June 6, 2016
Honorable Members of the Alaska Legislature
Dear Alaska Policy Maker:
The Resource Development Council for Alaska, Inc. (RDC) is writing to reiterate our support for a long-term fiscal plan and to once again oppose industry-specific taxes currently under consideration by the Alaska Legislature.
RDC is a statewide business association comprised of individuals and companies from Alaska’s oil and gas, mining, forest products, tourism and fisheries industries. RDC’s membership includes Alaska Native Corporations, local communities, organized labor, and industry support firms. RDC’s purpose is to encourage a strong, diversified private sector in Alaska and expand the state’s economic base through the responsible development of our natural resources.
We appreciate efforts made by you and many in the legislature to achieve a sustainable fiscal plan. We believe Alaskans, like ourselves, will be best served with a sustainable budget, first and foremost. RDC’s 78 member, statewide board, as well as our hundreds of member companies, is very concerned with the state fiscal situation.
For more than 20 years, RDC has advocated for a long-term fiscal plan, including efforts to limit unrestricted General Fund spending to a sustainable level, support some use of the Permanent Fund earnings as part of a fiscal plan, and tax policy and incentives that encourage future investment in Alaska’s resource industries. Most importantly, Alaska needs a plan that grows the pie bigger, rather than fighting over crumbs from a shrinking pie. This means maximizing investment in all of our natural resource industries to increase production and the creation of wealth, jobs, and economic opportunity.
Achieving this requires prudent use of earnings from state investments, and increasing private sector investment in our natural resource industries – rather than chasing away investment dollars through an ongoing series of tax and fee increases, increasing regulatory burdens, and associated actions and policies which make us less competitive for global investment.
The state’s operating budget is on an unsustainable path, and operating expenditures of all state agencies need to be prioritized. Unrestricted General Fund spending increased for 10 years while revenues fell.
It may be politically challenging for Alaska to fix the budget this session, but we must find a path to sustainability.
Support efficiencies in state spending to sustainable levels
RDC encourages you to seek ways to further reduce state spending. We support more efficiencies in state government, and encourage you to work with the Governor in prioritizing and finding additional reductions to achieve a sustainable level of spending.
Permanent Fund earnings
The state budget can be compared to a two-income household – revenues derived from the development of natural resources and financial returns on investments. Budget reductions and taxes will not close the budget gap alone. Permanent Fund earnings will need to be used, but only in a sustainable manner.
Consider broad based taxes, but don’t shrink the economic pie
As a last resort, after budget reductions and sustainable use of the Permanent Fund earnings, broad-based, equitable taxes on hard-working Alaskans and Alaskan businesses should be considered. The effects of a broad-based tax on Alaskans and businesses, particularly in rural Alaska, must be fully reviewed and unintended consequences considered.
Taxes on industry, while politically easier to achieve, risk shrinking our economy and the revenue pie, making things worse in the long run. Continuing to incentivize growth in the private sector will strengthen the foundation of Alaska’s economy and grow the revenue pie for the state over the long run. A strong and growing private sector should be a priority. When the private sector is healthy and growing, the State of Alaska will prosper.
It is not RDC’s role to tell policy makers specifically where to cut the budget, but to offer support to those who show leadership and help achieve a long range, sustainable fiscal plan. RDC encourages you to work together with the governor and your colleagues toward solving the state’s ongoing fiscal imbalance. We promise you our support and participation.
Thank you for your time, and we look forward to working with the legislature to find solutions for Alaska’s future.
Resource Development Council for Alaska, Inc.