Alaska’s budget dilemma

Alaska is continuing its nearly two year long discussion to balance the budget. There are essentially four alternatives (a) sell more oil at low prices, treat receipts are revenue; (b) reduce expenditure; (c) raise taxes, especially introduce an income tax; and (d) raid the Permanent Fund. The discussion has now centered around either an income tax or raiding the Permanent Fund.

Despite the inefficiency of government, Charles Wohlforth argues for an income tax, saying “As part of our political system, however, the dividend is essential. As intended by Gov. Jay Hammond, the dividend gave the Permanent Fund a political constituency. With no income tax, the dividend is doomed and the fund would be next.”

In an earlier article, he also explains that over 3 different oil booms, the government has been drawn towards megaprojects, which end up nowhere. This is one of our concerns as well – even if the government spends mineral money on infrastructure, is it likely they will spend it well? Or will it go into grandiose statues and elephant parks?

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