COVID-19 cases slow Legislative progress
A COVID-19 case in the Alaska Legislature cancelled House meetings for a few days and resulted in multiple absences among lawmakers and staff. Tok Representative Mike Cronk tested positive on Wednesday evening, the same day Alaska Governor Mike Dunleavy announced he had contracted the virus. Neither Dunleavy nor Cronk—both of whom are in their 50s—were seriously impacted by COVID-19. The men are continuing to recover and posted Facebook updates late last week reporting that their symptoms are diminishing. Since falling ill with the virus, Dunleavy —who was not eligible for the vaccine and has not yet received one— made a push for vaccines.
While there were no other cases among lawmakers, five legislative aides—staff to Cronk and to Anchorage lawmaker Sara Rasmussen— tested positive. Since many people in Juneau rent houses together, these cases led to additional quarantines of close contacts. At somewhat limited capacity, work continued. For example,
despite mild symptoms such as the loss of taste and smell, Cronk wrote on his Facebook page that he was continuing to work and attend meetings virtually.
Last Friday, Senator Tom Begich, an Anchorage Democrat, introduced a bill that would implement a flat five percent income tax based on an individual’s federal tax rate. The goal of Senate Bill 100 is to use taxation to generate revenue and thereby fill Alaska’s pressing budget deficit.
“The road Alaska is on has finally arrived at the edge of the fiscal cliff,” Begich wrote in a statement. Alaska’s budget has decreased by almost $4 billion, or 38.4 percent, over the past seven years. The Legislature has drawn from savings to fund state programs and services. This has led to a complete depletion of the Statutory Budget Reserve and left only $550 million in the Constitutional Budget Reserve. To fix this issue, said Begich, Alaskans need to turn to solutions other than the Permanent Fund Dividend and oil. According to Begich, SB 100 will “kickstart” the discussion of how to generate state revenue. Begich said in the statement that the Legislative Finance Division estimates that implementing an income tax could potentially raise about $1.4 billion beginning in 2023. Nine states already have a flat broadbased income tax. For his part, Dunleavy proposed $1.2 billion in new revenue over the next two years, but has not yet said how he plans to generate those funds.
Representative Neal Foster, a Democrat from Nome, said that he has not yet taken a position on the bill and will wait to hear debate before making a decision. Foster noted that if the proposed legislation makes it out of the Senate it might look drastically different than the current bill. According to Foster, a benefit to an income tax is that, because individuals pay according to their income, it is fairer for individuals who make less money. “Low income folks would pay little or no taxes. This is more fair,” he said. Opponents to an income tax point to economic hardships caused by the pandemic, said Foster. “For that reason I would be hesitant to implement new taxes,” he said. Foster added that implementing an income tax during these trying times would make a difficult situation more dire.
An alternative would be to impose a statewide sales tax. But Foster said he does not support this because it will disproportionately tax rural residents, who pay higher prices. For example, “a 5 percent tax on a gallon of milk in the village will be higher than the same gallon in the city.”
Moreover, Dunleavy has said that he will not support new taxes unless it goes to a vote of the people. “Even if a bill were to pass this session it would likely be vetoed,” said Foster.
A representative for Golovin Democrat Donny Olson said that the senator has not yet taken a position on SB 100, because it will likely undergo substantial changes. However, he does generally support income taxes only for higher income individuals.
An Eagle River Republican who was critical in ending the House deadlock is facing pushback for working with Democrats. Representative Kelly Merrick cast a crucial vote that ended the House’s 30-day deadlock when she voted for the opposite coalition’s nomination for House Speaker. However, Merrick is now being censured by her local Republican party. Eagle River Republicans pressured Merrick to resign and, when she did not, began a recall campaign against her.
Merrick, who was initially part of a caucus of 20 Republicans, broke from the group when she voted for Kodiak Republican Louise Stutes for House Speaker. Merrick at the time was clear that she had not joined the opposing group, but a few days later did switch coalitions. The fear of political repercussion is the reason the House impasse lasted so long—Republican legislators are afraid they will lose their seats if they work across party lines.