Keeping a lid on spending

Our legislators need to walk a fine line in their discussions on the state budget.

We don’t currently have a state personal income tax and, with state expenses paid largely through oil and gas revenues, can presumably avoid one for at least a few more years. But that situation is almost certain to change in the years ahead.

Right now state expenses are funded by a combination of oil and gas royalties and taxes, as well as corporate income taxes, but the day is coming when those will not be enough to meet state needs. And that is when we will need to dip into our individual pockets once again.

Having the possibility of individual state income taxes looming on the horizon can be unsettling for some but it has a positive impact on policy decisions. It is a strong incentive for our elected state officials to keep state spending as low as practical to cover items that are important to us. And though most of us benefit from state spending, either directly or indirectly, using up those resources brings the day closer when we will indeed need a personal state income tax once again.

Our goal should be putting that day off as long as possible and keep a rein on spending. In the years after the discovery at Prudhoe Bay in 1968 this state was rolling in dough and our leaders were able to access a lot of money that had been scarce for generations.

Reining in that spending has been understandably difficult and our leaders have had to establish priorities. That has had a beneficial impact on government decisions in that it has provided valuable guidance on what is important to the people of this state and what can be considered luxuries to be funded only when we have a full treasury.

We still have a long way to go in that regard but the fact that the process is started and well underway is commendable. Right now the important thing is putting behind us the free-spending government habits developed in years when the general public did not share in the burden of state needs.

One area where we are seeing the need for restraint is in deciding how much of our Permanent Fund revenue can be spent on government and how much allocated for individual dividends.

It is only in recent years when the state has had to use a portion of Permanent Fund earnings on government but that development is an important positive one. It is a reminder that there is no free lunch and that we need to keep spending to a level the state can afford in the years to come.

Many state leaders will say they are already doing that and, indeed, decisions must always be made and priorities established. They always have been a critical part of the government process but there was a time not long ago when almost anything could get through.

One benefit of the stage we are currently in is that value decisions must be made on what is important to the people of the state. Some Permanent Fund revenues can and must be spent on our communal and government needs, but those revenues also cover our individual dividend checks.

That creates a tug of war of sorts in that what doesn’t go to meet state needs can be paid out in individual dividends. There is a definite pull from communal needs that meets natural resistance from the pull of demand for individual dividend checks.

The old days were great while they lasted but having our elected officials make such value decisions is a good thing. It develops in them the discipline necessary for decisions important to our state.

In other words taxes are more than just an unwelcome burden. They have a significant positive side.

They encourage well-considered government decisions.

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.