I keep hoping that the motto of the famous Anchorage bar Chilkoot Charlie's, "We cheat the other guy and pass the savings on to you," can work out for me, but in these trying economic and political times, I'm a little concerned.
It seems obvious that Alaska's fiscal crisis will actually require a bit of sacrifice from all of us as well as action from the -- so far pathetically unproductive and seemingly delusional -- legislative majority. The governor, to his credit, has submitted legislation for a combination of budget cuts and revenue enhancements to bring us something that might resemble sustainable government. As an Alaskan, I'm hoping the Legislature can find the gumption to act soon and wisely enough to stave off economic collapse. As a commercial fisherman, I'm hoping to escape targeting as "the other guy."
The importance of commercial fishing to Alaska's economy can be shown in many ways. According to an Alaska Seafood Marketing Institute study, the seafood industry provides over 63,000 jobs throughout the state and produced a 2014 export value of $3.27 billion. Seventy-two percent of the active limited-entry permit holders are state residents. Tax revenue generated from the industry contributes to the state general fund and is what makes coastal communities around the state viable. Cuts to the Alaska Department of Fish and Game Commercial Fisheries Division budget will put Alaska's sustainable fisheries management at risk as well as compromising harvest opportunities as biologists lose resources needed to monitor fish stocks. Also, because existing fish taxes -- state and local -- are levied on the ex-vessel value, reducing support for marketing by cutting the ASMI budget is likely to be counterproductive.
Nonetheless, according to a December 2015 study by the Institute of Social and Economic Research at University of Alaska Anchorage, entitled "Fiscal Effects of Commercial Fishing, Mining and Tourism," the roughly $70 million in revenue from commercial fishing doesn't cover the $78 million cost of state expenditures. Some of the assumptions made can be challenged, but the numbers provide a justification for the governor's budget proposal to increase landing taxes by 1 percent.
Unlike the profit-based taxes levied on non-renewable natural resources like oil and gas and mining, fish taxes are based on a gross value and are paid regardless of the bottom line. Fishermen struggling at the margins are likely to feel that tax burden more acutely. It seems to me that more reliance on a profit-based tax to cover shortfalls and provide for government activities is a better way to go, thus allowing the state to take a slice of economically productive activity and refrain from policies -- like taxing the gross value of fish -- that further compromise marginally viable operators who, nonetheless, provide local jobs and support local economies.
Reinstitution of an income tax based on federal tax liability, as the governor has proposed, may be tough to swallow, especially for the majority in the Legislature who seem dogmatically opposed to the concept. However, the silver lining is that we would get to hit up "the other guy" -- the out-of-state residents, whether they are fishermen, oilfield workers, miners or tour guides -- who make money in Alaska only to spend it and probably get taxed on it in another state. We ought to at least curtail the free riding and get more in return for state-provided services -- sustainable fisheries management for example -- with an income tax. For mining and other resource-development activities, the environmental risks to aquatic resources that can so threaten fisheries might be slightly more justifiable if those often-promised "high-paying" jobs would actually contribute to state coffers.
Cuts and a broad-based income tax are just part of a solution, but some cuts and some taxes are worse than others. As we blow through the first trimester of the regular legislative session, it is still unclear how our fiscal predicament will be handled, if at all, by the elected officials in Juneau. In the zeal to cut -- always unspecified -- wasteful items, I hope they will be mindful of the counterproductive nature of at least some cuts. On the revenue side, an income tax at least gets a little bite from the "other guy" and ultimately eases the burden on those of us who will be living here after the present cadre of legislators is gone from office.
Chip Treinen lives in Anchorage and has fished commercially for over 35 years in a variety of fisheries from Southeast to the Bering Sea. He is a board member of United Fishermen of Alaska and a committee member of the Alaska Seafood Marketing Institute. The views expressed above are his own.
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