Tom Brennan

Tom Brennan

It seems likely that we will have a Permanent Fund dividend of $2,350 this year. Governor Mike Dunleavy and the Alaska Legislature both appear ready to sign off on such a deal.

That will make everybody happy for awhile but it really seems likely to speed up the time when we bring back the income tax.

There may be good reason to take that approach to using state assets. High finance is way over my head but it seems to me a more cautious approach to the dividends would make them last longer. And, most importantly, it would push the return of the income tax into the future, at least out of the near future.

Right now Alaska is the only one of the 50 states to have neither an income tax nor a state sales tax. And just three Alaska communities currently levy a local sales tax. Kalifornsky charges a 3 percent tax on various items, Kenai has a 6 percent tax and Ketchikan takes 6.5 percent.

We have avoided statewide personal taxes since the Alaska income tax bit the dust in 1980. We did away with it when the oil money was flowing robustly. And nobody except the perverse tax zealots have missed it.

But it has been a foregone conclusion from the start that the flow of oil money would eventually slow down and some form of state tax on personal income would be necessary once again. We have done without one for more than 40 years, though it was clear from the beginning that such a benefit of being an Alaskan would not last forever.

It should be noted, however, that corporate income taxes have been with us throughout those years. Those, when combined with oil and gas taxes and royalties, have carried the burden of state expenses for us. And we have been able to sock a nice part of that income away in the Alaska Permanent Fund.

For years the only use of Permanent Fund money was really the individual dividend. But in recent years the state has been drawing on the fund to cover state expenses. And that was the intent of those of us who voted in 1976 in the referendum that authorized the Permanent Fund.

When the fund got started, paying individual dividends seemed a good way to get the general public to stay interested and reasonably well informed on how the money was used. And for the most part it has been used well for the benefit of the people.

In fact, paying an individual dividend of nearly $2,400 seems rather irresponsible. Perhaps we should look at it as a spending spree that will inevitably have to end, though it’s unclear that this would even be the last of the big payouts.

A brush with reality is obviously in the cards at some point and I can’t really fault people if they want to write themselves a big check again this year. We’ve got the money and perhaps we should enjoy it while we can.

But I’m an old New Englander and the thought of voluntarily sending out checks of that magnitude makes my blood run cold.

Tom Brennan is an Anchorage columnist and author of six books. He was a reporter/columnist for The Anchorage Times and an editor and columnist at The Voice of The Times.

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