The #akleg join fiscal plan working group is underway. On today's agenda: ISER Director Ralph Townsend with a presentation about the economic impacts of taxes and PFD cuts.

Watch: akleg.gov/includes/_play…
Docs: akleg.gov/basis/get_docu… Image
Townsend says people get fixated on the number whenever an economist is before them. He says the focus should be on managing Alaska's resources:
-Human capital
-Private capital
-Public infrastructure
-Public financial assets (the Perm. Fund)
-Natural resources

#akleg
He says government is in large part balancing the good things (roads, infrastructure, services, education, etc) against the negative effects (like taxes).

"Good policy does make a difference in the long run. ... But anytime we make a change, it has short-run costs."
Townsend: "We can’t be frozen in place that there are short-run consequences. ... they’ll be reduced overtime as people adjust to the new environment."

He compares it to short-term layoffs as an example that would be absorbed over time.
He also notes that uncertainty has its costs. It may be invisible because "We don't see the buildings that don't get built" but that it can be hard for private sector to invest when it's unclear where it'll go.

#akleg
As for new revenues, he says his recommendation is "broad and low." Broad so it raises revenue, low so it doesn't dramatically alter behavior.
Neighbor brought over a salmon so I've had my hands busy gutting and cleaning it. But been very interesting look at it.
Townsend went over regressivity vs progressivity in taxes, noting some taxes are flatter than they appear and some flat taxes aren't really all that flat.

He also notes that an income tax may discourage certain behaviors (as in, if I make too much $ I might not apply to others)
Sen. Hughes asks about outmigration following the establishment of an income tax.

Townsend knows what study she's talking about and notes that the study is pretty flawed. He also says taxation level is likely not gonna be the sole factor in location.
On later questioning, Hughes says that she doubts Townsend because she has heard from some individuals that they WILL move away from Alaska if an income tax is implemented. She says it's something worth keeping in mind.
Rep. Carpenter asks who we would want to move to Alaska.

Townsend notes that Alaska has a lot of in migration and out migration. He says it fluctuates based on economic opportunity with big booms driven in large part by oil industry.

#akleg
Townsend says the outmigration now isn't driven by a non-existent income tax. He says the PFD and potential of income tax aren't likely the main drivers of the current run of outmigration, but the overall lack of economic opportunity.

#akleg
Townsend warns that "there’s going to be a nationwide competition for talent."

He says the issue of migration isn't just about PFD and income taxes, but the availability of good jobs and many other factors.

#akleg
Also, man, I really mangled that fish. Hey! At least another opportunity to break out the smoker!
Kiehl notes Alaska significantly dropped its corporate incomes taxes by adjusting the brackets and asks if there's a corresponding increase in growth.

Townsend isn't sure about studies, but notes Alaska has the highest concentration of S corps/LLCs (which aren't taxed)

#akleg
Townsend returns to THAT study from ISER that compared various cuts to a dividend cut.

He says "the impact of a dividend cut is somewhat higher" but that it's a misrepresentation to call it significantly higher than the other options.

#akleg Image
Townsend says the higher estimated impact w/ PFD cuts is because "more people who are spending more of their income."

He says that the whole claim that ISER says PFD cuts are WAY worse than everything is overstating the case. "It’s significant but it’s not overwhelming."

#akleg
And here's the distributional impacts of the PFD cut. He notes that pretty much anything other than the progressive income tax tend to put a higher burden on low-income Alaskans.

#akleg Image
Townsend isn't super sure what the exemptions on that 4% sales tax are but notes he's pretty sure it includes food. The higher the exemptions, of course, the higher the rate has to be to raise the same amount of revenue.

#akleg
Townsend also warns against trying to craft a tax that targets tourists, noting it would create some unintended consequences. What happens, he asks, if you were to set a summer-only sales tax with car sales.

#akleg
Hughes asks if there are states w taxes on hotels.

Townsend says, yes, many. Lodging taxes are extremely common. 10% or higher, but notes that lodging taxes would hit Alaskans too... like members of the #akleg

Hughes suggests making it seasonal (which he JUST warned against).
Hughes asks if there's a tipping point where lodging taxes would discourage visitors.

Townsend: Taxes are not a tipping point thing.

#akleg
Townsend says taxes can impact behavior, but there's rarely if ever a magic number that would equate to a "tipping point."
Townsend is on a slide of short-run impacts of spending cuts. Shows cutting state jobs leads to the largest impact on total jobs.

McCabe seems confused: The slide seems to "Fly in the face of the conservative thought process" he says. "Why would spending cuts cost jobs?"

#akleg Image
McCabe wonders about the multiplier effect of private sector dollars. It's like 9 dollars for every dollar, right?

Townsend says no. It's more like $2 circulating for every $1 in Alaska because, in large part, that's because money in Alaska leaves Alaska pretty quickly.

#akleg
Townsend: The question comes down to 'Who pays?'

He says it's the single most important issue in the entire conversation facing the #akleg. Everything else, he says, is interesting but doesn't move the need as much as figuring out who's gonna pay for it.
Hughes just tremendously misreading everything while Rep. Kreiss-Tomkins trying to do his best to politely correct her.

The entire #akleg situation encapsulated.
And now Hughes is suggesting that if we were to pay out dividends that roughly equal about $10k Per family then there'd be more small businesses. She says it should be factored in here.
Then she references a different report about the cost of uncertainty. She says as long as they fix it, then boom Alaska will have $550M in additional investment (again, it's more complicated than that).

Townsend says it's more complicated than that.

#akleg
He says changes on the state level—like cutting education—will mean some local Govs will turn to new revenue like local property taxes, which in turn could create big secondary impacts for business investment decisions.
He says a lot of state government responded to the Great Recession by cutting K-12 funding and universities. He says the long-term impact has been higher property taxes and greater student loan debts.

#akleg
McCabe doubts Townsend, says that the whole rise in property taxes might happen but he says the REAL question is did the schools cut their expenses.

Townsend says with the universities, for example, don't want to cut themselves into becoming useless.
Now we're getting McCabe's Let's run government like a business spiel: "At the end of the day the university is a business. It’s in the business of selling education."

McCabe seems to think UA hasn't cut services. JKT and Townsend say the cutbacks have been significant.

#akleg
McCabe says if a business is hurting then simply cut the employees.

Townsend says ISER, for example, used to have 5 economists. It's down to just one, who's currently on his way out.

JKT says it looks like they are running it like McCabe suggests.

#akleg
And now Townsend notes universities bring a lot more to their communities than just selling degrees. Editorializing, he says they help grow the economic, expand the diversity, strengthen the community.

"I would resist reducing universities to 2-year technical schools."

#akleg
Townsend says it's wrong to take a narrow view of what a university brings to a community. He notes UAA played an important and significant role in pandemic and has helped the local economy. I believe there's a Sea Wolf soaring overhead.

McCabe: "I deserved that."

#akleg
Townsend says he's deeply concerned by continuing trend of outmigration combined with a workforce that is less skilled than its been. He says Alaska needs a bigger and more skilled workforce if it wants to have a strong future.

#akleg Image
In the tail end, we get some disclaimers from the Republicans.

Hughes says they've been meeting "literally hours on a daily basis."

McCabe notes people may be complaining retreads but notes they're "educating those who have not seen those presentations" and that includes him.
And that's it til Thursday.

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More from @mattbuxton

6 Aug
Happening now. Oral arguments in AFN's lawsuit challenging the Dunleavy administration's expansion of the Constitutional Budget Reserve sweep to include the Power Cost Equalization program.

#akleg

Watch:
The key issue here is what is/isn't subject to the sweep. Previous decision said it has to be in the general fund AND available for appropriation by the #akleg.

Under a 2019 opinion by former AG Clarkson, Gov decided if it was LIKE the general fund, then it was the general fund.
Unsurprisingly, this hasn't been implemented equally across the board with a lot of questions about whether Clarkson's expanded understanding would also mean the Alaska Permanent Fund's earnings reserve account and several others should also be swept.

#akleg
Read 20 tweets
5 Aug
Out running an errand now, but the #akleg fiscal working group is underway with today’s hearing with Revenue Commissioner Lucinda Mahoney. Sounds like it’ll be more focus on the constitutional amendment (the one they’re gonna spend $250k on).

Watch here: akleg.gov/includes/_play…
Sounds like they’ve got some new fiscal model to debut today.

So far, Mahoney is talking about consistency in the size of the dividend… something that the PFD has never had (and also opposed by some far-right folks who few like it’d turn the PFD into an entitlement)
Sen. Hughes says maybe actually the PFD has been historically steady if you apply inflation.
Read 11 tweets
5 Mar
In the House and Health and Social Services Committee, Phil Hofstetter of Petersburg Medical Center says they had more covid-19 cases following the expiration of the disaster declaration than they DURING THE REST OF THE PANDEMIC.

#akleg
He says that travelers started to ignore travel requirements and individuals started to ignore masking mandates, etc. Behavior was changing, he said, because there was no more public health emergency.

He says the hospital is at capacity for covid-19 treatment. #akleg
They've had to close schools after getting through the pandemic without having any significant closures.
Read 5 tweets
4 Mar
The Senate Transportation Committee is currently meeting on the proposed closures of several DMV offices. Sen. Kiehl notes a lot of stuff--driver's tests, senior tests--need to be done in person.

Admin Commissioner Tshibaka suggests they just change the laws.

#akleg
Sen. Myers notes that you've gotta do the CDL certification in person.

However, Sen. Shower is gung-ho and asks Tshibaka if there's other laws they can change.
Sen. Kiehl also notes that it looks like a lot of the data about the movement online may be affected by the pandemic. He asks for a longer look back.

Sen. Shower, doing the work for Tshibaka, says well maybe people don't use it that much because people don't know.
Read 27 tweets
4 Mar
Sen. Lora Reinbold responds to Gov. Dunleavy's letter calling her a liar and spreader of disinformation about covid-19 and the state's response. So far a lot of hollering about "illegal" this and "illegally" that.

#akleg

Livestream via @alaskalandmine: facebook.com/19238368545053…
She pats herself on the back for waiting a week to hold her response because Dunleavy got covid. She wishes him a speedy recovery.
She credits herself with the #akleg failing to pass the disaster declaration. (It'd be the House's disorganization, but whatev, since when has she been about facts?)
Read 21 tweets
3 Mar
If you tune into today's House Health and Social Services Committee, you'll find Americans for Prosperity Alaska testifying in support of more government in the form the Department of Health and Social Services split.

#akleg
Rep. Spohnholz calls 'em out. Notes the reorganization really only calling for additional execs without any actual plan for improvement. Asks if they really support additional bureaucracy without a plan for improvement.

AFP's McKee says, well, there's more to look at.

#akleg
Rep. Fields notes that AFP has historically opposed public employment. Says their support for additional public employees - even if there's not really a plan for them - sounds like a sea change in AFP's policy.

McKee says that AFP has always respected public employees.

#akleg
Read 9 tweets

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