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Anchorage Daily News
Alaska History Seems To Repeat Itself
By LEW M. WILLIAMS, JR.
March 4, 2004
Four regular sessions and one special session of the Alaska Legislature spent money but failed to provide revenue to finance their extravagance. Members were too beholden to special interests to pass any reasonable tax revenues.
Although the same party controlled both houses of the Legislature and the governor's office, that majority party was split. Some supported the governor and some opposed him. Alaska pleaded poverty although it had lots of money in special funds.
A description of recent legislatures? No. It was the legislatures of 1941, '43, '45 and '47, plus a special session in 1946. They provide a lesson for this year's lawmakers: come up with a fiscal plan in cooperation with the governor -- or else.
The 1947 fiscal crisis started in 1939 when President Franklin Roosevelt, a Democrat, appointed Ernest Gruening as Alaska's governor. The governor and secretary of Alaska (lieutenant governor) were presidential appointees and employees of the Interior Department when Alaska was a territory. Harold Ickes, described as a cantankerous old token Republican in the Roosevelt Cabinet, was Interior secretary.
Gruening headed the division of Territories and Island Possessions in Ickes' department when his political friendship with Roosevelt resulted in his Alaska appointment. Ickes and Gruening had clashed over Puerto Rico policy so some said that Ickes kicked Gruening upstairs to get rid of him. If so, it proved a Superbowl kick for Alaska.
First, Ickes had to fire Gov. John Troy, publisher of Juneau's Daily Alaska Empire. Troy's ill health was given as the reason for his "resignation" on Aug. 29, 1939. But his refusal to support a 3 percent tax increase on gold mining, sought by Ickes, was the real reason for his departure.
Troy Democrats viewed Gruening as a carpetbagger. He clashed with old-timers over his support of equal rights for Natives, over statehood, over freight rates and over taxes. Alaskans and most companies doing business in Alaska paid no territorial taxes -- no income tax, no sales tax, no property tax, no license tax. Token taxes on salmon, liquor, motor fuel, mining and auto licenses provided 92.5 percent of the territory's revenue.
Territorial lawmakers met every other year and enacted a two-year budget. There was a war on during the '43 and '45 sessions, so it was up to the '47 session to do something to support programs that they and previous sessions enacted -- teachers' and territorial workers' pay raises, veterans' benefits, increased aid to dependent children, a new Department of Health and so forth.
Instead, the 1947 lawmakers fought -- fought the governor and fought among themselves. The House passed an income tax 21-2 (one member missing). The Senate killed it 9-7. It also killed a proposed property tax 10-6, split along governor/anti-governor lines. Ketchikan pharmacist Sen. Norman (Doc) Walker, a Democrat and a colorful orator, led the anti-governor Walker Bloc. It supported the Alaska canned salmon industry, which was the oil industry of its day.
When the '47 session ended, it had spent $10 million with an anticipated income of $6 million. Secretary of Alaska Lew Williams Sr. wrote in his Wrangell Sentinel column that the Legislature "could point with pride to having killed proposed revenue measures, except boosting the price of a good drink."
The territory had pots of money, much like the state today, but couldn't touch it. There was a surplus of $9 million in the unemployment compensation fund and smaller amounts dedicated to other programs.
The lawmakers thought they had the governor stymied. They included in the budget an amount to fund a special session. The governor fooled them. He didn't call the session. Under territorial law, the lawmakers couldn't call themselves into session or touch dedicated funds. That led to a ban on dedicated funds when the state constitution was written.
Gruening called his Board of Administration together. It cancelled all capital projects, including money for Ketchikan harbors, and froze payouts except for pensions and teachers' and state employees' pay.
By the 1948 election, Alaskans were fed up. Most of the Walker Bloc declined to seek re-election. Walker himself ran last in a four-way race for two senate seats. Thirteen of 40 lawmakers, almost a third, who served in the '45 and '47 sessions -- the anti-governor, anti-statehood bloc -- were gone in '49.
The 1949 lawmakers enacted seven tax measures including the income tax. It cost some of them re-election, but it solved Alaska's first fiscal problem. And some -- Jim Nolan of Wrangell, Bill Beltz of Nome, John Butrovich of Fairbanks and Bill Egan of Valdez -- continued serving Alaskans for many years as real statesmen.
Lew Williams Jr. is a retired publisher of the Ketchikan Daily News.