What was Sarah Palin's fiscal policy like in Alaska?

[mswas]

From here: http://www.andrys.com/palin-kilkenny.html

Sarah campaigned in Wasilla as a “fiscal conservative”. During her 6
years as Mayor, she increased general government expenditures by over
33%. During those same 6 years the amount of taxes collected by the
City increased by 38%. This was during a period of low inflation
(1996-2002). She reduced progressive property taxes and increased a
regressive sales tax which taxed even food. The tax cuts that she
promoted benefited large corporate property owners way more than they
benefited residents.

The huge increases in tax revenues during her mayoral administration
weren’t enough to fund everything on her wish list though, borrowed
money was needed, too. She inherited a city with zero debt, but left it
with indebtedness of over $22 million. What did Mayor Palin encourage
the voters to borrow money for? Was it the infrastructure that she said
she supported? The sewage treatment plant that the city lacked? or a
new library? No. $1m for a park. $15m-plus for construction of a
multi-use sports complex which she rushed through to build on a piece
of property that the City didn’t even have clear title to, that was
still in litigation 7 yrs later–to the delight of the lawyers
involved! The sports complex itself is a nice addition to the
community but a huge money pit, not the profit-generator she claimed it
would be. She also supported bonds for $5.5m for road projects that
could have been done in 5-7 yrs without any borrowing.

As an oil producer, the high price of oil has created a budget surplus
in Alaska. Rather than invest this surplus in technology that will
make us energy independent and increase efficiency, as Governor she
proposed distribution of this surplus to every individual in the state.

In this time of record state revenues and budget surpluses, she
recommended that the state borrow/bond for road projects, even while
she proposed distribution of surplus state revenues: spend today’s
surplus, borrow for needs.

From pork to petrodollars

Last year she championed a tax hike on oil companies which is helping bring in huge sums—more than $10 billion in the fiscal year that ended in June, according to the companies that pay them. Suddenly flush, the state has promised $1,200 to every man, woman and child, ostensibly to cover the high cost of fuel.

That giveaway is just the start. Rather than paying taxes to the state, Alaskans receive cheques from it. In “The Simpsons Movie”, released last year, Homer Simpson is handed $1,000 at the Alaskan border for “allowing the oil companies to ravage the state’s natural beauty”. That is an understatement: this month’s payments from the Alaska permanent fund are expected to be about twice as big. With the fuel surplus, this alone would get a family of four three-fifths of the way towards the federal poverty line in the lower 48 states. And many Alaskans do not pay sales taxes.

Meanwhile, the state’s industries hum along. Fishermen are doing well, thanks in part to a collapse in California’s salmon stocks. Mining is booming. Between 2000 and 2007 about 8,000 health-care jobs were created, a lot in a state with a civilian working population of just 335,000. More and more cruise ships chug up the coast. Alaska’s natives, who were given money to set up corporations in lieu of land, have proved adept at hoovering up federal contracts in the lower 48 states

http://www.legfin.state.ak.us/FisSum/FY08-Budget.pdf

Can anyone help divine this for me? My economic skills are kind of lacking. Did she make some shrewd moves that boosted the economy or did she pillage long-term stability for short-term gains?

[mswas]

Wow no one has answers? Not even Sam Stone?

[mazinger_z]

I don’t have a lot of time today at work, and I don’t dope from home or on the weekends, but I did a search across business and economic sites (including the NYT). It looks like she expanded the budget. But, she is able to do so because Alaska is flush with oil money.

Why she raised food taxes, I don’t know, but it might have to do with how she doles out money from the fed (i.e. fed money only goes to certain areas, like money for roads only goes to roads), and whatever infrastructure needs left over she decided to tax food. I’d rather tax the stores (who should just raise prices or compete by not doing so), but that’s my prerogative.

Also, each individual tax payer gets a chunk of money anyway, so she probably figures that a few cents isn’t going to kill anyone. Oh, and you don’t necessarily encourage voters to buy bonds. They are offered to the market and anyone can buy them. The idea is to use someone else’s money which you pay back on an interest rate less than what you earn on your other investments. If producing more oil infrastructure is more palatable, then a bond issuance seems like a no-brainer.

In my hometown, a public bus hit an elderly woman causing something like $5M damages (she sued and won). Rather than have the insurance pay out the rest, my town issued a bond. My property tax still went up, but that’s another story (as it always goes up).

[Key_Lime_Guy]

The first bit quoted in the OP doesn’t mention that the population of Wasilla also increased by a large percentage during the same time period (Population change since 2000: +66.9% according to this: http://www.city-data.com/city/Wasilla-Alaska.html)

[mswas]

@Key_Lime_Guy

The first bit quoted in the OP doesn’t mention that the population of Wasilla also increased by a large percentage during the same time period (Population change since 2000: +66.9% according to this: http://www.city-data.com/city/Wasilla-Alaska.html)

Well I am very curious as to whether or not she really did jack up the debt in Wasilla and if she did if there is any justification for it.

[Chefguy]

@mazinger_z

I don’t have a lot of time today at work, and I don’t dope from home or on the weekends, but I did a search across business and economic sites (including the NYT). It looks like she expanded the budget. But, she is able to do so because Alaska is flush with oil money.

Why she raised food taxes, I don’t know, but it might have to do with how she doles out money from the fed (i.e. fed money only goes to certain areas, like money for roads only goes to roads), and whatever infrastructure needs left over she decided to tax food. I’d rather tax the stores (who should just raise prices or compete by not doing so), but that’s my prerogative.

Also, each individual tax payer gets a chunk of money anyway, so she probably figures that a few cents isn’t going to kill anyone. Oh, and you don’t necessarily encourage voters to buy bonds. They are offered to the market and anyone can buy them. The idea is to use someone else’s money which you pay back on an interest rate less than what you earn on your other investments. If producing more oil infrastructure is more palatable, then a bond issuance seems like a no-brainer.

In my hometown, a public bus hit an elderly woman causing something like $5M damages (she sued and won). Rather than have the insurance pay out the rest, my town issued a bond. My property tax still went up, but that’s another story (as it always goes up).

A couple of notes: Alaska is indeed flush with oil money, but much of it is in the Permanent Fund. Any politician who even mentions tapping that money for anything whatsoever commits instant political suicide. Technically, Alaska has no taxpayers in the broader sense. There is no state income tax, but communities like Wasilla and Fairbanks have a sales tax. Reducing property taxes is one of the mantras for getting elected locally, but in a city like Anchorage that has no sales tax and a population of 250,000, that’s a dangerous thing to do.

Alaska has the lowest tax burden of all 50 states. Every man, woman and child who meets the residency requirement gets an oil rebate check every year. This year it will top $2,000, the highest ever paid out. We probably also have the loudest whiners about property taxes, even though it’s usually not only a wash, but you end up making money on the deal. Handout and entitlement mentality.

As Mayor, Palin did the old borrow-and-spend-and-leave-the-debt-to-the-next-guy shuffle that Republicans are so fond of. Since she isn’t going to finish out her term as promised, we won’t get to see whether or not she would have done the same at the state level. Speaking of which, her Lt. Governor is running for Don Young’s house seat and is in a virtual deadlock after the primary. They’re waiting for absentee ballots to determine the outcome. Should he win the primary and go on to win the general, that leaves our state in the hands of one of Palin’s unqualified appointees, the attorney general. Anchorage’s mayor is running for Ted Stevens’ seat, which would leave our city leaderless, as well.

[IAmNotSpartacus]

@Key_Lime_Guy

The first bit quoted in the OP doesn’t mention that the population of Wasilla also increased by a large percentage during the same time period (Population change since 2000: +66.9% according to this: http://www.city-data.com/city/Wasilla-Alaska.html)

She was mayor from 1996-2002. How much of that 66.9% increase was between 2000 and 2002?

[mswas]

@IAmNotSpartacus

She was mayor from 1996-2002. How much of that 66.9% increase was between 2000 and 2002?

I was thinking of that too, apparently it was growing a lot in the late 90s also. I’ve heard 5,450 as the number of her constituents when she was Mayor. Though, if it’s true that she raised the debt of a town under 10,000 people by $ 22m dollars, there is something seriously wrong with her ability to govern.

[Sam_Stone]

I just got in from work, so this is the first chance I’ve had to reply to this thread.

As far as what she’s done as mayor, it looks like a mixed bag to me. It sounds like she screwed up on the land title for the sports complex. She cut property tax by 40%, but raises sales taxes. Your cite says that she cut ‘progressive’ property taxes, but raised regressive sales taxes, and the tax cuts went to the rich. Sounds like typical democratic talking points. Frankly, I don’t know the details of the town’s tax structure, how high their taxes were compared to other places in Alaska, etc. I think you’d have to look into that before drawing any conclusions. It seems that there was a population boom after the property tax cut, so it may be that Wasilla’s property taxes were out of whack with other areas.

I noticed that this Kilkenny person is also the one who claims that Palin wanted to ban books. Sounds like she really hates her, and is making it a mission to do as much damage to her as possible. That doesn’t make her wrong, but it’s something to consider when evaluating the spin. It’s entirely possible that there’s something personal behind this. Kilkenny says that she attended every single council meeting. She’s a Democrat, so maybe she’s a self-appointed watchdog or something. I don’t know.

I tried researching the facts behind this, and discovered that this is some from viral E-mail that’s hugely popular right now. It’s been repeated in dozens of newspaper articles, but I couldn’t find a single one that independently verified the facts in it. So who knows? Maybe it’s completely accurate, or maybe not. I did find out that reducing the property taxes was a campaign pledge, so it seems like it’s something the population wanted. And she was re-elected by a 3-1 margin, with the former mayor running against her. So she must have been an improvement.

But that said, small town politics are not my thing. There’s a lot of personality involved, and the right economic policy isn’t always clear when you’re talking about a place with a few thousand people. Other factors come into play. For outsiders to look at the record and decide what was right or wrong is questionable - and that includes those using her time as mayor as proof that she’s a great politician. For all I know, she was popular because she attended the biggest church or something.

Now as far as the oil and gas revenues in Alaska, being from Alberta I know something about the pluses and minuses of being oil rich. I don’t mind her strategy of giving the oil money directly to the people at all. Oil money is very corrupting. You look around the world at the places awash in oil money, and it often doesn’t do the population any favors. It tends to give the government too much power and divorces them from the consequences of bad policy.

In the 1970’s, when oil prices were booming, Alberta did what the author of the letter is suggesting - used the money to fund all kinds of expensive projects. Then the price of oil crashed, and we wound up with a huge debt that took two decades to get rid of. One of the reasons Alaska’s government has a reputation for being so corrupt is precisely because of that oil money.

On the other hand, Alberta now is struggling with an infrastructure that can’t keep up with the economic boom because we haven’t invested enough in it. But that’s hindsight, and even now we have to be careful not to overbuild. But governments with huge coffers can’t help themselves. Sometimes the best alternative is to just give the money to the people and let them do what they want with it.

Her tax hike to the oil companies is not surprising - we just did exactly the same thing in Alberta. A royalty tax which made sense when oil was $24/bbl doesn’t make a lot of sense when oil is $124/bbl. But I don’t know the specifics of Alaska’s oil taxes - whether they’re a flat rate, or a percentage of the market rate, or what. I just don’t know.

I do think it’s meaningful that her approval rate in Alaska has hovered between 75% and 90% during most of her term. You can always find critics with a story to tell, but it seems pretty clear that whatever she’s doing has the widespread support of Alaskans.