Mat-Su divided on tax plans

Mat-Su residents are giving a mixed reception to Gov. Tony Knowles announcement that an income tax may be part of the solution to the states looming $1 billion budget crisis.

Martin Hammer, 43, of Meadow Lakes, is a construction worker who says the governor should pare state government before reaching into residents pockets for taxes.

I dont think they should be taxing anybody, Hammer said Friday. There are bound to be some places where they can cut there always is in a Democratic government. It seems to me a thinner, smoother government is the way to go. This is the time to find out how to thin it out.

Knowles tax proposal was made public Wednesday night during his State of the State speech, where he outlined a budget plan that calls for the transfer of $4 billion in Alaska Permanent Fund profits to the states Constitutional Budget Reserve and the use of increased annual earnings from the budget reserve to help pay for state services.

The transfer would be made only following a vote of the people. Knowles called for a special election early this year.

Knowles also proposed raising $350 million in new revenues through an Alaska Credit Income Tax, which would require Alaskans and nonresidents who earn their living in Alaska, but dont live here, to pay for a portion of Alaska services and benefits.

Families making as much as $60,000 a year the median Alaska income would pay nothing.

Residents would be credited for federal taxes paid on permanent fund dividends, and for a portion of property and sales taxes, Knowles said.

Republican leaders say the governors plan was a good starting point, but that deeper cuts in the state bureaucracy must be made before they will support a tax.

Knowles claims paring state government to the bone will still leave a $100 million gap between state revenues and spending.

Hammer agrees with the Republican stance, but is upset with both the Legislature and the governor because he says they should have seen the crisis coming and started planning for it a long time before oil prices began plunging last year.

I think its complacency they had, he said. It happened pretty quick to them, didnt it? They got caught with their pants down and were paying for their lack of foresight. Id hate to see what happened in 87 happen to the state again. Maybe they should find out ways of propping up income rather than relying on oil all the time. This is going to hurt a lot of people.

Michelle McCreary of Palmer says she supports an income tax and would even like to see the governors $60,000 tax threshold lowered so more people would contribute to state coffers.

I just really feel we need to stand on our own two feet economically, said McCreary, a homemaker and lifelong Alaskan.

I feel at the present time our ability to do so is coming to an end, she said. Our resources are dwindling and we cant rely on the oil companies to provide most of the money that goes into the budget.

McCreary says she remembers the recession of the late 1980s all too clearly.

That would be a minor taste of what it could be like if the problem isnt resolved, she said. I really regret (legislators) are so closed-minded to a tax. I would hope that some of the working class would at least be open to that, that we havent gotten too spoiled. Its an unusual thing to not pay taxes to your state. Theres certain government services that are needed to run the state and weve got to pay for that some way or another.

McCreary is concerned about Mat-Su and other Republican legislators penchant for cutting state spending, especially in the areas of transportation and education.

I dont know how much more bearable it can go, she said. I know that they have cut quite a bit. I would like to see some of the real basic services kept at the level theyre at. Unfortunately, I think the governor will probably hit a road block, but I think it was very courageous of him to at least throw the idea out.

McCreary says she would like to see the governor and the Legislature arrive at an agreement, even if compromises are made.

I think many people are just so used to not paying taxes that they become spoiled, she said.

No one likes to pay taxes. Thats why it would be really nice if there was some openness with the Legislature, she said. But I dont necessarily see that happening. As politicians, they probably are more concerned about the votes theyre going to get in the next election.