(The Center Square) – Decreasing state taxes and strong fiscal policies lifted Alaska to the top fifteen freest states in the country this year, but the state’s regulatory policy could use some work, according to a report.
Alaska jumped four spots from last year to rank 15th in the libertarian think tank Cato Institute’s Freedom in the 50 States Index, which has tracked personal and economic freedoms across more than 230 state and local public policies for over two decades.
Alaska’s rank has ranged wildly in that time from as low as 41 in 2007 to as high as 12 in 2014. This fluctuation in score is partially due to Alaska’s large oil and gas reserves, which means its fiscal policy scores depend strongly upon the global oil price, the report said.
Fiscal policy coupled with improvement in government size are the two primary reasons for Alaska’s rise from the 41st freest state in the country in the mid-2000s to the top 15 this year, according to the report.
Government employment in Alaska is 17.5% of private employment, an improvement from 20% in 2002, the report shows. Government consumption also hit a 21st-century low last year, though the state’s overall government consumption is generally considered high, the report said.
State taxes remain the lowest in the country, with the state tax burden at 1.8%. The local tax burden is comparatively high at 4.6% of income, according to the report.
Meanwhile, some regulatory policies are keeping Alaska’s score down.
“Despite its attractive overall fiscal situation, or perhaps because of it, Alaska does poorly on several important regulatory policy indicators and does middling overall,” the report said. “The labor market is far more regulated than one would expect for such a conservative state. There is no right-to-work law; the state has strict workers’ compensation mandates and a high minimum wage.”
Alaska’s minimum wage was $10.85 an hour in 2022. The state was also faulted for how heavily it regulates insurance. However, points were given for the freedom of practice nurses and dental hygienists enjoyed. Alaska has also improved its civil liability system over the last 25 years, the report said.
Alaska received good marks for personal freedoms, an area in which it continually scores well, the report shows. Unregulated homeschooling, secure gun rights, and a crime-adjusted incarceration rate below the national average are among the factors keeping Alaska’s personal freedom score high.
The state could do a great deal to improve school choice, and Alaska has one of the worst civil asset forfeiture laws in the country, according to the report.
“The burden of proof is on the owner of the property to prove innocence, property is subject to forfeiture from mere probable cause, and the proceeds largely go to law enforcement,” the report said.
The top five states for freedom were New Hampshire, Florida, South Dakota, Nevada and Arizona. The bottom five were Oregon, New Jersey, California, Hawaii and New York