THE THIRD QUARTER OF 2016By David G Hanger May 20, 2015
Do not expect much from the politicians. At the local level we are dealing primarily with grade schoolers, and it is arguably worse at the state level where there isn’t a pragmatist or a real adult in the room; just a bunch of hot-house ideologues. Remember, it was just a year ago the Alaska electorate allowed its limited ability to think to be coerced into believing the palpably idiotic and self-interested propaganda of the oil industry that the tax structure for the oil companies needed to be radically adjusted downward. Today the state legislature is dealing with considering taxing everything in sight, starting with a new individual state income tax as high as 15% of your Federal tax bill; and such a tax will raise revenues sufficient to cover about 10% to 15% of the current state deficit. Our local buck privates and corporals of industry, rather than thinking and analyzing for themselves (a rather dubious prospect to begin with), have permitted our bureaucratic dictators to do their thinking for them. True enough, the interest rates are historically low, thus a good time to do some building improvements and other projects; but proportionality has been completely ignored as a bunch of bozos have erected monumental tombstones with their names plaqued and appended upon them. But were any of them ever presented with a matrix or a grid that indicated what the tax rates locally would have to be to pay off this mess at various population and income rates? No, not a chance. But that is exactly the dilemma the state of Alaska faces right now because when they reduced the oil tax, they never considered what would happen to state finances if there was a downturn in oil prices. In other words they bet everything on the upside, and did not even bother to consider the downside. Guess what. That downside is going to be real grim, a lot grimmer than you understand right now. Numerous neophyte historians (idiots, really) in their review of military contests of the past have often criticized commanders for being more concerned for their lines of retreat and communications than with winning the battle at hand. But if you consider for a moment the immediate concern of a commanding general, i.e. that his 100,000-man army requires no less than 310,000 pounds of food daily, it is more readily apparent why a commander is so concerned about his hindquarters. The flow of supplies simply cannot stop. But our politicians both locally and at the state level have operated as if there is no possibility of a downside; have not even sought to analyze that prospect amongst a range of possible outcomes; and thus at the state level have already colossally failed to serve the citizens who elected them; and at the local level that fallout is coming soon. How much must the local tax rates be to pay off this bonded mess if the local population, the economy, or both declines by ten percent? By 15%? By 20%? In the past year we have already witnessed some of the scramble our local bureaucratic dictatorship and its lackey boards have undertaken in this regard. We have already had sales tax and property tax increases, and now the bureaucrats, of course, just want more. They want to tax senior citizens; I have actually heard 10% sales tax rates being discussed. Property taxes must go up even more. It is nuts. Duly note that the state government and our local government have completely divorced themselves from any concern for the private sector; thus our governments, purportedly created for the common good, to collectively do those things we cannot individually do ourselves, such as police, fire, sewer and water, transportation and power, education, are in fact enemies of the people. Where once we were in their eyes just sheep to be routinely fleeced, we are now victims to be repeatedly raped. Notice what is happening in Juneau. Perhaps understandably our new governor is concerned almost exclusively with financing state government, but never once have I heard him express any concern whatsoever for the consequences of this fiscal mess on the private sector. We are just supposed to pick up the tab, shut up, and prepare to get reamed over and over again so some government worker can keep his or her job. Government workers produce nothing; they don’t make money, they cost money. But rather than being concerned for preserving private sector jobs, i.e. jobs that make money, our state and local governments are solely concerned with paying more and more out in government salaries. Protect the bureaucrats; to hell with everyone else. Flip them the bird, and go for a long drive. By the third quarter of 2016 the construction crews now building at the hospital are gone. It sounds like a public radio DJ or two or three will be gone, too. All the state government money now in the pipeline will by then have been consumed. The tourist industry will have closed for the season. How many state ferries are going to get parked, I don’t know, but it is a safe bet that state ferry work will be considerably truncated. Come the end of winter what is next? Fishing and tourism, what else? The almost 30% of the town working for the government demanding another raise. The state government is $3.5 billion short of covering its operating budget. I doubt much beyond the basics will be coming from that source. Consider the extreme unwillingness of our monopolistic suppliers of such basic services as gasoline to reduce their retail prices even as the wholesale price of their product was reduced by half or more. Clearly there is no inclination on the part of our local and state governments to regulate those illegalities, thus it is reasonable to assume the price of goods and services here in Alaska will continue to increase at a rate exceeding the cost for similar goods down south, thus putting greater and greater pressure on your more static wallets. In the meantime, both state and local government want to jack up every possible method of taxation of which they can conceive (except for marijuana taxes; there they just want to bloviate about the perceived hazards of butane in the making of hash oil; while in the meantime more drunks have died in fires here in Ketchikan in the last month or so than have died from marijuana-related fires in the past 50 years). Your taxes are going to go up. Way up, as things are currently proposed. So your wallet is going to get clipped from both directions. While the government taxes you to death, there will be no corresponding effort on their part to keep the sharks and the barracudas from pricing you to death. Nowhere in any of those equations is there the slightest concern for the consequences to private sector workers. That’s a rape job. Fire government workers first; they produce nothing. Fire private sector workers last; they make money only by producing something. One does not get out of a $3.5 billion hole by crucifying first and only the people who actually make money. The burden these people intend to impose on the private sector is likely to create a cascading domino effect. I do not know exactly where that point of critical mass is, but needless to say, long before there is one person left in line at the ferry terminal to turn in the key to the now ghost town of Ketchikan, the remaining residents of this community will have refused to continue financing the local debt burden because they don’t have that much money. A considerable softening of the local economy within 15 months is a very reasonable assumption based on current indicators. Ten percent would be a relief with the more likely decline to be in the 15% to 20% range. What local and state government does will determine how much worse it will be. Senior citizens, for example, are a very important part of the local economy. There are a whole lot of retirees from the mill days and otherwise still hanging around, and most of them operate with relatively fixed incomes. There is not much inflationary increase to their retirement benefits. With the talk of imposing sales taxes and increased property taxes being seriously discussed by our local politicos it is in fact logical for any number of these folks at this point in time to consider selling their property and getting the hell out of the way of this looming fiscal fiasco. Early bird gets the worm. So, if you got kids or family down south and a comfortable arrangement otherwise, go play with the kids. You don’t need to support City Manager Karl Amylon’s, et. al, retirement salaries. So it remains to be seen what else local and state government can do to gum up the works. But what is pretty obvious right now is neither one of these governments knows how to count worth a good goddamn; and their squirming to get off that hook is intended to cost the rest of us one hell of a lot. The question is how many folks in the private sector will stay on the ride. There is every reason to assume a lot of talent will seek more profitable environs, thus the cascading domino effect could get out of control rather quickly, and an economic decline in the 20% to 30% range is far from out of the question. Any government so concerned about helping itself cannot be concerned at all about helping the private sector it is supposed to sustain and preserve; it will instead seek to rape it in every possible way. There is little to no reason to expect progress to come out of such a horrific mess. You are warned accordingly. David G Hanger
Received May 15, 2015 - Published May 20, 2015 Viewpoints - Opinion Letters:
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