You are hereDoes the State read its own memos?
Does the State read its own memos?
By Dave Stieren
Staff Writer
The Alaska Standard
A credo of the conservative movement and free market capitalism is that lower taxes and government expense allows for the private sector to flourish. Expand government’s take, or increase the regulatory cost of a private enterprise to do business, and you will curtail that business to pay more, upgrade facilities, or improve the product. It’s an argument made regarding the cruise ship tax and accompanying legislation, one made for ACES, and one of the many arguments against the socialization of health care. Apparently, the state of Alaska understands this, but has failed to implement this belief in a manner that makes any sense.
Recently, the Alaska International Airport Systems (AIAS) has introduced an proposal to entice an Asian based passenger carrier to extend, resume, or introduce weekly passenger service from an Asian city to Alaska. The proposal would provide incentives in the form of the waiving of fees, (what you and I would call taxes), with the total annual amount allowed up to $1 million. This would grant a waiver of “all landing fees, gate fees, and fuel flowage fees for each scheduled weekly round-trip non-stop passenger flight operated by the carrier between an AIAS airport and Asian airport .“ While the waiving of fees does represent a strong enticement for the potential carrier to operate, it does not create the one thing necessary to make this work: demand.
And within this lies the dilemma, not so much for an airline, but for the state and the “vast” reserves of oil and gas we hear about daily. As the pipeline sprints toward critical mass in regards to transferred volume of oil moved, we wring our hands and call for more studies. “We are America’s energy leader” was repeated in every whistle stop Gov. Palin made as John McCain’s running mate, and I’m sure to be echoed in her upcoming memoirs. I hate to tell you all this, but we are not. We are not America’s energy leader, anymore than Brett Favre is a frontline NFL quarterback. Our time in the leadership chair has passed. Think I’m wrong? Don’t take my word for it, ask the governor. In her piece in the Anchorage Daily News on May 17, she announced plans to re-review plans for moving natural gas from where it is to places where it’s needed. Again.
I assumed that ANGDA did this sort of thing for a living. Study, analyze, plan, spend, and wait. And where is AGIA in all this? “Our effort complements the progress TC Alaska is making on a line to the Lower 48, using its state license under the Alaska Gasline Inducement Act. Alaskans can look forward to all the benefits the AGIA project will produce. “ Uh, what benefits? According to a recent column written by Larry Wood in the Alaska Journal of Commerce highlights the greatest threat to any gas project; better resources closer to the market. With huge gas reserves in Texas and Louisiana, and an attitude toward the producers that puts other investment options on the table elsewhere, Tom Irwin should read the proposal that AIAs has put forth, and perhaps give his boss a call. Unless, of course, she’s busy writing.
I have been decrying 'fiscally independent government' since the day Alaska politicians denied the citizens right to the oil money and took it all themselves, before returning a small portion to the people as 'free money.'
One problem with fiscally independent government is that citizens cost money to keep and care for. The state gets virtually all its money from oil. The income from oil is not related to the number of citizens or their prosperity. Per capita state revenue (oil money) drops when population increases. Almost anything that increases business and jobs in the state increases the demand for state government services (increases state costs) but it does not increase state revenues. Some businesses are subject to a state tax but this does not offset the costs the employees generate for roads, schools, sewers, etc.
Why would Anchorage residents want to increase cruise ship traffic and jobs and population in Juneau? Cruise ships cost money. Docks must be built etc. Most of this is done with state (oil) money. The income from passengers goes into Juneau merchants pockets. The merchants, in turn, support local businesses and increase the demand for more employees to serve them. This increases the need for schools, roads, sewers, etc., which will increase the demand for state funding (because the workers do not pay taxes) which means less state money will be available for Anchorage.
Note that I vehemently oppose state taxes as long as the state has the oil money becuase additional money gives the state more control and power than it already has. The state has more than enough money to do what it should be doing. The problem is that with huge amounts of 'free money' there is no control on state spending. Every politician in the system can buy all the votes he or she needs.
IN any case, to the extent possible, it is currently in the best interest of the state (government; i.e. politicians) to discourage economic development that does not put money into politicians hands. The only limitationo on this is that people such as those who depend on tour boats for their livelihood get upset when their pocketboks are affected. As a result there is some lip service paid to economic development and squeaky wheels get a little grease to keep votes.
I am not trying to pick on Juneau. The same is true for businesses that generate more jobs in Anchorage; more people in Anchorage means less money for Juneau.
To visualize what I am saying, imagine what it would be like if the population of Alaska was 25. How much money would the legislature have to spend on each one of us? If the population were to drop to 25 today the state would lose almost nothing in taxes but would still have ALL the oil money. People complain about people who move here for the dividend, which makes ther dividend less. The dividend is nothing. What about the increased demand for services, roads, schools, convention centers etc?
Economics and politics are easy to understand. Just follow the money (and power).
Sarah Palin keeps espousing "smaller government", and as you say above, "... lower taxes and government expense allows for the private sector to flourish."
Last December Gov. Palin didn't hesitate to call in Big Government -- the biggest -- so that Alaska's own "private sector" could flourish -- you know, tourism -- when she called the Department of Homeland Security to reverse their decision to deny Far Eastern winter flights to Fairbanks due to a DHS staffing shortage of US Customs agents.
http://www.adn.com/money/industries/aviation/story/626764.html
No doubt this reversal by the DHS caused Customs agents to be drawn away from other U.S. entry points such as the border between Washington State and Canada at Blaine, WA, lessening the security available there -- at least until President Obama's budget was passed recently.
What's odd about that is that the cruise industry is pulling ships out of Alaska waters due to the increasingly heavy STATE taxes levied on each ship, the so-called "head tax". Cruises to Alaska from the Pacific Northwest are some of the cheapest 7-day vacations imaginable, so that $50/person head tax is disproportionally exorbitant. Are Japanese tourists arriving in Fairbanks taxed so disproportionately heavily?
What's the old saying, "cutting off your nose to spite your face"? Alaska government, no matter what size it is, should be encouraging BOTH forms of tourism, flights and cruises. Both Southeast Alaska and Central Alaska need the jobs.
but I doubt the good gov is listening right now. Gotta get typing....