JUNEAU, Alaska — Alaska Gov. Bill Walker has proposed instituting a personal income tax for the first time in 35 years as the oil-dependent state looks to plug a multibillion-dollar budget deficit amid chronically low prices.
In laying out his budget plan Wednesday, Walker also proposed using the fund that provides annual checks to most Alaskans to generate a stream of cash to help finance state government.
Alaska has been using savings to balance its budget but is blowing through its reserves at an estimated rate of $10 million a day. The governor warned that if the state stays on its current track, drawing down on savings, the dividend is in danger of ending in 2020.
Alaska isn’t alone among oil-producing states to experience hard times as oil prices stay low. But unlike states like Texas or Louisiana, Alaska has few other industries to make up the difference.
In recent years, oil has provided about 90 percent of the money available for lawmakers to spend. That’s down to about 75 percent, the state Revenue department says.
Oil flow through the trans-Alaska pipeline peaked at about 2 million barrels a day in the late 1980s but is averaging close to 505,000 barrels per day this year.
Alaska is one of seven states without an individual income tax, and it’s the only state to have repealed an existing income tax, according to the Tax Foundation, an independent tax policy research organization.
The income tax, as proposed, would generate about $200 million a year, according to the Walker administration.
