BEYOND THE NUMBERS
Alaska Governor Embraces Formula for Decline as Colorado Lawmakers Vote to Relax Theirs
Alaska Governor Mike Dunleavy is proposing two constitutional amendments that would severely restrict the state’s ability to invest in its future — much like the “Taxpayer Bill of Rights” (TABOR) in Colorado that has driven state funding crises ever since its enactment more than two decades ago, and that also has limited investments in education, infrastructure, and other key building blocks of economic growth.
In Alaska, lawmakers and voters should heed the advice of the last living framer of Alaska’s state constitution and reject the governor’s harmful amendments.
Colorado’s experience explains why. As more people have moved to the state to take advantage of its strong economy and beautiful scenery, TABOR’s rigid tax and spending limits and voter requirement to raise taxes have kept Colorado from fully capitalizing on that growth. Since the state enacted the measure in 1992, Colorado has fallen to near the bottom among states in support for education. In 2017 it ranked 48th in K-12 school spending and 47th in higher education support, as a share of personal income.
The state also faces an annual shortfall of about $1 billion in transportation funding, which supports highway and bridge construction and maintenance, among other things. This backlog also hurts Colorado businesses that depend on that infrastructure to get products to market.
Colorado’s extreme limit has forced lawmakers into inefficient workarounds to raise the revenue necessary to meet its growing population’s needs. In particular, lawmakers have found that the easiest way to circumvent TABOR is to raise fees, which doesn’t require voter approval. Because these fees generally aren’t based on a person’s income or ability to pay, raising them forces struggling Coloradans to bear more of the load for government services that everyone depends on. That makes a bad situation worse since Colorado’s tax system (not including fees) already asks more of lower-income families than it does of the richest. Coloradans making less than $22,000 pay an average of 8.7 percent of their income in taxes, whereas those making over $600,000 pay an average of just 6.5 percent of their income.
Since 1993, Colorado voters have approved close to 500 local ballot measures to relax TABOR’s restrictions on cities and towns and raise much-needed funds, and also voted to suspend TABOR’s statewide limits for five years in 2005. This year, lawmakers approved a measure to let voters ease the TABOR limitation to better invest in priorities that include education and infrastructure. The measure, which now goes to the voters in November, would similarly ease TABOR’s limits for state revenues.
In Alaska, the governor’s two proposed constitutional amendments would significantly worsen Alaska’s budget problems. Senate Joint Resolution 4 would require voter approval for any legislation that the legislature passes to increase taxes. It would also require lawmakers to sign off on any tax-related ballot measures that voters approve, which no other state does. Senate Joint Resolution 6 would enact a restrictive spending limit that would force drastic cuts to schools, roads, and other building blocks of economic growth in Alaska.
Like TABOR in Colorado, these measures would endanger Alaskans’ quality of life by:
- Forcing cities and towns to further raise property taxes and fees, cut funding for public services, or both. These constitutional amendments would squeeze the state budget, which in turn would put pressure on cities and towns to make up the difference through other means. Since property taxes and fees generally aren’t based on ability to pay or a person’s income, they are likely to ask more of Alaskans who earn low wages than the richest.
- Forcing deep cuts to education. Some 65 percent of K-12 school funding comes from the state, so a drop in those funds due to these measures could severely compromise Alaska’s education system. In his budget, Governor Dunleavy already proposed a $300 million funding cut to K-12 for this year. Further complicating matters, the state’s education formula is structured such that cuts in state funding, as the governor proposed, also reduce the amount that communities may contribute to local schools. These additional funding cuts could mean even larger class sizes, more difficulty heating school buildings, and additional challenges to educating students and building a strong workforce.
- Allowing Alaska’s infrastructure to fall further into disrepair. Investing in and maintaining the state’s roads, airports, marine highway system, and other forms of vital infrastructure are key to creating good jobs and promoting full economic recovery, yet Alaska faces significant backlogs in maintaining its airports, energy infrastructure, ferry system, and other areas. The amendments would make it much tougher to raise the revenue needed to maintain and improve these systems.
It’s a precarious time for Alaska. Volatile oil revenues are declining in the long term, and the state needs new revenues from diverse sources to put itself on a sustainable path, and soon. Governor Dunleavy’s amendments would exacerbate these challenges and further jeopardize Alaska’s long-term fiscal stability, in much the same way that TABOR has done in Colorado.
Alaskans should reject these amendments and similar budget gimmicks and instead raise the necessary revenues to invest in schools, health care, and infrastructure to promote broad-based prosperity and economic growth.