New ISER report analyzes effect of Alaska fiscal options on children and families

How might steps Alaska's state government takes to balance its budget affect Alaska families? Different ways of closing the state's $3 billion budget gap-the result of lower oil prices and dwindling oil revenues-will have different effects on households with and without children, according to a new report by Matthew Berman and Random Reamey of the UAA Institute of Social and Economic Research (ISER).

The state has cut some spending, but the authors say that a combination of more spending cuts and new revenues will be required to fill the huge budget gap. They looked specifically at how state income, sales, or property taxes and a cut in Permanent Fund dividends would affect incomes of households with and without children. They found:

• A cut in PFDs would be by far the costliest measure for households with children-compared either with what they would pay under any of the tax measures, or with what PFD cuts would cost households without children. Households with children would pay about 2.5 times more of their per-person incomes than those without children, for every $100 million of revenue raised.
• All measures except a graduated income tax would cost households with children more of their per-person incomes than those without children.
• Households without children would pay roughly the same share of their per-person incomes under any of the fiscal options, with a graduated income tax somewhat more costly.
• Non-residents would pay a share of any of the potential taxes, reducing the burden on Alaska households.

View the full report, Effect of Alaska Fiscal Options on Children and Families, at the Institute of Social and Economic Research website.

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