Governor floats idea of head tax to end legislative stalemate

After an entire regular session and more than half a special session gone with no deal on a state budget, Governor Bill Walker met with legislative leaders on Monday (June 5) to roll out a compromise package.

Under the governor’s proposal, people who work in Alaska would pay a set amount each year based on their income.

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But the House majority coalition met the package with a cool response. Dillingham Democrat House Speaker Bryce Edgmon says it doesn’t go far enough this year to solve the budget crisis.

“What we saw today being offered really is a scenario that finds the Legislature in an election year back in Juneau fighting intractable budget battles and having to make really tough choices,” Edgmon said. “So, what our coalition has been saying all along is: ‘We need to make those tough choices this year.’”

The governor’s tax concept, known as a “head tax” is based on a proposal by Fairbanks Republican Senator Click Bishop. But Walker wants to raise twice as much as Bishop proposed. Under Bishop’s proposal, the tax would range from 50 dollars for people who earn less than 20,000 dollars to 500 dollars for those paid more than a half million bucks.

Governor Walker also called on lawmakers to pass the Senate version of an overhaul to the state’s oil tax credit system – with one change. Under that change – known as ring fencing — oil and gas companies would no longer be able reduce their taxes due on revenue from one field by their costs to develop another.

Walker also endorsed the Senate version of a bill to draw money from the Permanent Fund to pay for the state government. It would set dividend checks  at $1,000.

But Walker supported the House version of the state budget.

The governor’s compromise package would reduce the gap between what the state spends and what it raises by nearly 90 percent [from $2.5 billion to $300 million].

The state government will shut down on July 1, if lawmakers can’t reach a compromise.