Stimulus Check Creator Issues New Tax Warning

A state legislator in Alaska has said that the state needs to introduce taxes to avoid running out of money as oil revenues that the region depends on are declining.

State Representative Cliff Groh told Newsweek on Friday that Alaska faces a "deep structural deficit" that needs to be tackled with an approach that will include the raising of taxes for high earners in the state.

"I strongly support a multi-prong approach to deal with this deep structural deficit that would include additional revenues," he said in a phone interview on Friday. "I have introduced legislation that would raise taxes on the oil industry and I have additionally sponsored legislation that would bring Alaska a high-earners tax."

Groh said that the tax would be 2 percent on incomes of more than $200,000 a year from Alaskans while the rest of the population making less than that will be mandated to contribute $20. He said that he was open to the reform of the permanent funds in ways that will protect it and a restructure of a dividend that the state's residents receive from oil revenues so "it's healthy and sustainable over the long run."

"I represent a district that includes many low-income people. It's in North Anchorage. And they, like all Alaskans, need good roads, good schools, good public safety, good public health, and other services provided by our state," Groh told Newsweek. "So, I very much support a multipronged and multifaceted approach to [deal with] our state's structural deficit to allow people to thrive in Alaska and not just survive."

Since Alaska became a state in 1959, oil revenues have contributed $180 billion to the region's income, according to data from the Alaska Oil and Gas Association. In 1976, the state created the Alaska Permanent Fund which took oil revenues and distributed it to residents as a dividend. That fund is now worth nearly $74 billion as of September 2023, according to the Alaska Permanent Fund Corporation.

But research shows that Alaska's oil fields are "mature" and last year oil production was at its lowest since 1976, according to the U.S. Department of Energy.

This year, the permanent dividend amount from the fund is $1,312, less than last year's distribution of $3,284, Alaska's Department of Revenue data showed.

Groh, who told Newsweek that as alegislative staffer in the Alaska Legislature, he helped create the permanent fund dividend, noted that Alaska was the only state in the country without a broad-based tax.

Groh said he supported income taxes over sales taxes and was against borrowing to plug a budget shortage.

"I think that the state trying to borrow money is a fool's errand and a road to disaster, and I oppose to say we're going to borrow our way out of it and just get in a deeper hole and that's not what we need," Groh said.

Correction: 11/17/23, 6:12 p.m. ET: This article was corrected to clarify details about Groh's career background and his tax plans.