Last Wednesday, Legislative Finance (LegFin) Director David Teal appeared before the Alaska House Finance Committee to discuss HB 115, the Committee leadership’s proposal to cut the PFD and institute income and capital gains taxes. The stated purpose of the presentation was to discuss modeling the impact of HB 115. As it turned out, however, the only impact of HB 115 that LegFin had considered was that on government revenues. The presentation didn’t even remotely touch on the impact of HB 115 on the overall Alaska economy — both the government and private sectors.
Especially in the midst of a recession, we believe that effort — assessing the impact of HB 115 on the overall Alaska economy — is critical. Government fiscal policy plays a hugely influential role in the midst of a recession. It can make a recession better, but it also can make it worse, or even much worse.
Because, to our knowledge, none of the Administration, LegFin, the Chamber, or for that matter anyone else has undertaken the effort specifically to score the effect of HB 115 on the overall Alaska economy, we have decided to do so, using the factors developed last year in two studies done by economists at the University of Alaska-Anchorage’s Institute of Social and Economic Research (ISER). The first — Short-Run Economic Impacts of Alaska Fiscal Options — was published in March 2016 (the “March 2016 ISER Report”). The second — Permanent Fund Dividends and Poverty in Alaska — was published in October (the “October 2016 ISER Report”). Continue reading