The grasshopper(legislators) spent damn near every penny of oil revenue. Now the grasshopper has stolen part of the ant's cache and is begging for more. You also cut my quote in a bad spot. There are two parts of how Alaska residents get a check. There is an investment account that by constitution gets 25% of oil revenue to invest. Part of investment gains are rolled back in to the investment account. The other portion are put in the earnings fund that checks are paid from. The earnings fund is not constitutionally protected. Correction, the amount of a check is in statue not constitution. The fund itself is in constitution. [PFD Statutes] https://pfd.alaska.gov/LinkClick.aspx?fileticket=KRSQ6VCpO_Q%3d&tabid=495&portalid=6 https://pfd.alaska.gov/LinkClick.aspx?fileticket=KRSQ6VCpO_Q...
- rovolo 7y ago
  Sorry for clipping out the 'neighbors' bit, but my point is that "stopgap measure", "couch cushions for change", and "is a distraction" imply that the size of the PFD is insignificant compared to state revenue. Or, the PFD size should at least be considered sacrosanct. Rereading your comment though, it's clear that you're mainly focusing on the legislators not dealing with the budget to your satisfaction. Closing the deficit caused by low oil prices/production will require more revenue or lower expenditures. However, I would note that governor Walker made a "hard choice" increasing revenue from the PFDs given that it caused voter outrage with people such as yourself. All of the money the legislature manages is the "people's money" since the government should be answerable to, and working for the residents of Alaska. --- Tangent, reading the statutes, it's painful to be reminded that Alaska was the first state in the US to pass a constitutional amendment denying marriage to gay people. > AS 25.05.013. Same-sex marriages. > (a) A marriage entered into by persons of the same sex, either under common law or under statute, that is recognized by another state or foreign jurisdiction is void in this state, and contractual rights granted by virtue of the marriage, including its termination, are unenforceable in this state. > (b) A same-sex relationship may not be recognized by the state as being entitled to the benefits of marriage. (§ 2 ch 21 SLA 1996)