To the editor: With recent claims regarding our recent report, “Unsustainable Spending: The State of Alaska’s Budget and Economy,” we want to assure Alaskans about the reliability of our analysis as well as the conclusions we draw.
Alaska policymakers face a situation that requires tough decisions, and they require a complete picture of all options available and the impacts of any proposals they are considering. Our analysis offers a pro-growth solution: cutting inefficient spending first to achieve fiscal stability for the state and avoiding taxes when possible.
Both our qualitative and quantitative analyses rely on methods and models commonly used, and we present our complete methodology so that researchers can validate our findings. Any “boilerplate” writing of our methodology in our current report is an indication that we consistently apply a model that provides a context to understanding how state economies function. Using state-specific data, our model is tailored to study how tax changes affect Alaska. This is no different from the Institute of Social and Economic Research at the University of Alaska Anchorage using IMPLAN, which uses a general framework to model a state economy and relies on Alaska-specific data to evaluate potential policies. There are, however, important differences between the two frameworks, but the fact that we both find harmful impacts of taxation should be a signal that new taxes are not the best answer to solving Alaska’s current problems.
We encourage a debate that recognizes the costs and benefits of any proposal to address the state’s budget shortfall. And while our model cannot evaluate every potential policy solution imaginable, we did analyze four that have been proposed through legislation in recent years.
We also point out that academic studies that have examined governments facing budget crises find the best course is to cut spending and avoid new taxes. We understand that Alaska faces its own challenges based on its economy, but ignoring lessons from respected scholars is not a responsible approach to policymaking.
Alaska’s policymakers must look at all possibilities to address the state’s shortfall, but before they raise taxes, they — and Alaskans — should understand the impact that decision would have.