Alaska governor Bill Walker has revealed his plan to issue the state’s first income tax in 35 years.
Walker announced the plan on Wednesday in response to Alaska’s multi-billion dollar budget deficit brought on by steadily falling oil prices.
The state was able to avoid income taxes and even pay residents an annual stipend during times of oil prosperity. However, oil prices have fallen below $37 a barrel, their lowest price in 7 years.
Walker said taking action was essential to avoid another recession like the one that plagued the state in the 80’s when oil prices also fell steeply.
When prices fell in the 1980s, many homes were foreclosed as jobs were lost to sinking oil prices.
“[W]e cannot continue with business as usual and live solely off of our natural resource revenues,” Walker said in a statement. “Never before has the state faced a deficit so large that we are draining more than $9 million from savings every day.”
The New Sustainable Alaska Plan was unveiled alongside a budget plan to minimize the state’s deficit.