State income tax in our future

Alaskans have enjoyed paying no state income tax for more than 40 years but that is likely to change in the not too distant future.

We did away with the personal income tax in 1980 and it has been a good 40 years. The time is almost certainly coming, however, when we will have to take part of the cost of our state government out of our own pockets once again.

It’s nobody’s fault. We booted the tax when the oil money began to flow from Prudhoe Bay and taxing ourselves was no longer necessary. But good deals like that just don’t last. They are great for as long as they do last but the end always comes.

Alaska’s personal income tax started in 1949 and was originally 10 percent of your federal income tax. That later rose to 16 percent of federal tax. We paid it when we had to and dumped it as soon as we could. Nobody does those things when they don’t have to. We were just lucky that there were more than 30 years when we didn’t have to.

How soon will the state income tax come back? I don’t think anybody can say for sure but the Legislature recently passed a budget that calls for spending more than $4 billion on state expenses. We will be receiving something like $1 billion in federal relief money and can still draw on some funds in the Permanent Fund.

Given those sources it seems likely that we will receive a Permanent Fund dividend this year, though it’s unlikely to be either as large as we’ve had in some years or as small as in lean years. Presumably it will be somewhere in the middle depending on how deep the politicians dip into the Permanent Fund for state services.

And keep in mind that the corporations doing business in Alaska have been paying a corporate income tax all along. That only goes so far and leaning more on them would just drive companies away

The Permanent Fund will be cranking out revenues for years to come, both for dividend checks and paying part of the cost of state government. We were very fortunate that the fund was established and it has served a good purpose over the years.

Dipping into it to pay for state expenses bothers a lot of people but that has largely kept the politicians out of our personal pockets. Not many states, if any others, can make that claim.

Being an Alaskan carries many distinctions and having a state government with $70 billion in the bank is just one of them. I was a senior executive at ARCO years ago and ARCO was the company that made the discovery at Prudhoe Bay and made it all possible.

The company was drilling the well when my wife and I arrived here in 1967. The discovery was announced the following spring and I was offered a job a few months later (at triple my old Anchorage Times reporter salary.)

ARCO the company disappeared from the scene in 2000 when it became a subsidiary of BP, which still operates a number of service stations carrying the ARCO logo.

It was a great thrill and a privilege to be involved in the operations at Prudhoe Bay in those years. It resulted in some memories of a lifetime.

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.